Chapter 5 - Negligence

Question 1

What is a tort?

Answer 1

A tort is a civil wrong where damage has been incurred without a pre-existing contractual relationship. Examples include assault, nuisance, and false imprisonment.

Question 2

How do damages in tort differ from breach of contract?

Answer 2

In tort, damages aim to restore the injured party to the position they were in before the tort occurred. In breach of contract, damages aim to place the party in the position they would have been if the contract was performed.

Question 3

What is the limitation period for bringing a tort action?
A) 3 years for personal injury and 6 years for other damages
B) 5 years for personal injury and 10 years for other damages
C) 1 year for personal injury and 3 years for other damages
D) 7 years for all tort claims

Answer 3

A) 3 years for personal injury and 6 years for other damages

Question 4

What are the four key elements to establish negligence?

Answer 4

1. Duty of care was owed.
2. Duty of care was breached.
3. Damage resulted.
4. Damage was not too remote.

Question 5

What needs to happen in the 2nd step of establishing negligence - Duty of care

Answer 5

The concept that a duty of care is owed to someone with whom you had no contractual relationship was established in a landmark case.

Question 6

How is “duty of care” determined?

Answer 6

Using four tests:
(1) Reasonably foreseeable
Was the damage reasonably foreseeable by the defendant as damage to the claimant at the time of the negligent act or omission?

(2) Proximity
Is there sufficient proximity, or neighbourhood, between the parties?

(3) Fair, just and reasonable
Is it fair, just and reasonable that the law should impose a duty on the defendant on the facts of the case?

(4) Public policy
Would the decision offend public policy

Question 7

Which case principle supports the “neighbor principle”?
A) Duty of confidentiality
B) Duty to warn
C) Proximity of harm
D) Neighbor principle

Answer 7

D) Neighbor principle

The House of Lords laid down the general principle that every person owes a duty of care to his ‘neighbour’, to ‘persons so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected’.

Question 8

What needs to happen in the 2nd step of establishing negligence - Breach of duty of care

Answer 8

Breach of duty of care

The second element that must be proven by a claimant in an action for negligence is that there was a breach of the duty of care by the defendant.
Whether or not there has been a breach of duty is a question of fact to be shown by the claimant.

Question 9

What is “Res ipsa loquitur”?

Answer 9

It means “the facts speak for themselves.” It applies when:

The cause of damage is unknown.
The damage would not occur without negligence.
The event was under the defendant’s control.

In such cases it will then be for the defendant to prove that the cause of the injury was not his negligence.

Question 10

In case law the standard of care required is that of a “reasonable man guided upon those considerations which ordinarily regulate the conduct of human affairs”. Name some tests which have been developed by case law.

Answer 10

 Particular skill
 Lack of skill is not relevant (ie standard of care for a learner driver is a reasonable driver)
 No hindsight - rely on the knowledge and general practice at the time of the act
 Body of professional opinion supports the approach taken
 Advantage and risk must be reasonably balanced
 Emergency (the reasonable man test is applied to the particular situation)
 Vulnerability – a higher standard of care is owed to protect the sight of a worker who was blind in one eye as an injury to his good eye would blind him

Question 11

What needs to happen in the 2nd step of establishing negligence - Damages resulted/loss cause by breach

Examples

Answer 11

The third element that the claimant must demonstrate is that he suffered injury or loss and that this was as a result of the breach.

 Loss represented by personal injury or damage to property
 Financial loss directly connected to such injury (for example, loss of earnings) or property
damage (consequential economic loss)
 Not usually pure economic loss

Question 12

When can financial losses be recovered in negligence?

Answer 12

Only if directly connected to personal injury, property damage, or consequential economic loss. Pure economic loss is usually not recoverable.

Question 13

What is the “but for test”

Answer 13

The test asks: Would the damage have occurred “but for” the defendant’s negligent act? If the answer is no, causation is established.

Proof of causation – the “but for test”
This is a question of fact.
Would the damage have occurred “but for” the negligent act?
Remoteness of damage will be considered by the courts

Question 14

What is “negligent misstatement”?

Answer 14

A negligent misstatement is providing false or misleading information that causes financial loss to the recipient, in the absence of a contractual relationship, where a special relationship exists.

Question 15

What factors are considered in a “special relationship” for negligent misstatement?

Answer 15

“special relationship” = paid for advice

1. The purpose of the statement.
2. The relationship between the professional and recipient.
3. Knowledge of the professional.
4. Reliance on the statement by the recipient.
5. Foreseeability of the reliance.
6. Whether the professional could be said to have assumed responsibility to the claimant.
7. The size of any class to which the recipient belonged.
8. Whether it is fair and equitable (and not an offence to public policy) to impose a duty of care.

Question 16

When is an auditor not liable for financial statements?
A) When there is no reliance by a specific party.
B) When they are aware of potential misuse of the statements.
C) When the statements are shared for internal use only.
D) Both A and C

Answer 16

D) Both A and C

Question 17

What does Section 507 of the Companies Act 2006 address?

Answer 17

It makes it an offence for an auditor to include materially misleading or false information in a report.

Question 18

Can an auditor limit liability for negligence?
A) Yes, in all cases.
B) No, liability cannot be limited.
C) Yes, if there is a liability limitation agreement under Section 534.
D) Only for criminal liability.

Answer 18

C) Yes, if there is a liability limitation agreement under Section 534.

Question 19

What 3 factors determine whether a duty of care exists in a non-takeover situation?

Answer 19

The foreseeability of reliance by the claimant.
The relationship between the accountant and recipient of the accounts.
Whether responsibility was assumed.

Question 20

What is contributory negligence?

Answer 20

If the defendant proves that the claimant’s actions partially caused their damage or loss, the court reduces damages in proportion to the claimant’s degree of fault. For example, if the claimant is 40% at fault, they receive only 60% of the damages.

Question 21

What law governs contributory negligence?
A) Tort Reform Act
B) Law Reform (Contributory Negligence) Act 1945
C) Civil Liability Act
D) Negligence Limitation Act

Answer 21

B) Law Reform (Contributory Negligence) Act 1945

Question 22

What does volenti non fit injuria mean?

Answer 22

“To a willing person, no injury is done.” It applies when the claimant voluntarily consents to the risk of loss or damage. However, knowledge of the risk alone is not sufficient—actual consent is required.

Question 23

Can “volenti non fit injuria” be used to exclude liability for death or personal injury?

Answer 23

No, where the Unfair Contract Terms Act (UCTA) applies, this defense cannot exclude liability for death or personal injury caused by negligence.

Question 24

What are exclusion clauses in negligence cases?

Answer 24

These are clauses in agreements that attempt to exclude or limit liability for negligence.

Clauses excluding liability for death or personal injury caused by negligence are void.
Clauses limiting liability for other types of damage must pass the “reasonableness test.”

Question 25

Does awareness of an exclusion clause automatically mean the claimant accepted the risk?
A) Yes, always.
B) No, awareness does not equal voluntary acceptance.
C) Only if the risk was explicitly stated.
D) Yes, if it was signed.

Answer 25

B) No, awareness does not equal voluntary acceptance.

Question 26

What is the primary purpose of damages in negligence?

Answer 26

To restore the claimant to the position they would have been in if the negligence had not occurred.

Question 27

What is the principle of remoteness of damage?

Answer 27

Damage must not be too remote—it must be a direct result of the wrongful act. Loss caused by a wrongful act cannot be considered too remote if it was the intended or foreseeable result of the act.

Question 28

Must all types of damage be foreseeable?

Answer 28

Yes, the actual type of damage must be reasonably foreseeable, even if the manner or extent of the damage was not predictable.

e.g. While pollution from the oil spill was a foreseeable risk, the fire caused by the spark was not reasonably foreseeable. Therefore, the defendant was not liable for the fire damage.

Question 29

Which of the following would NOT be considered too remote in negligence?
A) A physical injury caused by a car accident.
B) An unexpected explosion at a site due to a minor spark.
C) Emotional distress caused to a third party.
D) Fire damage from an unforeseeable chain of events.

Answer 29

A) A physical injury caused by a car accident.

Question 30

What is vicarious liability?

Answer 30

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

Question 31

Provide examples of relationships where vicarious liability applies.

Answer 31

Employer and employee.
Principal and agent.

Question 32

What are the two main tests to determine vicarious liability?

Answer 32

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

Question 33

What factors determine if someone is an employee?

Answer 33

Degree of control the employer has over the person.
The extent to which the person is integrated into the organization.

Question 34

What does “acting in the course of employment” mean?

Answer 34

The tort must be committed while the employee is performing duties related to their employment.

Question 35

Why was a school held vicariously liable for a warden’s tortious acts of abusing residents?

Answer 35

The acts were closely connected to the warden’s job responsibilities. The abuse occurred within the scope of duties related to the position, making it fair and just to hold the employer liable.

Question 36

Why were a solicitor’s fraudulent acts considered connected to employment?

Answer 36

Drafting agreements, even if dishonest, is within the ordinary scope of a solicitor’s business, so the employer was vicariously liable.

Question 37

Why was a police department not held liable for a constable shooting his girlfriend?

Answer 37

The act was not connected to his duties as a policeman; it was a personal vendetta unrelated to his employment.

Question 38

When is a principal vicariously liable for an agent’s tort?

Answer 38

When the agent acts within the limits of their authority and carries out tasks for which they were appointed.

Question 39

Why was a car owner held liable for a friend’s negligent driving during a trip to Monte Carlo?

Answer 39

The friend was driving with the owner’s permission to perform a task related to their mutual plans, making the owner vicariously liable for the friend’s negligence.

Question 40

When is a partnership vicariously liable for a partner’s wrongful act or omission?

Answer 40

When the act is committed in the ordinary course of business or with the authority of co-partners.

Reference: Section 10 of the Partnership Act 1890.

Question 41

INTERACTIVE QUESTION 9: PROFESSIONAL ADVICE

Claudia is a trainee accountant employed in an accountancy firm. She meets Daniel at a party and they date for three months. During that time, Daniel asks for some tax advice. Claudia looks up some information at work and then goes home and gives him advice, based on the information she has obtained from the office. She has misinterpreted the tax law and gives incorrect advice to Daniel. A reasonably competent accountant would not have given the same advice to Daniel.
If Daniel decides to sue Claudia, indicate whether or not she could rely on any of the following factors as a complete or partial defence.

YES OR NO

A She was merely a trainee and therefore the objective standard of care required is lower.
B She was in a relationship with Daniel, therefore there is a rebuttable presumption that she is not intending him to use her advice professionally.
C Daniel had intended to do as she advised anyway, so was not affected by her advice.

Daniel might succeed in a claim for negligence against:
D Claudia
E Claudia’s firm
F Claudia’s firm and Claudia

Answer 41

A No – the objective standard of care is the same for a trainee as a qualified accountant.
B No – there is no such rebuttable presumption (such as there is in contract law). However, the position would be different had Claudia given the advice at the party over a drink or two.
C Yes – if Daniel’s acts and therefore loss were unconnected with her advice then Claudia will not be liable. Daniel will have to prove that the reverse was true.
D Yes – if he can prove that the loss was due to her advice (i.e. the defence in (C) is removed).
E No – Claudia’s firm will not be vicariously liable, as although she researched the matter at work, she gave the advice in her own time and away from work premises and therefore not in the course of her employment.
F No – because of the answer to (E).

Question 42

3 Which of the following is irrelevant in determining whether a duty of care exists?
A Whether it is fair that the law should impose a duty on the defendant
B Whether the defendant intended to cause injury to the claimant
C Whether it was reasonably foreseeable that the claimant might suffer damage as a result of the defendant’s actions
D Whether there is sufficient proximity between the parties
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Answer 42

Correct answer(s): B Whether the defendant intended to cause injury to the claimant
This may be relevant when assessing damages but is not relevant to whether a duty of care exists at all.

Question 43

4 Which of the following statements is incorrect?
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B In arguing res ipsa loquitur, it must be shown that the thing that caused the damage was under the management and control of the defendant.
C Res ipsa loquitur is relevant where the reason for the damage is not known.
D Whether a breach of the duty of care has occurred is a matter of fact.
A If the defendant succeeds in arguing res ipsa loquitur, the burden of proof is then on the claimant to show negligence.

Answer 43

Correct answer(s): A If the defendant succeeds in arguing res ipsa loquitur, the burden of proof is then on the claimant to show negligence.
Res ipsa loquitur is an argument by the claimant that ‘the facts speak for themselves’ in pointing to a breach on the part of the defendant. The burden of proof then shifts to the defendant to show that they were not negligent.

Question 44

5 All of the following options, except one, must be shown by a claimant in order to succeed in an action for negligence.
Requirement:
Which is the exception?
A That the defendant owed them a duty of care.
B That the defendant was in breach of a duty of care.
C That the claimant suffered injury, damage or loss as a result of a breach of a duty of care.
D That the damage was not too remote.
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Answer 44

Correct answer(s): D That the damage was not too remote.
Whether the damage was too remote is a matter for the court to decide in assessing damages once negligence has been shown (ie, once the claimant has proved the other three options satisfactorily).

Question 45

6 All of the following statements, except one, were established by, or relevant to, the landmark case of Donoghue v Stevenson, which involved an allegation that there had been a decomposing snail in a bottle of ginger beer.
Requirement:
Which is the exception?
A No contractual relationship is necessary to found an action for negligence.
B There must be a sufficient degree of proximity or neighbourhood between the parties.
C A manufacturer could owe a duty of care to a person who did not actually buy its goods.
D There should be a special relationship of some sort between the parties.
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Answer 45

Correct answer(s): D There should be a special relationship of some sort between the parties.
This option is a principle established by Hedley Byrne v Heller, involving negligent misstatement and economic loss.

Question 46

8 Natasha holds all relevant qualifications as a PE teacher. One day, Becky, a student playing cricket, was hit on the head by the ball whilst trying to catch it, causing a serious injury to her. Shortly after this incident, a similar incident happened to a professional cricket player. Reacting to this later incident, the government department in charge of education issued guidance that stated that all pupils playing cricket should use a softer ball rather than the traditional hard cricket ball. After reading this, Becky’s parents decide to sue Natasha for negligence.
Requirements:
In the context of negligence:
Is the government guidance relevant to the standard of care owed by Natasha?
A Yes
B No
Is the standard of care owed by Natasha that of an ordinary reasonable person guided by those considerations that normally regulate the conduct of human affairs?
C Yes
D No
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Answer 46

Correct answer(s): B No
The test will depend on knowledge and practice at the time of the incident.
Correct answer(s): D No
The standard applied will be that of a reasonable person with the skill of a PE teacher holding all the qualifications that Natasha holds.

Question 47

10 An accountant has given incorrect tax advice to one of their clients. The error on the part of the accountant constituted negligence. They face potential liability in:
A contract only
B tort only
C contract and tort
D neither contract nor tort, but in misrepresentation

Answer 47

Correct answer(s): C contract and tort
Contractual liability may arise where he gives the advice in performance of a contract. Tortious liability may arise even where there is no contractual or fiduciary relationship between the parties.

Question 48

11 Brown & Cameron, a firm of accountants, prepares accounts for Target plc, showing a profit of £800,000 when they should, in fact, have shown a loss of £8,000. Marnie owned 300 shares in the company and, after reading the accounts that were sent to her (as to all shareholders), she purchased an additional 500 shares. When it came to light that the accounts had been prepared negligently (and the share price tumbled as a result of that negligence), Marnie sued the accountants for negligence. There was no disclaimer of liability in the audit report.
Requirement:
Which of the following best describes the legal position in respect of the potential liability of the firm, Brown & Cameron to Marnie?
A It is liable because the partners in the firm knew that the accounts would be sent to all shareholders.
B It is liable because it was reasonably foreseeable that existing shareholders would rely on the accounts for the purpose of reviewing their investments.
C It is not liable because Marnie bought her shares on the Stock Exchange and not from the company.
D It is not liable because the firm did not owe a duty to existing shareholders who rely on the accounts for a purpose other than that for which they were intended.
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Answer 48

Correct answer(s): D It is not liable because the firm did not owe a duty to existing shareholders who rely on the accounts for a purpose other than that for which they were intended.
The facts are similar to the Caparo case. The basic view is that the accounts are intended to enable shareholders to exercise their rights regarding the management of the company and not to make investment decisions. (Special circumstances may apply, of course, so that a different conclusion is reached, but there are none in this case.)

Question 49

12 Campbells, a firm of accountants, prepared annual accounts for Thespians plc. The director of Moneymakers Ltd, which held shares in Thespians plc, saw the accounts and, as a result, the company lent Thespians plc £100,000 to finance its new premises. In fact, the accounts had been prepared negligently and Thespians plc was actually facing mounting debts. Since there was no disclaimer of liability in the audit report, Moneymakers Ltd sued Campbells.
Requirement:
Which of the following best describes the legal position regarding Campbells’s potential liability to Moneymakers Ltd?
A Campbells is liable because it owes a duty of care to potential lenders.
B Campbells is liable because it knew that Moneymakers Ltd was a shareholder and would therefore have sight of the accounts.
C Campbells is not liable because the accounts were not prepared for the purpose of enabling people to decide whether or not to lend to the company.
D Campbells is not liable because such a lender should have investigated the accounts and concluded that they were inaccurate.
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Answer 49

Correct answer(s): C Campbells is not liable because the accounts were not prepared for the purpose of enabling people to decide whether or not to lend to the company.
The facts are similar to the Caparo case. There is no duty of care owed to potential lenders.

Question 50

14 Tina, a trainee accountant, was approached by Kevin, the husband of Tina’s senior colleague, Jatinder, at an office party. Kevin asked her for some professional advice. Flattered that he had asked her rather than Jatinder, Tina obliged. However, her advice was flawed.
Requirement:
Is she liable for the resulting loss suffered by Kevin?
A No, because she is only a trainee.
B No, because the advice was not given in a professional context.
C Yes, because she knows him and assumes responsibility for her advice.
D Yes, because she owes a duty of care for which the standard is that of a reasonable qualified accountant.
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Answer 50

Correct answer(s): B No, because the advice was not given in a professional context.
There can be no liability for advice given on social or informal occasions unless there are exceptional circumstances (and there are not in this case).

Question 51

15 Mateo, an accountant, prepares financial statements for MarkUp plc, knowing that the company was considering three takeover bids, including one from Growth plc. There was no disclaimer of liability in the accounts.
In the event that Mateo prepares the statements negligently, indicating that the company is financially secure when it is not, and Growth plc takes over MarkUp plc on the basis of those accounts:
Requirements:
Can Growth plc recover any resulting losses it makes on the takeover?
A Yes
B No
Will Mateo be liable to pay damages to the other takeover bidders where they were also identified to him as potential takeover bidders who would be relying on the accounts?
C Yes
D No

Answer 51

Correct answer(s): A Yes
Correct answer(s): D No
They will not have suffered any loss.

Question 52

16 Are the following statements true or false?
An auditor who is responsible for an auditor’s report containing materially false or misleading information commits an offence under the Companies Act 2006 that is punishable by a fine and/or imprisonment.
A True
B False
A liability limitation agreement between a company and its auditor limiting potential liability for negligence in the course of auditing accounts is automatically void.
C True
D False
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Answer 52

Correct answer(s): B False
An offence is committed but it is punishable by a fine only.
Correct answer(s): D False
Such an agreement may be valid.

Question 53

17 With regard to an auditor’s potential liability in tort for providing audited accounts:
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Is a provision (other than in a liability limitation agreement) that excludes them from such liability enforceable?
A Yes
B No
Can the company agree to indemnify an auditor against such liability?
C Yes
D No
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Answer 53

Correct answer(s): B No
Such a provision is void under s.532 Companies Act 2006 (but may be valid if contained in a liability limitation agreement that satisfies the provisions of that Act).
Correct answer(s): C Yes
Provided such an agreement is contained in a valid liability limitation agreement or is restricted to an indemnity in respect of the costs of successfully defending any proceedings.

Question 54

19 Reece’s parked car was damaged by the negligent driving of Jack on 1 January 20X0. He understands that there is a limitation period in regard to claiming damages in respect of tortious acts.
Requirement:
On which date will Reece be prevented from putting in a claim for the damage to his car?
A 1 January 20X3
B 1 January 20X4
C 1 January 20X5
D 1 January 20X6

Answer 54

Correct answer(s): D 1 January 20X6
The limitation period for tortious acts is six years (or three years in the case of personal injury).

Question 55

20 When deciding whether or not a professional is liable to a claimant in respect of a negligence claim, the court will look at the standard of care that they were expected to demonstrate. All, except one, of the following are principles that the court will consider when determining the standard of care.
Requirement:
Which is the exception?
A The body of professional opinion concerning the approach taken by the professional.
B Knowledge and general practice concerning the professional’s approach at the time the claim is made.
C Any vulnerabilities of the claimant that the professional is aware of.
D The particular skill that the professional says they have.

Answer 55

Correct answer(s): B Knowledge and general practice concerning the professional’s approach at the time the claim is made.
It is the knowledge and general practice at the time of the negligent event that are relevant. All the other options are correct principles that are considered.

Question 56

21 The Unfair Contract Terms Act 1977 provides that a person who is acting in the course of a business cannot exclude liability for any consequences of any negligent act on their part.
A True
B False
The Unfair Contract Terms Act 1977 does not apply to a clause excluding liability for negligence which has been agreed between two businesses.
C True
D False
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Answer 56

Correct answer(s): B False
While you cannot exclude liability for personal injury, you may be able to exclude liability for other injury or damage, if reasonable to do so.
Correct answer(s): D False
The Unfair Contract Terms Act 1977 applies to business-to-business liability.

Question 57

22 With regard to damages for negligence, do the following matters have to be considered to be reasonably foreseeable, in order that the claimant can recover damages in respect of their loss?
The manner in which the loss was suffered
A Yes
B No
The extent of the loss
C Yes
D No

Answer 57

Correct answer(s): B No
Correct answer(s): D No
What must be reasonably foreseeable is the type of damage suffered. Provided the type of damage suffered was reasonably foreseeable, it does not matter that it came about in an unexpected way nor that it was more or less extensive than was reasonably foreseeable.

Question 58

23 Are the following statements true or false?
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A principal is liable for the acts of his agent, provided they are committed by the agent in the course of performing the task for which they are an agent.
A True
B False
An employer will not be vicariously liable for the negligent acts of their employee, provided they can show that they took reasonable steps to avert the possibility of the tort being committed.
C True
D False
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Answer 58

Correct answer(s): A True
Correct answer(s): D False
Vicarious liability does not depend on the fault or endeavours of the employer.

Question 59

24 Rene is a bus driver and is bound by his employer’s rules that say he must not race other bus drivers. However, he does so and causes personal injury to Tabatha who is crossing the road.
Requirements:
Is Rene acting in the course of his employment?
A Yes
B No
Is Rene’s employer vicariously liable for his act?
C Yes
D No

Answer 59

Correct answer(s): A Yes
The fact that he is acting in breach of a prohibition against doing his job in a particular way does not take the act outside the scope of his employment.
Correct answer(s): C Yes

Question 60

27 Rustom owned shares in Target plc. In January 20X0 he bought a further 10,000 shares in Target plc after reading the following:
• A newspaper column by Tipster which stated that Target plc was a company which would benefit from the predicted rise in house prices in 20X0
• A postcard sent by a friend, Carl, who stated that he had paid for his holiday with his dividends from Target plc
• The annual accounts of Target plc which had been signed off by Target’s auditors, Laylem LLP
Requirement:
Within a month of Rustom buying the extra shares Target plc went into insolvent liquidation and he wants to know if any of Tipster, Carl or Laylem LLP owe him a duty of care in respect of his purchase of the 10,000 shares.
A Tipster, Carl and Laylem LLP all owe Rustom a duty of care.
B Neither Tipster, Carl or Laylem LLP owe Rustom a duty of care.
C Only Laylem LLP owe Rustom a duty of care.
D Both Carl and Tipster owe Rustom a duty of care.
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Answer 60

Correct answer(s): B Neither Tipster, Carl or Laylem LLP owe Rustom a duty of care.
There is no duty of care owed to Rustom by any of these parties since the relevant tests are not satisfied (for example the need for a sufficient degree of proximity or special relationship). Laylem LLP owes no duty of care to existing shareholders considering their investments.

Question 61

28 When an employee commits a tort, their employer may be found to be vicariously liable. Which of the following best describes vicarious liability?
A Vicarious liability arises when the employee’s tort is committed in the course of their employment. The principal purpose of the imposition of vicarious liability on an employer is to punish the employer for employing a negligent employee.
B Vicarious liability arises when the employee’s tort is committed in the course of their employment. The principal purpose of the imposition of vicarious liability on an employer is to ensure the victim of the tort has a solvent person against whom the victim can bring a claim.
C Vicarious liability arises when the employee commits a tort irrespective of whether it is committed in the course of their employment. The principal purpose of the imposition of vicarious liability on an employer is to punish the employer for employing a negligent employee.
D Vicarious liability arises when the employee commits a tort irrespective of whether it is committed in the course of their employment. The principal purpose of the imposition of vicarious liability on an employer is to ensure the victim of the tort has a solvent person against whom the victim can bring a claim.
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Answer 61

Correct answer(s): B Vicarious liability arises when the employee’s tort is committed in the course of their employment. The principal purpose of the imposition of vicarious liability on an employer is to ensure the victim of the tort has a solvent person against whom the victim can bring a claim.
Vicarious liability only arises for an employee’s tortious acts where those acts are committed in the course of their employment or they are sufficiently connected to their employment. Vicarious liability is not designed to punish the employer, rather to protect the victim of the tort.

Question 62

30 Where it can be shown that A owes B a contractual duty of care, it follows that a duty of care is also owed in tort.
A True
B False
In a claim for negligent misstatement, it will be harder for a sophisticated investor to satisfy the court that an auditor owes them a duty of care.
C True
D False
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Answer 62

Correct answer(s): B False
This will depend on the facts and the relationship between the parties.
Correct answer(s): C True
Generally speaking, sophisticated investors are likely to be considered responsible for their own actions.

Question 63

31 The court will consider a number of aspects when determining liability for loss or damage caused by negligence.
Requirements:
Will the court consider whether the damage caused was in the contemplation of the parties at the time of the negligent act or omission?
A Yes
B No
Will the court consider public policy when coming to its decision?
C Yes
D No
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Answer 63

Correct answer(s): B No
The correct test is whether the damage was reasonably foreseeable at the time, not whether it was actually in the contemplation of the parties themselves.
Correct answer(s): C Yes
Public policy will be considered as part of the court’s decision.

Question 64

36 Minnie is a coach driver who works through an agency called Drivers 4 U Ltd. Hope Tours Ltd contacted Drivers 4 U Ltd to hire a driver at short notice to drive one of its coaches on a day trip to an historical site. During the trip, Minnie negligently drives the coach and hits another vehicle.
Requirement:
Which of the following statements is correct?
A Minnie only is liable for her negligence.
B Drivers 4 U Ltd only is liable for Minnie’s negligence.
C Hope Tours Ltd only is liable for Minnie’s negligence.
D Drivers 4 U Ltd and Hope Tours Ltd could both be found liable by a court for Minnie’s negligence.

Answer 64

Correct answer(s): D Drivers 4 U Ltd and Hope Tours Ltd could both be found liable by a court for Minnie’s negligence.
In cases of agency workers, the ‘employer’ and ‘agency company’ could both be found liable by a court for the negligent actions of an employee. It depends on the facts. There is not enough evidence here to decide whether only one (of Drivers 4 U Ltd or Hope Tours Ltd) will be liable.