Analysis of Negligence and Negligent Misstatements in Business Law

This report examines the principles of negligence and negligent misstatements within the context of business law. It analyzes two problems, applying legal concepts such as duty of care, breach of duty, causation, and defenses like contributory negligence and volenti non fit injuria. The first problem involves a scenario where an accountant provides misleading financial information, leading to an investment loss. The analysis considers the accountant's responsibility for the misstatement and potential defenses. The second problem explores a workplace accident involving a forklift, addressing vicarious liability and the application of the volenti non fit injuria defense. The report draws on relevant case law to illustrate these legal principles and their practical application. The report aims to provide a comprehensive understanding of the legal ramifications of negligence and negligent misstatements in business settings.

INTRODUCTION TO BUSINESS LAW
AND ETHICS

TABLE OF CONTENTS
Problem 1...................................................................................................................................3
Problem 2...................................................................................................................................4

PROBLEM 1
The elements of negligence which can be applied in order to assess whether Beatrice could
sue Marcus for negligent misstatement have been discussed below in detail:
Duty of care:
Duty of care is an essential element which is applied as a control device in situation when a
plaintiff attempt to recover damages caused due to carelessness. A recognized duty
relationship exists in present case between Beatrice and Marcus, as Marcus was responsible
to manage book of accounts in appropriate manner so that the actual financial position could
be ascertained.
Breach of duty:
In present case breach of duty has been conducted by Marcus as he was responsible for
drafting books of accounts in appropriate manner but he did not conducted his duty in
appropriate manner. The same can be related with the case of Esanda Finance Corporation
Ltd v Peat Marwick Hungerfords (Reg) (1997) 188 CLR 241 in which decision was held
against the plaintiff that he is not responsible for the economic loss as the financial statement
which were provided were not requested directly from plaintiff. However, in present case as
Marcus knows that the information provided will be applied for taking investment decision,
thus he will be responsible for the economic loss.
Damages:
The damages which can be claimed by Beatric is the economic and financial loss which has
been occurred by him due to investment made in book shop on the basis of information
provided by Marcus.
Defences:
The defense available to Marcus is contributory negligence as Beatric believed on the
information provided through telephonic communication and did not asked for copy of
financial statement before taking decision.

Beatrice can sue Marcus for negligent misstatement as he did not accomplish his obligation in
appropriate manner. However, contributory negligence is available with him as defense in
order to reduce the damages.
PROBLEM 2
Duty of care
In present case Sofia is responsible for using forklift in appropriate manner as she has earned
the driving license for same. Thus it can be assessed that the element of negligent
misstatement exists in present case and they have been discussed below:
Breach of duty
The element of duty of breach exists when defendant is not able to discharge duty of care
regarding plaintiff. Further, breach of duty is ascertained through application of various rules.
The concept of negligence can be referred with the case of Blyth v Birimingham Waterworks
Co. (1856) 11 Exch 781 in which it has been stated that negligence is omission of doing an
act which a reasonable man would have conducted or doing an action which a reasonable
man would not do. The specified case can be related with present case as Sofia did not
conducted an act which a reasonable individual have conducted. Further, Russel will be
vicariously liable for the action of Sofia
Damages
The damages which can be claimed by the employer is the loss equivalent to extent of
negligence of employee. Jane can recover the financial damages from Sophie and Russel.
Defences
In this case defense of volenti non fit injuria will be applied as Jane voluntarily put herself in
a situation where there was possibility of injury. The defense available with Sofia is volenti
non fit injuria as she shouldn’t had wear headphones while entering from back door at work
site to be cautious of such accidents. Thus, her irresponsible behavior is also responsible for
the damages.
Sofia has been negligence to Jane however defence of volenti non fit injuria is available with
her. Further, Russell is not liable for the damages caused by Sofia.