LAW FOR BUSINESS Assignment - Essay Example

In general, compensation for economic loss resulting from damage to property can be recovered. As such, it is difficult to clearly distinguish between pure and consequential economic loss. This was demonstrated in Spartum Steel and Alloys Ltd v Martin &Co, wherein, the defendant had by inadvertence caused damage to an electronic cable in the plaintiff’s factory. The outcome of this act was a reduction in profits, and a general delay in the functioning of the factory. The court while awarding damages for the pure economic loss caused, rejected the claim for general damages (Speaight, 2009, p. 23). The compensation was with regard to the economic loss that was the direct outcome of the damage to property.

The floodgates argument has several features. One of these contends that allowing recovery for pure economic loss in some instances would result in a plethora of lawsuits, which would effectively diminish the functioning of the courts. Furthermore, the imposition of widespread liability would unfairly and disproportionately burden a defendant. In addition, the defendant would be hard pressed to assess his potential liability on causing damage to the effects of a primary victim (von Bar, Drobnig, & Alpat, 2004, p. 124). The number of secondary loss sufferers becomes indeterminate and depends on all those who have an economic interest in the primary victim’s property. . 19).

On several occasions, the floodgates argument has been employed, in order to restrict liability. Thus, the House of Lords admitted this argument in Majrowski v Guys and St. Thomas’s NHS Trust. In this case, it was held that an employer could be deemed to be vicariously liable for an employee’s breach of the Protection from Harassment Act 1997. Moreover, in Conn v City Council of the City of Sunderland, the Appellate Court ruled that classifying an act as harassment would depend upon the place and context in which it had taken place.

Consequently, it dismissed the plaintiff’s claim of injury as the language employed by the supervisor had been what was commonplace in that industry. In the case of Weller v Foot and Mouth Disease Research Institute, the inadvertent release of a virus from the defendant’s institute, resulted in a near epidemic of foot and mouth disease among the cattle of that area. As a result, the farmers in that area had to slaughter their cattle, and auctions could not be conducted. The auctioneers made a claim for damages.

In its ruling, the court held that the auctioneers had merely undergone an indirect financial loss, and were therefore not eligible to claim damages (Harpwood, 2008, p. 87). Thus, the floodgates argument has been successfully contained by the judiciary. This is evident from the ruling in the above cited cases. Question Two: Extent of Accountant’s Liability to Non – Clients An accountant’s liability, with regard to clients and non-clients was determined through the judgement of the courts in the following cases.

A negligent misrepresentation, despite being honest, can result in a claim for damages. This holds good, even if there had been no contract