ARM 55 Chp 6

basis for legal and regulator risk
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Terms in this set (94)
legal interests that can be violated by intentional torts1. physical safety of one's person 2. personal freedom of movement 3. protection of property 4. security of reputation 5. personal privacy 6. economic freedomstrict liability tort1. arise when an organization engages in certain activities that are considered ultra-hazardous or that involves product liability cases 2. does not require negligence or intent to harmultrahazadous activities1. blasting 2. harboring wild or dangerous animals 3. manufacturing or selling certain hazardous productscontractsLegal agreements between two or more parties, where each party has some obligation or responsibility to one another.requirements for enforceability1. agreement(including offer and acceptance) 2. consideration 3. capacity of contract 4. legal purposetypes of contracts1. express 2. implied 3. valid 4. void 5. voidable 6. unenforceableexpress contractA contract whose terms and intentions are explicitly stated.implied contracta contract whose terms and intentions are dictated by the actions of the parties to the contract and the surrounding circumstancesvalid contractA contract that meets all of the requirements to be enforceablevoid contractAn agreement that, despite the parties' intentions, never reaches contract status and is therefore not legally enforceable or binding.voidable contractA contract that one of the parties can reject (avoid) based on some circumstance surrounding its execution.unenforceable contracta contract that is a valid contract, but that because of a technical defect cannot be enforcedstatutes and regulations1. statutes can impose legal liability on an organization 2. statues are created by federal, state, provincial or territorial governments and often modify the duties owed to others 3. statues are also the basis for most criminal law (tax, mail and wire fraud laws)monetary damages1. criminal acts resulting in fines 2. failure to comply with statutes and regulationscompensatory damages1. A payment awarded by a court to reimburse a victim for actual harm. 2. indemnify those who incurred losses because of a breach of legal responsibility2 types of compensatory damages1. special 2. generalspecial compensatory damagesa form of compensatory damages that awards a sum of money for specific identifiable expenses associated with the injured person's loss, such as medical expense or lost wagesgeneral compensatory damagesa monetary award to compensate a victim for losses, such as pain and suffering that does not involve specific, measurable expensepunitive compensatory damagesa payment awarded by a court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conductdefense costs1. investigating circumstances and prepare for legal defense 2. investigation and defense costs can be the most expensive liability loss for an organizationindirect lossesseveral other net income losses are possible because of the filling of a claim against an organizationspecific performanceA court-ordered equitable remedy requiring a party to perform a certain act, often - but not always - as a result of breach of a contract.injunctiona court ordered equitable remedy requiring a party to act or refrain from actingmodifying legal and regulatory riskcategorized as hazard risk arising from liability riskpotential negative aspects of legal and regulatory risk1. risk avoidance 2. modifying the likelihood of an event 3. modifying the consequences of an eventrisk avoidanceis usually used as a risk treatment technique only in high probability-high severity situationsmodifying the likelihood of an event1. is often called loss prevention 2. this risk treatment method can be applied to: torts, contracts and statutesmodifying the likelihood of tort liabilityrisk mgmt professionals considering contractual removal or limitation of tort liability and hazard controlone way to prevent the likelihood of litigationby removing or limiting the organization's legal obligations to othersclauses added to contracts to remove or limit liability1. waivers 2. hold-harmless agreements 3. exculpatory agreements 4. unilateral noticeshazard1. A condition that increases the frequency or severity of a loss.hazard control1. another method to modify the likelihood of legal risk 2. involves implementing risk control measures that eliminate or reduce hazard 3. a key aspect of risk control for tort liabilitymodifying the likelihood of contractual liabilityto reduce is to have most if not all contracts reviewed by counsel, preferably before they are signedmodifying the likelihood of statutory liabilityprevented by understanding statutory complianceunderstanding can be gained from info acquired from1. internal experts who are knowledgeable about statutory requirements 2. trade associations, which often provide training courses to educate their members about compliance issuesmodifying the consequences of an event1. for hazard risk, this risk treatment technique is often referred to as loss reduction 2. the purpose of this techniques is to decrease the severity or effect of an organization's losses 3. can be applied to torts, contracts and statutesmodifying the consequences of tort liability1. the development of defenses 2. participation in settlement negotiationsdeveloping defensean important step in the litigation processadvantages and implications of used defenses1. legal privilege 2. immunity 3. comparative negligence 4. last clear chance doctrine 5. assumption of riskprivilegea rule of law allowing a person to refuse to disclose confidential persons from liabilityimmunitya defense that, in certain instances, shields the organizations or persons liabilitycomparative negligenceA common-law principle that requires both parties to a loss to share the financial burden of the bodily injury or property damage according to their respective degrees of fault.last clear chance doctrineA defense to negligence that holds the party who has the last clear chance to avoid harm and fails to do so solely responsible for the harm.modifying the consequences of contractual liability1. select a favorable jurisdiction 2. include limits of liability 3. include a liquidation damages provision 4. include a valuation clause 5. evaluation duty to mitigatemodifying the consequences of statutory liabilitydefense commonly pled by organizations in statutory cases is that the statue was unconstitutional or was too vague or ambiguous to be enforceablelegal systemsgive insurance professionals a basic understanding of the differences they might encounter in the international legal environment2 major legal systems categories1. civil-law system 2. common-law system3 different subsystems developed under civil law tradition1. roman 2. german 3. scandinavianother predominant legal systems1. east asian 2. hindu 3. islamic 4. south communistcivil law system or Roman-German law1. uses comprehensive codes and statutes to form the backbone of a legal system 2. the dominant legal system of western Europe, almost all of Latin America and parts of Africa and Asia 3. can be found in parts of some traditionally common-law countries 4. a judge is a civil servant 5. does not have the common-law jury trial 6. has a series of isolated meetings, written communications, motions, and rulings help decide the casecivil law system courtsusually divided into 2 or more separate sets, each with its own jurisdiction over different issues, with a different hierarchy, judiciary, and procedurestypical civil law case stages1. the preliminary stage 2. at the evidence stage 3. at the decision stageroman-french law1. uses a written legal code with a magistrate who acts as the final arbiter of private law disputes; the court relies heavily of appointed experts who investigate the evidence 2. the French civil code of 1804 consolidated the contrasting concepts of law by decree and law by customgerman-law1. most developed and influential of all the civil-law subsystems 2. is the civil code that took affect in 1900 3. Burgerliches Gesetzbuh(BGB) was developed for legal professionals to read and was to technical for laypersonsscandinavian law1. the legal system is both civil-law system and an independent system 2. the legal systems are based neither on large bodies or codified regulation, like those of the french and german systems, nor on case (common) lawcommon law systema judge interprets the facts of a case, examines precedents (prior judicial rulings in similar cases), and makes a decision based on the facts in the current caseprecedentsare guides, not rigid frameworks for all decisionseast asian lawhave relied on both civil and common law to varying degreeshindu law1. legal system is perhaps the oldest in the world 2. the customs and laws of Hinduism have applied separately and distinctly to the members of four major caste groups: Brahmans(priest), Kshatriyas(warriors), Vaishyas(tradesmen), and Sudras(servants and artisans)islamic law1. is used in countries whose citizens are almost entirely followers of the Islamic religion 2. the legal system is based on the foundations of the Book of the Qur'ansocialist communist lawthe system originated with the Marxist overthrow of czarist Russia in the October Revolution in 1917, which created the Soviet Unioninternational lawany legal dispute arising between parties from different countries public and private international law must be consideredpublic international lawA law that concerns the interrelation of nation states and that is governed by treaties and other international agreements.private international lawA law that involves disputes between individuals or corporations in different countries.commercial liability loss exposurescan be categorized in many ways, depending in part on the purpose of the categorizationmajor categories of commercial liability loss exposures1. premises and operations liability 2. products and completed operations liability 3. automobile liability 4. workers compensation and employer's liabilitypremises and operations liabilityrelates to liability arising from bodily injury and property damage caused either by an accident that occurs on an organization's owned, leased, or rented premises or by an accident that arises out of the organization's ongoing operations but occurs away from the premisesliability lossAny loss that a person or an organization sustains as a result of a claim or suit against that person or organization by someone seeking damages or some other remedy permitted by law.organization liabilitybased on negligence that is, the organization's failure to exercise the appropriate degree of care owed to some person under the circumstancesthe premises and operations liability loss exposureinclude bodily injury or property damage claims arising out of the use of mobile equipmentloss exposureAny condition or situation that presents a possibility of loss, whether or not an actual loss occurs.liability arising from the ownership, maintenance, or use of automobilesis treated as a distinct loss exposure, as is watercraft(vessels) liability and aircraft liabilitydistinct loss exposureliability of employee injury or illness, whether based on obligations under workers compensation laws or based on common-law principlesproducts and completed operations liabilityterms used to describe the coverage provided for specific types of liability loss exposuresproduct liabilityarises out of the manufacture, distribution, or sale of an unsafe, dangerous, or defective product and the failure of the manufacture, distributor, or retailer to meet its legal duties to the user or consumer of the productthe plaintiff must prove 3 elements1. the product was defective when it left the manufacture's or supplier's custody or control 2. the defective condition made the product unreasonably dangerous 3. the defective product was the proximate cause of the plaintiff's injurycompleted operation liabilitythe legal responsibility of a contractor, repairer, or other entity for bodily injury or property damage arising out of the entity's completed work,automobile liability loss exposurelegal responsibility for bodily injury or property damage arising out of the ownership, maintenance, or use of automobilesliability for operation by others1. a person who negligently furnishes a defective auto to another person may be held liable to a third person injured as a proximate result of the defect 2. a person who negligently entrusts an auto to a person who is unskilled in its operation or otherwise incompetent to operate itauto no fault lawsto provide stated benefits for all persons injured in auto accidents without a need to prove faultworkers compensation and employer's liabilityin addition to payments, an employer may also be held liable for occupational injuries or illnesses of its employees as a result of either tort suits or hold-harmless agreements to which the employer is a partyemployees' tort suits against employers1. claims for employee injury caused intentionally by the employer 2. claims by the employee's spouse for loss of consortium as a result of employee injury caused by the employer's negligence or other torts 3. claims for injury resulting from the employer's negligence or torts while acting in some capacity other than employersome employees that are exempt from workers compensation statues1. farm workers 2. domestic workers 3. occasional laborers 4. real estate agents 5. employees who are members of the employer's own familyhold harmless agreementA contractual provision that obligates one of the parties to assume the legal liability of another party.