Introduction to Business Law | Assignment-1

Running head: 2105AFE
INTRODUCTION TO BUSINESS LAW
Name of the Students
Name of the University
Authors Note

2105AFE1
ILAC- Answer
Issue
In this paper, the issue to be discussed is whether Kathy is entitled to claim damages from
Peter.
Rule
Negligence is considered to be a tort. It is regarded as the most significant area of law yet
to be extended. Negligence can be characterized as a civil wrong which involves the lawful
responsibility of care that causes the damage of the party to whom the responsibility is owed.
Simple economic failure is a financial loss alone. Although, in English law ‘purely financial’ loss
is rarely observed but can be the product of negligent misstatements, as described in Hedley
Byrne & Co vs. Heller & Partners case, under Fatal Accidents Act, 1976. Moreover, the
consequential financial loss specifically stems from personal harm or harm to property.
The cases in which an individual or institution justifiably trusted on the opinion, advice or
information provided by another individual or institution, the later individual or institution may
be held responsible for any loss or injury suffered by the former in the event of the negligent
delivery of the opinion, advice or information. In Hedley Byrne & Co vs. Heller & Partners case,
it has been ruled by the House of Lords that an individual who provides inaccurate or wrongful
information should be held responsible for damages incurred as an outcome of that dependence if
it is fairly probable that such information is being obtained. Nonetheless, in this case, the
defendant was found not responsible because the justification was identical to the neighbourhood
principle of Donoghue vs. Stevenson case. The plaintiff did not provide adequate proof of a
special reliance on both sides.
It is very important to find out whether the person giving opinion, advice or information
has a duty of care towards the plaintiff or not. In Mutual Life and Citizen’s Assurance Co Ltd vs.
Evatt case, it has been ruled by the court that a duty of care is due if the three-step test is met. An
individual providing advice, opinion or information will have a duty of care if:
 The subject matter of the information, opinion or advice is related to a trade or serious;
 The accused knows or should know that the plaintiff will depend on the advice, opinion
or information (‘assumption responsibility) (“Slide” 2, p24);
 It is fair for the plaintiff to depend upon the advice given by the defendant in the
circumstances (‘reasonable reliance’) (“Slide” 2, p24).
However, in Mutual Life and Citizen’s Assurance Co Ltd vs. Evatt case, it has been ruled
by the Privy Council that the plaintiff could not assert his loss of financial expenses on account
of the defendant’s negligent misstatement. Although the defendant was an insurance company,
and advice had been provided by it, but the monetary advice it had provided was not an expert.
The following criteria may apply to determine “reasonable reliance” (“Slide” 2, p25)
which includes:
i) The setting or situation under which the consultation or information is given as
mentioned in Mohr vs. Cleaver case;