BLAW204 Torts Essay: Negligence and Misrepresentation in Business

This essay delves into the realm of torts within the context of business law, specifically focusing on negligence and misrepresentation. It elucidates the core concepts of torts as civil wrongs and their implications for businesses. The essay meticulously outlines the elements required to establish negligence, including duty of care, breach of duty, causation, and damages, supported by relevant case laws such as Donoghue v Stevenson and Paris v Stepney Borough Council. It also explores the tort of misrepresentation, differentiating between statements of fact and opinion, and providing examples like Bisset v Wilkins. The essay highlights how these torts manifest in business scenarios, using examples like Australian Safeway Stores v Zaluzna. It also addresses the remedies available to aggrieved parties, including damages and contract rescission, and discusses key defenses such as contributory negligence, as illustrated by cases like Raad v KTP Holdings Pty Ltd. Furthermore, the essay examines the role of both common and statutory law, particularly the Civil Liability Act 2002 (NSW), in regulating negligence and providing protection to affected parties. It emphasizes the importance of businesses taking precautions to avoid liability and offers insights into other relevant torts like defamation and negligent misrepresentation. The essay concludes by underscoring the significance of businesses operating responsibly to avoid potential penalties arising from torts.

TORTS 2
Torts can be best defined as a civil wrong done by one party towards another and where the
infringement of a right results in legal liability being raised. There are different kinds of torts in
Australia, which includes negligence, misrepresentation, defamation, nuisance amongst the
others. When a case of tort is established, the party which has been harmed, or which had to bear
a certain loss, is allowed to make a claim for damages against the wrong doing party (Statsky,
2011). It is crucial that laws surrounding torts are properly taken care of in business situations as
the businesses are prone to attracting different torts, particularly the misrepresentation and
negligence. This is particularly important when the advice is to be given to the customers or to
the members of the public. In cases where the disgruntled clients suffer losses, there are certain
defences which can be applied by the businesses to safeguard from the claims made by the client
(Turner, 2013). In the following parts, a discussion has been carried on whereby these aspects of
torts have been elucidated, with real life experiences and case laws to give a better understanding
of the tort laws.
Negligence is one of the torts in the nation whereby a breach of duty of care takes place, which
results in the duty owed party being injured or harmed, due to the actions of the duty bearing
party (Greene, 2013). In order to show that a case of negligence is present, there is a need to
show the presence of certain elements, which includes the obligation of care, the contravention
of this obligation, resulting harm/ loss/ injury, foreseeability of risk of harm, loss not being too
remote and the direct causation. The absence of even one of the elements can make difficulty in
making a case of negligence, if not impossible (Trindade, Cane and Lunney, 2007).

TORTS 3
The initial step in making a case of negligence is showing that duty of care was present. For this,
often a reference is made to Donoghue v Stevenson [1932] AC 562 in which the courts held that
the manufacturer owed a duty of care towards the consumers as the relationship present between
them had such proximity that the acts of one had the capability of affecting another (British and
Irish Legal Information Institute, 2017). The next step for establishing negligence is showing that
this duty of care had been contravened. And it also has to be shown that the breach resulted in
harm/ loss/ injury. For this purpose, it has to be shown that as a result of the duty bearing party
not doing their part, the other party was injured, to show that indeed the breach of duty took
place and the same resulted in injuries (Emanuel and Emanuel, 2008). For this, reference needs
to be made to the decision given in Paris v Stepney Borough Council [1951] AC 367. As the
defendant had failed to provide the requisite safety material to the plaintiff, as a result of which,
the plaintiff was blinded completely, the defendant was held liable (Martin and Lancer, 2013).

TORTS 4
The next step in making a case of negligence is to show that the loss was substantial and not too
remote (Gibson and Fraser, 2014). Remoteness of losses resulted in no remedy being provided in
Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961] UKPC 2 (H2O,
2016). It is of utmost importance that there is foreseeability of harm being caused due to the
actions of the defendant. And for this, the view of a reasonable individual has to be taken into
consideration as per Wyong Shire Council v Shirt (1980) 146 CLR 40. The direct causation also
has to be established where it has to be shown that the injury was a direct result of the duty
breached (Jade, 2017).
Another substantial tort which the businesses often have to face is misrepresentation.
Misrepresentation refers to such a situation where one party is forced to enter into the contract
owing to a false statement being made by the other party. Even though misrepresentation is
predominantly covered under contract law, in some cases, it can run parallel under tort laws. For
making a case of misrepresentation, there is a need to show that a false statement of fact had
been made, instead of a false statement of opinion (E-Law Resources, 2017a). In Bisset v Wilkins
[1927] AC 177, the court held that a statement of opinion was made and not of fact, so a case of
misrepresentation could not stand (E-Law Resources, 2017b). Smith v Land and House Property
Corp (1884) 28 Ch D 7 was a case where the court held that the defendant was in a position to
know the truth or falseness of the situation and due to these reasons, a case of misrepresentation
was found to be present (E-Law Resources, 2017c).
The tort of negligence and misrepresentation can easily pop up in the business situations. For
instance, in a supermarket form of business, a number of customers come and visit the
supermarket. And it becomes a duty of care of the supermarket to provide the shoppers with a
safe shopping environment. As the defendant failed to do so in Australian Safeway Stores v

TORTS 5
Zaluzna (1987) 162 CLR 479, a case of negligence was found to be present (Sappideen et al,
2009). In the similar manner, if a business makes a claim that they have certain bids, when in
reality there are no bids available or have not been made, in such cases, a case of
misrepresentation would stand, as was held in the case of Smith New Court Securities v
Scrimgeour Vickers [1996] 3 WLR 1051 (E-Law Resources, 2017d). Hence, it becomes crucial
for the businesses to take care when they give advice and directors to the members of the public
and to the customers. This is with specific reference to case of misrepresentation which can be
raised as was seen in Smith New Court Securities v Scrimgeour Vickers.
When a tort is committed, the injured or disgruntled client gets different options on the basis of
the undertaken tort. For instance, if a case of negligence is present, the aggrieved party can apply
for damages for the physical injury they sustained, along with the economic loss and the mental
agony caused (Latimer, 2012). Though, it is crucial that all the components of negligence are
present. For instance, in Vaughan v Menlove (1837) 132 ER 490, Menlove did not take into
consideration the warnings given to him, due to which he was held negligence (Commonwealth
Legal Information Institute, 2017). And as has been highlighted through the case of Paris v
Stepney Borough Council, damages have to be paid to the injured party.
For a case of misrepresentation, the available remedies include claiming damages or can opt for
getting the contract rescinded as the presence of misrepresentation makes the contract voidable.
The remedies for misrepresentation are also differed on the basis of the type of
misrepresentation, which includes innocent, negligent and fraudulent. For instance, for a case of
fraudulent misrepresentation established in Car & Universal Credit v Caldwell [1964] 2 WLR
600, the contract was allowed to be rescinded by Caldwell (E-Law Resources, 2017e).

TORTS 6
One of the key defenses which are used in cases of negligence is contributory negligence. In
contributory negligence cases, the party who has been injured is held to have made contributions
towards their harm or the loss sustained by them. Where such a case is proved, the damages
which are awarded through the judgment of the court, to the injured party, are reduced by the
contribution made by the plaintiff in their harm (Dongen, 2014). Raad v KTP Holdings Pty Ltd
as Trustee for VM & KTP Nguyen Family Trust [2016] NSW 2016 888 was a case, where even
though the plaintiff had slipped in the supermarket of the defendant, her running was seen as a
fact which contributed towards the injury. And so, the court decided to reduce the value of
damages by 10% (Devitt, 2016). Similarly, in the matter of Froom v Butcher [1976] 1 QB 286,
as the plaintiff was not wearing seat belts, the damages which the court awarded to them, was
brought down by £100 (Swarb, 2017). These cases highlight the manner in which the businesses
attract liabilities under negligence and the way through which these liabilities can be reduced
down, if not evaded in entirety.
Even though negligence is covered mostly under the common law, the statutory law also covers
negligence through the civil liability act of the particular state or territory. For instance, in New
South Wales, the Civil Liability Act 2002 (NSW) applies. Section 5B of this act provides the
provisions relating to the duty of care, in which it has to be shown that the risk was not
insignificant, had been clearly foreseeable and a prudent person would have taken all the
required precautions for evading the same. As per section 5D of this act, the liability is provided
for the remoteness of injury and where the damages are held as remote, the damages are not to be
awarded. Similarly, section 5S of this act provides if a case of contributory negligence is present
the compensation has to be reduced entirely where the same is deemed as a just thing to be done,
on the basis of the circumstances of the case present (Legislation NSW, 2015). Hence, apart from

TORTS 7
the public authority which is presented through the common law, the statutory laws also play a
key role in protection of the interests of the parties affected through such torts.
The consumers, the members of the public and any other party do have the right of taking the
requisite actions against the businesses in case a tort of misrepresentation or negligence is
established provided they relied on the misrepresentation made and where they were directly
owed a duty of care and it was breached resulting in substantial damage. For instance, in the case
of Horsfall v Thomas [1862] 1 H&C 90, there was an absence of reliance of the claimant on the
misrepresentation made by the respondent. In this case, the claimant had purchased a gun which
had a concealed defect. The reason for failure of the claim was due to the fact that the claimant
had inspected the gun before he made the purchase (E-Law Resources, 2017f). And due to these
reasons, no relief was awarded to the claimant. Hence, the actions of the consumers have to be
brought carefully for a successfully claim to be made.
Apart from the tort of misrepresentation and negligence, a tort which the businesses often have to
face is the tort of defamation. Defamation occurs when the reputation of a person is tarnished
and can take place in two manners, i.e., slander and libel. So, while communicating with their
clients, the businesses have to ensure that they do not make any such statement where the client
is defamed. Also, negligent misrepresentation is another tort which has to be steered clear by the
businesses. Some other business torts include tortious interference with contract or trade,
injurious falsehood and fraud (Barnett and Harder, 2014). Hence, it is of utmost importance that
the businesses take care while they operate their businesses so that unnecessary penalties arising
out of torts are not attracted upon them.

TORTS 8
In the preceding segments, the discussion highlighted the two key torts which are applicable in
Australia, i.e., negligence and misrepresentation. Both of these result in a loss for the business as
the business has to incur penalties. Even though misrepresentation is a contract law aspect, due
to the actions of one affecting another, the penalties are attracted under tort law, whereby the
aggrieved party can apply for damages. A case of negligence requires certain elements to be
clearly presented and when a case of negligence is clearly made, the party can claim damages for
physical injury, economic loss and even for the mental distress caused. Through different case
laws, live examples of these torts affecting the businesses have been highlighted. For instance,
through two case laws, the presence of negligence and contributory negligence for the
supermarkets was highlighted. Also, the torts not only attracts common law provisions, but also
the statutory ones, thus making it important for the businesses to be well versed with these laws
and avoid any damages being attracted to the business.

TORTS 9
References
Barnett, K., and Harder, S. (2014) Remedies in Australian Private Law. Victoria: Cambridge
University Press.
British and Irish Legal Information Institute. (2017) Donoghue v Stevenson [1932] UKHL 100
(26 May 1932). [Online] British and Irish Legal Information Institute. Available from:
http://www.bailii.org/uk/cases/UKHL/1932/100.html [Accessed on 07/09/17]
Commonwealth Legal Information Institute. (2017) Vaughan v Menlove. [Online]
Commonwealth Legal Information Institute. Available from:
http://www.commonlii.org/uk/cases/EngR/1837/424.pdf [Accessed on: 07/09/17]
Devitt, S. (2016) A slip up - shopping centre liable for slip and fall on wet tiles. [Online]
Lexology. Available from: http://www.lexology.com/library/detail.aspx?g=bdcef724-3c2e-482d-
9d74-540bc1a44d6c [Accessed on: 07/09/17]
Dongen, E.V. (2014) Contributory Negligence: A Historical and Comparative Study. Boston:
Brill Nijhoff.
E-Law Resources. (2017a) Misrepresentation. [Online] E-Law Resources. Available from:
http://e-lawresources.co.uk/Misrepresentation.php [Accessed on: 07/09/17]
E-Law Resources. (2017b) Bisset v Wilkinson [1927] AC 177 Privy Council. [Online] E-Law
Resources. Available from: http://www.e-lawresources.co.uk/Bisset-v-Wilkinson.php [Accessed
on: 07/09/17]

TORTS 10
E-Law Resources. (2017c) Smith v Land and House Property Corp (1884) 28 Ch D 7. [Online]
E-Law Resources. Available from: http://www.e-lawresources.co.uk/Smith-v-Land-and-House-
Property-Corp.php [Accessed on: 07/09/17]
E-Law Resources. (2017d) Smith New Court Securities v Scrimgeour Vickers [1996] 3 WLR
1051. [Online] E-Law Resources. Available from: http://www.e-lawresources.co.uk/Smith-New-
Court-Securities-v-Scrimgeour-Vickers.php [Accessed on: 07/09/17]
E-Law Resources. (2017e) Car & Universal Credit v Caldwell [1964] 2 WLR 600. [Online] E-
Law Resources. Available from: http://www.e-lawresources.co.uk/Car--and--Universal-Credit-v-
Caldwell.php [Accessed on: 07/09/17]
E-Law Resources. (2017f) Horsfall v Thomas [1862] 1 H&C 90. [Online] E-Law Resources.
Available from: http://www.e-lawresources.co.uk/Horsfall-v-Thomas.php [Accessed on:
07/09/17]
Emanuel, S., and Emanuel, L. (2008) Torts. New York: Aspen Publishers.
Gibson, A., and Fraser, D. (2014) Business Law 2014. 8th ed. Melbourne: Pearson Education
Australia.
Greene, B. (2013) Course Notes: Tort Law. Oxon: Routledge.
H2O. (2016) Wagon Mound (No. 1) -- "The Oil in the Wharf Case". [Online] H2O. Available
from: https://h2o.law.harvard.edu/collages/4919 [Accessed on: 07/09/17]
Jade. (2016) Wyong Shire Council v Shirt. [Online] Jade. Available from: https://jade.io/j/?
a=outline&id=66842 [Accessed on: 07/09/17]

TORTS 11
Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia
Limited.
Legislation NSW. (2015) Civil Liability Act 2002 No 22. [Online] New South Wales
Government. Available from: http://www.legislation.nsw.gov.au/#/view/act/2002/22 [Accessed
on: 07/09/17]
Martin, J., and Lancer, D. (2013) AQA Law for AS Fifth Edition. 5th ed. Oxon: Hachette UK.
Sappideen, C., at al. (2009) Torts, Commentary and Materials. 10th ed. Pyrmont: Lawbook Co.
Statsky, W.P. (2011) Essentials of Torts. 3rd ed. New York: Cengage Learning.
Swarb. (2017) Froom v Butcher: CA 21 Jul 1975. [Online] Swarb. Available from:
http://swarb.co.uk/froom-v-butcher-ca-21-jul-1975/ [Accessed on: 07/09/17]
Trindade, F., Cane, P. and Lunney, M. (2007) The law of torts in Australia. 4th ed. South
Melbourne: Oxford University Press.
Turner, C. (2013) Unlocking Torts. 3rd ed. Oxon: Routledge.