Business Law Assignment: Liabilities of Betapharm Ltd in Negligence

This assignment analyzes a business law case involving Betapharm Ltd, a pharmaceutical company, and its liability for a defective drug. The case explores the legal concept of negligence, examining the elements of duty of care, breach of duty, causation, and remoteness of damage. The analysis applies the ILAC method (Issue, Law, Application, Conclusion) to determine Betapharm's potential liabilities to various parties affected by the drug's side effects. The assignment considers defenses such as volenti non fit injuria and analyzes the application of legal principles from relevant case laws, including Donoghue v Stevenson and Caparo Industries Plc v Dickman. The conclusion determines the company's liability to specific individuals based on the facts presented and the application of legal principles.

Running head: BUSINESS LAW
BUSINESS LAW
Name of Student
Name of University
Author Note

1BUSINESS LAW
Table of Contents
Issue:................................................................................................................................................2
Rule:.................................................................................................................................................2
Application:.....................................................................................................................................4
Conclusion:......................................................................................................................................5
References:......................................................................................................................................6

2BUSINESS LAW
Issue:
The issue to be discussed is the potential liabilities possessed by Betapharm Ltd towards
the potential plaintiffs.
Rule:
The modern negligence law was introduced in the case of Donoghue v Stevenson [1932]
AC 562. Negligence refers to the tort resulting from the breach of duty that results into loss or
injury to the party to whom such duty is owed. In civil liability as per the Civil Liability Act 2002
(NSW), the aggrieved party can claim damages in the court of law. to place a negligence claim
successfully, the claimant is required to prove four major criteria; that the negligent party has a
duty of care, that he has breached it, that damage is being caused from such breach of duty and
finally the damage is not very remote (Goldberg, Sebok & Zipursky, 2016).
To prove the presence of duty of care, the claimant is required to show that a personal
injury is caused to him. Duty of taking care refers to the situations that have been recognized by
law. The event of failure to take care can make the defendant pay damages to the party injured.
The presence of such duty is given in the Caparo test formulated in Caparo Industries Plc v
Dickman [1990] 2 AC 605 case. The test involves three steps; that the foresight of the harm
caused was reasonable as entrenched in Home Office v Dorset Yacht Co Ltd [1970] AC 1004
case, that there is a proximate relation as observed in Bourhill v Young [1943] AC 92 and that it
will be just, fair as well as reasonable for imposing of the duty to take care on the defendant.

3BUSINESS LAW
Further, where the secondary victims who have suffered from psychiatric harm, it must
be shown that the 4 conditions given in the Alcock & ors v Chief Constable of South Yorkshire
[1992] AC 310 are satisfied. They are the presence of a close connection of love to the primary
victim, that he has seen the incident without any aid, that there is proximity to the incident or
event after result as seen in McLoughlin v O'Brian [1982] 2 WLR 982 and the psychiatric injury
have resulted from a shocking incident.
In order to prove that the other party has caused the breach of his duty to wards the
plaintiff, the objective test is used as seen in Vaughan v Menlove (1837) 3 Bing. N.C. 467. In this
test, it is seen whether the defendant can meet the level of reasonable man.
Causation part is usually determined by applying the test of ‘but for’ as enshrined in the
case of Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428. In this test, it is checked that
‘but for’ the defendant’s act, the claimant whether has suffered any loss. If the answer appears to
be affirmative, then defendant has no liability whereas if the answer appears to be negative the
defendant will be made liable. It is provided in the case of Chester v Afshar [2004] 3 WLR 927
also.
The last part to be applied to succeed in the negligence claim is to check the remoteness
of the damage caused to the plaintiff. The famous Wagon Mound no 1 [1961] AC 388 provides
that breaching party can only made responsible for the loss which can be foreseen. When the loss
suffered by the plaintiff can be foreseen, then he is liable to the full loss.
However, the defendant will not be regarded as negligent absolutely if the plaintiff agreed
to suffer the loss caused to him and had also consented to it. This is known as volenti non fit
injuria where it is seen that the plaintiff agrees to suffer the loss (Hogg, 2016). It can be used as

4BUSINESS LAW
defence by the defendant. The essential element of it is that the plaintiff must possess full
knowledge regarding the nature as well as extent of the risk as seen in the case of Wooldridge v
Sumner & Anor [1963] 2 QB 43.
Application:
From the facts of the given case it is seen that a latest drug is designed by the Betapharm
Ltd to provide remedy to cold. The drug has an active element called THX 1138 which is
supposed to have 0.1g of selladol. But the chief production officer made a mistake and the first
batch of the medicine has 1g of the THX 1138. Alice purchased a box of it and consumed one
tablet. After this, she felt cold she had one tablet. While he was driving home 30 minutes after
taking medicine, she suffered from dizziness as well as severe headache resulting to seizure that
causes crashing of her car. Due to this incident, she suffered injuries and lost one of his arms.
Thus from these facts, it is seen that the company has committed negligence towards Alice as all
the elements of negligence were present and thus liable to Alice for the losses suffered by her.
However, by applying the Alcock test, Bob will not be able to succeed if he claims
damages from the company as he did not fulfill the conditions given in the said test.
Again, after the company puts an advertisement to recall the drug by explaining its ill
effects and telling people not to consume it, Dan saw it. Inspite of knowing everything in detail,
he took one tablet. Thus he voluntarily took the tablet after knowing the risks to be incurred for
taking it. Hence, the pharmacy company can utilize the voluntary non fit injuria defence if he
makes a claim for damages. Further, Elizabeth can recover the loss from Dan personally.

5BUSINESS LAW
Conclusion:
The pharmaceutical company is liable to Alice only and not to Dan or Bon or Elizabeth.

6BUSINESS LAW
References:
Alcock & ors v Chief Constable of South Yorkshire [1992] AC 310
Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428
Bourhill v Young [1943] AC 92
Caparo Industries Plc v Dickman [1990] 2 AC 605
Chester v Afshar [2004] 3 WLR 927 also.
Civil Liability Act 2002 (NSW)
Donoghue v Stevenson [1932] AC 562
Goldberg, J. C., Sebok, A. J., & Zipursky, B. C. (2016). Tort Law: Responsibilities and Redress.
Aspen Publishers.
Hogg, M. A. (2016). Liability for unknown risks: a Common Law perspective. Journal of
European Tort Law, 7(2), 113-142.
Home Office v Dorset Yacht Co Ltd [1970] AC 1004
McLoughlin v O'Brian [1982] 2 WLR 982
Vaughan v Menlove (1837) 3 Bing. N.C. 467
Wagon Mound no 1 [1961] AC 388
Wooldridge v Sumner & Anor [1963] 2 QB 43.