LAWS20058 AUSTRALIAN COMMERCIAL LAW

Study Guide Week 10

Law of Torts 1

1 Preview 1

3 Trespass, Nuisance, Conversion and Detinue 2

4 DEFAMATION 2

6.3 Standard of care 3

6.4 Damage caused by the breach 3

8.2 Seminar Review Exercises 4

8.3 Masterclass Problems 5

Law of Torts

Preview

Objectives

• Understand the elements of the tort of negligence

• Explain the tort of negligence in the context of when a duty of care arises, the relevant standard of care owed when a duty of care exists and the factors that influence the calculation of damages for losses or injuries caused by the breach

Prescribed Reading

Key Terminology

• Detinue – The detention of goods when they are demanded by the person lawfully entitled to them.

• Negligence – Breach of a duty of care by failing to satisfy a requisite standard of care and causing damage as a consequence.

What is a tort?

Tort law, in particular the tort of negligence, is important in commerce so that a business understands the legal risk of the organisation through the goods it sells or manufactures, the services it provides and the actions of employees. The torts of trespass, nuisance, conversion, detinue, negligence and economic torts will now be examined.

Trespass, Nuisance, Conversion and Detinue

The oldest tort is trespass. It originated as a form of relief for direct interference with someone’s person, goods or land. Trespass to person has various forms, such as assault, battery and false imprisonment. If you study the textbook, you will learn the little-known distinction between assault and battery, which is different from how these words are used in everyday life. Trespass to land most often involves entering someone’s land without their permission. Trespass to goods may involve destruction, damage or removal of the goods.

DEFAMATION

economic torts

negligence

The most common tort in real life (and probably the most common form of legal action in the civil courts) is the tort of negligence. This tort has been subject to huge scrutiny by the courts over the years, and is now subject to substantial legislation modifying the common law principles. However, the structure of the tort remains the same as it always was.

Not every accidental act or misstatement that causes harm to another creates legal liability. A person will be liable in negligence if the law imposes on the party a duty to act with care. The tort of negligence is committed usually when a careless act causes harm to another person or property. The law of negligence traditionally consisted of common law or case law rules. But since the civil liability reforms following the insurance crisis some twenty years ago the law of negligence is now a combination of case law and statutory rules. In all states and territories Civil Liability Acts were passed in 2002.

Elements of the negligence

The defendant may be able to use available defences, including contributory negligence and the voluntary assumption of risk.

The duty of care

To be liable for negligence, you must have breached a duty of care owed to the person making the claim. The first step is therefore to consider the situations in which a duty of care arises. You will learn that this is difficult to establish when the risk only involves economic loss, rather than personal injury or property damage which might also lead to economic loss.

Standard of care

Damage caused by the breach

Defences

Finally, one must consider whether claimants themselves deserve to bear some of the responsibility. Sometimes, people who are harmed by negligence were also neglectful of their own welfare, and deserve to have some of the blame attributed to them. Occasionally, they are found to have voluntarily undertaken the risk of harm, and cannot recover at all. Much more often, they merely are contributors to the loss, which is recognised by discounting the quantum of damages in some way.

negligent advice or representation

In this unit, you have already learned that fraudulent misrepresentation is actionable as the tort of deceit. Later in this module, you will learn about the most important tort of negligence. This tort can apply to negligent misrepresentations made in circumstances where they can reasonably be expected to be relied upon. The tort of negligent misrepresentation is quite separate from contract laws about misrepresentation. Parties negotiating a contract owe no duty to each other to avoid negligent misstatements, although such misstatements might be captured by the laws of innocent misrepresentation or misleading and deceptive conduct.

Review

Summary

Seminar Review Exercises

Mary has just learned to drive and obtained her driver’s licence. She always gets nervous when she drives with her boyfriend in the car, because he taught her to drive. She is driving him to work one day and remembers too late which turn to take. She attempts to make the turn when the car is going too fast. The road is wet and the wheels start sliding. The car misses the turn and slides off the road, hitting a parked car and a pedestrian before slamming into a house. Her boyfriend has forgotten to put on his seat belt and he flies forward and hits his head on the windscreen. He suffers a fractured skull. The pedestrian hits the ground hard and breaks his arm. Both of them have large medical bills. The boyfriend suffers long-term memory loss and is unable to work as a professional accountant. The parked car is completely written off and cannot be repaired. The owner of the parked car misses an appointment with a client and loses the client’s business. The car driven by Mary has extensive damage to the front. It is owned by Mary’s boyfriend. The house is also extensively damaged and costs $50,000 to repair. While the house is damaged, the owners have to move out and rent another house at $300 per week.

Identify who Mary owes a duty of care to and describe:

Review Exercise 3 – Negligent Advice

Chris is an accountant and financial adviser. He attends a party and meets Suzi. Suzi is thinking of being a property investor and asks Chris what he thinks she should do about acquiring an investment property in a certain Melbourne suburb to negative gear. Chris says “You can’t miss Suzi. It’s a good suburb and your tax position would benefit from being able to negative gear an investment property.”

Defamation cases are frequently resolved out of court but in recent years there have been a number of high-profile defamation cases that have been litigated in Australian courts. Recent cases involving successful legal actions by actors Rebel Wilson and Geoffrey Rush and politician Sarah Hanson-Young (see Moodle for articles).

Describe the impact of these cases on statements about other people by employees and representatives of businesses. How can the risk of defaming people on social media accounts of a business be minimised?

Masterclass Problems

Blade Industries is a Singaporean firm that manufactures and exports electric knives to an Australian importer called AlwaysSharp Pty Ltd. The most recent shipment of knives did not have safety catches but the need for a safety catch was not apparent to a first-time user. Bobby is a new chef at Slippery Fish restaurant in Sydney, which recently purchased a number of AlwaysSharp knives for their chefs but Bobby has never used this type of knife before. When Bobby switches the knife on it starts cutting immediately and Bobby’s hand is badly injured. Two nearby waiters faint at the sight of blood and bone and one broke her arm on falling.

Discuss the liability of Blade Industries and/or AlwaysSharp to Bobby and the staff who fainted under the tort of negligence.