Tort Unit 3 SBAQs Flashcards
Which ONE OR MORE of the following is/are NOT pure economic losses?
A. The cost of acquiring a defective product
B. Damage caused to other property by a defective product
C. Financial loss suffered without any physical impact on the claimant or their property
D. The claimant’s loss of earnings following an injury caused by the defendant
The correct answers are B and D. These items are not pure economic losses.
Where a defective product causes damage to other property that damage is not pure economic loss.
A loss of earnings following an injury is not pure economic loss. Such loss of earnings is consequential economic loss – following from the physical injury suffered by the claimant.
In contrast, the cost of acquiring a defective product, and financial loss suffered without any physical impact on the claimant or their property, are both correctly described as pure economic loss.
Hannah owns a pottery business. Due to the negligence of contractors working locally, the supply of electricity to Hannah’s pottery is cut off for 15 hours. Hannah consequently loses the pottery which was being fired in the kilns at the time, together with the profits she would have made on the pottery and is unable to fire any more pottery until the power is restored.
Which one of the following statements is CORRECT?
A. Hannah can recover for the damaged pottery, the resulting lost profits and the loss of profits on the other pottery she was unable to fire until the power was restored.
B. Hannah can only recover for the damage to the pottery as the other losses are pure economic losses.
C. Hannah cannot recover for any of her losses as the contractors did not owe her any duty of care.
D. Hannah can recover for the damaged pottery and the resulting lost profits. She cannot, however, recover for the loss of profits on the other pottery she was unable to fire since this is pure economic loss
D is the correct answer. The damage to the pottery is physical damage and the loss of profit on it is directly consequential on the physical damage – both are, therefore, recoverable. The loss of profits for the 15 hours is not consequential on any physical damage and is, therefore, pure economic loss and not recoverable.
ABC Ltd were asked to provide a reference for their former employee, Jane, by XYZ Ltd who had provisionally offered her a job. Unfortunately, when preparing the reference Jane’s record was confused with another employee’s record. The reference given was completely inaccurate, stating that Jane was a bad timekeeper. Jane was not offered the job as a result of the information contained in the reference.
Which one of the following statements correctly identifies Jane’s position?
A. Jane cannot bring a claim against ABC Ltd as she did not ask for the reference and therefore no duty is owed to her.
B. Jane may bring a claim against ABC Ltd as a former employer does owe a duty to a former employee to prepare the reference without negligence.
C. Jane has suffered no loss and cannot bring a claim.
D. Jane may bring a claim against XYZ Ltd for relying on an inaccurate reference.
B is the correct answer. A former employer does owe a duty to a former employee to prepare the reference without negligence. See the case of Spring v Guardian Assurance [1994].
Is the following statement true or false?
When drafting a will, the only person to whom a solicitor owes a duty of care is the testator (i.e. the person making the will).
The statement is false. When drafting a will the solicitor may also owe a duty to named beneficiaries under the will. The case of White v Jones [1995] deals with this.
Assume that a coach carrying a load of passengers is involved in a road accident caused by the negligence of a car driver.
In which ONE of the following claims is it NOT necessary to apply the special rules for pure psychiatric harm?
A. Graham Crosby, the coach driver, suffers a heart attack brought on by the shock of the accident
B. Penny Brown, a passenger on the coach, suffers mild cuts and bruises, and as a result later develops a fear of travelling by coach.
C. Paul Dobson, a passenger on the coach, is not physically injured but later develops a fear of travelling by coach.
D. Jean Smith, the mother of one of the passengers, collapses with shock on hearing of the accident and then suffers from migraines for several weeks afterwards
The correct answer is B. Penny Brown has not suffered from pure psychiatric harm. Her fear of travelling by coach is consequential psychiatric harm, following from her physical injury of cuts and bruises. Therefore, it is not necessary to apply the special rules for pure psychiatric harm to her claim. The usual rules for duty of care will apply. Under the usual rules for duty of care, Penny will be owed a duty of care by the car driver, as this is an established duty situation.
All the claims other than that of Penny Brown do involve pure psychiatric harm because, in each of those cases, the injury suffered was caused without any physical impact on the claimant.
Gillberts Ltd contracted to install a new central heating system for ACJ Ltd at its offices. Gillberts’ employee, John, did the work. Because of John’s negligence the system overheated and one of the pipes cracked. This caused damage to some floorcovering and furniture at the offices . Which one of the following is WRONG ?
A. ACJ Ltd could sue Gillberts Ltd for breach of s.13 of the Supply of Goods and Services Act 1982.
B. ACJ Ltd could sue John for breach of s.13 of the Supply of Goods and Services Act 1982.
C. ACJ Ltd could sue Gillberts Ltd in the tort of negligence.
D. ACJ Ltd could sue John in the tort of negligence.
A, C and D are correct. B is not correct, as John is not a party to the contract so could not be sued for breach of s.13 SGSA 1982.
Is the following statement true or false?
In any claim to recover damages for pure psychiatric harm caused, the nature of the psychiatric injury must be:
Caused by a sudden shock, and
Amount to a medically recognised illness
TRUE
In respect of claims for pure psychiatric harm, which ONE OR MORE of the following statements are CORRECT explanations of the rules for primary victims?
A. A person who is endangered by the defendant’s negligence but does not suffer physical injury will be classed as a primary victim
B. A duty of care is owed to primary victims suffering pure psychiatric harm in the same way as to victims of physical injury
C. A primary victim will always recover damages for their loss.
The correct answers are A and B. It is correct to say that a person who is endangered by the defendant’s negligence but does not suffer physical injury will be classed as a primary victim and that a duty of care is owed to primary victims suffering pure psychiatric harm in the same way as to victims of physical injury.
It is not correct to say that a primary victim will always recover damages for their loss. This statement is too wide because it does not take account of questions of breach of duty, causation of damage, and defences.
Consider the following facts:
Harold Smith is carefully driving along a road when a car driven by Brian Jones pulls out of a side street at excessive speed and collides with Harold’s car. Harold is killed. The following people all suffer psychiatric harm as a result:
Harold’s wife, who was standing at a nearby bus stop waiting for Harold to pick her up and witnessed the whole accident.
A lady standing next to Harold’s wife at the bus stop, who also witnessed the whole accident.
Harold’s mother, who is told of the accident on the telephone.
Is it TRUE OR FALSE to say that Harold’s wife, the lady at the bus stop, and Harold’s mother are all secondary victims of Brian’s negligence?
This statement is true. They are all classed as secondary victims. However, Brian does not owe a duty of care to all secondary victims. So, the next question you would need to consider would be – when is a secondary victim owed a duty of care?
Assume that the facts are as in the preceding question. Harold Smith’s wife, and his mother, and the witness at the bus stop, all suffer a medically recognised psychiatric illness caused by the sudden shock. It is accepted as reasonably foreseeable that a person of normal fortitude would have suffered psychiatric harm in those circumstances.
To which ONE OR MORE of them does Brian Jones owe a duty of care?
A. Harold’s wife, who was standing at a nearby bus stop waiting for Harold to pick her up, and witnessed the whole accident
B. The lady standing next to Harold’s wife at the bus stop, who also witnessed the whole accident.
C. Harold’s mother, who is told of the accident on the telephone
The correct answer is A. Brian Jones owes a duty of care to Harold’s wife because she is the only one who satisfies all the requirements of being a secondary victim who is owed a duty of care ie she has a close relationship of love and affection with Harold, she was present at the accident, and she witnessed it with her own senses.
The lady at the bus stop and Harold’s mother do not satisfy all of these requirements, so Brian does not owe a duty of care to them. They are victims of Brian’s negligence, but Brian will not be liable to them for the harm which they have suffered.
A solicitor has been instructed by a mother and daughter for advice on potential claims that they may have against a cosmetic surgeon. The mother received cosmetic filler treatment to her face in preparation for the daughter’s wedding. This went wrong and caused substantial swelling and pain to her face. As a result of the treatment the mother was unable to work for three months. The mother is a presenter on an online shopping channel and has lost a significant amount of income. The daughter felt that she had no choice but to cancel the wedding because her mother would have been unable to attend. The daughter has lost a substantial amount of money as a consequence of this.
Which of the following statements best explains whether the clients would be compensated for their financial losses if the cosmetic surgeon’s negligence was proven to have caused their loss?
A. Neither the mother nor the daughter would receive compensation for their financial losses because they have suffered pure economic loss.
B. Both the mother and the daughter would receive compensation for their financial losses because there is an established duty of care between doctors and patients.
C. Only the mother would receive compensation for her financial losses because they are owed a duty of care for their pure economic loss. The daughter would not be owed a duty of care for her pure economic loss because there was not a ‘special relationship’ between her and the surgeon.
D. Only the mother would receive compensation for her financial losses because there is an established duty of care between doctors and patients. The daughter’s loss is too remote.
E. Only the mother would receive compensation for her financial losses because there is an established duty of care between doctors and patients. The daughter would not be owed a duty of care for her pure economic loss because there was not a ‘special relationship’ between her and the surgeon.
E is the correct answer.
A is wrong because the mother would be compensated for her financial loss as her lost income is consequential on her personal injury ie it is not pure economic loss. It is correct, however, that the daughter has suffered pure economic loss (PEL) and that she would not be compensated for this (see further below).
B is wrong because, while there is an established duty of care between doctors and their patients, this would not assist the daughter as she is not a patient of the surgeon. It is also wrong because the daughter has suffered PEL. The established duty of care is only relevant for personal injury or property damage and not for PEL.
C is incorrect as the mother has not suffered PEL. It is correct, however, that the daughter would not be owed a duty of care for her pure economic loss because there was not a ‘special relationship’ between her and the surgeon. She would not satisfy the test for a ‘special relationship’ from Hedley Byrne v Heller (as expanded upon in Caparo v Dickman).
D is wrong because the daughter would not be owed a duty of care for her PEL. Their claim would therefore fail at the duty of care stage and the question of remoteness is, therefore, irrelevant.
A solicitor has been instructed by two trade union members. They were both attending their annual conference when a car driver lost control of their vehicle and crashed into the queue of people waiting to get into the conference. Client 1 was in the queue. They suffered a minor injury to their leg but have also been diagnosed with post-traumatic stress disorder (PTSD), Client 2 was on the other side of the road at the time and saw the accident take place. Client 2 has also been diagnosed with PTSD.
Which of the following statements best explains whether the clients would be compensated for their PTSD if the car driver’s negligence was proven to have caused their loss?
A. Neither Client 1 nor Client 2 would receive compensation for their PTSD because they have suffered pure psychiatric harm.
B. Both Client 1 and Client 2 would receive compensation for their PTSD because there is an established duty of care between road users and pedestrians.
C. Only Client 1 would receive compensation for their PTSD because they are owed a duty of care for their pure psychiatric harm as they are a primary victim. Client 2 would not be owed a duty of care for their pure psychiatric harm as they are neither a primary victim nor a secondary victim who would be owed a duty of care.
D. Only Client 1 would receive compensation for their PTSD because there is an established duty of care between road users and pedestrians. However, Client 2’s PTSD is too remote.
E. Only Client 1 would receive compensation for their PTSD because there is an established duty of care between road users and pedestrians. However, Client 2 would not be owed a duty of care for their pure psychiatric harm as they are neither a primary victim nor a secondary victim who would be owed a duty of care.
E is the correct answer.
A is wrong because Client 1 has not suffered pure psychiatric harm (PPH) as their PTSD has been caused by a physical impact. Their PTSD would be compensated for as part of the pain and suffering for the physical injury. It is correct, however, that Client 2 has suffered PPH and that they would not be compensated for this (see further below).
B is wrong because, while there is an established duty of care between road users and pedestrians, this would not assist Client 2 as they have suffered PPH. The established duty is only relevant for personal injury or property damage and not for PPH.
C is wrong because Client 1 has not suffered PPH. They are owed a duty of care because they have suffered a physical injury and the established duty of care between road users and pedestrians applies. Their PTSD would be covered under this established duty and Client 1 would not have to rely on the special rules that apply for PPH. (The test for a primary victim (PV) only applies for PPH ie psychological harm without physical impact). It is correct, however, that Client 2 would not be owed a duty of care for their PPH as they are neither a PV nor a secondary victim (SV) who would be owed a duty of care. They were not a PV as they were not in the ‘danger zone’ when the car crashed. There is also nothing on the facts to suggest that they had a close relationship of love and affection with any person who was physically endangered by the car driver. They would not, therefore, satisfy all the Alcock control mechanisms.
D is wrong because Client 2 would not be owed a duty of care for their PTSD. The claim would therefore fail at the duty of care stage and the question of remoteness is, therefore, irrelevant.
A client has consulted a solicitor about problems they are having with a new computerised record system. The client provides employers with security checks on prospective new employees. It does this using the computerised record system to search for information about credit records, county court judgments, and criminal convictions.
The record system was purchased from X Ltd, a company specialising in the supply of computer systems comprising both hardware and software. The client has encountered a fault in the computer hardware. Your client did initially complain to X Ltd. However, they have received no reply and it seems that X Ltd may have ceased trading.
The hardware was manufactured by Y Ltd, a large and reputable company. Y Ltd have accepted that there is a fault in the hardware. They have offered to supply the replacement parts at a discount.
The client has asked for advice on whether they should accept this offer, or whether, in fact, they could sue Y Ltd for the full cost of a new system.
Which of the following statements best explains whether the client should accept the offer by Y Ltd rather than suing Y Ltd for the full cost of a new system?
A. Yes, because, while Y Ltd have admitted liability, your client should avoid incurring unnecessary legal costs.
B. Yes, because your client has suffered pure economic loss and Y Ltd do not owe them a duty of care. If they sue Y Ltd their claim is bound to fail.
C. No, because Y Ltd, as a manufacturer, owe the client an established duty of care and Y Ltd have admitted that they are in breach of that duty.
D. No, because the client can sue Y Ltd in contract for the full cost of a replacement system.
E. No, because a duty of care is owed as there is a ‘special relationship’ between the client and Y Ltd and Y Ltd have admitted that they are in breach of that duty.
The correct answer is B- this is an example of economic loss caused by acquiring a defective item of property. The client’s loss is categorised as pure economic loss and is caught by the general rule that there is no duty of care owed for this type of loss. As there is no exception that would apply, the client should accept the offer that has been made by Y Ltd.
A is incorrect because, while it is generally correct that any unnecessary legal costs should be avoided, this is not the reason why the offer should be accepted as the client’s claim is bound to fail in any event. Y Ltd may have admitted that they were at fault, but they will not be liable because a duty of care is not owed to the client.
C is wrong because the manufacturer’s duty of care only encompasses physical damage, personal injury and any consequential economic loss. It does not apply to pure economic loss.
D is wrong because the client’s contract is with X Ltd and not Y Ltd. The client does not, therefore, have a claim against Y Ltd in contract.
E is wrong because there is nothing on the facts to suggest that a special relationship involving an assumption of responsibility by Y Ltd to the client would apply.
A solicitor is instructed by a client who wishes to bring a claim in negligence for substantial losses arising from an investment they have made in buy-to-let properties. The client had asked a friend, who is an estate agent, to advise on suitable purchases. The client had no knowledge of the risks involved in buying properties for letting and had made it clear that they would be relying on their friend’s skill and judgment. The client’s friend recommended buying two houses near to a university with the stated aim that the houses would convert into separate lettings for multiple occupation by students. The client bought the houses on the basis of the friend’s recommendation. The client later discovered that the houses were unsuitable for multiple occupation and has suffered a substantial loss of income from the houses as a result. The client now wishes to recoup these losses from their friend.
Which of the following statements best explains whether your client is owed a duty of care by their former friend?
A. No, because there can never be a duty of care in respect of negligent advice given in a social situation.
B. No, because your client has suffered pure economic loss.
C. Yes, because the former friend had assumed a responsibility to the client and it was reasonable for the client to rely on the former friend for advice.
D. Yes, because the former friend had assumed a responsibility to the client and the former friend did not exclude their liability by way of a disclaimer.
E. Yes, because it was reasonable for the client to rely on the former friend for advice and the former friend did not exclude their liability by way of a disclaimer.
C is correct as it correctly states the two parts of the test for a duty of care to be owed for negligent statements.
A is incorrect because, while it is generally true that there is no duty of care in respect of advice given in a social situation, there are exceptions (as per Chaudhry v Prabhakar [1989] 1 WLR 29).
B is incorrect because, while it is true that there is generally no duty of care for pure economic loss, there are exceptions- in particular for negligent statements (as per Hedley Byrne v Heller & Partners Ltd [1964] AC 465).
D is incorrect as, while an assumption of responsibility is one element of when a ‘special relationship’ may give rise to a duty of care for negligent statements, it must also be reasonable for the claimant to rely on the defendant for advice. Also, the fact that there may or may not have been a disclaimer of liability is not relevant to whether a duty of care was owed.
E is incorrect for similar reasons to D, the difference being that there must also be an assumption of responsibility by the defendant to the claimant.
An investor has sought advice from a solicitor on whether they can obtain compensation from geologist. The geologist was instructed by a mining company, which paid the geologist to prepare a report on the viability of mining for certain valuable minerals at a site. The report was favourable. However, the site did not, in fact, contain any valuable minerals. The company has now ceased trading.
The investor was an existing shareholder in the company. The geologist’s report was shown to the investor with a view to persuading them to buy more shares in the company. The investor did purchase more shares but has lost a substantial amount of money as a result.
A prominent disclaimer on the front of the geologist’s report seeks to exclude any liability for the report. It stated that the geologist did not warrant that the report would be accurate, and that the report was being supplied without any assumption of responsibility.
Which of the following statements best explains the approach the courts would take to determine whether the geologist can exclude liability for their report?
A. The fact that reasonable steps were taken to bring the clearly worded disclaimer to the investor’s attention of the would determine the issue in favour of the geologist.
B. The fact that the investor did not pay for the report would determine the issue in favour of the geologist.
C. The fact that the investor did not pay for the report and that they could have insured themselves against the risk would be relevant factors as to whether it would be fair to allow the geologist to rely on the disclaimer.
D. The fact that the investor did not pay for the report would be a relevant factor as to whether it would be fair to allow the geologist to rely on the disclaimer.
E. The fact that the investor did not pay for the report would be a relevant factor but would not determine the issue.
The best answer is C. Under s.62 Consumer Rights Act 2015, it is possible to exclude liability for economic losses provided that the disclaimer is ‘fair’ in ‘all the circumstances’. The fact that the investor did not pay for the advice is a relevant circumstance. The ability of the parties to insure themselves is also a relevant factor (Smith v Eric S Bush [1989].
A is correct in that these are relevant common law factors, but it is wrong that these determine the issue. The statutory controls under CRA 2015 and UCTA 1977 are also relevant.
B is wrong because the fact that the investor did not pay for the report is only one factor and would not, therefore, determine the issue one way or the other. The answer also fails to consider that the key issue is whether the disclaimer is ‘fair’.
D and E are correct but they are not the best answer as they fail to consider any other relevant factors.
