LAW504 Business Law: Negligence Claim Analysis and Case Review

This business law assignment provides a detailed analysis of a negligence suit, focusing on the elements required to establish liability. It examines a case scenario involving contaminated fuel and its impact on various parties. The analysis applies legal principles such as duty of care, breach of duty, causation, and remoteness of damages, referencing key case laws like Donoghue v Stevenson and Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd. The assignment concludes that White Ltd can file a negligence suit against Sam, while other parties cannot hold Sam liable due to remoteness of damages or voluntary assumption of risk. The solution includes a comprehensive bibliography of relevant legislation, cases, and academic resources. Desklib offers more solved assignments and study resources for students.

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Business Law Assignment

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Answer
Issue
Whether a suit for negligence can be filed against Sam and who can file it?
Law
The law of negligence prevents a person from taking or not taking any action which could
result in causing harm to another party. It is referred to failure of a duty by a person that
resulted in causing harm to another party. A party who suffered any harm or loss due to
breach of duty of another party can claim for damages from the party based on the law of
negligence. In this context, Donoghue v Stevenson (1932) AC 562 case is important. The
claimant filed a suit against the defendant to claim damages for the negligence (Cornock,
2011, p. 21). The claimant suffered personal injury because the drink he ordered from the
café of the defendant had remains of a dead snail which negatively affected the health of
the claimant. The court accepted the claim by providing that a duty of care was owed by the
student towards his customers which was breached and due to such breach the claimant
suffered loss. Thus, the court allowed the claim of the claimant for damages. In this case,
the court provided the neighbour test which can be understood from section 5B (1) of the
Civil Liability Act 2002 (NSW) (CSU LAW504 Modules, 2018, Topic 3).
This section provides that there must be reasonable foreseeability of the risk based on
which any reasonable person would have taken actions to prevent the loss of another party.
The court gave similar views in the judgement of Perre v Apand (1999) 198 CLR 180. The
duty which is owed by the party must be breached in order to claim for damages (CSU
LAW504 Modules, 2018, Topic 3). Without breaching of a duty of care, a suit for negligence
cannot be formed. Section 5B (2) provides provisions regarding this matter. This section
provides that the court should evaluate factors including the likelihood of harm, seriousness
of injury, social utility and cost and efforts to prevent the harm by not breaching the duty of
care. In Bolton v Stone (1951) AC 850 case, the court provided that probability of harm is
necessary to be analysed before allowing a claim for negligence. In Latimer v AEC Ltd (1953)
AC 643 case, the court provided that the party breached his/her duty of care if he/she failed
to take reasonable actions towards protecting another party (Luntz et al, 2017). Another

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factor which is required for suit of negligence is causation of the harm as given under
section 5D (1).
The law provides that loss suffered by a party must be direct cause of the negligent action
taken or not taken by the defendant. The ‘but for’ test is used by the court to identify
whether the cause of harm was the actions of the defendant that was given in the case of
Cork v Kirby Maclean (1952) 2 ALL ER 402. Finally, remoteness of the damages suffered by a
party is evaluated by the court to allow the damages for negligent action (CSU LAW504
Modules, 2018, Topic 3). The damages which are too remote cannot form part of a
negligence suit as given in the judgement of Overseas Tankship (UK) Ltd v Morts Dock &
Engineering Co Ltd (1961) AC 388. Although the party who suffers damages due to
negligence can claim for compensation, however, the voluntary assumption of risk principle
provides an exception to this rule. As given under section 5G, parties cannot claim damages
for obvious or inherent risk suffered by the party. The court also provided in Overseas
Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd case that damages which are
foreseeable kind are only liable for damages and injury which is too remote is not liable for a
claim of damages (CSU LAW504 Modules, 2018, Topic 4).
Application
In the given case study, due to Sam’s negligence, contaminated fuel is filled into the aircraft
of White Ltd, Blue Ltd and Green Ltd. Due to contaminated fuel, the aircraft of White Ltd
was involved in an accident due to which the company suffered a loss of $1 million. A duty
of care was present which was breached due to the negligence of Sam. As per the accident
report, the cause of the accident was contaminated fuel, thus, Sam is liable to pay damages
to White Ltd. The loss suffered by the owner of Mercedes Benz is too remote, and it was not
foreseeable, thus, he cannot hold Sam liable for his damages. Sam told the pilot of Blue Ltd
not to fly his aircraft based on which he prevented a bigger disaster. Due to the prevention
of risk and fulfilment of duty of care by Sam, he is not liable towards Blue Ltd. He is also not
liable towards the customer who suffered a loss of $250,000 since the damages were too
remote. Lastly, Sam asked the pilot of Green Ltd not to fly his aircraft; however, he ignored
his warning and still flies his aircraft. Thus, in this scenario, Sam is not liable towards Green
Ltd based on the voluntary assumption of risk.

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Conclusion
Based on the above observations, a suit for negligence can be filed by White Ltd against
Sam. Other parties cannot hold Sam liable for the loss suffered by them.

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Bibliography
Legislation
Civil Liability Act 2002 (NSW)
Cases
Bolton v Stone (1951) AC 850
Cork v Kirby Maclean (1952) 2 ALL ER 402
Donoghue v Stevenson (1932) AC 562
Latimer v AEC Ltd (1953) AC 643
Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (1961) AC 388
Perre v Apand (1999) 198 CLR 180
Books/Articles/On-line Modules
Cornock, M ‘A legal commentary on negligence’ (2011) 23(1) Paediatric Nursing 21.
CSU LAW504 Modules
Luntz, H, Hambly, D, Burns, K, Dietrich, J, Foster, N, Grant, G and Harder, S (2017). Torts:
cases and commentary, London: LexiNexis Butterworths.