Chapter 4 - Negligence

Question 1

What does tort mean?

Answer 1

A tort is a wrongful act or an infringement of a person’s rights (other than under a contract) that leads to legal liability

Question 2

What’s the difference between a contract and a tort?

Answer 2

Contract - Agreement or relationship between two parties

Tort - No prior relationship is required e.g., car accident

Question 3

What happens if there’s both a contract and a tort

Answer 3

You can choose which one has the best remedy

Question 4

How are damages awarded in a contract vs a tort

Answer 4

Contract - Party put back in the position they would’ve been in if the contract had been carried on

Tort - The goal is to put the injured party in the position they would’ve been in if the harmful act (the tort) had never happened.

Question 5

What’s the limitation period for a contract vs Tort?

Answer 5

Contract - Time limit is 6 years from when the contract was broken

Tort - time limit is usually 6 years but it’s three years if the claim is personally injury

Question 6

What are the main elements of tort to satisfy successful action?

Answer 6

*Act or omission by the defendant (they did something wrong)
*Act or omission must have directly caused damage or injury to the claimant (clearly say what they did)
*Courts must be able to establish a legal liability as a result of damage

Question 7

What is negligence?

Answer 7

Breach of a legal duty to take care, which results in damage to another

Question 8

What must the claimant prove to claim negligence?

Answer 8

*Duty of care owed
*Defendant breached that duty
*Consequence of that breach, damage or loss has been suffered

Question 9

What is duty of care?

Answer 9

Take reasonable care not to cause foreseeable harm to others

Question 10

What is the neighbour principle?

Answer 10

The case Donoghue v Stevenson introduced this idea and just says you owe a duty of care to people who you are affected by your actionsat

Question 11

What’s the difference between economic loss and financial loss?

Answer 11

Economic - Someone loses money because of negligence but not directly tied to physical damage or harm

Financial loss - Losing money directly or indirectly as a result of someone’s action

Because of the Hedley Byrne v Heller the law updated and says if there’s a special relationship between the person giving advice and the person reliant you can claim for damages

Question 12

What issues are considered to determine if duty of care exists?

Answer 12

1. Was the harm predictable?
2. Close connection between the parties (neighbour principle)
3. Should the law create a duty of care here?
4. Does public policy allow it?

Question 13

What is required for a successful claim in regards to duty of care?

Answer 13

1. Duty of care existed
2. The defendant breached that duty of care

Question 14

What does res ipsa loquitor mean?

Answer 14

The thing that speaks for itself

Question 15

What is considered a reasonable person in relation to claimant claiming duty of care

Answer 15

Ordinary, sensible person (sometimes known as clapham Omnibus

Question 16

What are the key principles to explain how standard of care is applied in negligence cases

Answer 16

1. Particular Skill: If defendant has professional training i.e. lawyer or accountant - they are judged by the standard of someone in their profession not a regular person
2. Lack of skill is no excuse - Defendant’s training or experience doesn’t matter. Trainee accountant is held to the same standard
3. No Hindsight allowed: Court only looks at what the defendant knew at the time of the incident - Later knowledge is not allowed
4. Body of opinion - A professional is expected to follow the general practice and body of opinion in that area
5. Advantage and risk - When deciding if reasonable care has been taken the courts will weigh up the benefits and risk of the defendant’s actions
6. Emergency - If emergency situation caused the defendant to act negligently this will be taken into consideration
7. Vulnerability - If the claimant is vulnerable and the defendant is aware of this vulnerability than a higher standard of care is expected

Question 17

What must the claimant prove in terms of proving losses?

Answer 17

Claimant must demonstrate that he or she suffered loss or damage as a direct consequence of the breach

If the claimant can’t then no damages

The claimant must also show a link between defendant’s conduct and damage that’s occurred:

*If damage caused by something or someone else then no liability on the defendant’s part

*If the claimant would have suffered the loss regardless of the defendant’s conduct then he or she has not caused the loss

Question 18

What are the types of losses that are recoverable?

Answer 18

*Loss as a result of personal injury
*Damage to property
*Financial loss directly connected to personal injury

Pure financial loss is rarely recoverable

Question 19

What is negligent mistatement?

Answer 19

Happens when someone gives incorrect advice or information and another person suffers financial loss by relying on it

Question 20

What was then the effects of Hedley Byrne?

Answer 20

Created a new duty situation by recognition liability for negligent misstatements causing economic loss in circumstances where there exists a special relationship between parties

Question 21

What’s a special relationship

Answer 21

Trusted connection between two parties where one relies on the advice or information of the other

Question 22

What is the criteria to determine if there is a special relationship

Answer 22

*Was the defendant in the business of giving professional advice

*Was the advice given in a business context rather than a social context

*Did the defendant know that the claimant would rely on the advice.

Question 23

Is there a duty of care if there’s no special relationship?

Answer 23

No

Question 24

What’s the Caparo test?

Answer 24

Based off a case to determine whether duty of care exists using the following criteria

*Foreseeability - Can harm be predicted
*Proximity - Is there a direct relationship between auditor and claimant
*Fairness - Is it fair to make someone liable

Question 25

What are factors to consider in establishing whether a duty of care exists in statements made in course of giving advice?

Answer 25

*Purpose of which the statement is made
*Skill accorded to that professional
*State of knowledge at the time
*Responsibility that the defendant had to the claimant
*Size or class which claimant belongs to i.e. shareholder
*Extent to which the advice was given was relied upon
*Foreseeable that the advice would be acted upon the claimant
*Fair and equitable, in given circumstances to impose a duty of care

Question 26

As a result of consistent litigation what have businesses done to limit liability

Answer 26

Using limited liability partnerships

Question 27

What does the Companies Act 2006 state in terms of liability for auditor’s report - Section 507, 532 and 507

Answer 27

Reckless False Reporting

Section 507 - Reckless False Reporting

*Criminal offence for an auditor to recklessly create a report that is misleading or false
*Penalty - Fine if found guilty

Section 532 - No automatic protection for auditors
*A company cannot indemnify (protect) its auditors from liability except in certain situations like if an auditor successfully defends themselves in legal proceedings

Section 534 - Liability limitation agreements
*Auditors and companies can agree to limit the auditor’s liability in the following conditions
- Agreement approved by company members
- Agreement valid for one year or less
- Liability must be limited to an amount that is just and reasonable

Question 28

What’s the remedy in action in negligence?

Answer 28

Award of damages

Question 29

What are the three main defences that a defendant can use to challenge a negligence claim?

Answer 29

Contributory negligence, Volenti Non Fit injuria (Consent to risk), Exclusion clauses

Question 30

What is contributory negligence?

Answer 30

When the claimant is partly responsible for their own injury or loss

The court can reduce the damages awarded based on how much claimant contributed to the harm

Example: In a car accident, if the claimant wasn’t wearing a belt they might be held partly responsible for injuries

Question 31

What is Volenti Non Fit Injuria (Consent to Risk)

Answer 31

Applies if claimant freely accepted the risk of harm

If claimant consents the defendant might not owe a duty of care

Question 32

What are exclusion clauses?

Answer 32

Limit or exclude liability for negligence

If valid under laws like Unfair Contract Terms Act 1977 they can protect the defendant from negligence claim

Liability might also be excluded for unforeseeable events like an act of God e.g. natural disaster

Question 33

What is Vicarious liability?

Answer 33

Happens when one person is held legally responsible for the actions of someone else

e.g. An employer can be held liable for a tort committed by an employee during their job

Question 34

Why is the vicarious liability advantageous for a claimant?

Answer 34

Employers are likely to have insurance or financial resources to pay compensation whereas suing the employee directly but the employee might not be able to afford the damages

Question 35

What is the vicarious liability for an agent?

Answer 35

When someone (principal) is held responsible for a tort committed by their agent.

Happens if the agent was acting within the authority given by the principal and performing tasks the principal appointed them to do.