RMIN 5100S - Test 3 (Atkinson) Questions and
Correct Answers | Latest Update 2026
Desk
- people with an organized desk tend to prefer property, while people with an
unorganized desk tend to like liability
Liability Risk
you are responsible for someone else or their stuff.
Legal Liability
- Criminal: crimes against society. Punishable by imprisonment and fines
- Civil: breach of duty owed to others. Punishable by money and injunctions.
- A single act can be both: 2008-09 Salmonella Outbreak. Major recall in 46
states of products that were contaminated with salmonella (especially Peanut
Butter paste). The company was continuing to sell the products even after bad
tests. The CEO was sentenced to 28 years in prison.
3 Bases for Legal Liability
,1. Tort
2. Legal Liability Based on Contracts
3. Legal Liability Based on Statutes
Tort
3 types of Tort:
1. Negligence
2. Intentional
3. Strict Liability
Negligence (a type of tort)
Is based on:
- a duty of care
- breach of duty
- injury or damage
There must be proximate cause (a connection between the breach of duty and
the injury/damage)
- This is by far the #1 reason why we have liabilities
Intentional (a type of tort)
,- 2 Types:
1. Act - intends to do the action, but no intent to harm (You run a red light and
hit a car).
2. Injury - Purpose is to cause harm (assault, battery, invasion)
Strict Liability (a type of tort)
- liability in the absence of Negligence and Intentional tort (aka Absolute
Liability)
- liability that is imposed even though the defendant acted neither negligently
or with the intent to cause harm
- also used to describe liability from statutes (Workers Comp., Dram Shop)
- examples include owning wild animals, blasting/explosive operations, and
dangerously defective products
Legal Liability Based on Contracts
Breach of Contract
- failure of a seller to fulfill its promise
- in the eyes of the law, the seller "warrants" that a product is fit for its intended
use
- if a product fails to function well, the buyer will likely want to their money
back (this is not covered by insurance).
- things get a bit more serious if the product's failure results in BI/PD (this is
covered by insurance)
, - Ex: a kid was able to open a child-proof container and drink Draino (the parents
can sue Draino and the latch-maker)
Hold Harmless and Indemnification Agreements
- assume legal liability for another's liability
- If Party A agrees to hold harmless and/or indemnify Party B, then Party A has
assumed a Contractual Liability
- these stipulate which company will be held legally responsible for costs of
lawsuits in the event that a component causes BI or PD
- Ex: car companies and supplying manufacturers. In 1993, Ford Explorers started
rolling over with Firestone tires, so Ford starting using different tires (led to big
rivalry)
- Hold harmless: "we won't sue each other"
- Indemnify: "if someone sues you, we will handle it"
Hold Harmless and Indemnification Agreements (Liability Based On Contracts)
- assume legal liability for another's liability
- If Party A agrees to hold harmless and/or indemnify Party B, then Party A has
assumed a Contractual Liability
- these stipulate which company will be held legally responsible for costs of
lawsuits in the event that a component causes BI or PD
- Ex: car companies and supplying manufacturers. In 1993, Ford Explorers started
rolling over with Firestone tires, so Ford starting using different tires (led to big
rivalry)
- Hold harmless: "we won't sue each other"
Correct Answers | Latest Update 2026
Desk
- people with an organized desk tend to prefer property, while people with an
unorganized desk tend to like liability
Liability Risk
you are responsible for someone else or their stuff.
Legal Liability
- Criminal: crimes against society. Punishable by imprisonment and fines
- Civil: breach of duty owed to others. Punishable by money and injunctions.
- A single act can be both: 2008-09 Salmonella Outbreak. Major recall in 46
states of products that were contaminated with salmonella (especially Peanut
Butter paste). The company was continuing to sell the products even after bad
tests. The CEO was sentenced to 28 years in prison.
3 Bases for Legal Liability
,1. Tort
2. Legal Liability Based on Contracts
3. Legal Liability Based on Statutes
Tort
3 types of Tort:
1. Negligence
2. Intentional
3. Strict Liability
Negligence (a type of tort)
Is based on:
- a duty of care
- breach of duty
- injury or damage
There must be proximate cause (a connection between the breach of duty and
the injury/damage)
- This is by far the #1 reason why we have liabilities
Intentional (a type of tort)
,- 2 Types:
1. Act - intends to do the action, but no intent to harm (You run a red light and
hit a car).
2. Injury - Purpose is to cause harm (assault, battery, invasion)
Strict Liability (a type of tort)
- liability in the absence of Negligence and Intentional tort (aka Absolute
Liability)
- liability that is imposed even though the defendant acted neither negligently
or with the intent to cause harm
- also used to describe liability from statutes (Workers Comp., Dram Shop)
- examples include owning wild animals, blasting/explosive operations, and
dangerously defective products
Legal Liability Based on Contracts
Breach of Contract
- failure of a seller to fulfill its promise
- in the eyes of the law, the seller "warrants" that a product is fit for its intended
use
- if a product fails to function well, the buyer will likely want to their money
back (this is not covered by insurance).
- things get a bit more serious if the product's failure results in BI/PD (this is
covered by insurance)
, - Ex: a kid was able to open a child-proof container and drink Draino (the parents
can sue Draino and the latch-maker)
Hold Harmless and Indemnification Agreements
- assume legal liability for another's liability
- If Party A agrees to hold harmless and/or indemnify Party B, then Party A has
assumed a Contractual Liability
- these stipulate which company will be held legally responsible for costs of
lawsuits in the event that a component causes BI or PD
- Ex: car companies and supplying manufacturers. In 1993, Ford Explorers started
rolling over with Firestone tires, so Ford starting using different tires (led to big
rivalry)
- Hold harmless: "we won't sue each other"
- Indemnify: "if someone sues you, we will handle it"
Hold Harmless and Indemnification Agreements (Liability Based On Contracts)
- assume legal liability for another's liability
- If Party A agrees to hold harmless and/or indemnify Party B, then Party A has
assumed a Contractual Liability
- these stipulate which company will be held legally responsible for costs of
lawsuits in the event that a component causes BI or PD
- Ex: car companies and supplying manufacturers. In 1993, Ford Explorers started
rolling over with Firestone tires, so Ford starting using different tires (led to big
rivalry)
- Hold harmless: "we won't sue each other"
