NEGLIGENCE Flashcards
Tort
Civil wrong but damage has been incurred but NO contractual relationship. E.g assault, trespass
Less preferable to ‘breach of contract’ as damages are usually paid to put the person in a position as if the tort would not have happened.
Must bring tort in action 6 YEARS after damage occurred, 3 YEARS for personal injury.
Tort of negligence
Duty of care was owed > duty of care breached > damage result (no need to prove intent) > damage was not too remote
Duty of care
Owed to someone with no contractual relationship.
4 TESTS:
- Reasonably foreseeable - by defendant at time of act e.g negligence
- Proximity - neighbour
- Fair just and reasonable - that the law impose a duty on defendant in circumstance
- Public policy - decision offend public policy?
Breach of duty of care
Prove by claimaint that there was reasonable probability of negligence and therefore breach of duty of care by defendant.
Burden of proof - question of fact must be shown by claimaint.
Res ipsa loquitur - facts speak for themselves: when
- Cause of damage is not known
- Damage would not have arisen if there was not a lack of care
- Thing that caused damage was under control of defendant.
THEN, defendant must prove the cause of injury was not negligent.
Breach of duty of care - reasonable person care to a neighbour
Tests:
Skill e.g. driving instructor
Lack of skill not relevant e.g. learner and reasonable driver is the same
No hindsight - rely on knowledge at time of act
Body of professional supports approach
Advantage and risk must be balanced
Emergency
Vunrability - higher standard of care owed e.g blind in one eye - need to owe a care to make sure doesn’t go blind in the other
Loss caused by breach
- Loss by personal injury or damage to items
- Financial loss directly connected to injury
- Not usually pure economic loss - not been cause by 1
Proof of causation - but for test
Buying for directors and not the price of the company means that buyer wouldn’t be able to claim for loss if sold elsewhere.
Professional advice and negligent misstatement - HEDLEY BYRNE & CO LTD V HELLER AND PARTNERS LTD
Recovery of pure economic loss can be recovered if there was a SPECIAL RELATIONSHIP
HEDLEY BYRNE & CO LTD V HELLER AND PARTNERS LTD:
Case:
C was advertising agent for new client (Easypower) D
C requested financial info on Easypower bank (D).
D retuned non commital replies which expressly disclaimed legal responsibility, this turned out to be a negligent misstatement.
Decision:
D couldn’t avoid liability for disclaimer, but because of disclosure made they were not liable for negligence, but in normal circumstances they would have been because there was a ‘special relationship’
All of the duty of care, breach and financial loss occur but there was an exclusion clause.
Special relationship -CAPARO V DICKMAN AND OTHERS, third party duty of care in takeovers and non take overs.
Case:
CAPARO is a shareholder in Fidelity plc,
Accounts showed a profit of 1.3 but should have shown a loss of 400,000
CAPARO claimed against auditors saying they owe a duty of care to investors & potential investors
CAPARO said this made fidelity vulnerable for a takeover bid.
Decision: duty of care owed to shareholders as a WHOLE not potential of exsisting shareholders for increasing their stakes.
- main reason of annual accounts is so shareholders can exercise their rights but NOT GIVE ADVICE on further investment.
Third party CAN be owed a duty of care if
- identify third party
- knew how accounts would be used
- third party intends to rely on accounts
E.g an audior may owe a duty of care in a takeover (to bidder)
If audit work was carried out negligently they may be liable for damages to bidder
E.g. non take over situations - law society found auditors to be defrauding clients e.g. auditor negligent(reasonably foreseeable company would rely on accounts)
NO duty of care:
Auditor acting on behalf of a company rather than individuals (auditor advised clients to seek individual advice)
Causation of loss
Case:
Accountants has knowledge that company was seeking outside finance
Accounts were overvalued stock and inflated profits
Claimaint saw accounts and took over company
Decision:
Claim failed on causation ‘but for’
Company was taken over to secure directors not on the decision of price, also claimaint should have known from own equiries that figures weren’t right.
Considered factors for negligent misstatement (summary)
- Purpose of statement and how it was communicated
- relationship between professional, recipient, third party
- knowledge of professional (not recipient unless sophisticated investor)
- whether professional had assumed responsibility to claimaint
- size of class of recipient - individual / company
- extent of reliance was foreseeable
- fair and equitable to impose a duty of care (public policy)
Companies Act liability for auditors report and audited accounts
- Auditor commits an offence if ‘recklessly causes’ any ‘misleading or false’ to material extent (punishable by FINE)
- Provosion which stops him from liability for negligence is VOID
- company may enter into a ‘liability limitation agreement’ (shareholder approval) - limits auditors liability for negligence must be a ‘fair and reasonable’ amount.
Defences
Contributory negligence e.g. not wearing a seatbelt:
- Partly due to claimaint fault, damages get reduced in court in proportion.
Volenti - to a willing person no injury is done:
- claimant consented damage - must be voluntary, knowledge of risk is not enough so conscent is needed.
Not valid if the unfair contract overrides this e.g. relive damages for death or personal injury e.g. accepting a lift from a drunk person.
Exclusion clauses:
- agreement that restricts liability however UCTA may apply instead
- clauses excluding death or personal injury caused by negligence - VOID
- other restricts for liability will need to pass the reasonableness test e.g. not weighed before bunjee jump
- UTCA says it does not necessarily mean any acceptance of voluntary risk.
Damages
Intended to put claimaint in same position he would have been if not suffered any loss.
- Damage must not be too remote e.g. pregnant lady hearing loud noise of crash causing miscarriage
- Reasonably foreseeable - type of damage (however it does not matter if injuries were more than expected)
e.g. Wagon Mount - pollution was foreseeable, fire was not.
Vicarious liability & tests
One person held legally responsible for tortious acts of another e.g employer, principle (over agent)
Tests:
Must be employee but NOT contractor
Must have been acting in course of employment.
Employee - degree of control employer has over them
Vicarious liability and agency
Principle vicariously liable for a tort committed by agent when they are acting in their authority.
e.g. friend asked a car to drive his car to Monte Carlo, friend crashed into bus, owner of car vicariously responsible.
