Study 1: Intro to liability insurance Flashcards
What is liability?
Liability refers to responsibility assessed against a person (possibly an insured) or an entity (a company) for injury or damage to a third party as a result of applying the law.
From an accounting point of view, liability represents money owed or debt.
How does responsibility relate to liability?
Liability equates with responsibility, the responsibility that falls upon persons because of their actions or arising from their ownership, control, use, or operation of something.
What are the 3 ways law imposes liability? What is the most common way that law imposes liability? and its definition?
- Negligence
- Nuisance
- Breach of contract
The most common way law imposes liability is a finding that someone has committed a tort (a wrongful act) due to negligence, which results in damage or injury to another.
Negligence- failure to use the degree of care expected from a reasonable person and prudent person.
What is nuisance? intentional tort?
When someone infringes on a persons right to enjoy and use his or her property, it qualifies as nuisance if there is a substantial and unreasonable interference with these rights.
The categories of nuisance and negligent acts qualify as torts. When someone intends to injure someone else in a way that the law forbids, it is classified as an intentional tort
What are the types of nuisance?
Private nuisance- interference with a persons use and enjoyment of his or her land
Public nuisance- An action or a thing that interferes with the general public. Interference involving the rights of many people
What is a breach of contract?
When a party to a contract fails to honour its terms, that party is said to be in breach of contract.
Most important factor of someone being in breach of contract is that is has to be a fundamental and important part of the contract. (Ex. tenant not paying rent is fundamental, tenant paying rent late is not fundamental)
Definition of contractual liability and hold harmless?
Contractual liability- Liability assumed through a contract. Legal liability policies are based upon liability in tort or negligence and provide limited coverage for contractual liability.
Hold Harmless and indemnity provisions- A contractual agreement whereby one party assumes the liability and risk of another party and indemnifies the other party from having to bear the loss.
Canadian law - Jurisdiction
A breach of law in one municipality may not be one in another. Each jurisdiction sets its own standards that modify the rules to accommodate the needs of the community. Therefore, knowledge of the statute law from one area to another is often very important to determine whether a wrongful act has occurred.
What is statute law?
A law set down in a government act and passed by legislature.
Criminal law versus Civil law - what are the differences?
Criminal law - The criminal code of Canada includes a list of acts that qualify as crimes that will be punished by society. Criminal law seeks to determine guilt. (Must be guilty beyond a reasonable doubt)
Civil law- A civil action (lawsuit) arises from a dispute, formally bought before a court, between individuals or corporations, where the injured party is usually interested in monetary compensation.
Criminal court seeks to punish an offender by imprisonment or fine, etc. The civil court is concerned with setting appropriate compensation for the damages suffered and than obliging the liable party to pay this sum to the injured. In other words breach of criminal law demands punishment, breach of civil law demands compensation
What are the two systems of Civil law in Canada?
Civil Code of Quebec - evolved from the time Quebec was a French colony. The courts role is to settle disputes according to specifications set out in the code; its role is not to make law but interpret it
- Articles 1457 to 1481 form cornerstone of civil litigation
- Articles 2389 to 2414 cover rules governing insurance
- Articles 2463 ti 2479 talk about damage insurance
- Articles 2498 to 2504 deal with liability insurance
What are the two systems of Civil law in Canada? continued….
Common law system - evolved into mix of both case law precedent and statute law. Statute laws supersede case law precedent when one comes into conflict with the other.
Courts role is bound to follow prior or past precedents
What is Case Law Precedent?
Under common law, the courts look upon cases that have already been decided for guidance on how to resolve cases currently in dispute.
If a precedent has not been set for the particular case under consideration, the court may include in its judgement a set of rules with attendant criteria in a logical argument in support of its decision. This process of developing sound and fair legal principles within case law is referred to as creating precedent.
When such a decision eventually influences the outcome of future cases, it is considered to be precedent-setting case law.
Case law precedent - Does it follow a hierarchy system?
Yes, a certain hierarchy is followed to apply the law of precedent. If more than one judgement is found with a similar fact situation, the court will follow the precedent set by the higher court. (Supreme court of Canada decisions supersede all other courts)
Quebec courts are not bound by prior rulings or decisions, but they tend to be effectively persuaded when arguments are supported by case law.
What is the court structure in Canada?
Look at exhibit on page 1-10
- Lowest levels are small claims courts or divisions for small cases
- Next is county or district courts for intermediate lawsuits
- Highest level in province is superior courts for largest legal cases, and that’s followed by provincial/territorial court of appeal.
- Highest court in Canada is Supreme court of Canada. All appeal cases from provincial court systems do not automatically qualify to be heard at this level. Cases are selected based on national importance or to establish precedent
- There is also Federal court and Federal court of appeal. Federal court deals with intellectual property, federal taxes, etc.
