Understanding Tort Of Negligence And Misrepresentation In Business Situations

A study of torts as they apply to business situations, in particular the torts of negligence and misrepresentation, but with some reference to other appropriate torts as applicable.  In your essay you are required to demonstrate some research and reading on the following issues, and to make appropriate comment on different torts, with a reference to current examples from real life situations:

• Explain the legal components of the torts of negligence and a misrepresentation. What steps need to be proved to show that either has occurred?
• How might these two different torts apply to a business situation, eg., considering the care and maintenance expected within a retailer’s premises where customersmight visit, the quality and safety of goods and services supplied by a retailer/prover?
• What care should be taken when giving advice or directions to customers, or even justmembers of the public?
• What might be the consequences to a business of a situation where an injured or disgruntled client has suffered some loss?
• What defences are available to a business where an individual is claiming to be injured, or has suffered loss, as a result of the actions of the business?
• Whether there are any current or real life instances of business’s being liable for a tortious act?
• Whether there is any role for statutory or public authorities who should be protecting the interests of Australian (or even non Australian) interests or parties.
• How a consumer, member of the public, or any other party who is affected by the actions of the business, might take action against the business, and what they might expect to gain from that action?
• What other torts, besides negligence and misrepresentation, which might also be applicableto the actions of a business.
• To make any interesting observations regarding the application of tortious principles as theymay apply in the business world.

Expectations

• Students are to read text books, cases, search the internet for articles and commentary, and to follow the guidance of the lecturer in their research and reading.
• Ensure your name and student number is clearly visible on your assignment.
• Keep a copy of your work for your records.
• Expression is important, and students should ensure that their essay displays appropriate clear expression and presentation.
• Students must reference materials appropriately (statute and case law), and ensure that any materials that are cited, quoted or referred to, have appropriate attribution (ie footnoted Kent Institute Australia Pty. Ltd.
• Each presentation must be individual work and students must not copy another student’s work, or cut and paste work from books or the internet. Please be aware that plagiarism (the copying of someone else’s work) is not acceptable in any professional practice.
• Please ask your lecturer for assistance if you are unsure about an aspect of this assessment.

Introduction to Tort Law

Under the common law jurisdictions, tort is usually referred to as a civil wrong undertaken which results in a party being harmed or bearing loss, which results in legal liabilities being raised for the person indulged in such tortious activities. Tortfeasor is the term which is used for referring the person who commits such a tortious act (Trindade, Cane and Lunney, 2007). In Australia, there are different torts which apply to the businesses and this includes the tort of negligence, misrepresentation, and the others. Upon establishing a successful case of tort, the injured or the harmed party is able to apply for damages as a manner of relief from the wrong done by the other party. The businesses have to be aware of these torts and have to take steps for avoiding any situation where liabilities can be raised owing to indulgence in such torts (Lunney and Oliphant, 2008).  Thus, this discussion is concentrated on the different torts which apply on businesses in the nation, with a particular reference to negligence and misrepresentation.

In order to take steps to avoid being indulged in negligence, it is important for the businesses to understand the very meaning of negligence. Negligence is a situation where a party X does something which has the possibility of injuring or harming party Y due to the proximity between the parties. And in such cases, party X owes a duty of care to party Y, which when breached, results in injury to the party Y, and resultantly attracts penalties owing to the negligence of party X (Kennedy, 2009). It is crucial for the other party to prove that the elements of negligence were present in order to make a successful claim of negligence. These elements include obligation of care, its violation, a resultant loss/ injury/ harm, the risk being reasonably foreseeable, the remoteness of loss, the proximity between parties and direct causation. In order to prove a case of negligence, the established case laws which were present in practical circumstances prove to be of help (Kolah, 2013).

To show the proximity between parties and the duty of care the case of Donoghue v Stevenson [1932] AC 562 proves to be of help. In this case, Stevenson was the manufacturer who had produced thee ginger beer bottle which was consumed by Donoghue while she was sitting in the cafe. Donoghue fell sick due to the dead snail which was found in the beer bottle and claimed for damages arising out of negligence. The court held the manufacturer liable as the dead snail was deemed as a breach of duty of care and the proximity in their relationship had the capacity of affecting each other. Hence, Stevenson was ordered to compensate Donoghue for her losses (Latimer, 2012).

Another requirement for showing the presence of negligence is to show that the duty had been contravened and that the losses had been substantial (Statsky, 2011). Paris v Stepney Borough Council [1951] AC 367 is a case which helps in this aspect. In this case, the breach of duty of care was found as the council was aware that the plaintiff was already blind in one eye. And by not providing him the safety goggles for the other eye, the council was held liable for negligence. The reason for holding the defendant liable also was due to the fact that the plaintiff was blinded which was taken to be a major loss (Martin and Lancer, 2013). Had the injury been remote as was held in Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961] UKPC 2, the damages would not have been awarded (H2O, 2016). The loss has to be foreseeable in a reasonable manner for the damages to be awarded for a case of negligence. And for the purpose of foreseeability, the view of a reasonable person has to be taken due to the ruling given in the case of Wyong Shire Council v Shirt (1980) 146 CLR 40 (Jade, 2017). The last step is to show that the injury was a direct result of the negligence of defendant (Turner, 2013).

Tort of Negligence - Meaning, Elements and Case Laws

Misrepresentation, even though lies in the contract law jurisdiction, is also deemed as tort in the nation. This is because under misrepresentation, a person is forced/ induced into entering of the contract after making a false statement. In order to show that a case of misrepresentation is present, there is a need to show that the false statement made was of fact and not of opinion (Cartwright, 2012). The statement of opinion regarding the farm holding the sheep in Bisset v Wilkins [1927] AC 177 resulted in the court finding that misrepresentation is not present. The next condition is to show that the plaintiff made reliance on the false statement of fact made by the defendant (E-Law Resources, 2017a). In Horsfall v Thomas [1862] 1 H&C 90, the court held that the claimant had not relied on the statement made by the respondent. And due to these reasons, even when the statement of fact has been lied about, a case of misrepresentation would not stand (E-Law Resources, 2017b). The position of a person knowing the truth or falseness of a statement is also taken into consideration for establishing the presence of negligence as was held in Smith v Land and House Property Corp (1884) 28 Ch D 7 (E-Law Resources, 2017c).

Due to the businesses regularly indulging with customers and clients, the chances of a case of a tort of negligence or misrepresentation being made are quite high. For instance, Australian Safeway Stores v Zaluzna (1987) 162 CLR 479 was a case where the defendant was held liable for negligence for failing to provide safe shopping experience to its customers (Sappideen et al, 2009). So, when dealing with the customers and clients, it is important for care to be taken. For instance, in Smith New Court Securities v Scrimgeour Vickers [1996] 3 WLR 1051, the business stated that they had certain available bids, but in actuality, they had none. This was deemed as a misrepresentation on part of the business (E-Law Resources, 2017d).

The injured clients get an option of making a claim of damages when a tort had been committed. For negligence, the parties can make a claim if the elements of negligence are established and can apply for the physical injury sustained by them, the mental distress and even for the economic losses suffered by them (Gibson and Fraser, 2014). Vaughan v Menlove (1837) 132 ER 490 was a case where the damages were not awarded as the defendant had failed to take the reasonable care towards himself and had not worked on the warnings of fire (Commonlii, 2017). Similarly, for misrepresentation, the damages which are available are rescinding the contract or the more appropriate one in cases of tort, as damages for the loss (Latimer, 2012).

The businesses have available defences in cases of a tort being made against them. In misrepresentation, they can show that they had reasonable basis to rely on the truth of the situation. In cases of negligence, the defence of contributory negligence proves to be of help. In this defence, it has to be shown that the plaintiff had, by their actions, taken such steps where they added in the injury which they had received and in such cases, the penalty which is imposed on the defendant had to be reasonably brought down by the contribution of the negligence made by the plaintiff (Dongen, 2014). For instance, even though the floor of the supermarket was wet, but by running on the wet floor to grab the last item on shelf, the plaintiff in Raad v KTP Holdings Pty Ltd as Trustee for VM & KTP Nguyen Family Trust [2016] NSW 2016 888 was held guilty of contributory negligence, and as a result of this, their remedial damages were reduced by ten percent (Devitt, 2016).

Tort of Misrepresentation - Meaning, Elements and Case Laws

Apart from the common law, the statutory law result also attracts penalties for negligence. Each jurisdiction in the nation has its own Civil Liability Act through which the provisions for negligence are given. The Civil Liability Act 2002 is applicable in the jurisdiction of New South Wales. Under section 5B of this act, it is provided that a person would not be deemed to have breached his duty of care till the time it could be proved that the risk of harm was significant, till the time it was properly foreseeable and till the time it can be shown that a reasonable individual would have taken the desired safeguards in order to evade this liability. Not only can the provisions of negligence, but also of contributory negligence be established, through the statutory act. Under section 5S of this act, it is provided that in case where a contributory negligence is shown to be present, the awarded compensation to the plaintiff can be reduced 100% if the circumstances of the particular case demand the same. So, not only the public authorities, the statutory authorities can also make an action for torts, for protecting the interest of the affected parties (Legislation NSW, 2015).

Negligence and misrepresentation are not the only two torts which have an impact on the businesses but there are different torts which can poses financial liability for the businesses. In this regard are the torts of fraud, injurious falsehood, tortious interference with contract or trade, and defamation. Defamation refers to such a situation where the reputation of an individual is tarnished by actions or words and takes form of libel and slander. For instance, when the business communicates with their clients, they have to take steps that they do not insult anyone or defame any party. All these torts result in heavy damages for the businesses, where they are imposed penalties and this is a loss as the money used for giving the penalties could otherwise be used by the businesses in furthering their objectives (Barnett and Harder, 2014).

To summarize the discussion carried on till now, the businesses have to bear losses due to certain torts in which they engage. The main two torts include misrepresentation and negligence. Under the tort of negligence, the businesses can be asked to compensate for the physical injuries, the economic loss and the mental distress caused to the plaintiff, when they fail in taking the requisite duty of care towards the plaintiff, by the reason of which, the plaintiff is injured. Alternatively, in the cases of misrepresentation, such a statement is made by the business which is false, and where the business knew of the falseness of the statement, which resulted in the consumer making relations with them. Owing to this falseness, the businesses have to compensate the consumers for reliance made on the false statement and the resultant loss which they had to bear. Not only the common law, but the statutory law also imposes these liabilities on the businesses. Hence, it is important for the businesses to not only be aware of the different torts which apply on them, but also take steps towards not indulging in activities which can possible result in a tort.

References

Barnett, K., and Harder, S. (2014) Remedies in Australian Private Law. Victoria: Cambridge University Press.

Cartwright, J. (2012) Misrepresentation, Mistake and Non-disclosure. 3^rd ed. London: Sweet & Maxwell.

Commonlii. (2017) Vaughan v Menlove. [Online] Commonlii. Available from: https://www.commonlii.org/uk/cases/EngR/1837/424.pdf [Accessed on: 08/09/17]

Devitt, S. (2016) A slip up - shopping centre liable for slip and fall on wet tiles. [Online] Lexology. Available from: https://www.lexology.com/library/detail.aspx?g=bdcef724-3c2e-482d-9d74-540bc1a44d6c [Accessed on: 08/09/17]

Dongen, E.V. (2014) Contributory Negligence: A Historical and Comparative Study. Boston: Brill Nijhoff.

E-Law Resources. (2017a) Bisset v Wilkinson [1927] AC 177 Privy Council. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Bisset-v-Wilkinson.php [Accessed on: 08/09/17]

E-Law Resources. (2017b) Horsfall v Thomas [1862] 1 H&C 90. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Horsfall-v-Thomas.php [Accessed on: 08/09/17]

E-Law Resources. (2017c) Smith v Land and House Property Corp (1884) 28 Ch D 7. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Smith-v-Land-and-House-Property-Corp.php [Accessed on: 08/09/17]

E-Law Resources. (2017d) Smith New Court Securities v Scrimgeour Vickers [1996] 3 WLR 1051. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Smith-New-Court-Securities-v-Scrimgeour-Vickers.php [Accessed on: 08/09/17]

Emanuel, S., and Emanuel, L. (2008) Torts. New York: Aspen Publishers.

Gibson, A., and Fraser, D. (2014) Business Law 2014. 8^th ed. Melbourne: Pearson Education Australia.

H2O. (2016) Wagon Mound (No. 1) -- "The Oil in the Wharf Case". [Online] H2O. Available from: https://h2o.law.harvard.edu/collages/4919 [Accessed on: 08/09/17]

Jade. (2016) Wyong Shire Council v Shirt. [Online] Jade. Available from: https://jade.io/j/?a=outline&id=66842 [Accessed on: 08/09/17]

Kennedy, R. (2009) Duty of Care in the Human Services: Mishaps, Misdeeds ad the Law. Victoria: Cambridge University Press.

Kolah, A. (2013) Essential Law for Marketers. 2^nd ed. United States: Kogan Page Limited.

Latimer, P. (2012) Australian Business Law 2012. 31^st ed. Sydney, NSW: CCH Australia Limited.

Legislation NSW. (2015) Civil Liability Act 2002 No 22. [Online] New South Wales Government. Available from: https://www.legislation.nsw.gov.au/#/view/act/2002/22 [Accessed on: 08/09/17]

Lunney, M., and Oliphant, K. (2008) Tort Law: Text and Materials. 3^rd ed. New York: Oxford University Press.

Martin, J., and Lancer, D. (2013) AQA Law for AS Fifth Edition. 5^th ed. Oxon: Hachette UK.

Sappideen, C., at al. (2009) Torts, Commentary and Materials. 10^th ed. Pyrmont: Lawbook Co.

Statsky, W.P. (2011) Essentials of Torts. 3^rd ed. New York: Cengage Learning.

Trindade, F., Cane, P., and Lunney, M. (2007) The law of torts in Australia. 4^th ed. South Melbourne: Oxford University Press.

Turner, C. (2013) Unlocking Torts. 3^rd ed. Oxon: Routledge.