Topics 7 and 8 Business Law

Tort law

civil wrongs

Negligence

party causes harm (physical, property, or financial loss) to others because of his failure to perform his duty of reasonable care to them

Donoghue v Stevenson

manufacturer owes a duty of care to its consumers. Snail was in a beer bottle and poisinded a consumer.

Lam v Aerosol Co.

pesticide sprayer caused explosion when used near open washing machine. Manufacturer could reasonably see to the consumer suffering these injuries, not adequate warnings.

Wood v Wah Tung

occupiers owe a duty of care to its lawful visitors.It could have reasonably foreseen the chance of workers falling into uncovered holes. It had been negligent in this case by failing to cover the hole or put barriers around it in the room. Moreover, its general warning was inadequate to alert the workers the specific danger.

Hau v Starway

there was a notice outside the toilet of a restaurant saying that its floor was wet. When a customer was in the toilet, a cleaner suddenly cleaned the floor with water. The customer fell on the floor as a result. Should have specific notice as to the cleaning process happening

Reasonable forseeablity

"reasonable person" in the same situation could have anticipated the harm that resulted from their conduct

Ho v On Park Parking

the court decided that the owner of a car park which provided security measures had the duty to prevent the cars of clients from being stolen while the owner of an open space car park had no such duty.

Murphy v Brentwood District Council

the court said that if a manufacturer produced a product which was poor in quality, he was not liable at torts law to the buyer (no contract between the parties) for the loss of profits due to the product not working since this was a pure economic loss item. The courts do not allow recovery of pure economic loss caused by negligent conduct.

Economic loss from negligence

did the injured party rely on the skills and judgmenet of the defendent? did the defedent know or should have known who would rely on his masstatement and what the purpose of the reliance was? Was it reasonable for the injured party to rely on the defendant in the circumstances of the case?

Smith v Eric

A (a surveyor) owed a duty of care to B (a purchaser of a flat) when it prepared a valuation report to C (a money lender) since A ought to know C would pass the report to B who would then rely on it and buy a house

Hedley v Heller

Has the defendant given his negligent advice to the injured party together with a valid disclaimer. i.e. an exemption clause in a case not involving a contract - when the negligent advice was given for free

Mutual Life v Evatt

If the defendant was a professional in life insurance matters, the injured party was not supposed to rely on its advice on investment matters in which the defendant had no special skills. Established that a duty of care arises when a person provides advice on a serious matter, knowing the other person will rely on it, and it is reasonable for them to do so

Nettleship v Weston

learner driver dosen;t meet the standard of an ordinary driver, they may be liable for negligence to injured parties even if they have done their best

Breach of duty of care

Whether we have breached our duty of care depends on whether what we have done is adequate to protect our neighbours from being harmed

Wong v Hospital

A was emotionally unstable. She threw acid at a nurse who was working at the reception area. Given the earlier cases of violence, the centre should know there was a real risk of harm towards its employees. It could have installed a barrier at the reception area or provided for an emergency button for its staff. It had therefore breached its duty of care towards the nurse.

Paris v Stepney

How are the likely results of the harm? the court held that employers had to take more care of the disabled employees since they could suffer more serious harm than the other employees.

Latimer v A.E.C

Does the defendant have adequate resources to care for others? Inadequate resources to care for others → lesser care for others is excusable if the risk of harm is not high and the likely results of the harm are not serious. When a factory flooded, A tried to minimize the water to prevent people from slipping, including by installing a warning sign. B slipped while carrying a barrel. Ultimately, it was decided that A took action that a "reasonable" person would take in the same situation.

Daborn v Bath Tramways

Does the defendant have good reasons for his negligent conduct? the court excused an ambulance driver who drove carelessly as he did so to save the lives of the wounded.

Contributory negligence

the award of damages to the injured party will be reduced if he has also been negligent and this has contributed to his sufferings.

Chun v Au

Failure to stop before walking across the road but after checking the traffic before doing so: reduction of damages by 10% for the injured pedestrian.

Voluntary assumption of the risk of harm

Where the injured party knows that there is a risk of harm and he voluntarily agrees to being harmed, he cannot sue the defendant for negligence if he has been harmed. However, a person is not assumed to have agreed to be harmed even though he is aware of the exemption clause / disclaimer which refers to the risk of harm. Besides, there cannot be voluntary assumption of risk of physical injury in the business context.

Liability for negligence of employees and independent contractors

A boss is liable for negligence of his employees committed in the course of their employment. He is, however, generally speaking, not liable for the negligence of his appointed independent contractors unless: he has been negligent in appointing them or failed to take reasonable steps to ensure their satisfactory performance of their duties

Concurrent actions

Sometimes the innocent party can take both contract law action and torts law action. Court will award the larger award for damages. Under torts law the innocent party cannot recover any expectation loss (i.e. loss of profits) as the aim of torts law is to restore the innocent party to the position before the happening of the negligence.

Employee

dosen't share profits and loss equally with his boss and aspects of job controlled by boss, payed on hourly basis, done at employer's place, tools for work provided by boss

Cheng v HK Golf Club

a caddie was held to be an independent contractor mainly because his working hour was flexible and there was not enough control of him when he worked for the club.