Business Law

This document discusses the principles of business law, specifically focusing on negligence, liability, and claims for damages. It includes case studies and legal references to support the analysis. The first issue examines whether Raylene has a claim against Slonia, while the second issue explores whether Paul has a claim against AJ, Weldon, or Mechanangello. The document provides an in-depth analysis of the rules and applications of negligence in these scenarios.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Issue 1
The issue arising from the given instance is whether Raylene has a claim against Slonia.
Rule
The failure to perform any precautionary commission or omission that a person in a
particular set of situation is expected to ensure by virtue of his position with a view to avoid
causing injury to a third party is to be regarded as negligence and the same will confer the
aggrieved third party with the authority to claim damages flowing from such a negligent
action (Foley & Christensen, 2016). However, the existence of the law of negligence is to be
established by assessing a situation under the light of five tests of negligence. These include
responsibility of care, violation of that responsibility, a loss caused for that violation to a third
party, link of the injury with the violation and a claim for damages available to the aggrieved.
These tests pertaining to the presence of a negligent act has evolved with the case of
Donoghue v Stevenson [1932] UKHL 100.
The presence of such a responsibility of care can be assessed under the factors that has
been provided under the case of Perre v Apand (1999) 198 CLR 180. The proximity between
the violation and the injury caused is to traced as can be discussed under the case of Jaensch
v Coffey [1984] HCA 52. The expected injury that the action is probable to cause is required
to be anticipatable. However, the probability of the causation of injury will not be a
conclusive test it needs to be backed by other tests as well. This can be discussed under the
principles established in the case of Peabody Donation Fund v Sir Lindsay Parkinson & Co
Ltd [1984] 3 All ER 529.
There are certain responsibilities that are imposed upon certain professionals by virtue of
their position. This includes the standard responsibility that accountants as well as auditors

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are required to ensure while acting under the authority of their position. This needs to be
discussed under the principles established in the case of Shaddock & Associates Pty Ltd v
Parramatta City Council (1981) 36 ALR 285. As per the provisions enumerated u/s 50 of the
Civil Liability Act 2002, the professional standards that applies to a particular profession
needs to be used while assessing a negligent action of a professional (Laing & Hoy, 2018).
In case the aggrieved has established the commission of a negligent action, the aggrieved
will be conferred with an authority to proceed with an action against the wrongdoer for a
claim of damages. Damages are available to an aggrieved with respect to any physical injury,
property related loss as well as economic loss. This can be supported with the case of
Todorovic v Waller [1981] HCA 7. This will enable the aggrieved to claim pecuniary
damages. There are certain non-pecuniary losses that are also available to the aggrieved but
the quantum of the same needs to be assessed by the court. This includes emotional distress
caused to the aggrieved. This can be illustrated with the case of State of NSW v Riley [2003]
NSWCA 208.
Application
In the given instance, there has been a technology company established by Raylene
namely NoTasker, who has been employing university students to carry out menial tasks.
Owing to a remarkable growth in his business, he desired to expand his business and include
high school students in his workforce. Such a plan to expand his workforce has made him
visit a professional accountant as well as financial advisor named Slonia and they discussed
the plans for the expansion of the business belonging to Raylene. This confers Slonia with a
position where she has the power to regulate the action of Raylene and any abusive or
negligent use of that power would land Raylene as well as her business in financial trouble.
This can be viewed as a responsibility of ensuring care by Slonia while providing financial

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advice to Raylene and she will be required to carry out her duty by in accordance to the
professional standards as mandated u/s 50 of the Civil Liability Act 2002. This can be
supported with the case of Donoghue v Stevenson [1932] UKHL 100.
Slonia has advised Raylene to proceed with the expansion and also mentioned the position
of her business to be sound. She also claimed that the business plan that Slonia has suggested
was designed in accordance with the Australian standards. However, there has been a
downfall in the business pattern of Raylene and she has suffered a loss. In this context, it has
been admitted by Slonia that she failed to factor the pre-existing debts of Raylene. She also
admitted that she has failed to consider the cost relating to the expansion. Moreover, Raylene
has also discovered that the plan has not been designed in accordance with the Australian
standards. This needs to be treated as a violation of the duty pertaining to Slonia in exercising
her duties as a accountant as evident from the principles of the case of Shaddock &
Associates Pty Ltd v Parramatta City Council (1981) 36 ALR 285. Moreover, Slonia has
admitted that she has based her decision of making suggestion upon astrological charts of
Raylene, which suggested as progress in her business. This cannot be treated as an adherence
to the professional standard.
Again, in the furtherance of the advice Raylene has incurred a loan of $175,000 from
Wisdom Credit, signed a five year lease as well as purchased new computers. Owing to the
downfall of her business she failed to make the payment of her debts and was rendered
bankrupt. This can be treated as an injury that has been caused to Raylene by the negligent
acts of Slonia. Hence, there exists an act of negligence by Slonia, which is actionable by
Raylene as can be supported with the case of Donoghue v Stevenson [1932] UKHL 100. In
this case, Raylene has a claim for both pecuniary as well as non-pecuniary damages.

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Conclusion
Hence, it can be concluded that Raylene has a claim against Slonia.
Issue 2
The issue arising from the given instance is whether Paul has a claim against any of AJ,
Weldon or Mechanangello.
Rule
Negligence points towards a situation where a person exhibits a failure to perform any
preventive action that he is expected to ensure in a specific situation by virtue of his position
for the purpose of avoiding the causing of injury to a third party. Such a negligent act will
confer the aggrieved third party with the right to demand damages accrued from such a
negligent action. However, the presence of the action of negligence is to be established by
assessing a situation under the light of five tests of negligence. These include responsibility
of care, violation of that responsibility, a loss caused for that violation to a third party, link of
the injury with the violation and a claim for damages available to the aggrieved. These tests
pertaining to the presence of a negligent act has evolved with the case of Donoghue v
Stevenson [1932] UKHL 100.
U/s 50 of the Civil Liability Act 2002, the professional standards that applies to a
particular profession needs to be used while assessing a negligent action of a professional.
This includes the liability that a manufacturer owes with respect to the product delivered by
him to a customer for being used (Foley & Christensen, 2016). It has been held by the courts
in the case of Heaven v Pender (1883) 11 QBD 503, that a manufacturer has the duty to
ensure the safety of the product he has been supplying to his customer. The violation of such

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a responsibility will result in negligence and will provide the customer with a chance to claim
damages.
In case the aggrieved has established the commission of a negligent action, the aggrieved
will be conferred with an authority to proceed with an action against the wrongdoer for a
claim of damages. Damages are available to an aggrieved with respect to any physical injury,
property related loss as well as economic loss. This can be supported with the case of Clark v
Macourt [2013] HCA 93. This will enable the aggrieved to claim pecuniary damages. There
are certain non-pecuniary losses that are also available to the aggrieved but the quantum of
the same needs to be assessed by the court. This includes emotional distress caused to the
aggrieved. This can be illustrated with the case of State of NSW v Riley [2003] NSWCA 208.
Medical expanses can also be claimed as damages caused by the negligent act of the alleged
person. This can be supported with the case of Layton v Walsh (1978) 19 ALR 594 (FC).
A liability will be imposed upon a person for the wrongful or negligent act of another, if
the former person has the authority to control the actions of another. This is to be termed as
vicarious liability and the same is evident in case of the employer-employee as well as
agency relationship in which the inferior person is acting under the control and within the
scope of authority extended by the superior. This can be supported with the case of Lister v
Romford Ice and Cold Storage Co Ltd [1957] AC555. In case the wrongful act has been
committed by the employee in the furtherance of his employment, the injured party has the
right to claim damages from both the employee for the negligence as well as the employer for
being vicariously liable.
Application
In the given instance, AK manufacturing Ltd being a medium sized manufacturer were
involved in the manufacture of quadbikes. This makes them liable to exhibit all the

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precautionary actions while manufacturing the quadbikes and to ensure that the person
buying the same does not have any risk of suffering injury. Any violation of the same causing
injury to the buyer will render the manufacturer to be liable for negligence and the buyer will
have the potential claim for damages from the employer. This can be supported by the
principles of the case of Donoghue v Stevenson [1932] UKHL 100.
Paul has purchased a quadbike from the AK manufacturing Ltd and has been riding it in
the farm in accordance with the instructions provided in the manual of the company. In this
furtherance, the wheel of the quadbike broke off causing paul to be throw off and his
shoulder being broken. Moreover, the quadbike he has purchased has also been broken
beyond repair. This needs to be treated as an injury caused to the Paul. Moreover, it has been
discovered that the company has a history of supplying broken products and the wheel broke
off because of the failure of the company to check the welded parts for cracks. Moreover they
failed to ensure that whether the quadbike has the probability of handling proper forces of
operation and a crack in the wheel of the quadbike has also been discovered which has caused
the injury. This can be treated as an act of negligence. This can be supported with the case of
Heaven v Pender (1883) 11 QBD 503.
This mishap has caused Paul a medical expense of $4000 as well as a loss of usual wage
of $375. This can be claimed as pecuniary damages by Paul as can be supported with the case
of Layton v Walsh (1978) 19 ALR 594 (FC). Moreover, the mishap has been caused because
of the failure of Weldon, an employee of the company, to take proper preparations to the
axial while welding the quadbike. Moreover, Mechanangello, an employee engineer has also
committed a mistake while adding up the forces of the axial. This made the same half as
strong for operations as it was supposed to be. This can be treated as an act of negligence
committed by both Weldon as well as Mechanangello. However, as the negligent acts has
been committed by Weldon and Mechanangello in the furtherance of their employment with

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AK manufacturing Ltd, the company will also be held vicariously liable. Hence, Paul has a
potential claim for damages against AK manufacturing Ltd, Mechanangello as well as
Weldon. This can be supported with the case of Lister v Romford Ice and Cold Storage Co
Ltd [1957] AC555.
Conclusion
Hence, it can be concluded that Paul has a claim against all of AJ, Weldon or
Mechanangello.

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Reference
Clark v Macourt [2013] HCA 93
Donoghue v Stevenson [1932] UKHL 100
Foley, M., & Christensen, M. (2016). Negligence and the Duty of Care: A Case Study
Discussion. Singapore Nursing Journal, 43(1).
Heaven v Pender (1883) 11 QBD 503
Jaensch v Coffey [1984] HCA 52
Laing, G. K., & Hoy, S. (2018). A Retrospective of Professional Liability of Auditors in
Australia. Journal of New Business Ideas & Trends, 16(1).
Layton v Walsh (1978) 19 ALR 594 (FC)
Lister v Romford Ice and Cold Storage Co Ltd [1957] AC555
Peabody Donation Fund v Sir Lindsay Parkinson & Co Ltd [1984] 3 All ER 529
Perre v Apand (1999) 198 CLR 180
Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 36 ALR 285
State of NSW v Riley [2003] NSWCA 208
The Civil Liability Act 2002
Todorovic v Waller [1981] HCA 7