Business Law - Negligence

Tort

A civil wrong that is actionable by law and exists independently of a contract. It allows a claimant to seek compensation for harm or loss caused by another’s wrongful act.

Negligence

A tort based on the failure to take reasonable care, resulting in damage to another. To succeed, the claimant must prove duty of care, breach of duty, and causation.

Elements of Negligence

The three requirements needed to establish negligence: (1) duty of care owed by defendant to claimant, (2) breach of that duty, and (3) damage caused by the breach.

Duty of Care

A legal obligation requiring a person to act with reasonable care to avoid foreseeable harm to others. The claimant must prove that such a duty exists.

Donoghue v Stevenson (1932)

A woman became ill after drinking ginger beer containing a decomposed snail. There was no contract between her and the manufacturer.

The House of Lords held that a duty of care is owed to persons who are reasonably foreseeable (“neighbours”).

Application: Used to establish duty of care based on foreseeability, especially where no contract exists.

Neighbour Principle

A principle from Donoghue v Stevenson stating that individuals must take reasonable care to avoid acts or omissions likely to injure persons closely and directly affected by their actions.

Caparo Industries plc v Dickman (1990)

Investors relied on inaccurate accounts prepared by auditors.

The court held that duty of care exists only where there is (1) foreseeability, (2) proximity, and (3) it is fair, just and reasonable to impose liability.

Application: Used to structure duty of care analysis in problem questions.

Foreseeability

The requirement that the defendant should reasonably predict that their actions could cause harm to the claimant.

Proximity

A close relationship (physical, relational, or circumstantial) between the defendant and claimant such that harm is likely to affect the claimant.

Fair, Just and Reasonable

A policy consideration used by courts to decide whether it is appropriate to impose a duty of care in the circumstances.

Reasonable Person Test

An objective standard used to determine breach of duty by asking whether a reasonable person of ordinary prudence would have acted the same way as the defendant.

Blyth v Birmingham Waterworks Co (1856)

Water pipes burst due to extreme frost.

The court held that negligence is the failure to do what a reasonable person would do.

Application: Used to define negligence and apply the reasonable person standard.

Breach of Duty

Occurs when the defendant fails to meet the standard of care expected of a reasonable person in the circumstances.

Likelihood of Harm

A factor in breach analysis; the greater the likelihood of harm, the greater the care required.

Bolton v Stone (1951)

A cricket ball left the field and injured the claimant, but this had only happened rarely.

The court held no breach as the risk was very low.

Application: Used when risk is minimal to argue no negligence.

Mowser v DeNobriga

A spectator was injured by a horse leaving a racetrack.

The court held organisers liable as the risk to spectators was foreseeable and precautions were insufficient.

Application: Used where risk is high and precautions were inadequate.

Seriousness of Harm

A factor in breach analysis; more serious potential harm requires greater care.

Haley v London Electricity Board (1965)

A blind man fell into a trench inadequately protected by barriers.

The court held the defendant liable as precautions were insufficient for vulnerable persons.

Application: Used for vulnerable claimants and higher care requirements.

Eggshell Skull Rule

A principle stating that the defendant must take the claimant as they find them, meaning they are liable for the full extent of harm even if the claimant is unusually vulnerable.

Rhyna v Transport and Harbours Department

Employer failed to consider an employee’s disability, resulting in injury.

The court held the employer breached its duty.

Application: Used for seriousness of harm and vulnerable claimants.

Cost and Practicability

A factor in breach analysis; courts consider how easy or costly it would have been to prevent the harm.

Latimer v AEC Ltd (1952)

A factory floor became slippery; the employer took reasonable steps but did not close the factory.

The court held no breach as further precautions were impractical.

Application: Used where reasonable steps were already taken.

Social Utility

A factor in breach analysis; if the defendant’s actions serve an important purpose, some risk may be justified.

Professional Negligence

Occurs when a professional fails to meet the standard of a reasonably competent person in their field.

Law Society v KPMG Peat Marwick (2000)

Accountants negligently prepared accounts failing to detect fraud.

The court held they owed a duty to the Law Society, a third party relying on their work.

Application: Used to show professionals can owe duties to third parties.

White v Jones (1995)

Solicitors delayed updating a will, causing a beneficiary to lose inheritance.

The court held a duty was owed to the beneficiary.

Application: Used for duty of care to third parties affected by professional negligence.

Smith v Eric S Bush (1989)

A surveyor prepared a report relied on by a house buyer, despite a disclaimer.

The court held a duty existed as reliance was foreseeable.

Application: Used for negligent misstatement and reliance.

Millen v UWI Hospital Board of Management (1984)

A surgeon negligently left part of a suture in a patient.

The court held this fell below the standard of a competent professional.

Application: Used to show breach in medical negligence.

Rojannenisha v Guyana Sugar Producers Association Ltd (1973)

A worker died after a foot injury; the doctor did not give a tetanus shot.

The court held no negligence as the doctor’s actions were judged by knowledge at the time.

Application: Used to show professionals judged by standards at the time, not hindsight.

Causation

The requirement that the defendant’s breach must have caused the claimant’s damage.

But For Test

A test for causation asking whether the harm would have occurred “but for” the defendant’s actions.

Cutler v Vauxhall Motors Ltd (1971)

A worker’s injury required surgery, but he would have needed it anyway due to a pre-existing condition.

The court held causation failed.

Application: Used where damage would have occurred regardless of defendant’s actions.

Novus Actus Interveniens

A new intervening act that breaks the chain of causation if it is independent and unreasonable.

Intervening Act (Reasonable)

A response that is natural and foreseeable, which does not break the chain of causation.

Intervening Act (Unreasonable)

An independent or criminal act that breaks the chain of causation.

Remoteness of Damage

A principle limiting liability to damage that is reasonably foreseeable.

The Wagon Mound (No 1) (1961)

Oil spilled into water and later caught fire causing damage.

The court held the defendants were not liable for fire damage as it was not foreseeable.

Application: Used to show liability only arises for foreseeable damage.

Res Ipsa Loquitur

A doctrine meaning “the thing speaks for itself,” allowing negligence to be inferred where the accident would not normally occur without negligence and was under the defendant’s control.

Mohan and Osbourne (1939)

A patient died after a surgical swab was left inside her body.

The court held negligence could be presumed.

Application: Used where breach is obvious without direct evidence.

Damages

Monetary compensation awarded to restore the claimant to their pre-injury position.

General Damages

Compensation for non-financial loss such as pain, suffering, and loss of enjoyment of life.

Special Damages

Compensation for quantifiable financial loss such as medical expenses or lost earnings.

Nominal Damages

A small sum awarded where a legal wrong occurred but no significant loss was suffered.

Exemplary Damages

Punitive damages awarded to punish the defendant and deter similar conduct.

Contributory Negligence

A defence where the claimant’s actions contributed to the extent of their injuries, resulting in reduced damages.

O’Connell v Jackson

A claimant injured in a road accident was not wearing a helmet; injuries were worse than they should have been.

Damages were reduced by 15%.

Application: Used to reduce damages where claimant contributed to harm.

Volenti Non Fit Injuria

A defence where the claimant knowingly and voluntarily accepted the risk of harm, completely eliminating liability.

Express Consent

Where the claimant explicitly agrees to accept the risk.

Implied Consent

Where the claimant’s actions indicate acceptance of risk.