Aspects of contract and negligence for business

Aspects of contract and negligence for business

Purpose of this assignment

To be able to use a variety of written methods to demonstrate a full understanding about the tort of negligence affects business.


Wayne has recently invested £100,000 in Fidelity Ltd.  He invested the money on the advice of his friend, Rio, who had invested £500,000 in the company, having been sent the company accounts by the auditors, Careless and Co.  The auditors had sent the accounts to Rio in order to persuade him to invest in the company.  The accounts showed the company to be in a strong financial position and both Rio
and Wayne expect to make a substantial sum of money selling the shares in the future.  Pleased with the possibility of making a substantial profit and to celebrate England winning the world cup, Wayne decides to hold a party the following Saturday.

On the evening of the party, John, who has not been invited, enters via the back door and, on seeing Wayne coming towards him, goes through a small door marked “Dangerous Steps”.  The door opens inwards and John falls down the steps into a cellar.  He smashes his Rolex watch and breaks his wrist. Ashley, who has been invited to the party, trips over badly laid flooring and falls into a bucket of bleach, seriously burning his hands and damaging his clothing.  Glen, another guest, decides to leave the party by climbing over the garden wall rather than using the door.  He does not realise there is a 10 foot drop the other side of the wall and breaks both his legs.

David, who has recently passed his driving test, decides to drive his car to the office.  He has parked in the car park at the office of Franks.  Later, he reverses his car but he negligently fails to see Peter, who is drunk, walk past the rear of the car.  Peter is seriously injured when the car reverses over his legs. On hearing the commotion several other staff rush out onto the street.  One of these employees is Ella, Peter’s sister; she is so shocked by what she sees that she develops a psychiatric illness.

On Monday, Wayne and Rio receive the news that Fidelity Ltd has gone into liquidation with debts of
£2.1m.  The accounts had been negligently prepared by Careless & Co and should have shown that
Fidelity Ltd. Was in a very poor financial position.


You should identify all the relevant issues regarding the tort of negligence and ensure you support your answers with appropriate legal authority and evaluation using supporting case law.


1.  Explain to Wayne the duties and standard of care owed by an occupier of premises and advise him of any claims John, Ashley and Glen may have under the Occupiers Liabilities Act 1957 and 1984.  (LO
3.1, 3.2, 4.1)

2.   Explain the test which is applied in the tort of negligence to determine whether the defendant breached the legal duty of care owed to a claimant.  Which factors would a court take into account to determine how a reasonable person would act? (LO 3.3)

3.   Explain the requirements in Caparo v Dickman that have to be established if the court is to recognise a new duty of care.  (LO 3.1, 4.1)

4.   Consider the tort of negligence and explain David’s liability (if any) to Paddy and Ella (LO 3.2, 4.2). Explain to David the concept of vicarious liability and how Franks may or may not be liable (LO 3.3, 4.2)

5.  Advise Wayne and Rio on their likelihood of succeeding in a claim for negligent misstatement against
Careless & Co.  (4.2)

To achieve M2 you will have used suitable techniques to explore in depth the nature of the essential elements involved in liability in negligence and use your findings to apply to different situations

To achieve M3 the work you present will be in appropriate business report format and will use all legal and business terminology accurately.

To achieve D1 critically reflect on your findings above and provide clear justifications for all the conclusions you have reached.

To achieve D2 you will have demonstrated an effective approach to independent study and research and will have met the deadline to submit the tasks and achieve the unit assessment criteria.

Evidence checklist
Summary of evidence required by student
Evidence presented
3.1  Contrast liability in tort with contractual liability    Formal report to be submitted
3.2 Explain the nature of liability in negligence    Report
3.3 Explain how a business can be vicariously liable    Report
4.1  Apply the elements of tort of negligence and defences in different situations    Report
4.2  Apply the elements of vicarious liability in given situations    Report

Achievement Summary

HND Business Management
Assessor name
Yasmin Powell

Unit Number and title
5: Aspects of Contract and
Negligence for Business
Student name

Reference    To achieve the criteria the evidence must show that the student is able to:    Achieved? (tick)
3.1    Contrast liability in tort with contractual liability
Explain the nature of liability in negligence
3.3    Explain how a business can be vicariously liable
4.1    Apply the elements of tort of negligence and defences in different situations
4.2    Apply the elements of vicarious liability in given situations

Higher Grade achievements (where applicable)

Grade descriptor
Achieved? (tick)
Grade descriptor
Achieved? (tick)
M1: Identify and apply strategies to find appropriate solutions        D1: Use critical reflection to evaluate own work and justify valid conclusions
M2: Select / design and apply appropriate methods / techniques        D2: Take responsibility for managing and organising activities
M3: Present and communicate appropriate findings        D3: Demonstrate convergent/lateral/creative thinking

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