LAW504 Business Law: Analysis of Negligence and Liability Case

This case study examines a negligence claim against Sam Speed, who runs an aircraft refueling service. After contaminating fuel due to a lapse in his duties, Sam refuels three aircraft, leading to different outcomes for each company involved. The analysis identifies White Ltd as the only potential plaintiff able to successfully file a suit against Sam, as their aircraft crashed due to the contaminated fuel, establishing a direct causation. The owner of Mercedes Benz and the customer of Blue Ltd, their losses were deemed too remote. Green Ltd's pilot, who ignored the warning signs, assumed voluntary risk. The study applies legal principles such as duty of care, breach of duty, causation, and remoteness of damages, referencing relevant case law and legislation, to determine liability under tort law. Desklib offers similar solved assignments for students.

Business Law
Assignment
2018

QUESTION
I: ISSUE
Key issue:
Who are the potential plaintiffs in the case for whose losses Sam is liable for?
L: LAW
A party who suffered any loss due to the negligence of another party can hold him liable for
his/her damages and claim for compensation under the tort of negligence. Certain elements
must be fulfilled in order to claim damages based on negligence of a party. Firstly, the party
against whom a suit for negligence is filed must have a duty of care to maintain a standard
of care (Barker et al, 2012). The party who did not have a duty of care cannot be held liable
for negligent action. Furthermore, such duty must be breached by the defendant due to
failure to maintain a standard of care. Lastly, due to such failure, a party must suffer a loss
which is not too remote and caused due to the actions of the defendant. In order to
understand these elements, Donoghue v Stevenson (1932) AC 562 case can be evaluated. In
this case, the court provided an important judgement which provides provisions regarding
the implementation of the principle of negligence. The claimant, in this case, suffered a
personal injury due to the negligence of the defendant (CSU LAW504 Modules, 2018, Topic
3).
Due to failure to maintain a standard of care by the defendant, the drink of the claimant
included remains of a snail. The claimant demanded damages for the personal injury
suffered by him. The court provided a leading judgement in which it was held that the
defendant had a duty of care towards the safety of its customers. Such duty was breached
which caused damages to the claimant. Furthermore, the damages were not too remote
and caused directly due to the action of the defendant, thus, a suit for negligence was valid.
Section 5B (1) of the Civil Liability Act 2002 (NSW) provided the provision regarding
foreseeability of the risk based on which the party is required to take necessary steps in
order to prevent such harm. Section 5B (2) of the act provides various provisions regarding
identifying whether the party breached a duty (CSU LAW504 Modules, 2018, Topic 3). It

provides four principles to evaluate whether a duty of care has been breached which
include:
 Likelihood of occurring of any injury
 Seriousness of the injury which might occur due to breach of duty
 Social utility
 Efforts and cost required to prevent such injury
The first element is discussed in the case of Bolton v Stone (1951) AC 850 in which a cricket
ball hit the plaintiff which caused him personal injury. The court provided that in the
previous 30 years no injury has occurred near the area and the chance of risk was low. Thus,
a suit for negligence cannot be applied in this case. In Paris v Stepney Borough Council
(1951) AC 367 case, the court provided provision regarding the seriousness of the harm. In
this case, the court provided that the chances that an eye of the employee can be lost are a
reasonable ground for the employer to take appropriate steps to prevent such risk (Butler,
2018). Denning L.J. provided in the case of Latimer v AEC Ltd (1953) AC 643 that in order to
protect him the defendant must prove that reasonable steps were taken by him to prevent
the risk.
Causation of the damages is another element of negligence which provides that the actions
of the defendant must be the direct cause of the injury suffered by the plaintiff as given in
section 5D (1). In order to evaluate the causation, the court provided ‘but for’ test in the
case of Cork v Kirby Maclean (1952) 2 ALL ER 402 (Montague, 2013). The test evaluates that
the injury suffered by the plaintiff would not have occurred, but for the action of the
defendant, he suffered substantial loss. Remoteness of damages is also necessary to be
evaluated by the court since compensation cannot be awarded for the damages which are
too remote as given in the case of Overseas Tankship (UK) Ltd v Morts Dock & Engineering
Co Ltd (1961) AC 388. One of the main defences against a suit of negligence is ‘voluntary
assumption of risk’ (CSU LAW504 Modules, 2018, Topic 4). It provides that the party who
understands and accepts the risk cannot rely on the suit of negligence to claim for damages.
A: APPLICATION
Sam was responsible for filling right fuel into the aircraft based on which he owed a duty of
care. As the accident reports showed, the accident of White Ltd’s aircraft was caused due to

the contaminated fuel put by Sam into the plane, thus, White Ltd can hold him liable for his
negligence. The loss suffered by the owner of Mercedes Benz was too remote based on
which Sam cannot be held liable to pay for his damages. Sam prevented the accident of Blue
Ltd’s aircraft by stopping the pilot from flying it based on which he is not liable towards Blue
Ltd. The damages suffered by the customer of Blue Ltd were too remote based on which a
suit for negligence against Sam cannot be filed. Lastly, the pilot of Green Ltd rejected all the
warning signs of Sam, and he still flies the plane which has resulted in an accident. Thus,
Sam can rely on the defence of voluntary assumption of risk to prevent the liability from
paying the compensation for the loss suffered by Green Ltd.
C: CONCLUSION
To conclude, White Ltd is the only potential plaintiff that can file a suit against Sam for the
loss suffered by him due to the negligence of Sam.

BIBLIOGRAPHY
Legislation
Civil Liability Act 2002 (NSW)
Cases
Bolton v Stone (1951) AC 850
Cork v Kirby Maclean (1952) 2 ALL ER 402
Donoghue v Stevenson (1932) AC 562
Latimer v AEC Ltd (1953) AC 643
Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (1961) AC 388
Paris v Stepney Borough Council (1951) AC 367
Books/Articles/On-line Modules
Barker, K, Cane, P, Lunney, M and Trindade, F (2012). The law of torts in Austraila. Oxford:
Oxford University Press.
Butler, D (2010). Employer liability for workplace Trauma, Abingdon: Routledge.
CSU LAW504 Modules
Montague, JE (2013). Q&A Torts 2013-2014, Abingdon: Routledge.