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Liability and Contract Issues

Liability and Contract Issues. Chapter 5 Risk Management For Financial Planners. What is it? A tort is the result of one individual or organization causing harm to another Physical, emotional, or financial Can be intentional or unintentional. Liability and Contract Issues. Chapter 5

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Liability and Contract Issues

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  1. Liability and Contract Issues Chapter 5 Risk Management For Financial Planners • What is it? • A tort is the result of one individual or organization causing harm to another • Physical, emotional, or financial • Can be intentional or unintentional

  2. Liability and Contract Issues Chapter 5 Risk Management For Financial Planners • Liability • A court may impose liability to compensate another as a result of a tort • Defenses Against Liability • Assumption of the risk • Contributory negligence • Comparative negligence • Last clear chance

  3. Liability and Contract Issues Chapter 5 Risk Management For Financial Planners • Liability Insurance • Can help ease the financial plan of an adverse judgment • Does not limit liability • Amount of coverage needed depends on individual • Higher assets or income indicate a need for higher levels of coverage

  4. Liability and Contract Issues Chapter 5 Risk Management For Financial Planners • Tort-related terms and definitions • Attractive nuisance • Negligence per se • Absolute liability • Strict liability • Vicarious liability • Collateral source rule

  5. Liability and Contract Issues Chapter 5 Risk Management For Financial Planners • Professional liability • Standard of care requirement far greater for professionals • Agency relationships • Three different types of authority • Express – specifically given • Implied – authority needed to do agent’s job • Apparent (ostensible) – exists when a third party believes an agent truly has authority to act

  6. Liability and Contract Issues Chapter 5 Risk Management For Financial Planners • Contracts • Patrol evidence rule • When parties put their agreement into final, complete, written form, all previous understandings invalid • Doctrine of waiver • Where an individual or organization has voluntarily given up a contractual right • Doctrine of estoppel • Prevents and individual from re-asserting a contractual right that has previously been waived

  7. Liability and Contract Issues Chapter 5 Risk Management For Financial Planners • Contracts (cont’d) • Rescission • An equitable remedy by which the original contract is terminated from its beginning • Reformation • An equitable remedy in which a contract is changed to more accurately express the original intentions of the parties • Contract of adhesion • A contract where one party writes the contract and the other party has only the choice to accept it or reject it

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