Commercial Law Assignment: Negligence, Ethics and Compensation

This report provides a detailed analysis of a commercial law case centered on negligence and ethical considerations. It begins by defining the core issue: advising Marcos on claiming compensation from Alice due to her negligent actions. The report outlines the rules of negligence, drawing from Australian tort law and landmark cases such as Donoghue v Stevenson. It explains the essential elements of negligence, including duty of care, breach of duty, proximate relation, and damage. The report delves into each element, citing relevant case law to illustrate key principles and legal precedents. It discusses the concept of duty of care, emphasizing the legal obligations of individuals and businesses, and examines what constitutes a breach of duty. Furthermore, it explores proximate relation, the necessity of a connection between the defendant's actions and the plaintiff's injury, and the concept of foreseeable damage. The report also addresses potential defenses that Alice could raise, such as contributory negligence and voluntary assumption of risk. Finally, it applies these legal principles to the case, analyzing Alice's actions and their consequences for Marcos, and concluding whether Alice's actions constitute negligence. The report highlights Alice's failure to act as a prudent business owner, her breaches of duty, and the resulting harm to Marcos.

Running head: PRINCIPLE OF COMMERCIAL LAW
Negligence and Ethics
Name of the student:
Name of the university:
Author note

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Table of Contents
Answer of part A........................................................................................................................2
Issue:.......................................................................................................................................2
Rules:......................................................................................................................................2
Duty of care:.......................................................................................................................2
Breach of duty:...................................................................................................................3
Proximate relation:.............................................................................................................4
Damage:.............................................................................................................................5
Defence:.............................................................................................................................5
Application:............................................................................................................................6
Conclusion:.............................................................................................................................7
Answer to part B........................................................................................................................8
(a)............................................................................................................................................8
(b)...........................................................................................................................................8
c).............................................................................................................................................9
Reference:................................................................................................................................10

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Answer of part A
Issue:
Advice Marcos regarding the scope of claiming compensation from Alice under the
negligent act is the main issue of this case.
Rules:
An ordinary person has certain reciprocal duties that he has to perform. When he
fails to perform the same, he is stated to do negligent act. In Australia, negligence is a part of
the Tort Law (Martin 2016). One of the most remarkable cases on the negligence is
Donoghue v Stevenson where the essential elements of negligence have been described. It
has been stated by the court that the acts of the person must meet all the requirements stated
under:
 The defendant has certain duties to the victim;
 The defendant has failed to perform his duties like a prudent man should do;
 The negligent act has caused a damage to the victim;
 The damage is not foreseeable in nature.
Duty of care:
An act will be termed as negligence on the fulfilment of above noted facts. Duty to
take care denotes legal duty. In the case of Donoghue v Stevenson, it has been observed that
the manufacturer had failed to perform his duty to serve good quality of product and the
consumer get sick due to such carelessness. This caused great physical and mental damage to
the consumer. The court observed that the manufacturer is legally bound to provide good
products and owe a duty to the consumer.

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In case of Grant v Australian Knitting Mills Ltd (1935) AC 85, the plaintiff had
developed certain skin disease after buying the product of the defendant. It was examined and
found that the cloths are contained of excessive sulphates. The court was pleased to pass its
judgment against defendant as he failed to take reasonable care for the products and that
caused serious damage to the plaintiff.
Breach of duty:
The second important element of negligent act is the breach of duty made by the
defendant during their ordinary course of business. In McHale v Watson (1966) 115 CLR
199, two children were playing and by the careless act of the defendant, plaintiff had lost his
eye. It was held that though both the plaintiff and defendant were minor and defendant had
not intentionally did the wrong act, he should be cautious in his part and he had failed to act
like a prudent person and therefore, the plaintiff can claim for damage from him. However,
the next important thing in case of negligent Act is the seriousness of the consequence
(Cavico et al. 2016). If the negligent act of the defendant has caused a great dilemma to the
plaintiff, the defendant will be liable to pay compensation to the plaintiff. Such damage
should be cropped up by the breach made by the defendant. In Rogers v Whitaker [1992]
HCA 58, the plaintiff was treated by the defendant and by the negligent act of the defendant,
plaintiff had lost his eye. It has been found by the court that defendant was failed to perform
his legal duties and such failure caused irreparable damage to the plaintiff. Similar situation
arose in the case of Woods v Multi-Sport Holdings (2002) 208 CLR 460. In that case, the
defendant had failed to warn the plaintiff regarding the eye injury and also failed to provide
necessary instruments so that the chances of accident can be avoided. It has been observed
that the defendant could not able to provide helmet to the plaintiff and consequently, the
plaintiff had sustained certain eye injury. Therefore, the acts of the defendant have been
considered as negligent act. In Waverley Council v Ferreira [2005] NSWCA 418, a child was

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died due to fall from roof and his family had filed a case against the building council. It has
been held that the building authority had failed to take proper care to the building that
resulted into the death of the child. The act of the council was treated as the negligent act by
the court.
Proximate relation:
It has been stated under the law that no one is allowed to do any act by which
another get injured unreasonably. If the duty to take care is being violated, the wrongdoer
will be held liable under the act of negligence. However, in Bourhill v Young 1943 AC 92, it
has been observed that if the duty to the plaintiff could not be proved, the defendant is not
under compulsion to pay compensation to the plaintiff. Therefore, it is important to determine
the relationship between the plaintiff and the defendant. In case of Anns v Merton London
Borough Council, the Court held that there must be a proximate relationship within the
defendant and the plaintiff. The principle of proximity has also been established in the case of
the Sutherland Shire Council v Heyman (1985) HC. Proximity denotes the nearness or
closeness. Employee and employer relationship, manufacturer and consumer relationship,
driver and customer relationship can be treated as proximate relationship (Goldberg, Sebok
and Zipursky 2016). In all these cases, the related persons owe certain reciprocal duties to
others. Foreseeable nature of the damage is an essential element of the proximate relationship
(Cusimano and Roberts 2016). If the damage is not foreseeable, the defendant will not be
held liable for damage. In Bourhill v Young 1943 AC 92, there was no proximate
relationship in between the plaintiff and the defendant and the damage caused by the
defendant was not foreseeable in nature. Therefore, the court held that the defendant is not
liable to pay any compensation to the plaintiff.

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Damage:
In case of a claim under negligence, the victim must have to prove that the
negligent act of the defendant has caused serious injury to him. The injury could either be
physical or mental or property related. In Chappel v Hart [1998] 1 HCA 55, a surgeon had
failed to comply with all the necessary duties and that cause serious damage to the plaintiff.
Further, in the case of Donoghue, it has been observed that the negligent act of the
manufacturer had caused serious physical and mental damage to the plaintiff. However, it
should be borne in mind that the damage must be foreseeable in nature. It has been held in
Overseas Tank ship (UK) Ltd V Morts Dock & Engineering Co (The Wagon Mound)
[1961] AC 388 that if the damage is not foreseeable, the defendant will not hold responsible
for anything.
Defence:
On the other hand, Alice may approach certain defence before the court. She can
raise the provision of contributory negligence and voluntary assumption of risk. Where in a
case, the plaintiff is also liable for his injury; the defendant can defend him under this
provision. In this case, the defendant is not bound to pay all compensation to the plaintiff. For
an instance, if a drunken man hire a taxi and aboard in it after knowing that the driver of the
car is also drunken and if the car meet with an accident, the plaintiff could not ask for the
entire compensation as he is partly liable for the injury and he had a knowledge about the
drunkenness of the driver. The provision of contributory negligence has been mentioned
under section 23 and section 24 of the Civil Liability Act 2003 (QLD). According to section
23 of the Act, besides analysing the breach of duty made by the defendant, it is also necessary
to point out whether plaintiff had done his portion of duties successfully or not (Cusimano
and Roberts 2016). Like the defendant, plaintiff has also certain reciprocal duties to the
defendant. Defendant should take all the precautions to avoid the accident. If he fails to do

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the same, he will be held liable for the damage partly and his acts will be treated as
contributory negligence. Butterfield v Forrester is the case where the principle of
contributory negligence has been established. In this case, a person was collided with a pole
and sustained injury. In the trial, it has been held that the speed limit of his car was high and
he had not seen the pole and sustained injury. Therefore, he had failed to comply with his
portion of duties. In the case of March v Stramare Pty Ltd (1991) 171 CLR 506, it has been
observed that defendant had parked his car in the middle road and plaintiff was collided with
the car. However, it has later been known that plaintiff was drunk and exceeds the speed limit
of his car. Therefore, he had lost his control and rammed the car of the defendant and
sustained injury. Therefore, plaintiff is also partly responsible for his injury and could not
claim entire damage from the defendant.
On the other hand, Alice can defend her under the provision of the voluntary
assumption of risk. It has been observed that if the plaintiff knew that certain accident may
cause to him, and he choose to continue with the act irrespective of these causes and
sustained injury, plaintiff could not ask for entire damage. For instance, a person is watching
motor cycle race knowing the fact that accident may cause and he can be injured by the same
and still choose to watch the race. If he sustained any injury due to this, his acts will be come
under the purview of voluntary action of risk.
Application:
In this case, it has been observed that Alice had started a business where she had
provided poor service to the customers. The boat she used for the business is of cheap quality
and allowed the boat to sail in the sea when it was overcrowded. The floor of the boat was
slippery and Marcos, a customer of Alice, was fallen down due to this. He had sustained
certain injury due to this. Additionally, when Marcos had sustained injury, instead of taking
him to the hospital, Alice had continued the sailing and the condition of Marcos had

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deteriorated. In this case, it is clear that the acts of Alice were not prudent and she had failed
to perform the legal duty of an entrepreneur. Alice should have to take all the proper care to
her customers and must make sure that all the requirements of the business have properly
been checked. However, she had failed to meet all the important criteria of her business and
failed to act like a prudent man. It has been observed that the boat she occupied has a total
seat of 20 people, but she allowed more that 20 person in the boat. She had failed to cover the
entire floor of the boat with mat and applied paint on the rest of the floor and the floor
became slippery due to this. When Marcos was failed to wear proper shoes for the ride, she
should have to stop him as per the business requirement. However, she had not taken any
such steps for her business and Marcos had to suffer loss for that. According to Donoghue’s
case, the act of Alice had met all the essentials of negligence and according to Roger’s case;
the consequence of the breach of duty has created a serious impact on Marcos. According to
Oveido, failure to perform proper duty is termed as negligent act (Oviedo 2016).
However, Alice can defend her case under the parlance of contributory negligence
and voluntary assumption of risk. The website, from where Marcos booked his ticket, certain
facts was mentioned such as wearing close shoes. However, he had failed to wear the same
and wishes to continue his journey. The accident can be avoided if Marcos had complied with
all the requirements. Therefore, he can be held liable under the contributory negligence.
Concurrently, after came into the knowledge that close shoes are important for the ride, he
had not taken any steps and went to the ride without wearing the proper shoes. This act can
be treated as voluntary assumption of risk. Therefore, Alice can defend her case on the basis
of this.
Conclusion:
Therefore, it is advised to Marcos that he can claim damage from Alice under the provision
of negligence.

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Answer to part B
(a) Certain ethical dilemmas can be observed in the acts of Alice. The nature of her act
has attracted the provisions of the rights approach.
The main reason of choosing the ethical approach is that the act of the human being
reflects the nature and character of the person (Ferrell and Fraedrich 2015). A person should
have to choose the right thing that is ethical in nature. Ethical action protects the moral rights
of an individual and therefore, it is important to take decisions carefully so that it may not
harm the rights and dignity of others (University, 2018). According to this approach, the acts
of the human being proved the level rationality within him and consider the moral duty of
that human (Shapiro and Stefkovich 2016). It has been learnt from the given case that Alice
had failed to take right decision. She had not chosen the right path and due to her
irresponsibility, damage had sustained by Marcos. Alice had failed to take rational decision.
(b) There are certain factors and tensions present in this case and that should be taken
into consideration by any reasonable and prudent person (Hunink et al. 2014). It is the
ultimate duty of the individual to take moral decision at every stage of his life. Ethical
decision making process needs trained sensitivity and one must handle the ethical situations
practically (Iphofen 2016). It is required to apply proper methods to take ethical decisions.
The factors needed to be balanced are:
 Whether the decision has caused any damage to others or not.
 Whether the decision is the most appropriate option or not.
 Whether the nature of the decision is efficient or not.
 Whether there is any alternative options or not.
 Whether the decision has treated all the people equally or not.
 Whether the impacts of the decision affects the whole community or not.

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c) The decision of Alice had attracted the right approach.
It is clear from the case that Alice needed to take prudent decision while dealing
with the customers and should have to show certain duty of care to the customers as well.
However, she had failed to do any of her duty and failed to take proper decision at the time
when Marcos got injured. At that time, she had to take Marcos to the hospital. However,
instead doing the same, she chooses to continue sailing in the sea. Such decision has attracted
the provision of the rights approach and it has been observed that Alice had failed to show
rationality and Marcos had to develop injury or that. A prudent person should not make such
decision like Alice. First of all, it was not right to allow Marcos when he had not complied
with the rules mentioned in the website. Further, when Marcos got injured, Alice should have
to stop finding whales and rushed him to the hospital for the sake of ethics and morality. She
should not allow excessive persons to the boat. Above all, she should make a proper plan for
her business.

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