Duty of Care and Negligence

Discuss abou the Business Law for Property Trust Ltd.

In the case of Donoghue v Stevenson 1932 AC 562 it has been stated by the court that a concept known as duty of care imposes an obligation on a person to safeguard the right of another person who may be injured or harmed by the actions of such person.  This means that the duty of care is present in relation to any person who can reasonable foresee damages or injury being caused to another person due to actions of such person.  The claimant under the law of negligence has to establish that the other person owed them a duty of care, the duty was contravened, the contravention caused damages and the injury was not “too” remote.

In the case of Hedley Byrne & Co v Heller [1963] 3 WLR 101 it had been ruled by the court that where an economic loss gas been caused to a person due to a negligent misstatement rather than a negligent act the person who has made such statement may be liable for negligence.

The contravention of the duty owed by the defendant is analyzed based in an objective test as per the ratio decidendi of the case of Vaughan v Menlove (1837) 3 Bing. N.C. 467.  The test stipulates the application of a prudent person towards making a comparison between his actions and the actions of the defendant. If the defendant took the same level of care as the prudent person he has not contravened the duty. On the other hand when it is a professional in contexts his actions are analyzed by the standards of a professional as per the ratio decidendi of South Australia Asset Management Corp v York Montague [1996] 3 WLR 87

The damages caused in relation to the contravention of the duty are assessed by applying “but for” test as per the obiter dicta of the case of Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428. Only and only if the damages results out of the contravention a claim for negligence will be successful.

It has been provided through the scenario that Amelia is a professional tax advisor. She has provided an advice to Maria as per which Maria had to obtain additional loan to expand her business. However it has been provided where Maria acted upon the advice of Amelia she has been subjected to losses. This is because Amelia had not taken into consideration Maria’s previous debts and had provided the advice based on fortune cards. In the given situation by applying the Hedley Byrne & Co test it can be stated that Amelia had a duty of care to Maria as she can foreseeable suffer losses because of Amelia’s actions.  by applying the case of South Australia Asset Management Corp v York Montague it can be stated that she has not acted with a professional standard as she did not taken into consideration Maria’s previous debts and had provided the advice based on fortune cards. The loss would not have been caused to Maria if Amelia did not provided the wrong idea to expand the business as per the “but for test”. The damages incurred by Maria are not too remote. Thus Maria can sue Amelia for negligence.

In the case of Donoghue v Stevenson 1932 AC 562 it was also provided that it is the liability of the manufacturer in case any person has incurred an injury by using the manufactured goods. 

The duty of care is present in relation to the wrongdoer can be identified by applying the “Caparo test” as brought into existence by the case of Caparo Industries pIc v Dickman [1990] 2 AC 605  House of Lords. The test analyzes the proximity between the plaintiff and the defendant to identify the existence of the duty of care.

The contravention of the duty owed by the defendant is analyzed based in an objective test as per the ratio decidendi of the case of Vaughan v Menlove (1837) 3 Bing. N.C. 467.  The test stipulates the application of a prudent person towards making a comparison between his actions and the actions of the defendant. If the defendant took the same level of care as the prudent person he has not contravened the duty.

The damages caused in relation to the contravention of the duty are assessed by applying “but for” test as per the obiter dicta of the case of Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428. Only and only if the damages results out of the contravention a claim for negligence will be successful.

In Nettleship v Weston [1971] 3 WLR 370 a defense known as contributory negligence had been initiated by the court. The defense comes to the context where claimants have also been negligent in relation to the damages caused to them. This is analyzed based on general negligence rules discussed above. In such situation either the claim for damages is defeated or the claim is proportionated based in negligence of the claimant.

Dan had the duty to provided a bike without any defects to Nathaniel.  He owned a duty of care to Nathaniel as he could be harmed by his actions. The duty was breached as the bike did not have a reflector. However the but for test cannot be satisfied as even where the reflector was present the accident would have taken place. Further Nathaniel did not listen to the advice of Dan and selected the freeway.

Julia had a duty of care to Nathaniel as she was a driver and as a driver she was at close proximity to those who are present on the road as per the Caparo test. Thus she has a duty of care to Nathaniel.  The duty has been violated as she took her eyes off the road which a reasonable person would not do in the situation. Damages have been caused to Nathaniel because of the contravention of duty by Julia and would not have been caused otherwise as per the “but for” test. Thus Julia is liable for negligence.  However Nathaniel had also contributed to the negligence by not following the warning sign and riding in the freeway without precautions. Thus the damages would be proportionate or nullified by the court as per Nettleship v Weston.

Breach of Duty of Care and Damages

In the case of Dickinson v Dodds (1876) 2 Ch. D. 463 it had been ruled by the court that an offer is open to be accepted by any person to whom it has been made until the offer has not ended. There are several ways in which an offer can be brought to an end such as death of offeror, lapse of time or revocation of offer.

Revocation of offer is an act through which the offeror signifies to the person(s) to whom the offer has been made that he or she no longer wants to offer to valid and available for acceptance. The fact that the offer has been revoked has to be notified to the offeree as per the case of Byrne & Co v Leon Van Tien Hoven & Co [1880] 5 CPD 344.

In the given situation it has been provided that an offer has been made by Rosita to Jay that that he wants to sell at a price of $3500, 200 KG of Wagyu beef to Jay. He has further mentioned that the offer is valid for a period of 24 hours. However Rosita has accepted another offer before the time provided to Jay elapsed. The offer had further not been revoked by Rosita before Jay accepted it. Thus a contract was formed as soon as the offer was accepted by Jay.

A term can be regarded as a contractual term only if it has been appropriately incorporated. It had been stated by the court in the case of Olley  v Marlborough Court [1949] 1 All ER 127 that a term cannot be a part of the contract after the contract has been formed. In this case the defendant had made a contract with the plaintiff at the hotel desk. A term stated at the back of his room door. The court held in the case that was the term was not added at the time of formation of contract it is not a valid term.

In the given situation Jay has went into a contract with Jeff the agent of Mario’s Trucks and Motors Pty Ltd for the purpose of a car. After the contract was signed for the purchase jay asked the agent whether he would receive any free services for the car of not. Jeff promised Jay for free services. In this situation as the term has been promised after the formation of a contract and there was no consideration provided by it by Jay it would not be a term of the contract as per Olley  v Marlborough Court.

Contributory Negligence

In the case of Central London Property Trust Ltd v High Trees Ltd [1947] KB 130 it had been stated by the court that the doctrine of promissory estoppels can be applied when a person has made a promise which is not supported by a consideration and it would be inequitable for the person to not comply with the promise. The doctrine was used in Tool Metal Manufacturing v Tungsten [1955] 1 WLR 761. However there must be a preexisting contractual obligation which has been changed, the promise must be clear and it would be inequitable for the person to not comply with the promise.

In the case of Combe v Combe [1951] 2 KB 215 it was stated by the court that where a  pre-existing legal obligation is not present the promise is not applicable

In the given situation there was no contract formed between Jay and the Nacho. Thus there was no pre-existing legal obligation. Although there has been a promise made by Nacho which has resulted in significant loss for Jay as there was no pre-existing legal obligation the doctrine cannot be applied as per Combe v Combe.

In the case of Commercial Bank of Australia Ltd v Amadio [1983] HCA 14 the plaintiff bank has provided loan to the defendant who had guaranteed a loan for their son. The parents did not have understanding of English and the bank manager did not provide them with the required details about the consequences of being a guarantor. The court held that the contract was invalid as it was an unconscionable conduct done by the bank.

In the same was as discussed in the above case the court will not let the bank make a claim from the parents of Jay for the loan taken by Ricardo as they had been subjected to  unconscionable conduct. The parents did not have understanding of the agreement and the bank manager did not provide them with the required details about the consequences of being a guarantor.

References

Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428

Byrne & Co v Leon Van Tien Hoven & Co [1880] 5 CPD 344.

Caparo Industries pIc v Dickman [1990] 2 AC 605 

Central London Property Trust Ltd v High Trees Ltd [1947] KB 130

Combe v Combe [1951] 2 KB 215

Commercial Bank of Australia Ltd v Amadio [1983] HCA 14

Dickinson v Dodds (1876) 2 Ch. D. 463

Donoghue v Stevenson 1932 AC 562

Hedley Byrne & Co v Heller [1963] 3 WLR 101

Nettleship v Weston [1971] 3 WLR 370

Olley  v Marlborough Court [1949] 1 All ER 127

South Australia Asset Management Corp v York Montague [1996] 3 WLR 87

Tool Metal Manufacturing v Tungsten [1955] 1 WLR 761.

Vaughan v Menlove (1837) 3 Bing. N.C. 467