Negligent Misstatement - Essay Example

?Question Negligent Mis ment Winston’s potential liability for negligent mis ment falls under the exceptional category of tort where negligence for pure economic loss can incur liability.1 In order for liability to arise, each of the potential claimants would have to prove that Winston owed them a duty of care, that he breached that duty and that as a result of that breach of duty, there was loss that was reasonably foreseeable.2 The duty arises under the tort of negligent misstatement only if there is special relationship between Winston and the potential claimant. It was established in Hedley Byrne v Heller that liability for negligent misstatement will arise where a party seeks information or advice from another on the basis of trust that the other party would use care and knew that the information or advice would be relied on.3 Moreover, the party from whom information or advice is sought must also have held himself out as having special knowledge or expertise relative to the information sought.4 Based on the ruling in Hedley Byrne, it is entirely unlikely that Winston will be liable for any negligent misstatement in offering advice to Mary in respect of the purchase of a good used car. To begin with, the information is solicited at a party which indicates that in the circumstances, Mary could not have reasonably expected Winston to exercise a degree of care. Secondly, there is no evidence on the facts of the case for discussion indicating the Winston held himself out as having specialized knowledge relative to good used car. It would appear that Mary is relying on the fact that Winston is her boyfriend and this is not the requisite special relationship alluded to in Hedley Byrne. The special relationship referred to is in which the individual relied on for information and advice is in that line of business. Liability for negligent misstatement will not arise in social settings.5 The situation with Errol is quite different as Winston is asked for advice based on his professional capacity as an account executive. Errol wants advice about the Winston’s company’s profitability and sales potential with a view to going into business with Winston. Liability for negligent misstatement would arise where advice or information is sought from a person who is qualified to give that information or advice and it is clear that the information or advice is going to be relied on.6 Therefore Winston owes Errol a duty of care since he is an account executive and owns the business that Errol wants information about for the sole purpose of going into business with Winston. It is clear that Errol will rely on Winston’s information, as Errol is seeking the information for a specific purpose.7 Winston can also be liable to Errol for remaining silent when his boss Felicity fraudulently misled Errol with respect to the insurance policy. Although Felicity is Winston’s boss, Sizzler’s is Winston’s company, the fraud involved information about Sizzler’s insurance policy covering Errol’s new shop. Therefore Felicity is actually Winston’s agent. Under the ruling in Standard Chartered Bank v Pakistan National Shipping Co., the principle is liable for the fraud of an agent who was acting under the principle’s authority.8 Winston will also be liable for negligent misstatement with respect to the reference he provided for Barnie. Barnie was let go from Winston’s employ as a result of restructuring, not for the reasons stated in his reference for Barnie. The fact that Winston believed that his reference was honest is of no consequence since he failed to investigate the facts before committing his reference to paper and distribution. It was held in Cox v Sun Alliance Life Ltd that an employer owed a duty of care to conduct reasonable enquiries into the facts. All negative statements must only be made after conducting a reasonable inquiry or investigation.9 This case confirms an earlier ruling by the House of Lords in which it was ruled that an employer owes an employee a duty of care in preparing a reference for a prospective employer.10 Winston’s failure to ensure that his client’s instructions were followed in the preparation of a will renders Winston liable in negligent misstatement to Sunil for his unrealized bequest under the will. The facts of Winston and Sunil’s case runs parallel to the facts in White v Jones. In this case a testator instructed solicitors to amend a will in which the plaintiff had been disinherited. The amended will would reflect the beneficiary’s reinstatement. However, the solicitor’s did not respond fast enough and the testator died thus leaving the beneficiary disinherited. The House of Lords ruled that the solicitors owed the plaintiff a duty of care as a putative beneficiary and the loss was not remote. Therefore the duty of care was breached by failure to act in timely fashion.11 Question 2: Occupiers Liability Western Rail Company’s (WRC) potential liability for Gavin and Sarah falls within the scope of the Occupiers Liability Acts 1984 and 1957. The 1984 Act applies to the owner’s liability for damages to persons who are not visitors to the property12 The 1957 Act establishes occupiers liability for visitors to the property.13 Therefore the Occupiers Liability Act 1957 applies to Sarah since she was a visitor to WRC’s premises and the 1984 Act applies to Gavin since he was not a visitor. Section 1 of the Occupiers Liability Act 1984 establishes that the owner or occupier of premises owes common duty of care to persons other than visitors to the premises if he knows or ought to know of danger on the premises, he knows or ought to know that others are in the areas of the danger or may come in the area of the danger and the risk of danger is one that the occupier ought to provide some protection against.14 Gavin slipped into a gap in the fence in his efforts to retrieve a ball. It would appear that since the gap was big enough to admit a 15 year old, WRC as occupiers ought to have been aware of the gap. Secondly, Gavin was playing in a park near the railway and therefore it is reasonable to assume that WRC would have known that others would be in the vicinity of the danger posed by a gap in the fence. Although the duty to safeguard against the risk of harm can be discharged by placing appropriate signs or warnings in the vicinity of the danger15, there is no evidence that WRC took this measure. Gavin is child and as such there is generally a special duty of care owed to safeguard against the risk of harm to children.16 However, in Titchener v BRB, it was held that there was no duty of care toward a 15 year old who walked across a railway line and was subsequently hit by a train. The rationale was that the child was aware of the line, the dangers associated with rails and was aware of having to look out for on-coming trains.17 Therefore, although there is generally a duty to take special care relative to children who are not visitors, the age of the child and the degree of self-care expected of the child is relevant. WRC will not be liable for Gavin’s death. There is apparently no need to warn of dangers where the danger is already well known. However had Gavin been younger, it is very likely that WRC would have been liable for his death since he would not have been expected to be as careful as adults.18 WRC’s potential liability for Sarah’s injury is found under Section 1 of the Occupiers Liability Act 1957 which prescribes that occupiers owe a duty of care to all visitors.19 The duty is further detailed by Section 2(2) of the 1957 Act which provides that the occupier owes a common duty of care to take all reasonable precautions to ensure that visitors are “reasonably safe” while on the premises.20 WRC can discharge the duty by placing appropriate warnings relative to the danger.21 However, the warning must be such that it is sufficient to ensure that the visitor is safe.22 In White v Blackmore, a notice warning that motor racing was dangerous was held to be a satisfactory discharge of the occupier’s liability to lawful visitors.23 Therefore WRC’s notice of the dangers of running is sufficient to discharge the duty of care toward its visitors. Moreover, occupiers are not under a duty to warn of obvious risks.24Moreover, even if WRC is found to be liable, Sarah’s right to recovery would be reduced under the Law Reform (Contributory Negligence) Act 1945 because she failed to take reasonable care in running in a railway at a presumably busy time of day.25 The sign seeking to exclude liability however is void under the Unfair Contract Terms Act 1977 is void. By virtue of the 1977 Act liability cannot be excluded for personal injury cannot be excluded where the premises is a business.26 However, since it is unlikely that WRC will be found liable for Sarah’s injury, the question of exclusion of liability will not be relevant. Bibliography Textbooks Harpwood, V. Modern Tort Law, (7th Edition, Oxon, UK: Cavendish Publishing Limited, 2009). Articles/Journals MacGrath, M. ‘The Recovery of Pure Economic Loss in Negligence – An Emerging Dichotomy.’ (1985) 3 Oxford Journal of Legal Studies, 350-377. Table of Cases Caparo Industries plc v Dickman [1995] 2 WLR 358. Chaudhry v Prabhaker [1988] 3 All ER 718. Cotton v Derbyshire Dafbyshire Dales DC [1994] 20 June. Cox v Sun Alliance Life Ltd [2001] IRLR 488. Glasgow Corp v Taylor [1922] 1 AC 44. Hedley Byrne v Heller [1964] AC 463. Mutual Life and Citizens Assurance Co. v Evatt [1971] AC 793. Spring v Guardian Assurance plc [994] 2 All ER 129. Standard Chartered Bank v Pakistan National Shipping Co. [2003] 1 All ER 273. Titchener v BRB [1983] 3 All ER 770. White v Blackmore [1972] 3 All ER 158. White v Jones [1995] 2 AC 207. Table of Statutes Law Reform (Contributory Negligence) Act 1945. Occupiers Liability Act 1984. Occupiers Liability Act 1957. Unfair Contract Terms Act 1977. Read More