Business Law and Ethics: Tort of Negligence Case Study and Analysis

This report presents a detailed analysis of a business law and ethics case involving Extortionate PLC and a customer named Samantha. The case revolves around an incident where Samantha, while visiting the bank, suffered injuries due to a misplaced carpet, leading to financial loss. The report explores the application of the Tort of Negligence, examining the elements of duty, breach, causation, and harm. It investigates the bank's liability, considering the exclusion clause and the history of similar accidents. The analysis delves into the rules applicable to the case, including the landmark case of Donoghue vs. Stevenson, and the policies of compensation. The conclusion determines that the bank is liable under the Full Compensation Policy and that the exclusion clause does not absolve them of their negligence. The report highlights the significance of business law and ethics in corporate settings and underscores the importance of adhering to legal and ethical standards to avoid repercussions. The report is a past paper available on Desklib for students.

BUSINESS LAW
AND ETHICS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Overview of the case...................................................................................................................3
Overview of the overall issue......................................................................................................3
Rules applicable to the case.........................................................................................................4
Application of Law of Tort..........................................................................................................5
Conclusion on the basis of application of law.............................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business Law consists of all the laws as well as legislations that are applicable to an organisation
and need to be complied by it in order to avoid legal repercussions. Besides this, ethics is that
branch of philosophy which deals with the right and wrong conduct. Business law and ethics
play a crucial role in corporate context as they tend to collaboratively define the manner in which
a company needs to function. Tort of Negligence is a law which is applicable in the case
whereby the 4 elements of negligence are proved (Law, 2019). This provides defence to the party
who has suffered any kind of financial or non financial loss owing to the course of action
executed in negligence by others. The following essay is based upon a case taken place between
a customer and a bank. Tort of Negligence is discussed in a detailed manner in order to find out
solution to the issue raised in the case.
MAIN BODY
Overview of the case
The case is presented between a bank and one of its customers. The parties are named
Extortionate PLC and Samantha respectively. As per the case, Samantha is found to be visiting
the bank for the purposing of raising a loan for her upcoming business. While on her way back to
home, she trips from the stairs because of a carpet that is misplaced near the stairs. This causes
her certain injuries in her wrist as well as hand, giving rise to the emergence of unwanted
financial loss/ burden upon the party. The misplacement of the carpet has in the past also resulted
in causing a number of accidents to the customers visiting the bank. The bank had already
stipulated an exclusion clause which limits the liability of bank towards any personal injury or
damage being caused to the customers, while making use of their facilities. This clause is
displayed in the business hall so that every customer or associate coming to the bank premise can
have a reading of it.
Overview of the overall issue
The overall study conducted over the case raise the most important question which is
regarding the main defaulter in this case. The issue will be dealt in the later part of the essay
through the application of provisions of Tort of Negligence. This law will be applied because
bank has shown extensive negligence towards the placement of carpet. This can be said on the
basis of the fact that multiple accidents have occurred in past times also because of the carpet

and the bank has still not responded to it in any manner. The provisions of the law of tort will
provide assistance in finding out the actual liability of the defaulter, Extortionate PLC.
Rules applicable to the case
The Tort of Negligence is considered to be a wrong which is suffered by an individual owing to
the careless act of another party in terms of avoidance of a foreseeable risk (Simmons, Zillman
and Furbish, 2019). The law related to negligence has over the course of time undergone
evolution and thus now also deals with the conditions which emerge amidst 2 or more than two
parties in an instance whereby a contract (implied or written) does not exist between them. The
landmark case in relation to the law of tort is acknowledged to be Doneghue vs Stevenson (1932)
AC 562. As per this case, it was put forth that regardless of the absence of a contract, implied or
express, a course of action for negligence can effectively succeed (Epstein and Sharkey, 2020).
In the case claimant put forward the argument that she was entitled to duty of care even if
deficient good (ginger beer bottle having a snail) was bought not by her but her friend with no
contract existing between the producer and person undergoing the damage. On the basis of this
case, a principle evolved that every person has a duty of care to someone who could be affected
by their act or omission. Such Duty of Care is acknowledged to be the foremost element that
needs to be established in case a claim has to succeed.
There are 4 elements which act as prerequisite for the presence of negligence in any case.
These are identified to be Duty, breach, cause and harm. In relation to duty, it is essential to
take into account the roles as well as responsibility held by an individual that must be complied
with along with the outcomes that would arise as a result of non compliance. The second
condition is that duty must have been breached (Cypher, 2020). The third condition for proving
the prevalence of negligence is cause which implies that the duty breach should result in placing
negative impact upon the plaintiff in the form that they must be harmed. The last condition is
harm which states that the plaintiff intending to file the case should have undergone suffering as
a result of the course of action undertaken by the defaulter.
Now, the most important part of application of any law to a case is the ascertainment of
compensation or liability for the defaulter. In this relation, it has been identified that there are
mainly 3 policies of compensation as per the Law of Tort. These are named Full Compensation
Policy, Half Compensation Policy and No Compensation Policy (Stoyanova, 2019). In full

compensation policy, the defaulter being wholly engaged in committing the negligent act is
liable to pay full compensation to the party suffering damages. Under Half Compensation policy,
default occurs because of both the parties and thus only half amount of loss is compensated
(Abraham and White, 2020). The No Compensation policy as the name suggests provides that no
compensation has to be paid as they are denied the right to be compensated by the court. They
may file the case but are not entitled to compensation for losses borne by them.
Application of Law of Tort
The case presents Samatha to have undergone injuries because the bank showed careless
behaviour in relation to the placement of carpet. The case also presented that just like her several
individuals have prior undergone accidents due to the carpet. This was sheer careless conduct
shown on the part of the bank, Extortionate PLC. Further, the exclusion clause put forth by the
bank for the customers does not prevent the party from being liable to the individuals undergoing
injuries because of the misplacement of carpet. The negligence on the part of the bank has been
proved as the unethical/wrongful act justifies the presence of all the 4 elements that prove
negligence. Thus, the prevalence of negligence within the case of Extortionate PLC and
Samantha makes it a case that needs to be studied in virtue of Law of Tort.
Conclusion on the basis of application of law
On the basis of discussion done above about the case in the light of Tort of Negligence, it
is inferred that the bank having knowledge of the incidents caused because of the misplacement
of carpet should have placed it appropriately. This would have mitigated the occurrence of
accidents that were regularly taking place because of the carpet. The action done by the bank
falls under the category of negligence because it fulfils the 4 criteria that are essential to prove
negligence shown on the part of one or more parties. The application of Tort of Negligence
implies that the bank would have to compensate Samantha in accordance with the Full
Compensation Policy under the law. This means that Extortionate PLC would be paying 100% of
the amount that has been borne by Samantha in the form of financial loss because of the injuries
caused to her. Besides this, it has also been concluded that the inclusion of an exclusion clause
by the bank, Extortionate PLC, does not free it from the liability of being involved in negligence
for keeping the carpet inappropriately.

CONCLUSION
The information presented above exhibits the importance of laws as well as ethics within the
business settings. Both of them together provide aid to an organisation in gaining knowledge of
the desirable manner to conduct operations in accordance with the provisions of ethics and law.
In an instance whereby the firm is found to be breaching ethics or business law, it becomes guilty
of committing a crime and thus can be posed to severe consequences. Besides this, it is identified
that Tort of Negligence is applicable in all the cases whereby negligence is proved in the virtue
of presence of the 4 elements, namely, duty, cause, breach and harm. There are 3 main types of
systems of compensation applicable under the Tort of Negligence and these are recognised to be
Full Compensation Policy, Half Compensation Policy and No Compensation Policy.

REFERENCES
Books & Journals
Cypher, R.L., 2020. Demystifying the 4 Elements of Negligence. The Journal of Perinatal &
Neonatal Nursing, 34(2), pp.108-109.
Abraham, K.S. and White, G.E., 2020, March. Conceptualizing Tort Law: The Continuous (and
Continuing) Struggle. In Maryland Law Review (Symposium for Professor Oscar Gray),
Forthcoming.
Stoyanova, V., 2019. Common law tort of negligence as a tool for deconstructing positive
obligations under the European convention on human rights. The International Journal of
Human Rights, pp.1-24.
Simmons, J.H., Zillman, D.N. and Furbish, R.H., 2019. Maine Tort Law. LexisNexis.
Law, W.I.T., 2019. Introduction to Tort Law.
Epstein, R.A. and Sharkey, C.M., 2020. Cases and materials on torts. Aspen Publishers.