University Business Law Assignment: Negligence and Tort

This document presents a business law assignment analyzing the tort of negligence. The assignment utilizes the IRAC method to examine a scenario involving a car accident caused by reckless driving. It explores the legal principles of negligence, including the duty of care established in Donoghue vs. Stevenson, and the Caparo test. The analysis considers the foreseeability of damages and the remoteness of injury, referencing cases like Wagon Mound No. 1 and Mainguard Packaging Ltd. vs. Hilton Haulage Ltd. The conclusion determines the liability for damages, including the loss of eggs, production, and documentary fees suffered by Milhouse Bakery Ltd. The assignment also provides context on torts, vicarious liability, and damages, including compensatory and exemplary damages, as outlined in the assignment brief.

Running head: 115.211 BUSINESS LAW
IRAC ON TORT OF NEGLIGENCE
Name of the Student
Name of the University
Authors Note

1115.211 BUSINESS LAW
Issue
In this paper, the issue to be discussed is whether Bart is liable for the following loss
suffered by Milhouse Bakery Ltd.:
i) $10000 for the loss of eggs;
ii) $35000 for the loss of production;
iii) $5000 for the loss of the fee for the documentary.
Law
In the case of Donoghue vs. Stevenson [1932] AC 562, the modern negligence law was
presented. Negligence involves the harm arising from a breach of responsibility leading to loss or
injury of the party to which this responsibility is to be owed. In New Zealand, the injured party
can seek compensation. For a successful negligent claim, four essential requirements must be
proved by the plaintiff which includes:
 The liable party or defendant has a duty of care towards the plaintiff;
 That duty of care has been violated by the defendant;
 The harm occurs out of this violation of duty; and
 That harm is not too far (West, 2016).
The complainant must prove that a personal injury is caused to him to establish that there
is a duty of care. The duty to take care applies to those circumstances which are recognized by
law. The defendant will need to pay damages to the plaintiff if he refuses to take care of the
injury. The Caparo test as explained in the Caparo Industries Plc vs. Dickman [1990] 2 AC
605 case shows the existence of this duty. The test consists of three steps: a rational foresight of

2115.211 BUSINESS LAW
the damage caused, a proximate relationship and it will be just, fair and rational to impose the
duty of taking care of the defendant.
Finally, to prevail in the argument for negligence, the last part which needs to be verified
is the remoteness of the injury to the claimant. The well-known Wagon Mound No. 1 [1961] AC
388 stated that an infringer can only take responsibility for the inevitable loss. If the loss faced
by the plaintiff can be predicted, then the defendant needs to pay the entire loss. The same
decision is upheld in the Mainguard Packaging Ltd. vs. Hilton Haulage Ltd. [1990] 1 NZLR
360 case.
Application
In this given scenario, due to the reckless driving of Bart, an accident took place between
Bart and Lisa and as a result the entire cargo-carrying eggs worth $ 10000 on behalf of the
Millhouse Bakery Ltd. was destroyed. This incident also affected the production of the bakery
and the shooting of a documentary.
However, by applying the rule of Donoghue vs. Stevenson [1932] AC 562 case, it can be
said that Bart owed a duty of care towards Lisa.
By applying the rule of Caparo Industries Plc vs. Dickman [1990] 2 AC 605 case, it can
be said that in this case there exists a rational foresight of the damage caused, a proximate
relationship and it will be just, fair and rational to impose the duty of taking care on Bart.
By applying the case of Mainguard Packaging Ltd. vs. Hilton Haulage Ltd. [1990] 1
NZLR 360 it can be said that the interruption in production is foreseeable but the suspension of
documentary shooting was not.

3115.211 BUSINESS LAW
Conclusion
Therefore, Bart is liable to pay damages for the following loss suffered by Milhouse
Bakery Ltd.:
i) $10000 for the loss of eggs;
ii) $35000 for the loss of production;

4115.211 BUSINESS LAW
Reference
Caparo Industries Plc vs. Dickman [1990] 2 AC 605
Donoghue vs. Stevenson [1932] AC 562
Mainguard Packaging Ltd. vs. Hilton Haulage Ltd. [1990] 1 NZLR 360
Wagon Mound No. 1 [1961] AC 388
West, A. (2016). Defining Accidents in the Air: Why Tort Law Principles Are Essential to
Interpret the Montreal Convention's Accident Requirement. Fordham L. Rev., 85, 1465.