Notesale: Turn your study into money

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BUSINESS LAW – LAW OF TORT (lecture 6)
Negligence – provides a remedy to C for loss or damage caused by the negligence of D
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d of c owed to the C;
2
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The breach caused the damage (ie causation); 4
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The
universal test of Donoghue v Stevenson devised the ‘neighbour principle’ and has been extended to cover a wide variety of situations eg Hedley Byrne & co v
Heller v Partners
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If no, follow the 3 stage Caparo test
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The loss must be reasonably
foreseeable; and
2
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it must be ‘fair, just and
reasonable’ for the law to impose a
duty in the situation
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A special relationship of trust and
confidence between c and d
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*The phrase is not actually fully explained in
Hedley Byrne
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This, however,
is no longer a requirement
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* cf Smith v Eric S Bush –disclaimer was not
effective, so not reasonable to exclude liability
for negligence under UCTA 1977
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*The courts have sough to make a
distinction between actual physical
damage to property, consequential
economic loss and pure economic
loss – Spartan Steel and Alloys Ltd v
Martin & Co (Contractors) Ltd
Exception to the general rule: the
rule in Hedley Byrne v Heller –
Though the cts have traditionallt
been reluctant to allow for claims for
PE loss, if such losses have been
caused by negligent misstatement or
service then they may be
recoverable
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2
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LIABILITY OF A COMPANY DIRECTOR
FOR NEGLIGENT MISSTATEMENT:
*The concept of limited liability upon
incorporation of a limited company is liable for
debts incurred
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NB Policy
considerations in Caparo
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3
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*A director of a limited company will be
personally liable for a statement – Williams v
Natural Life Health Foods Ltd – principle of
veil of incorporation applied, no personal
liability on d for negligent misstatement,
UNLESS, a special relationship between c and d
(requires reasonable reliance by c and an
assumption of personal liability by d) BUT…

Capro:
*The d knew the statement would be
communicated to c (actual reliance - JEB
Fasteners Ltd v Marks Bloom & Co);
*the advice was given for a specific transaction
or transactions of a particular kind (purpose
reliance);
*the d reasonably anticipated that the c would be
likely to rely on the advice for the purpose for
which it was given, without seeking further
independent advice (reasonable reliance)
*D knew of the identity of the c
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Reasonable for C to rely on advice
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Reasonable assumption that c
would take independent advice
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*cf MCA Records Inc v Charly Records ltd
(No
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No protection for d as did act through
company
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Generally cts will
allow personal liability to flow to d or employee
if evidence of deceit

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