Business Law: Negligence and Ethical Decision Making

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

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BUSINESS LAW
Table of Contents
Question One:.............................................................................................................................2
Issue:.......................................................................................................................................2
Rule:.......................................................................................................................................2
Application:............................................................................................................................6
Conclusion..............................................................................................................................7
Question 2..................................................................................................................................8
Recognizing the Ethical Issue................................................................................................8
Facts........................................................................................................................................8
Evaluating the alternative options..........................................................................................9
Make the decision...................................................................................................................9
Reflecting on the outcome......................................................................................................9

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Question One:
Issue:
The issue that exists in this given scenario is whether Will can claim damages from Frederick
due to his negligence.
Rule:
The provisions of claims of the parties who had been victims of negligence of other parties
had been first established in the case of Donoghue v Stevenson. Lord Atkin in this case had
established the neighbour principle. It can be stated in accordance with the judgment of the
aforementioned case that a person has the duty of care to his neighbour so as prevent such
neighbour from suffering any loss or injury due to negligent actions or omissions of such
person. The judgment of this case opened the gates to wide range of claims arising from
negligence. It also enabled the courts to assess what constitutes negligence and when party is
liable to compensate the other for his negligent actions or omissions. The basic and important
elements of negligence as held in this case are:
 Duty of care on the part of the defendant towards the plaintiff
 Breach of duty of care on the part of the defendant
 Causation of the damage sustained by the plaintiff
 Remoteness of the damage.
Duty of care- Duty of care on the part of the defendant towards the plaintiff is the first
essential element of claim of negligence. It is to be mentioned that a test can be applied to
assess whether the defendant owed a duty of care to the plaintiff. The test is known as the
Caparo test as it had been first established in the case of Caparo Industries pIc v
Dickman [1990] 2 AC 605 . The aforementioned case is a notable English case involving

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duty of care in professional negligence. In this case a threefold test had been applied to assess
the duty of care. Such test assesses :
 Whether the harm caused to the plaintiff was reasonably foreseeable to the defendant`
 Whether any relationship of proximity existed between the parties
 Whether it is fair and reasonable to impose the duty of care on the defendant
Breach of duty of care- Breach of duty of care is the next important element which is
required to be proved by the claimant for establishing negligence of the part of the defendant
Wyong Shire Council v Shirt (1980) 146 CLR 40. An objective test is applied by the courts
to assess whether the defendant breached his duty of care to the plaintiff. The objective test
had been first applied in the case Vaughan v Menlove (1837) 3 Bing. N.C. 467. The purpose
of this test is to assess whether the defendant had met the standard of a reasonable person
while discharging his duties. If the answer to the aforementioned question is found to be yes,
it would be held that the defendant would not be liable for the loss sustained by the claimant.
However, if it is established that any reasonable person would have taken additional care to
prevent another person from sustaining any loss or injury, it would be held that the defendant
did not meet the standard of a reasonable person and therefore the defendant would be liable
to pay damages to the claimant provided the other essentials of negligence are present. The
application of the objective test includes the following elements:
 Likelihood of the harm –. Bolton v Stone [1951] AC 850 is a case where it was
illustrated that the likelihood of the harm caused to the defendant was an important
element of duty of care. The rationale behind this is that the defendant cannot be
expected to guard against events which cannot be foreseen.