Business Law A

(N11120)
Lecture 8 Law of Tort

Nottingham University Business School Malaysia Campus Semester 1, 2012-13

Wen Li Chan, 2012

Agenda, Reading
The Law of Tort Introduction to the General Principles
Proof of damage, causation, defences, remedies

Torts relevant to business

Negligence Some other torts relevant to business: Occupiers Liability, Liability for defective products, Nuisance, Trespass, Defamation Vicarious liability

Reading
MacIntyre (2nd Ed) Ch. 8; Ch. 9 Relevant sections in MacIntyre eBook (3rd Ed) on The Tort of Negligence, and Nuisance, Trespass, Defamation and Vicarious Liability Riches & Allen, pp. 330-355, 429-431, 493-500
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Tort An Introduction
Note on Civil (i.e. non-criminal) Liability Liability arising in contract
Liability is voluntarily undertaken, because something is given in return (consideration) both sides have made a bargain liabilities & rights are exchanged

Liability arising in tort

Liability is not voluntarily undertaken. Liability is imposed by courts / Parliament (through statutes) who have decided that certain types of behaviour give rise to tortious liability. Liability does not arise as the result of a bargain
e.g. If a driver runs over a pedestrian due to negligent driving Pedestrian may sue under the tort of negligence driver has no choice whether to accept liability, the courts will impose it. Liability arises as a consequence of having committed a tort, not as the result of a bargain
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Tort An Introduction

(2)

Tort a civil wrong which is not a breach of contract

The law seeks to provide legal remedies for victims in certain forms of harmful conduct Tort covers many areas, e.g.
Trespass to land & goods, Injury to business/personal reputation, Interference with use & enjoyment of land, Personal injury and death, Damage to commercial interests We will focus on the tort of Negligence

Liability is normally fault-based (vs. strict liability in contract)

Liability in tort is imposed only when a persons conduct does not match up to an objective, reasonable standard Claimant needs to prove that defendant acted intentionally / negligently (carelessly) In the Driver-pedestrian example: Driver will be liable only if he drove in a way that showed he failed to take reasonable care. If it cannot be shown that the driver drove badly, then there will be no liability, no matter how severe the pedestrians injuries.
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Tort An Introduction

(3)

Note: Liability in tort is normally fault-based, but there are situations where tortious liability may be imposed despite the defendant not being at fault:

Torts of strict liability

No need to prove fault e.g. Consumer Protection Act 1987 Manufacturer is strictly liable for injuries caused by his defective products

Vicarious liability
One person being held liable for torts of another e.g. Employer Employee

Establishing A Cause of Action in Tort

Generally, elements needed to establish a cause of action in tort:
Proof of Damage Causation

Note:
Defences

Remedies
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TORTS RELEVANT TO BUSINESS:

NEGLIGENCE
We now apply the basic principles of tortious liability to the tort of negligence, one of the most important torts in modern law

Torts Relevant to Business

Negligence

Careless conduct causing damage or loss to others A breach of a duty to take care, with the result that damage is caused to the defendant

Elements of the tort of negligence: Donoghue v. Stevenson (1932) - Claimant needs to prove 3 things:

Defendant owed him a duty of care

Defendant breached that duty of care

A foreseeable type of damage was caused by that breach of duty

If these 3 elements can be proved claimant entitled to damages

To put the injured party in the position he would have been if the tort had never been committed (court will look at expenses incurred, injuries suffered)
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Negligence
1

Duty of Care
-

A duty of care was owed

Duty of care
The neighbour principle

Donoghue v. Stevenson (1932)

Lord Atkin: You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour Neighbour? - Persons who are so closely & directly affected by ones act that one ought reasonably have them in contemplation as being so affected when one is directing his mind to the acts/omissions in question

Using the famous neighbour speech of Lord Atkin in Donoghue, courts have subsequently recognised duty situations, e.g.

Manufacturers & repairers

Professional advisers Road users (drivers) - Nettleship v. Weston (1971)

Customers
Clients Other road users & pedestrians

Negligence
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Breach of Duty of Care

Breach of that duty of care

Breach of Duty
Merely owing a duty of care is not enough to give rise to liability. Need to show that the duty of care has been broken by the defendant (D) Duty of care would be breached if the D does not take the care which a reasonable person would take in all the circumstances. An objective standard; its no defence that the D was doing his incompetent best!
e.g. The standard of care required of a driver is that of a reasonable driver (regardless of whether person has been driving for 20 years or 20 minutes or is a learner driver) Nettleship v. Weston (1971)

A higher standard is expected of professionals & persons claiming special competence standard of a reasonably competent person in that profession Bolam v. Friern Hospital Management Committee (1957)

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Negligence
3

Foreseeable Damage Caused

Foreseeable damage was caused by that breach of duty

Proof of Damage
Claimant must show that Ds breach of duty has caused him to suffer loss for which damages are being claimed

Causation

But for test: Would the damage have occurred but for the defendants conduct? If it was caused by some other factor, D will escape liability Barnett v. Chelsea & Kensington Hospital Management Committee (1968)

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Negligence
3

Foreseeable Damage Caused

Foreseeability

(2)

Foreseeable damage was caused by that breach of duty

Even if a causal connection is established, damage must not be too remote (indirect) Claimant must also show that the loss was a type of loss which would foreseeably follow from Ds breach The Wagon Mound As long as a certain type of damage was foreseeable, D will be liable for all damage of that type (no need to show that the extent of the injury was foreseeable): Smith v. Leech Brain & Co (1962) (personal injury), Vacwell Engineering v. BDH Chemicals (property) Damages may be awarded for e.g. death, personal injury, psychiatric injury, damage to property (cost of repair/replacing goods; which may incl. loss of profit for not being able to use the goods until repaired)
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Negligence
3

Foreseeable Damage Caused

A note on Economic Loss

(3)

Foreseeable damage was caused by that breach of duty

As a matter of policy, courts are reluctant to compensate for pure economic loss Loss which is not an injury to the person or damage to property e.g. loss of profits see Weller v. Foot & Mouth Research Institute (1966) However: Hedley Byrne v. Heller (1963)

Liability for negligent mis-statement can arise, even if it results in pure economic loss
In the 1990s, courts have applied the principle in Hedley Byrne to allow recovery for pure economic loss where it is caused by negligent advice/information; or negligent provision of services
[Read more about it in Elliott & Quinn on Tort (see Library) under Negligence Pure Economic Loss]
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Negligence

Defences
Consent/Voluntary Assumption of risk (volenti non fit
injuria) Claimant had full knowledge of the risk, & the risk was accepted voluntarily, e.g. ICI Ltd v. Shatwell (1965) Note: Pitts v. Hunt (1981) Motorists cannot rely on volenti defence to avoid liability to passengers Haynes v Harwood (1935) Volenti defence will not apply if claimant was injured while reasonably trying to carry out a rescue

Contributory Negligence
Where damage suffered is the result of partly the claimants own fault
e.g. Failure to wear seatbelt Froom v. Butcher (1975) Apportionment of blame between claimant and defendant Law Reform (Contributory Negligence) Act 1945, s.1
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NEGLIGENCE A Quick Summary

Q: Is A liable in negligence to B ? 3 things needed to prove negligence (Donoghue v. Stevenson):

Duty of care
Neighbour principle (Donoghue v. Stevenson) e.g. - Duty of care of drivers twds passengers & road users Nettleship v. Weston

Breach of duty of care

Has A failed to take the care which a reasonable person would have done? (Higher std of care for professionals)

Foreseeable damage caused

Enough to show that some injury/damage was foreseeable - Smith v. Leech Brain (injury), Vacwell Engineering v. BDH Chemicals (damage to property)
NB. Courts reluctant to compensate for pure economic loss but see Hedley Byrne v. Heller

Proof of damage (injury/ property) Causation (Barnett v. Chelsea) Not too remote (The Wagon Mound)

Defences to a claim in negligence? Contributory Negligence - Froom v. Butcher, Eagle v. Chambers Consent (Volenti) Driver cannot use volenti against passenger - Pitts v. Hunt Cannot use against injured rescuers - Haynes v. Harwood

OCCUPIER'S LIABILITY
towards lawful visitors, and trespassers

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Occupier's Liability
Occupiers of premises (i.e. person with control of premises/ movable structures e.g. ladders, vehicles) owe a duty of care to: Lawful visitors
Definition of lawful? Occupiers Liability Act 1957 Occupier of premises must take reasonable care to see that a visitor to his premises will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there. Std. of care varies with circumstances e.g. Higher duty owed to children, Lower duty owed to contractors Subject to defences e.g. volenti, contributory negligence. Notices/signs can be a defence if they enable a lawful visitor to be reasonably safe; but subject to UCTA 1977.

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Occupier's Liability (2)

Trespassers (non-lawful visitors)
A narrower duty of care! Occupiers Liability Act 1984 Occupier owes duty to take reasonable care to see that the trespasser is not injured if (i) he knows/ought to know that a danger exists; (ii) knows/ought to know the trespasser is in the vicinity of the danger; (iii) the risk is one which the occupier could reasonably be expected to offer the trespasser some protection UCTA 1977 does not apply to the OLA 1984 This means that notices/ signs which reasonably inform people of the danger or reasonably discourage people from taking risks which injure them can have the effect of excluding liability, even for death/personal injury Unless occupier knows that the condition of the land or the activities of the trespasser mean that the trespasser is likely to be injured
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LIABILITY FOR DEFECTIVE PRODUCTS

Remedies may exist in 3 possible areas of law:

Negligence / Breach of Contract / Consumer Protection Act

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Liability for Defective Products

Remedies possible under 3 areas of law:

Liability in Contract Law

Liability in Negligence

Strict liability under the Consumer Protection Act 1987

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Liability for Defective Products

Liability in contract

(2)

Breach of contract of sale of goods between consumer & retailer (see implied terms.. Sale of Goods Act) However, take note of the Contract (Rights of Third Parties) Act 1999 A
Contract

Third party

o o o

Q: What if C is the one who was injured from consuming a defective product? General rule: A contract is private between the parties who made it. Contract (Rights of Third Parties) Act 1999 C can sue on a contract which he did not make, if:
(i) (ii) the contract expressly provides C may do so, or the contract purports to confer a benefit on C (unless A & B can show that they did not intend that to be enforceable by C)

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Liability for Defective Products

Liability in common law - Tort of Negligence
See Lecture 7 on Negligence

(3)

Manufacturers owe duty of care to customers; may be liable to consumer for loss & damage caused by defective product Need to show (Donoghue v. Stevenson):

Duty of care Breach Foreseeable damage caused

(Manufacturer Consumers) (Did the mfr fail to take the care a reas. person would have?) (Causation, remoteness..)

Note that negligence can be a difficult tort to establish.

e.g. in Donoghue, the manufacturers of the ginger beer would not have been liable if they could have proved that they had taken all reasonable care!

See next slide

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Liability for Defective Products

(4)

Strict liability under statute law - Consumer Protection Act 1987

Producer of defective products liable for harm caused by his products unless certain defences under the Act can be established.

A claimant injured by an unsafe product will be able to sue the manufacturer (and possibly others) without having to prove the tort of negligence.
Who can sue? Any person injured by a (unsafe/defective) product, the safety of which was not such as persons generally are entitled to expect

Who is liable? Any one or more of the following producers: Manufacturer, Extractor of raw materials, Industrial processors of agri produce, own branders who add their label to products they dont produce, anyone who imports product into EU (NB. Retailers who are not own-branders would be liable under SGA 1979) Products Incl. components & raw materials
Damage suffered Death or personal injury; Property (only if >275); Not recoverable: Damage to product itself, Damage to business property
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Liability for Defective Products

Strict liability under CPA 1987 (contd)
Defences Defect caused by complying with EU/UK legislation

(5)

Product not supplied/manufactured in the course of a business (e.g. if produced as a hobby but will be liable under negligence) Defect did not exist when product was put onto the market Supplier of a component has a defence if the unsafety arose because the manufacturer misused the product Development risks defence Producer has a defence if can show that when he produced it, the state of scientific & technical knowledge was not such that a producer of the same description of the product in question might be expected to have discovered it

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Summary Liability for Defective Products

Summary of liability potentially imposed by Contract Law, Tort of Negligence, and CPA 1987:
Contract Who can sue? Contracting party (or person within CRTPA 1999) Other contracting party Breach of a term, statutory law or common law (e.g. SGA 1979) Exclusion clause (subject to UCTA 1977) Negligence A person suffering loss or injury Person who was negligent (1) Duty of care owed (2) Duty breached (3) Causing foreseeable loss/injury Volenti; Contributory negligence; Exclusion of liability for loss other than personal injury (subject to reasonableness test in UCTA 1977) CPA 1987 A person suffering loss or injury Manufacturer, ownbrander or importer into EU Injury, or Property damage >275, caused by unsafe product Contributory negligence; 5 statutory defences

Who is liable?

What must be proved?

Defences

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SOME OTHER TORTS

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Some Other Torts

Trespass
To land, person, goods

Nuisance
Public, private

Defamation
Publication of a false statement that damages someones reputation

Rule in Rylands v. Fletcher

Where a defendant has brought onto, or deliberately allowed to accumulate, something on his land that is likely to do mischief if it escapes, he is strictly liable if the thing escapes and causes damage (e.g. water, electricity, gas, vibrations)
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VICARIOUS LIABILITY
When would employers be liable for torts committed by their employees?

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Vicarious Liability (of Employer)

An employer is liable for damage caused to another person by his employee while he was in the course of employment (i.e. while the employee was carrying out his work)
(The injury may have been caused to an outsider or a fellow employee)

Note: Rationale for vicarious liability?

Employers are in control of the conduct of their employees, and therefore should be responsible for their acts Since employers benefit from employees work, they should be liable for any damage the employee may cause in its performance Resources employer will be in the best financial position to meet a claim Preventing negligent recruitment Promotion of care
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Vicarious Liability

Employee must have been acting in the course of employment

Was an employee acting in the course of employment (i.e. carrying out his work) when he brought about the injury for which the injured person wants to make the employer liable? Note: Employee vs. Independent contractor
(See Lecture 9 on Employment Law)

The courts have devised various tests to determine whether someone was acting within the course of his/her employment when the tort was committed

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Vicarious Liability In this example, for Negligence

Acting in the Course of Employment

Was employee negligent?

N (Negligence
Apply Donoghue v. Stevenson principles not established)

Claimant has no cause of action

Y (Liability in
negligence established)

Can claimant also hold the employer liable?

Depends on whether employee was acting in the course of employment

What does this mean? - See next slide

Employer is vicariously liable

Employer is not vicariously liable

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Vicarious Liability

Acting in the Course of Employment

This is a matter for the court to decide in each case! The decision can be a difficult one to make. These cases give us an idea of how the courts have dealt with this aspect of employers liability: If employee is engaged on a private matter personal to him employer not liable for injuries caused by the employee during this time Britt v. Galmoye & Nevill (1928), Mattis v. Pollock (2004) Employer may be liable despite the fact that the employee was acting improperly if the act was part of his contractual duties Century Insurance v. Northern Ireland Road Transport Board (1942)

Just because an employer has told an employee not to do a particular act doesnt always excuse the employer from vicarious liability if the employee causes damage when doing the forbidden act - Joseph Rand v. Craig (1919), Limpus v. London General Omnibus (1862)
If an employee does something entirely for his own benefit, he is said to be on a frolic of his own (employer not vicariously liable) Hilton v. Thomas Burton (Rhodes) Ltd (1961)
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Vicarious Liability

Employers Defences
1. Consent of the victim / voluntary assumption of risk
2. Contributory negligence
Note:

The Civil Liability (Contribution) Act 1978 allows an employer who has been found liable to get a contribution from the employee who caused the accident (however, this is rarely used as employers will generally carry insurance)

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