Negligence and Pure Economic Loss in Construction: A Case Study Analysis

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

1COMPANY LAW
Answer One
Issue
The issue that has been identified in the given scenario is whether there was negligence on the art
of Billy Jean in constructing the complex.
Rule
The tort of Negligence is a legal wrong in which one of the parties suffers damage at the hands
of another party due to failure of the latter party to take care or avoid what seems to be potential
risk to a reasonable person.
The law of Negligence had been established first in the case of Donoghue v Stevenson [1932]
AC 562. The neighbor principle was first established in this case. As held by Lord Atkin, a
person must take reasonable care to avoid acts or omissions which is likely to injure such
person’s neighbor. The neighbor principle made provisions for claiming damages by injured
parties, to whom a duty of care was owed by the defendant and the defendant breached such duty
of care.. It can be said in accordance with the decision of the aforementioned case that a claimant
must prove the following elements in order to be successful in claiming negligence on the part of
the defendant:
 The defendant owed a duty of care to the to the plaintiff
 Such defendant breached his duty of care
 The damage sustained by the claimant was caused directly by the negligent action of the
defendant
 The Damage was not too remote.

2COMPANY LAW
Duty of Care
This is the first essential element of negligence. It must be proved by the claimant that the
defendant owed a duty of care to him. To identify whether a duty of care was owed by the
defendant, the Caparo test was applied. The Caparo test can be said to be a threefold test which
takes into consideration the following:
 Whether the damage sustained by the claimant as a result of the defendant’s conduct was
reasonably foreseeable
 Whether a relationship of proximity between the parties existed
 Whether it fair and reasonable to impose such duty on the defendant.
Breach of duty of care
This is the second important essential to establish negligence is breach of duty of care on the part
of the defendant. To assess whether the duty of care as imposed on the defendant was breached
the courts generally apply an objective test as established in the case Vaughan v Menlove (1837)
3 Bing. N.C. 467. By the application of the objective test the courts assess whether the defendant
had met the standard of a reasonable person. However it can be mentioned that the objective test
can vary depending upon the circumstance of the particular defendant n the situation. In the case
Blake v Galloway [2004] 3 All ER 315, it was held by the court that if the defendant is
professional, such defendant will be held to be of the standard of a reasonable person within the
same profession.
By applying the objective test the courts generally tend to assess the following factors: