Slide 1

Business Law A(N11120)Lecture 8Law of Tort

Nottingham University Business School Malaysia CampusSemester 1, 2012-13

Wen Li Chan, 20121Agenda, ReadingThe Law of Tort Introduction to the General PrinciplesProof of damage, causation, defences, remediesTorts relevant to businessNegligenceSome other torts relevant to business: Occupiers Liability, Liability for defective products, Nuisance, Trespass, DefamationVicarious liability

ReadingMacIntyre (2nd Ed) Ch. 8; Ch. 9Relevant sections in MacIntyre eBook (3rd Ed) on The Tort of Negligence, and Nuisance, Trespass, Defamation and Vicarious LiabilityRiches & Allen, pp. 330-355, 429-431, 493-5002

2Tort An IntroductionNote on Civil (i.e. non-criminal) LiabilityLiability arising in contractLiability is voluntarily undertaken, because something is given in return (consideration) both sides have made a bargain liabilities & rights are exchanged

Liability arising in tortLiability 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 bargaine.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 bargain3Business Law A (N1A120) Lect 8Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)3Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)3Tort An Introduction (2)Tort a civil wrong which is not a breach of contractThe law seeks to provide legal remedies for victims in certain forms of harmful conductTort 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 NegligenceLiability 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 standardClaimant 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.4Business Law A (N1A120) Lect 8Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)4Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)4Tort 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 liabilityNo need to prove faulte.g. Consumer Protection Act 1987 Manufacturer is strictly liable for injuries caused by his defective products

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

5Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)5Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)5Establishing A Cause of Action in TortGenerally, elements needed to establish a cause of action in tort:

Note:

6Proof of DamageCausationDefencesRemedies

?Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)6Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)6Torts Relevant to business:

negligenceWe now apply the basic principles of tortious liability to the tort of negligence, one of the most important torts in modern law7

7Torts Relevant to Business NegligenceCareless conduct causing damage or loss to othersA 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:

If these 3 elements can be proved claimant entitled to damagesTo 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)

8Defendant owed him a duty of care1A foreseeable type of damage was caused by that breach of duty3Defendant breached that duty of care2

Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)8Donoghue v. Stevenson the claimant and his friend visited a caf. The friend bought some ice cream and a bottle of ginger beer for the claimant. The claimant poured some ginger beer over the ice cream and ate some of the mixture. When the friend poured out the rest of the ginger beer the remains of some decomposed snail fell out of the bottle. Claimant suffered gastroenteritis and nervous shock. Claimant had no ctt with the caf so cant sue. She instead sued the manufacturer of the ginger beer. Held the manufacturer owe a duty of care to see that customers are not injured by their products. Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)8Negligence Duty of CareDuty of careThe 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 neighbourNeighbour? - 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 CustomersProfessional advisers ClientsRoad users (drivers) Other road users & pedestrians - Nettleship v. Weston (1971)

9A duty of care was owed 1Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)9Nettleship v. Weston objective test. No difference between learner and experienced drivers.Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)9Negligence Breach of Duty of CareBreach of DutyMerely 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)

10Breach of that duty of care2Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)10Bolam electric shock treatment for depression causes broken bones caused by convulsion. Held - a doctor who acts according to an accepted school of thought is not negligent just because it turns out to be wrong.Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)10Negligence Foreseeable Damage CausedProof of Damage

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

CausationBut for test: Would the damage have occurred but for the defendants conduct?If it was caused by some other factor, D will escape liabilityBarnett v. Chelsea & Kensington Hospital Management Committee (1968)11Foreseeable damage was caused by that breach of duty3

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Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)11Barnett v. Chelsea & Kensington Hospital - person suffered from vomiting negligently turned away by hospital. Died from arsenic poisoning. He would have died even if the hospital treated him. Held no causation.Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)11Negligence Foreseeable Damage Caused (2)ForeseeabilityEven 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 MoundAs 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)12Foreseeable damage was caused by that breach of duty3Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)12The Wagon Mound - defendant negligently spilled furnace oil into harbour. Claimant welding on wharf, continued to do so, thought it was safe. Oil ignited. Held defendant did not know, and could not have expected to know, that furnace oil floating on water could be ignited.Smith v Leech Brain the defendants negligent caused injury when a drop of molten metal splashed into claimants lip. The injury caused cancer, causing death. Held defendant liable for claimants death.Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)12Negligence Foreseeable Damage Caused (3)A note on Economic LossAs a matter of policy, courts are reluctant to compensate for pure economic lossLoss 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 lossIn 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]

13Foreseeable damage was caused by that breach of duty3Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)13However, in Hedley Byrne, the defendant was not liable as it was plain that they gave advice without responsibility.Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)13Negligence DefencesConsent/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 passengersHaynes v Harwood (1935) Volenti defence will not apply if claimant was injured while reasonably trying to carry out a rescue

Contributory NegligenceWhere damage suffered is the result of partly the claimants own faulte.g. Failure to wear seatbelt Froom v. Butcher (1975)Apportionment of blame between claimant and defendant Law Reform (Contributory Negligence) Act 1945, s.114

Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)14ICI Ltd workers did not take safety precautions. Employer not liable as they were not aware that safety precautions not adopted.Haynes policemen injured trying to safe some children from a runaway horse. Can claim compensation although it was caused by his own decision.Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)14Q: Is liable in negligence to ?Defences to a claim in negligence?Contributory Negligence - Froom v. Butcher, Eagle v. ChambersConsent (Volenti) Driver cannot use volenti against passenger - Pitts v. Hunt Cannot use against injured rescuers - Haynes v. HarwoodNB. Courts reluctant to compensate for pure economic loss but see Hedley Byrne v. HellerABNEGLIGENCE A Quick Summary

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OCCUPIER'S Liabilitytowards lawful visitors, and trespassers16

16Occupier'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 visitorsDefinition 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 contractorsSubject 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 1977.17

17Occupier'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 1984This 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 injuryUnless occupier knows that the condition of the land or the activities of the trespasser mean that the trespasser is likely to be injured18

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Liability FOR DEFECTIVE PRODUCTSRemedies may exist in 3 possible areas of law:

Negligence / Breach of Contract / Consumer Protection Act1919Liability for Defective Products20Remedies possible under 3 areas of law:

20Liability for Defective Products (2)Liability in contract 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

21Q: 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: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)ABCContractThird party21Liability for Defective Products (3)Liability in common law - Tort of NegligenceSee Lecture 7 on NegligenceManufacturers owe duty of care to customers; may be liable to consumer for loss & damage caused by defective productNeed to show (Donoghue v. Stevenson):

Duty of care (Manufacturer Consumers)Breach (Did the mfr fail to take the care a reas. person would have?)Foreseeable damage caused (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 slide2222Liability for Defective Products (4)Strict liability under statute law - Consumer Protection Act 1987Producer 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 expectWho 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 materialsDamage suffered Death or personal injury; Property (only if >275); Not recoverable: Damage to product itself, Damage to business property2323Liability for Defective Products (5) Strict liability under CPA 1987 (contd)Defences Defect caused by complying with EU/UK legislationProduct 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 marketSupplier of a component has a defence if the unsafety arose because the manufacturer misused the productDevelopment 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 it2424Summary Liability for Defective ProductsSummary of liability potentially imposed by Contract Law, Tort of Negligence, and CPA 1987:

25ContractNegligenceCPA 1987Who can sue?Contracting party (or person within CRTPA 1999)A person suffering loss or injuryA person suffering loss or injuryWho is liable?Other contracting partyPerson who was negligentManufacturer, own-brander or importer into EUWhat must be proved?Breach of a term, statutory law or common law (e.g. SGA 1979)Duty of care owedDuty breachedCausing foreseeable loss/injuryInjury, or Property damage >275, caused by unsafe productDefences Exclusion clause (subject to UCTA 1977)Volenti; Contributory negligence; Exclusion of liability for loss other than personal injury (subject to reasonableness test in UCTA 1977)Contributory negligence; 5 statutory defences25

SOME OTHER TORTS2626Some Other TortsTrespass To land, person, goodsNuisancePublic, privateDefamationPublication of a false statement that damages someones reputation Rule in Rylands v. FletcherWhere 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 LiabilityWhen would employers be liable for torts committed by their employees?2828Vicarious 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 actsSince employers benefit from employees work, they should be liable for any damage the employee may cause in its performanceResources employer will be in the best financial position to meet a claimPreventing negligent recruitmentPromotion of care

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Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)29Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)29Vicarious LiabilityEmployee must have been acting in the course of employmentWas 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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Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)30Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)30Vicarious Liability In this example, for Negligence Acting in the Course of Employment31

Depends on whether employee was acting in the course of employmentWas employee negligent?Apply Donoghue v. Stevenson principlesN (Negligence not established)Claimant has no cause of actionCan claimant also hold the employer liable?YEmployer is vicariously liableNEmployer is not vicariously liable

What does this mean? - See next slideY (Liability in negligence established)Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)31Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)31Vicarious Liability Acting in the Course of Employment32

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)Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)32Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)32Vicarious Liability Employers DefencesConsent of the victim / voluntary assumption of riskContributory 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)33

Business Law A (N1A120) Lect 4bBusiness Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2007 (Jan Intake)Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)33Business Law A (N1A120) Lect 3Nottingham University Business School Semester 1, 2006-2007 (Jan Intake)33