AU 62 Chapter 7 - Underwriting Professional
Liability Questions with 100% Correct
Answers
Consequential damages
A payment awarded by a court to indemnify an injured party for losses that result indirectly
from a wrong such as a breach of contract or a tort or civil wrong.
In a professional liability suit based on breach of contract, consequential damages, such as
loss of profits, might be awarded if the professional, at the time of the contracting, was aware
of some special or unusual circumstance that might occur as a result of the breach.
Accountants professional liability
The liability arising out of harm to clients and others caused by breach of an accountant's
legal duty.
Informed consent
The consent to a medical treatment or procedure obtained after adequate disclosure that
requires apprising the patient of the nature, potential benefits and risks, and alternative forms
of the proposed treatment.
Nominal damages
An award that indicates that, while the plaintiff has sustained some harm, the injury is not one
warranting substantial monetary relief. They are a small amount, such as $1, awarded to a
plaintiff when a breach of contract occurred but without compensable injury.
Professional Breach of Contract and Tort Actions
,Professionals have a duty to perform the services for which they were hired, and they also
have a duty to perform those services in accordance with the appropriate standards of
conduct. The first duty is primarily contractual; the second duty arise from tort principle of
law. Consequently, a professional's violation of duty of duties owed to a client can result in a
breach of contract action, a tort action, or both types of actions alleging professional liability.
Contract law
the contract law approach to establishing professional liability is based on the contractual
relationship between professionals and their clients. The contract may be a formal written
agreement, but even if it is not, the law will assume that a contract exists, based on the
relationship between the parties.
Most professional contracts are promises to perform services fro clients. If a professional fails
to perform the services agreed to, a breach of contract occurs. If the client suffers harm as a
result of the breach, teh client is entitled to be restored, as nearly as practical, to the position
that he or she would have occupied had the contract been performed as promised.
Compensatory damages
are intended to indemnify a person for injury or damage sustained. Unlike compensatory
damages in negligence actions, compensatory damages in breach-of-contract actions do not
normally include amounts for intangible general damages such as pain and suffering.
Compensatory damages in contract actions are generally limited to the monetary loss
sustained by the party alleging a breach of contract.
Liquidated damages
A reasonable estimation of actual damages, agreed to by contracting parties and included in
the contract, to be paid in the event of a breach or for negligence.
, Tort Principles of Law
Under tort principles of law, members of a skilled profession are liable for injury resulting
from their failure to perform with reasonable professional care and competence. A
professional is not liable merely because of any unfavorable outcome. He or she must be
found to have made an error or omission that a reasonable competent professional in the same
field would not have made.
Distinguishing Between Contract and Tort Claims
In a contract claim, the allegation is that the defendant failed to do something that was
required by the contract - for example, that an insurance agent failed to place teh insurance
that it agreed to obtain for teh plaintiff.
A tort claim rests on allegations that the performance of the contract did not meet the
standards of reasonable professional care - for example, that although the accountant
prepared the tax returns as agree, the returns contained errors that a reasonably competent
accountant would not have made.
In many cases, the injured party will be able to establish the professional's liability on either
contract or tort principles, or both. If a professional's performance causes bodily injury, a tort
action is likely to result because, in general, the injured party cannot sue for emotional
damages or other pain and suffering in a breach of contract action.
Statutes of Limitation - different statutes of limitation may apply to contract and tort actions
making one preferable to the other, depending on the law of the jurisdiction involved. For
Liability Questions with 100% Correct
Answers
Consequential damages
A payment awarded by a court to indemnify an injured party for losses that result indirectly
from a wrong such as a breach of contract or a tort or civil wrong.
In a professional liability suit based on breach of contract, consequential damages, such as
loss of profits, might be awarded if the professional, at the time of the contracting, was aware
of some special or unusual circumstance that might occur as a result of the breach.
Accountants professional liability
The liability arising out of harm to clients and others caused by breach of an accountant's
legal duty.
Informed consent
The consent to a medical treatment or procedure obtained after adequate disclosure that
requires apprising the patient of the nature, potential benefits and risks, and alternative forms
of the proposed treatment.
Nominal damages
An award that indicates that, while the plaintiff has sustained some harm, the injury is not one
warranting substantial monetary relief. They are a small amount, such as $1, awarded to a
plaintiff when a breach of contract occurred but without compensable injury.
Professional Breach of Contract and Tort Actions
,Professionals have a duty to perform the services for which they were hired, and they also
have a duty to perform those services in accordance with the appropriate standards of
conduct. The first duty is primarily contractual; the second duty arise from tort principle of
law. Consequently, a professional's violation of duty of duties owed to a client can result in a
breach of contract action, a tort action, or both types of actions alleging professional liability.
Contract law
the contract law approach to establishing professional liability is based on the contractual
relationship between professionals and their clients. The contract may be a formal written
agreement, but even if it is not, the law will assume that a contract exists, based on the
relationship between the parties.
Most professional contracts are promises to perform services fro clients. If a professional fails
to perform the services agreed to, a breach of contract occurs. If the client suffers harm as a
result of the breach, teh client is entitled to be restored, as nearly as practical, to the position
that he or she would have occupied had the contract been performed as promised.
Compensatory damages
are intended to indemnify a person for injury or damage sustained. Unlike compensatory
damages in negligence actions, compensatory damages in breach-of-contract actions do not
normally include amounts for intangible general damages such as pain and suffering.
Compensatory damages in contract actions are generally limited to the monetary loss
sustained by the party alleging a breach of contract.
Liquidated damages
A reasonable estimation of actual damages, agreed to by contracting parties and included in
the contract, to be paid in the event of a breach or for negligence.
, Tort Principles of Law
Under tort principles of law, members of a skilled profession are liable for injury resulting
from their failure to perform with reasonable professional care and competence. A
professional is not liable merely because of any unfavorable outcome. He or she must be
found to have made an error or omission that a reasonable competent professional in the same
field would not have made.
Distinguishing Between Contract and Tort Claims
In a contract claim, the allegation is that the defendant failed to do something that was
required by the contract - for example, that an insurance agent failed to place teh insurance
that it agreed to obtain for teh plaintiff.
A tort claim rests on allegations that the performance of the contract did not meet the
standards of reasonable professional care - for example, that although the accountant
prepared the tax returns as agree, the returns contained errors that a reasonably competent
accountant would not have made.
In many cases, the injured party will be able to establish the professional's liability on either
contract or tort principles, or both. If a professional's performance causes bodily injury, a tort
action is likely to result because, in general, the injured party cannot sue for emotional
damages or other pain and suffering in a breach of contract action.
Statutes of Limitation - different statutes of limitation may apply to contract and tort actions
making one preferable to the other, depending on the law of the jurisdiction involved. For
