Legal Analysis: Contract and Tort Law - Duty, Negligence, Liability

This essay delves into two distinct legal scenarios, applying principles of contract and tort law. The first scenario examines Peter's potential liability under the tort of negligence for injuries sustained by several individuals due to debris from his excavation site, focusing on the concept of duty of care established in landmark cases like Donoghue v Stevenson. The analysis considers the foreseeability and proximity of harm to each individual, distinguishing between direct and remote causes of injury. The second scenario assesses the nature of Sandy's financial advice to Mike and whether it constitutes negligent misrepresentation, considering vicarious liability and the intention to create a legally binding contract. The essay contrasts social interactions with legally enforceable agreements, referencing cases like Ermogenous v Greek Orthodox Community of SA Inc and Balfour v Balfour, to determine if a duty of care existed between Sandy and Mike. Ultimately, the essay concludes that Peter is liable to Thomas under tort law, while Sandy and her firm have no liability towards Mike.

Running head: CONTRACT AND LAW
Contract and Tort
Name of the Student
Name of the University
Author Note

1CONTRACT AND TORT
QUESTION 1
Issue:
The extend of Peter’s duty of care must be established and evaluated. There are four
individuals (Thomas, Ella, Ben and Joe) who have been directly or remotely injured due
to the debris left around Peter’s excavation site. Once the other details are determined
Peter’s liability to the others under the Tort of Negligence can be deduced.
Law:
The tort of Negligence arises in instances where there is a duty of care, the breach of
which causes an injury, harm or damage. The breach and the injury must be closely
linked to an act to amount to negligence.
The scope of duty of care has been established in the monumental case of Donghue V
Stevenson which also converted the principle of love thy neighbor into a legal
philosophy. Neighbor here implies any individual who would be directly affected by
one’s actions. The same has been reinstated in the Australian case Grant V Australian
Knitting Mills which extended the concept and scope of duty. The English case Caparo
Industries Pic V Dickman gives the tests that helps determine duty of care and the
subsequent harm, which must be reasonably foreseeable. Bolton V Stone (1951) and later
Roads and Traffic Authority of NSW v Dederer (2007) have ensured that duty of care
is not owed if the harm caused is not reasonably foreseeable.
Plunkett has pointed out that negligence is not an all-encompassing concept and has
limited application. It is limited to establishing a duty of care in the absence of which the
injury becomes damnum absque injuria.
Application/Defense:

2CONTRACT AND TORT
Thomas gets injured as a result of the stones and debris from Peter’s site.
Ella has a nervous breakdown on seeing Thomas’s cut.
Ben fell off his bike and broke his hand when some of Peters dirt was on the pavement.
Joe also got a few scratches and bruises on account of the debris from the site and later
contacted a rare disease.
The injuries caused to Thomas, Ben and Joe to a certain extend can be said to arise as
a result of Peter’s actions by applying the reasonable man yardstick however, Ella has no
cause of action against Peter. We can also apply the case of Jaensch V Coffey to
reestablish that the incident and Ella’s injury are too far removed to fall within Peter’s
duty of care. Additionally, applying the reasonable man test the injury to Ella could not
be reasonably foreseen as her reaction was a result of Thomas’s cut and not the debris on
Peter’s site.
In the other instances it might be difficult to establish with confidence the relation
between the breach of duty and the harm. Ben’s actions could amount to contributory
negligence as it is not certain if he fell as a result of the dirt collapsing or because of his
own fault. If the former is true then Peter’s duty of care extends to Ben, as it can be
reasonably foreseen that an individual would fall off their scooter due to obstructions and
stones on the road. However, if the latter is true and Ben fell as a result of his own
mistake, but his arm broke as a result of the debris and stones from Peter’s sit, Peter is not
entirely responsible for the injury caused as Ben has contributed to his own injury.
The initial few scratches to Joe might be attributed to Peter’s negligence however the
contraction of the bacteria being a removed and remote cause cannot be linked to the
accident. In the same breath the basic test to determine a connection between the breach
and the injury is to establish if such an injury would have occurred ‘but for’ or without

3CONTRACT AND TORT
the breach of the duty, this does not however give conclusive results as there could be
several cause of damage March v Stramare (E & MH) Pty Ltd 1991. Hence the next
test to follow is a ‘Whether and Why’ test in which the party assuming the breach of duty
will be held accountable for the increased probability of harm that his actions have
caused.
The defense available to Peter can be applied for Ella, Ben and Joe the injuries to
Thomas however are unequivocally a direct cause of the breach of his duty of care. If Ben
can establish that his fall was a direct result of the stones and debris from Peter’s site then
the remedy from tort of negligence would apply to him too.
Conclusion/Remedy:
As established through the case of Donoghue V Stevenson Peter does owe a duty of
care to all the pedestrians and others that come in contact with his excavation site, it is his
responsibility to ensure that no one is injured as a direct result of his action. His liability
extends to the harm that is foreseeable and proximate.
Therefore, his duty of care is not absolute and do not extend to all who suffer an
injury as a direct or indirect result of his failure to cover the excavation site or take
adequate safety measures. Ella and Joe are prevented from taking legal action against
Peter by applying the principle of reasonably foreseeable injury and the decided cases.
The extend of Peter’s liability towards Ben could range from Contributory Negligence to
no liability. Thomas however can hold Peter liable under the tort of Negligence for breach
of duty.

4CONTRACT AND TORT
QUESTION 2
Issue:
The nature and impact of Sandy’s advice has to be evaluated against concepts of
vicarious liability and intention of entering into a legally binding contract. Sandy and
Mike being friends, their interactions do not amount to a contract. However, Sandy is a
trainee at an audit firm and has given Mike financial advice similar to that within the
scope of her work and training.
Law:
Vicarious liability is a concept that covers all of Sandy’s actions done on behalf of
and as an extension of her training with Peters & Co. As a result of the nature of
relationship between the Company and Sandy being similar to that of employer and
employee the former is liable for all the actions of the latter done in their professional
capacity and within the course of the employment. This liability extends even when the
employee or trainee has acted without obtaining specific permission or approval for such
act or omission. In such relations both the employer and employee are jointly and
severally liable for negligent acts of the employee done in the course of their employment
(Australian Legal Terminology, 2013).
The intention behind the interactions between two individuals is paramount. When
two individuals intend to have a social contract and do not expect a legal relation to arise
out of such an engagement, no contract arises. As established in Ermogenous v Greek
Orthodox Community of SA Inc it is essential to determine if parties wish to enter into
a social or a legally binding contract. This doctrine rests on the parties’ desire to be bound
by law and is one of the essential elements of a valid and binding contract as established
in Balfour V Balfour establishing.

5CONTRACT AND TORT
Negligent misrepresentation as per Hedley Byre & Co. V Heller & Partners arises
when an expert within their professional capacity provides incorrect and misleading
advise that causes a financial loss to their client.
Application/Defence:
The responsibility that Mr. Morris and Peters & Co. owes for all their financial advice
is to their clients. The contract agreed upon with their clients protects the clients against
negligent misrepresentation or misleading advice that prove to be detrimental to them.
Any advice or audit report given by Sandy within the course of employment binds Peter
& Co through the principle of vicarious liability. However, the nature of the agreement
that has been entered into between Mike and Sandy in no manner amount to a legally
binding contract.
Mike and Sandy had a conversation where Sandy gave Mike financial advice, such an
advice was informal in nature and not within the scope of Sandy’s course of employment.
A contract arises when a party agrees to an offer and as a result intends to and creates a
legal obligation and relationship (Poole, 2016). In the given scenario at no point does
Mike imply that he desires to enter into a legal relationship with Sandy. Sandy has no
duty towards Mike as the advice was given as part of a general conversation and not in
lieu of a professional responsibility or duty. Negligence of misrepresentation only exists
when a valid contract and duty of care exists.
Conclusion/Remedy:
As the advice was given in a social and not a legal capacity the same does not make
Sandy liable under tort of negligent misrepresentation. At no point of the conversation
was a contract initiated giving rise to any duty, right, obligation or liability. As Sandy is
not liable to Mike for the information and advice given and all conversations happened

6CONTRACT AND TORT
independent of Sandy’s employment and within a personal sphere, Peter & Co have no
liability towards Mike.

7CONTRACT AND TORT
Reference List:
Australian Legal Terminology 2013 Vicarious Liability
Balfour V Balfour (1919) 2 KB 571
Bolton V Stone AC 850, (1951) 1 All ER 1078
Caparo Industries Pic V Dickman (1990) UKHL
Donoghue V Stevenson (1932) UKHL 100
Ermogenous v Greek Orthodox Community of SA Inc 9 (2000) HCA 8, (2002) 209 CLR
95, High Court.
Grant V Australian Knitting Mills (1936)
Hedley Byre & Co. V Heller & Partners (1964) AC 465
Jaensch V Coffey (1984) 155 CLR 549
March v Stramare (E & MH) Pty Ltd 1991
Plunkett, J., 2018. The Duty of Care in Negligence. Bloomsbury Publishing.
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Roads and Traffic Authority of NSW v Dederer (2007) 324 CLR 330