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Contract In A Business Situation Add in library

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Be able to apply the elements of a contract in a business situation

Now that you understand the principles of liability in negligence in business activities. You need to apply the elements of the tort of negligence and defences in different business situations. You need to give example of business situations and then apply the elements of the tort of negligence and defences in those situations. Include examples from academic sources and use proper referencing.

Mr. Jawad is an executive director of a company. He hired Mr. Owais to conduct and establish his business in United Kingdom and assigned him the responsibility to spread it the European countries. But instead of expanding the business, he has even failed to properly establish it in UK. The reason Owais postulated was his severe and sudden illness, but he didn't inform the company in three months despite his normal correspondence with the company. Under the circumstances, whether Mr. Owais will be held for negligence in the business or his defence shall be entertained by the Court. You need to apply the elements of vicarious liability in this situation.

As a legal advisor in the above stated Scenario, explain the nature of liability in negligence and inform the parties in this case of what legal options may be available to them

Explain how a business can be vicariously liable and advise Mr. Jawad if they have a claim against Mr Owais for Vicarious Liability.


Relevant Laws:

Liability in negligence

In the tort of negligence, the liability is imposed upon the wrongdoer to take due and reasonable care. Secondly, it has to be first observed in negligence, is whether there exists any relationship between the parties. The relationship should be of due and reasonable, care if a person wants to sue the other party for negligence. The parties  in the case of negligence may be known to each other or can be strangers. The doctor is known to a patient, but driver of any vehicle is not known to the road user who is injured by him.

In Caparo Industries PLC V Dickman 1990 UKHL 2, 2 AC 605 the defendants were not liable as their contract was with the Company. They were auditors of the Company were not liable to the shareholders as potential investors (Review Editor, 2003).

Vicarious Liability:

It is vicarious liability when wrong is done to a third party by the employee when he is in the employment. Its employer's vicarious liability for the wrongdoing of employees to the third party when he is in employment, For vicarious liability to exist, there has to be an employer employee relationship and the wrong is done during his employment. The employer is directly liable for another way of behaving, conduct and wrongdoing to third parties.

In the vicarious liability, the provisions of law of torts apply when the relationship is of employer and employee.It was held in Hollis V/s Vabu Pty Ltd (2001)207 CLR 21 that an employer is vicariously liable for the wrong done by employees when in employment (TAN, 2008). The owner of the car is vicariously liable for the neglected conduct of his driver. The employer is vicariously liable for the acts done by his employee in case of harassment and discrimination.

As a legal adviser, it is suggested that Mr Owais was hired to spread Mr Jawad's business in the U.K. and further spread in European countries. It was Mr Owais’s responsibility to do so, but he failed to carry out his responsibilities as he felt sick for three months. He further did not inform Mr Jawad of his illness. He was negligent in carrying out his responsibilities. Thus Mr Jawad can take legal action against Mr Owais for negligence and tort.

It is advised to Mr Jawad to initiate legal proceedings against Mr Owais as he is vicariously liable for being negligent in spreading the business and not informing Mr Jawad about his illness. Mr Jawad is also entitled to get damages from Mr Owais for the loss of business for three months. Had Mr. Owais had responsibly spread the business; the Company would have made huge profits. Mr Owais will be held to pay damages for the loss of business due to his negligence.



International Labour Law Reports, E. (2001). AUSTRALIA. International Labour Law Reports Online, 22(1), pp.109-123.

Sharkey, C. (2003). Punitive Damages as Societal Damages. The Yale Law Journal, 113(2), p.347.

Review Editor, B. (2003). Genestream Pty Ltd. PharmaDeals Review, 2003(40).

TAN, S. (2008). Vicarious Liability. Internal Medicine News, 41(24), pp.36-37.

Zinn, C. (2002). Australia proposes peer review of alleged negligence cases. BMJ, 325(7364), pp.565-565.


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