Chapter 4 - Negligence Flashcards
What does tort mean?
A tort is a wrongful act or an infringement of a person’s rights (other than under a contract) that leads to legal liability
What’s the difference between a contract and a tort?
Contract - Agreement or relationship between two parties
Tort - No prior relationship is required e.g., car accident
What happens if there’s both a contract and a tort
You can choose which one has the best remedy
How are damages awarded in a contract vs a tort
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.
What’s the limitation period for a contract vs Tort?
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
What are the main elements of tort to satisfy successful action?
*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
What is negligence?
Breach of a legal duty to take care, which results in damage to another
What must the claimant prove to claim negligence?
*Duty of care owed
*Defendant breached that duty
*Consequence of that breach, damage or loss has been suffered
What is duty of care?
Take reasonable care not to cause foreseeable harm to others
What is the neighbour principle?
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
What’s the difference between economic loss and financial loss?
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
What issues are considered to determine if duty of care exists?
- Was the harm predictable?
- Close connection between the parties (neighbour principle)
- Should the law create a duty of care here?
- Does public policy allow it?
What is required for a successful claim in regards to duty of care?
- Duty of care existed
- The defendant breached that duty of care
What does res ipsa loquitor mean?
The thing that speaks for itself
What is considered a reasonable person in relation to claimant claiming duty of care
Ordinary, sensible person (sometimes known as clapham Omnibus
What are the key principles to explain how standard of care is applied in negligence cases
- 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
- Lack of skill is no excuse - Defendant’s training or experience doesn’t matter. Trainee accountant is held to the same standard
- No Hindsight allowed: Court only looks at what the defendant knew at the time of the incident - Later knowledge is not allowed
- Body of opinion - A professional is expected to follow the general practice and body of opinion in that area
- 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
- Emergency - If emergency situation caused the defendant to act negligently this will be taken into consideration
- Vulnerability - If the claimant is vulnerable and the defendant is aware of this vulnerability than a higher standard of care is expected
What must the claimant prove in terms of proving losses?
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
What are the types of losses that are recoverable?
*Loss as a result of personal injury
*Damage to property
*Financial loss directly connected to personal injury
Pure financial loss is rarely recoverable
What is negligent mistatement?
Happens when someone gives incorrect advice or information and another person suffers financial loss by relying on it
What was then the effects of Hedley Byrne?
Created a new duty situation by recognition liability for negligent misstatements causing economic loss in circumstances where there exists a special relationship between parties
What’s a special relationship
Trusted connection between two parties where one relies on the advice or information of the other
What is the criteria to determine if there is a special relationship
*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.
Is there a duty of care if there’s no special relationship?
No
What’s the Caparo test?
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
What are factors to consider in establishing whether a duty of care exists in statements made in course of giving advice?
*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
As a result of consistent litigation what have businesses done to limit liability
Using limited liability partnerships
What does the Companies Act 2006 state in terms of liability for auditor’s report - Section 507, 532 and 507
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
What’s the remedy in action in negligence?
Award of damages
What are the three main defences that a defendant can use to challenge a negligence claim?
Contributory negligence, Volenti Non Fit injuria (Consent to risk), Exclusion clauses
What is contributory negligence?
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
What is Volenti Non Fit Injuria (Consent to Risk)
Applies if claimant freely accepted the risk of harm
If claimant consents the defendant might not owe a duty of care
What are exclusion clauses?
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
What is Vicarious liability?
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
Why is the vicarious liability advantageous for a claimant?
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
What is the vicarious liability for an agent?
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.
