Commercial Law Report: Negligence, Agency, and Vicarious Liability

This report delves into key aspects of commercial law, focusing on negligence, vicarious liability, and agency. It begins by defining negligence and outlining the essential elements required to establish a claim, including duty of care, breach of duty, and damages, with references to relevant case law such as Caparo Industries plc v Dickman. The report then contrasts negligence with the Consumer Protection Act 1987, highlighting the differences in proving liability. It also examines psychiatric injury, differentiating between primary and secondary victims, and explores the factors necessary for each to succeed in a claim. Furthermore, the report explains different types of authority within an agency relationship, including actual, apparent, authority through ratification, and authority through necessity. A case study is provided to illustrate the application of these legal principles, analyzing the liabilities of individuals and employers in a scenario involving negligence, vicarious liability, and various types of injuries, including economic, physical, and psychiatric.

Individual Report
Running Head: COMMERCIAL LAW 0
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Student’s Name

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Question 1
Negligence is an important aspect while studying tort law. It reflects a situation where a person
breaches his/her duty of care and fails to act like a responsible/reasonable person with respect to
another person to whom the duty of care was owed (Berg, 2019). To prove negligence in a
situation, some factors are required. These factors are mentioned hereunder:-
1. Duty of care: - This is the very basic requirement for negligence. The defendant is
required to owe a duty of care to claimant. If this duty would not be there then there will
be no question of negligence. Now to check whether a person owes a duty of care or not,
a decision given under many of the cases can be taken as a reference. Caparo Industries
pIc v Dickman [1990] 2 AC 605 plays an important role here. It was given in this case
that to held a duty of care three elements are required to be there. Firstly, there must be a
proximate relation sip between defendant and claimant. Secondly, the damages must be
foreseeable in a reasonable manner and lastly, it must be just and reasonable to levy the
duty of care to the defendant.
2. Breach of Duty: - This is another requirement to be successful in a claim of negligence.
This requirement says that defendant must breach the duty of care that he/she owe to
claimant. If the duty of care would not breach, there will be no issue of an argument
between the parties, hence it is an important requirement to prove negligence. Breach of
duty refers to a situation where a person fails to act reasonably and must bring the
claimant to a situation where the same can face an unreasonable risk of harm.
3. Damages: - The claimant must suffer from certain losses/damages due to a breach of
duty. The damages must be of nature that can be recognized by the law. Further, these

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damages must be a straight consequence of the breach of duty. Here this is to inform that
all the claimant need not face damages. Further nominal damages are sufficient to
establish a claim of negligence. It was given in the case of Barnett v Chelsea and
Kensington Hospital Management Committee [1961] that to check the causation, the
court takes help of “but for” test and determine whether damages would not have been
there but for defendant’s omission or negligent action.
Question 2
Similar to tort law, Consumer Protection Act also provides security to the consumer in those
cases where the provider of goods acts negligently. It put the strict liability on marketers,
importers, suppliers, and producers of goods which are defective and causes loss to consumers.
The main difference between protection provided under this act and protection provided under
negligence is that this act provides much greater protection to consumer in comparison to
protection provided under negligence. Different criteria are there to prove a claim for liability in
negligence as well as under the Consumer Protection Act 1987. As discussed above three
requirements need to be met in order to verify a claim of liability under negligence. These are the
existence of duty of care, reach of duty and damages to claimant out of such breach. In order to
discuss the same in context of Consumer Protection Act 1987, this is to state that following are
required to be there:-
 Defect: - The product must contain a defect. No matter what kind of product is this, but a
defect must be there as in case of the nonexistence of defect, no question of damages will
arise further.

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 Damages: - Only existence of a defect is not enough but the same must be of nature that
brings damages for the consumer. In other words, the consumer must suffer from
damages or losses because of the defect contained in goods.
 Relationship between damages and defect:- The damages incurred to the consumer must
be a direct result of the defect found in goods. It means if a consumer suffers from losses
but those losses are not a result of the defect, then a claim for liability cannot be
established under the subjective act.
 Defendant: - Defendant must be an importer, producer, marketer or supplier into EU
(European Union) of the product.
Question 3
Different kinds of losses can occur to a claimant under negligence. For instance economic losses,
physical injuries and psychiatric injury. There can be two types of victims can be there that may
suffer from psychiatric injury i.e. primary as well as secondary victims. Both kinds of victims
can initiate the claim against a defendant but for that, some factors need to exist in a case that is
mentioned as follow:-
 Primary victim:- These are persons who do not get injured physically by the defendant
but witness the incident of negligence and remain in reasonable fear of their own safety.
It was given in the case of Dulieu v White [1901] 2 KB 669 that means such kind of
victim remain in the physical zone of danger. It provided under the decision of Behrens
& ors v Bertram Mills Circus Ltd. [1957] 2 QB 1 that an actual psychiatric injury must be
there.

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 Secondary victims: - People, who do not remain in fear of their safety and also not get
physically injured by the defendant, are known as secondary victims. These people have
a relationship of love and affection with the main victim of the case and are present at the
accident site. It the case of Alcock v Chief Constable of South Yorkshire Police [1991]
UKHL 5, [1992] 1 AC 310, the court held that a relationship of proximity is required to
be there of the claimant with a person suffering harm. The person who claims to be a
victim of psychiatric injury is required to be present at an accident site or its aftermath.
Lastly, the event of the accident must be perceived by claimant directly or the immediate
aftermath.
Question 4
Different kind of authorities can be there under an agency relationship. Few common types of
authorities are mentioned hereunder:-
 Actual Authority:- As the name implies it is a situation where a principal provides
express authority to an agent. Such authority can be provided in oral as well as in written
mode. Further, this authority can be divided into two subcategories namely express
authority and implied authority. The prior authority is the one which a principal explicitly
gives to agent whereas implied authority is the one which is there to execute the acts
mentioned under expressed authority.
 Apparent Authority: - This is an authority that a principle does not provide in actual to
the agent but it exists because of principle shows by his/her conduct to the outsider that a
person is entitled to acting as an agent. It is also known as an ostensible authority

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 Authority through ratification:- This authority exists in those cases where an act is
already done on behalf of a person (principal) by another person (agent) who had neither
actual nor apparent authority, but later on principal ratifies such conduct. On ratification,
such authority comes into existence.
 Authority through necessity:-When a person do something regarding the property of
another person because of the existence of imminent jeopardy, then such person is known
as an agent under necessity and his/her authority is known as Authority through necessity
(Eaa.org.hk, 2019).
Question 5
Issue
What will be the liability of Will and his employer with respect to Peter, Mary, and Smith.
Rules
As given in the case of Caparo Industries pIc v Dickman to establish a claim of negligence, a
duty of care must be there on the part of the defendant. When a person fails to act as a sensible
person and due to this another person suffers from a loss then such another person can bring a
claim against the person who failed to act reasonably. Economic losses, physical injuries, and
psychiatric injury are the kind of losses that people can suffer with out of a case of negligence. In
cases of psychiatric injury, many victims can be there. These include primary as well as a
secondary victim. Dulieu v White is an important case to study here. In this case, it was held that
to prove him/herself as as the main victim of psychiatric injury, a person must have fear of
his/her own safety and because of the same must face psychiatric harm.

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In addition to the primary victim, another victim can also be there that is known as a secondary
victim. Primary victims remain in the physical zone of danger. It was provided in the case of
Page v Smith [1996] 1 AC 155 that such victims are only required to prove that being in a
physical danger zone they could suffer from a physical injury. It is not required to prove whether
the psychiatric injury was foreseeable or not (E-lawresources.co.uk, 2019).
Further, secondary victims are people who do not remain in the physical zone of danger but
witness an incident and get influenced by the same which further affect their psychiatric
condition in an adverse manner. It was given in the case of Alcock v Chief Constable of South
Yorkshire, that a close tie of affection and love must be there with the primary victim. Further the
same must witness an incident, must get shocked and must be suffered from a psychiatric injury
because of such shock. If all the conditions are there, then a secondary victim can get success in
his/her claim.
Vicarious liability is another concept of Tort Law where an employer can be held accountable
for the negligence conducted by of his/her employees that occur in the due course of service. It
means an employer is liable for the tort conducted by employees. Here this is necessary to
mention that employer will only be responsible for those acts that are authorized by him.
Application
In the case presented hereby, many victims are involved. The first victim is Peter who met an
accident with a will. Will was driving the motorcycle very fast. Applying the provisions of tort
law, Will owed a duty of care to Peter as he was required to act similar to a reasonable person.
Further, he failed to do so as he was driving very fast and because of his fast driving, Peter met

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an accident. At last, Peter suffered from a physical injury out of the result of the accident. As all
the requirement set under Caparo case are satisfied here hence, Will seems to be held liable
towards Peter. Peter lost the contract and became unable to pay on work and hence he can ask
damages for economic loss as well as for physical injury.
Secondly, Mary, Peter’s cousin faced this incident and lost her employment as she became
incapable to focus on the work after being witness by the accident. She was walking along with
pavement. As given in the case, the accident happened around the corner of the road. Applying
the provisions of Page v Smith, Mary seems to be entitled to claim the damages as a primary
victim as she existed in the physical zone of danger and it was foreseeable that physical harm
could occur to her. This is enough to establish negligence and She can sue Will for psychiatric
injury.
Smith is the secondary victim of the case as he viewed the accident but was not in the physical
zone of danger. He will not be successful in his claim as he had no tie of love and affection with
neither Peter nor Mary. As he does not satisfy the conditions stipulated under Alcock v Chief
Constable of South Yorkshire, he cannot sue Will.
As Will is liable for Peter and Mary, his employer will be responsible to pay damages under due
to the principle of vicarious liability. Mr. Will was working under the given authority and
accident happened while performing the duty hence being his employer, Sam Speedy is liable to
pay damages to Peter and Mary.
Conclusion

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Will and his employer are liable towards Peter and Mary but not towards Smith as he had no
relationship of love and affection and do not satisfy the requirement of law to be a valid
secondary victim.

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References
Alcock v Chief Constable of South Yorkshire Police [1991] UKHL 5, [1992] 1 AC 310
Barnett v Chelsea and Kensington Hospital Management Committee [1961]
Behrens & ors v Bertram Mills Circus Ltd. [1957] 2 QB 1
Berg,D. (2019) Negligence and the "Reasonable Person" in a Personal Injury Case. [Online]
Available at: https://www.lawyers.com/legal-info/personal-injury/personal-injury-basics/who-is-
the-reasonable-person-in-a-personal-injury-case.html [Accessed on 27th May 2019].
Caparo Industries pIc v Dickman [1990] 2 AC 605
Consumer Protection Act 1987
Dulieu v White [1901] 2 KB 669
Eaa.org.hk. (2019) Formation of agency. [Online] Available at:
https://www.eaa.org.hk/en-us/Information-Centre/Publications/Agency-Law/-3-Formation-of-
agency [Accessed on 25th May 2019].
E-lawresources.co.uk (2019) Page v Smith [1996] 1 AC 155 House of Lords. [Online] Available
at: http://www.e-lawresources.co.uk/Page-v-Smith.php [Accessed on 25th May 2019].
Page v Smith [1996] 1 AC 155