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CH 5] Business 101 5-19

Illustration 5.4 The Four types of Endorsement
For Deposit Only
1) 2)
Howard Skidmore Howard Skidmore

Blank Restrictive
Endorsement
Endorsement

DO NOT WRITE, STAMP, OR SIGN BELOW THIS LINE
Reserved for Financial Institution Use*
Reserved for Financial Institution Use* DO NOT WRITE, STAMP, OR SIGN BELOW THIS LINE

3) Pay to the Order of 4) Without Recourse
Newell’s Feed Store Howard Skidmore
Howard Skidmore

Special Qualified
Endorsement Endorsement

DO NOT WRITE, STAMP, OR SIGN BELOW THIS LINE
Reserved for Financial Institution Use* DO NOT WRITE, STAMP, OR SIGN BELOW THIS LINE
Reserved for Financial Institution Use*

5
The Law of Torts
Criminal law addresses intentional acts against the state or society and how
restitution is made for those crimes. Tort law deals with compensating injured persons
who have suffered from noncriminal wrongs. A tort (from the French meaning wrong) tort
refers to a civil wrong inflicted on other persons or their property or reputation and the Civil wrong inflicted on
restitution to be made to restore the wronged person. The law of torts is closely related to other persons or their
the law of agency, because the business entity, the principal, can be held liable for the property.
torts (wrongs) committed by its agents in the course of business dealings.
Torts arise as being either intentional in their cause, or the result of negligence. An
intentional tort is a deliberate act by a person or business. Examples are slander (a intentional tort
spoken lie about an individual’s character), libel (a written lie about an individual’s Civil wrong purposely
character), and fraud (a crime or offense of deliberately deceiving another in order to inflicted on other persons
damage them — usually, to obtain property or services unjustly; this is accomplished or their property, such as
through the aid of forged objects). assault, slander, libel, or
fraud.
Negligence tort arises from carelessness, rather than intentional behavior, that
causes injury to another person. Businesses become involved in such cases through the fraud
actions of both owners and employees. A McDonalds restaurant was held responsible theft by deception.
when its coffee in a cup and supported between the knees of a driver was spilt and burned
the driver. negligence tort
A wrong based on
Product Liability is an area important part of tort law, and has been developed by careless rather than
both statutory and case law to hold businesses liable for negligence in the design, intentional behavior that
manufacture, sale, and/or use of products. Product liability is aimed at making products causes injury to another
safer. Though it has also been applied to machinery built decades prior, and had been person.
bought and sold several times before any malfunction occurred. This happened to the product liability
Piper Aircraft Corporation when a Piper J-3 Cub airplane, built in 1946, crashed and the Area of tort law that holds
pilot died. The widow sued and the court agreed that the Piper Corporation was liable business liable for
even though it had ceased production of this plane model 40 years prior to the incident. negligence in the design,
The judge ruled that Piper should have foreseen such an accident. Was that a reasonable manufacture, sale, and
decision? use of products.
Product liability laws are meant to encourage firms to design products with safety
improvements, such as the Black & Decker iron in the advertisement in Illustration 5.5,
but then an eager attorney and an activist judge can throw good sense away.

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