Chapter 4 - Negligence

Question 1

Does the law of tort include negligence?

Answer 1

Yes.

Question 2

In tort, does a previous transaction or contractual relationship need to exist?

Answer 2

No.

In tort, no previous transaction or contractual relationship need exist.

Question 3

What is the measure of damages in contract?

Answer 3

The measure of damages in contract will be such amount as would put the claimant in the position they would have been in had the contract been performed

Question 4

What is the measure of damages in tort?

Answer 4

In tort, the award will reflect the position they would have been in had the tortious act not taken place.

Question 5

What is the limitation period (during which an injured party must take proceedings) from a breach of contract?

Answer 5

Six years from the breach of contract.

Question 6

What is the limitation period (during which an injured party must take proceedings) from the damage caused by the tortious act being suffered?

Answer 6

Six years from the damaged caused by the tortious act being suffered (or three years in the case of personal injury).

Question 7

What are the elements of a tort?

Answer 7

A tort consists of an act or omission by the defendant, which act or omission is responsible for causing injury or damage to the claimant.

The damage must normally be due to the fault of the defendant and it must be caused to an interest of the claimant that the law seeks to protect.

Question 8

What may the terms ‘negligence’ or ‘negligent’ refer to?

Answer 8

The terms ‘negligence’ and ‘negligent’ may refer to the careless way in which an act is carried out, or to the tort which arises when a person is in breach of a legal duty of care that they owe to another, thereby causing that person harm or loss.

Question 9

What does the claimant need to prove to succeed in an action for negligence?

Answer 9

To succeed in an action for negligence, the burden of proof is on the claimant to prove, on a balance of probabilities, that:

– the defendant owed a duty of care to the claimant to avoid causing injury, damage or loss

– there was a breach of that duty by the defendant

– in consequence the claimant suffered injury, damage or loss

Question 10

What are the four tests to decide whether or not a duty of care exist?

Answer 10

1. Reasonably foreseeable
2. Proximity
3. Fair, just and reasonable
4. Public policy - Is it a matter of public policy that no duty of care should exist?

Question 11

What is res ipsa loquitur?

Answer 11

‘The facts speak for themselves’

The court will infer that the defendant was in breach of the duty of care.

Question 12

What are the seven principles established regarding the standard of care needed to satisfy the duty of care?

Answer 12

1. Particular skill
2. Lack of skill - Peculiarities or disabilities of the defendant are not relevant
3. No hindsight
4. Body of opinion
5. Advantage and risk
6. Emergency
7. Vulnerability

Question 13

Under what circumstances will a person be compensated regarding loss caused by a breach?

Answer 13

A person will only be compensated if they have suffered actual loss, injury, damage or harm as a consequence of another’s actions

Question 14

Is negligent misstatement an aspect of the tort of negligence?

Answer 14

Yes

Question 15

When may professional/expert advisors owe a duty of care in addition to their contractual obligations?

Answer 15

Where an adviser (such as an accountant, banker, solicitor or surveyor) makes a statement in some professional or expert capacity, where it is likely that others would rely on what they said, then they may owe a duty of care in addition to their contractual commitments.

However, they will not be liable for advice given informally or on a social occasion.

Question 16

Will there be a duty of care from auditors or accountant to bidders interested in buying a company?

Answer 16

It is likely that unless the defendant makes the negligent misstatement in the knowledge or reasonable expectation that an identified bidder would rely on it, then no duty of care is owed to anyone other than the body of shareholders as a whole.

On the other hand, preparing information in the knowledge that a particular person was contemplating a transaction and would rely on the information in deciding whether or not to proceed with the transaction would mean that a duty of care was owed.

Question 17

When financial statements are prepared for the purpose of contesting a proposed takeover bid, will the directors and financial advisors owe a duty of care to a know takeover bidder?

Answer 17

Yes.

Where financial statements are prepared for the purpose of contesting a proposed takeover bid, the directors and financial advisers will owe a duty of care in respect of them to a known takeover bidder.

Question 18

What are eight important factors regarding duty of care?

Answer 18

1. The purpose for which the statement is made and communicated
2. The relationship between the professional, the recipient and any relevant third party
3. The state of knowledge of the professional
4. Whether the professional could be said to have assumed responsibility to the claimant
5. The size of any class to which the recipient belonged
6. Whether the third party was identified and known to the professional
7. The extent of reliance by the claimant and whether that was foreseeable
8. Whether it is fair and equitable (and not an offence to public policy) to impose a duty of care

Question 19

What is the treatment of any exclusion clause which attempts to exclude liability for negligent misstatement?

Answer 19

Any exclusion clause which attempts to exclude liability for negligent misstatement may be subject to the reasonableness test in UCTA.

Question 20

Is it an offence under the Companies Act regarding auditors who recklessly cause an auditor’s report to contain any matter that is misleading or false to a material extent.

Answer 20

Yes.

Such an offence is punishable by a fine.

Question 21

What are two provisions of the Companies Act relevant to the question of professional liability?

Answer 21

1. Any provision which exempts an auditor of a company (to any extent) from, or indemnifies them against, liability for negligence (among other things) in relation to providing audited accounts is void.
2. A company may enter into a liability limitation agreement with an auditor, limiting their liability for negligence (among other things) in the course of auditing accounts to a fair and reasonable amount,

Question 22

What are three defences particularly relevant to a case involving negligence?

Answer 22

1. Contributory negligence - Where the defendant can show that the damage or loss suffered was partly due to the claimant’s fault, the claimant’s damages will be reduced by the court in proportion to their degree of fault.
2. Volenti non fit injuria (“to a willing person no injury is done”) - This applies where the claimant voluntarily (ie, exercising free choice) agrees to undertake the legal risk of loss or damage at their own expense. Effectively it amounts to an agreement by the claimant to exempt the defendant from a duty of care which otherwise would be owed.
3. Exclusion clauses

Question 23

What are damages for negligence?

Answer 23

Damages for negligence are compensatory and are intended to put the claimant in the same position they would have been in had they not suffered any loss.

Question 24

When can loss never be too remote?

Answer 24

When a person commits a tort with the intention of causing loss or harm which in fact results from the wrongful act, that loss can never be too remote.

Question 25

What is vicarious liability?

Answer 25

Vicarious liability is a legal doctrine under which one person can be held legally responsible and liable for the tortious acts of another person.

Vicarious liability is a legal liability which may be imposed on a person even though they are free from blame and in addition to the personal liability of the other person who committed the tort.

Question 26

What are the two requirements to establish vicarious liability regarding employment?

Answer 26

1. the wrongdoer (tortfeasor) must be an employee and not an independent contractor.
2. The employee must have been acting in the course of their employment.

An employee is not considered acting in the course of their employment when they are travelling to and
from work.

Question 27

Is a principle vicariously liable for a tort committed by an agent?

Answer 27

A principal is vicariously liable for a tort committed by an agent acting within the limits of their authority and carrying out the acts for which he was appointed as agent.

Question 28

Can a partnership be vicariously liable?

Answer 28

Yes.

A partnership is liable for any wrongful act or omission of any partner acting in the ordinary course of the business of the firm or with the authority of their co-partners which causes loss or injury to another person