BUSINESS LAW. BUSINESS LAW Name of the Student Name of

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

1BUSINESS LAW
Issue 1
The issue in the case is to determine whether a claim can be made by Raylene against
Slonia with respect to the negligent misstatement made by her about the investment advise
Rule
A person is deemed not to have a duty of care against another person of there has been a
pure financial loss. This means that a party cannot claim negligence against another party if the
party has made loss in terms of investment. This rule had been established by the case of Spartan
Steel & Alloys Ltd v Martin [1972] 3 WLR 502.
However, in relation to the above discussed case, there is an except which can be used by
a party against another in situation of a negligent misstatement. A negligent misstatement will
take place when a party has relied on the advice of another person and made an investment,
which has gone sour. The same can be illustrated with the case of Hedley Byrne & Co v Heller
[1963] 3 WLR 101. The same principles have also been used in the case of Anns v Merton
London Borough Council [1978] AC 728 and Murphy v Brentwood District Council [1991] 1
AC 398. As highlighted by the case of MLC Co Ltd v Evatt (1968) 122 CLR 556 there has to be
a special relationship between the parties in context for the duty of care to be present which may
also not be a contractual relationship. The courts take in consideration a few factors to analyze
whether the person giving advice should be held to have a duty of care towards the other. The
factors are as follows
1. Has the advice been made by the party in a commercial or business context

2BUSINESS LAW
2. Will it be proper and just to deem that the person who is making the advice is aware of
the fact that the other party seeks to rely on his advice and get into a dealing
3. Will it be proper and just to deem that the person who is getting the advice will rely in the
advice and take actions in accordance to it
One way in which duty of care may be limited in relation to a negligence misstatement i
by having in place an exemption clause in the contract of advice
In the case of Wyong Shire Council v Shirt (1980) 146 CLR 40 rules regarding breach of
duty have been laid down. The risk of injury must be real as per this case which means that the
risk must not be fanciful or farfetched. In the case of Rogers v Whitaker [1992] HCA 58 the
court ruled that the factors for analyzing breach of duty include, probability of injury, seriousness
and precautions of taking burden.
The element of causation can be established by the But for test. If the loss would have
been caused without the negligent advice being made then the element of causation is not
established as per the case of Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428.
Application of Law
In this given scenario, Raylene established a technological company named ‘NoTasker’
which gets students of the universities during the university holidays in doing basic tasks against
small sum. In the early 2019 Raylene thought about the expansion of the business in order to
cover the students of the high schools. She discussed her plans of business expansion with Slonia
who is a professional financial advisor and an accountant. on Slonia’s advice Raylene borrowed
a sum of $175,000 from the Wisdom Credit which is a small union which provides overdraft ad
loan facilities. After borrowing the loan Raylene signed a lease of five-year term on a fresh