Legal Foundation for Business - Essay Example

?Question Four This case will examine the judgement of the House of Lords in the case of Donoghue V Stevenson1. The analysis will be conducted in twomain parts. The first part will involve an identification of the justification for the decision that was taken by the Judges in the House of Lords. The second section will involve an analysis of the case in relation to its contribution to the development of the law of negligence in British and Commonwealth Law. b) Justification for the decision reached in this case This paper will examine Part B of the official question before Part A. This is because Part B creates a major background that can be used for the discussion of the application of the precedence from the Donghue V Stevenson case. Facts of the Case On the 26th of August, Mrs. May Donoghue, a Scottish widow went to a cafe with her friend and made some orders. Donoghue's friend ordered something else and Donoghue ordered a ginger beer. Donoghue's friend paid for the order. The cafe owner served Donoghue with the ginger beer which she poured from an opaque bottle to Donoghue's cup2. There was normal ginger beer in the cup and Donoghue drank it. However, when Donoghue's friend poured some more of the ginger beer, a decomposed snail came afloat. Donoghue fell ill form the sight of it and complained of abdominal pain. She was admitted to hospital a few days later and was diagnosed of gastroenteritis and shock3. Donoghue's friend took the details of the manufacturer of the ginger beer which led to Stevenson, the manufacturer. This led to a case against Stevenson in court. A case was filed against Stevenson and hearings begun in May 1929. Arguments in the Court Case In the case, Donoghue tried to get Stevenson to take responsibility for her sickness resulting from drinking the contaminated ginger beer and the emotional shock that came with it. Her argument was that Stevenson should have gone the extra mile to prevent injuries. However, Stevenson argued that since Donoghue was not the one who paid for the beer, there was no contract between Donoghue and himself. Also, there was no proof that Stevenson was negligent in delivering the ginger beer to the Donoghue. The court at the local level could not uphold Donoghue's case. Donoghue appealed to the Inner House in Scotland but the case could not be ruled in her favour. Donoghue went on and filed a gase in the House of Lords as a pauper in 19314. The House of Lords The House of Lords began to hear the case in 1932. The House of Lords had to decide between whether to hold Stevenson responsible for the sickness and emotional pain that Donoghue suffered or not. It was clear that there was some kind of unfair injuries had been suffered by Donoghue. And it was also obvious that the injury was directly attributable to the decomposed snail in a ginger beer supplied by Stevenson. However, the fundamental laws could not directly link Stevenson to the issue because: 1. There was no contract between Donoghue and Stevenson since Donoghue did not pay for the ginger beer. 2. There was no evidence that Stevenson was negligent. There could be a chain of possibilities that could include other third parties who could potentially be responsible for the issue. The House of Lords, being the highest adjudicating body with some law making powers at that time had to decide on how to deal with the problem. They could set a precedence. However, such a precedence had to be sensitive to the broader society since it could be reapplied to other cases in the future. Thus, the five judges of the case sat on the facts and took a decision. The submissions of the different judges were as follows: Lord Thankerton He identified that there was no contract between Donoghue and Stevenson and clearly, there was no duty of care between the parties. However, he conceded that a manufacturer brings himself a voluntary obligation of not harming a consumer. This obligation was to be upheld in order that a consumer can rely upon the diligence of the manufacturer without issues. This means that he identified the need for some kind of obligation to be placed on manufacturers to meet a minimum standard of diligence in dealing with consumers. Thus, he favoured some kind of obligation being placed on Stevenson. Lord Macmillan He stated that “the law takes no cognisance of carelessness in abstract. It concerns itself with carelessness only where there is a duty of care”5. This means that people can be careless. However, if the carelessness does not affect anyone, the law can turn a blind eye on it. On the other hand, if a person's carelessness has the potential of causing some kind of harm to another, then the law needs to set up some compulsory requirements for such person to meet. He supported Donoghue's claim. Lord Buckmaster Lord Buckmaster identified that there was no Common Law support for Donoghue's claim. This is because previous cases had always occurred where there was a valid contract or an identifiable duty of care. In his view, Stevenson had products on sale throughout Scotland. Hence, if the claim of Donoghue was upheld, it would mean anyone with issues with Stevenson could abuse the precedence. So he dismissed the claim of Donoghue. Lord Tomlin He concurred with Lord Buckmaster stating that it would be dangerous for the general policy to be created that could hold people responsible for things that they are not directly connected to. This is because in Lord Tomlin's view, a general and a broad duty of care principle would open the floodgates. And many claims could be made against manufacturers. He looked at the broader policy position of holding Stevenson responsible and disallowed Donoghue's claim. Lord Atkin As identified above, two judges recognised the need for some kind of duty of care to be placed upon people who provided services to the general public and two of the judges sitting on this case dissented. Thus, Lord Atkin, the fifth judge was the one whose view would break the deadlock. To this end he stated that: "At present I content myself with pointing out that in English law there must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances. The liability for negligence, whether you style it such or treat it as in other systems as a species of "culpa," is no doubt based upon a general public sentiment of moral wrongdoing for which the offender must pay. But acts or omissions which any moral code would censure cannot, in a practical world, be treated so as to give a right to every person injured by them to demand relief. In this way rules of law arise which limit the range of complainants and the extent of their remedy. The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law, is my neighbour? The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question."6 Lord Atkin took a broad view of the case of Donoghue V Stevenson. He looked at the broader impact of people's actions on others and formulated the “neighbourhood principle”. The neighbourhood principle was to get people to take liability for their negligence and how they treat their actions if it has the potential of hurting or causing injury to other people in the society. Thus, Lord Atkin upheld Donoghue's claim and asked for the principle of neighbourhood to be instituted in the English legal system. This became the foundation for tort, a branch of delict and a central element of civil law7. Apart form upholding the claim of Donoghue against Stevenson, Lord Atkin identified that it is important for people to question their actions and omissions whenever they are doing things. Once they do so, they must assess those actions and ascertain if they have the possibility of causing harm or injury to others. Through this, they must try to identify reasonably foreseeable consequences of their actions and omissions and prevent them from affecting members of the public. In defining the relevant members of the public who could be affected by a person's actions, one must answer the question of “who is my neighbour”. One's neighbour is an individual or group of people who could be affected by his or her actions. And once this is done, an individual must take reasonable steps to prevent his “neighbours” from being affected by his actions or omissions. Failure to do so, would mean that the individual would have to be held accountable for negligence in law and the injured person must be able to claim damages to that effect. a) Implication of the Ruling of Donoghue V Stevenson on the Development of the Law of Negligence This section of the research will examine the implication of the ruling of Donoghue V Stevenson in tort law and how it generally affects corporate entities and businesses. As identified in the case of Donoghue V Stevenson, Donoghue and her friend went to a cafe and her friend made an order. The order was paid for, by Donoghue's friend. However, the ginger beer that Donoghue drank turned out to contain a decomposed snail and this caused Donoghue to suffer a stomach upset as well as emotional injury. In the case that ensued, Stevenson, the manufacturer, could not be held accountable for the injuries of Donoghue because there was no direct contract between them and secondly, Donoghue could not prove that Stevenson was negligent in creating the situation. Hence, it was sent onto appeal where the House of Lords sat on the case and came up with some important pointers and elements that set the framework for tort law and the dominant principles of negligence in English Law and related legal jurisdictions. There are five main principles in negligence that are derived from the ruling of the Donoghue V Stevenson case, particularly the submission of Lord Atkin. And these are: 1. Recoverable loss. 2. Duty of care. 3. Breach of duty. 4. Direct connection between breach and loss or damage. 5. Foreseeability of the loss and damage These are core principles that are grasped from the actions of Stevenson. And based on that, the House of Lords formulated a set of pointers and tests that could hold Stevenson and other manufacturers liable in cases involving negligence. First of all, for a person to be identified as being “negligent” in a civil case, there should be some kind of identifiable recoverable loss that the claimant has suffered. In this landmark case, Donoghue suffered emotional and bodily injury because of the ginger beer that she drank and the decomposed snail she saw. This is a valid loss that can be quantified and damages can be sought for it. The principle was extended to other cases and today, claims can be made for personal injury, damage to property and the economic loss that can be directly traced to them8. Without an identifiable loss, a person cannot take another person to court for negligent claims. Some form of negligence could be treated under criminal liability. However, for a civil lawsuit to succeed on the basis of negligence, an identifiable loss must have been suffered by the claimant. The claimant must also prove that the defendant owed him a duty of care. In doing this, the claimant must show that the claimant fell into the category of “neighbour” as per the definition of Lord Atkin in the Donoghue case. In other words, there should have been some kind of direct linkage between the defendant's actions or omissions that had a direct impact on the loss that was suffered by the claimant. In order to do this, the claimant must prove that there was a “sufficient relationship of proximity” between the claimant and the defendant9. A claim may be disallowed if the relationship between the claimant and the defendant are not sufficient to connect the defendant with the alleged act. If the relationship is sufficient, it is necessary to to take into account all other factors that negate the claim10. This could include the effort made by the defendant to ameliorate the act and other things. However, the most important thing is that, the duty of care that existed between the claimant and the defendant was breached. And the breach must be directly connected with the loss that was suffered by the claimant. If the connection between the claimant and the defendant during the incident in question was not strong enough, the case could be said to be very remote and the claim may be dismissed by a court. On the other hand, if the connection is strong and the defendant took reasonable steps to reduce the connection, the claim may be reduced in proportion to the effort made by the defendant. In the case of Donoghue V Stevenson, it was clear and apparent that the defendant owed some kind of duty of care to the final consumer. Thus, the choice of the court was to set the ambit in such a way that the manufacturer could compensate Donoghue for the injuries she suffered. However, modern cases have integrated new standards and new requirements. The case of Caparo Industries Plc V Dickman11 privity of relationships, foreseeability and reasonableness were re-emphasized in the assessment of losses and damages in negligence cases12. In the case, shareholders of Fidelity Plc took a decision to purchase a company audited by Dickman. However, they realized that the accounts were misstated and profits of the company was inflated to present it in a favourable light and expedite the sale of the company. After the takeover, it was noted that the accounts should have shown a loss of ?465,000 instead of the the profits of ?1.3 million that was reported under Dickman's oversight. The shareholders of Caparo sued for damages for negligent misstatement. The court held that Dickman owed no duty of care to the shareholders of Caparo Industries. This presented three further tests in cases involving negligence. This include: 1. Was the damage reasonably foreseeable? 2. Was there sufficient proximity between claimant and defendant? 3. Is it just and reasonable to impose a duty of care?13 In order to establish a duty of care, the answer to all these three questions need to be “yes”. This is because the different pointers help to establish the neighbourhood principle and put it in the rightful perspective. Thus, the pointers are necessary and important to establish obligations in negligent cases today. Thus, in order to recap the pointers, a person who foresees that his action or omission will have a specific effect on other third parties or should this should have been reasonably inferred but fails to do so can be held liable under the law of negligence14. This is the basic principle and rule that was established in the original ruling of Donoghue V Stevenson. However, in this quest, the claimant needs to show that there was an injury or loss that was directly suffered because of the action or inaction of the defendant. The resultant injury or damage must be directly traceable to the defendant before damages can be awarded. In doing these analysis, the standard of proof is on the basis of the balance of probabilities15. Thus, the defendant must show the possibility and how it affected him or her on the basis of the likelihood of occurrence. Conclusion The principle of neighbourhood presented by Lord Atkin in the case of Donoghue V Stevenson sets a general duty of care that is applicable to all businesses that run services to the general public. This creates a universal class of standards that a manufacturer or business operator must be sensitive to. Where there is a breach of duty of care which affects a member of the society, that individual can sue for damages in a claim in tort. Books Martin Hunt. Tort Law. (London: Sweet and Maxwell, 2010) Sue Hodge. Tort Law. (London: Willan Publishing, 2012). Journals Keith Patten (2012) “Personal Injury: Snail Trail” Law Journal (LexisNexis) 162 (7513) pp643 – 645 Martin Taylor. (2008) “The Most Famous Litigant” Scottish Council of Law Reporting 152 (2) pp319 – 322 Cases Anns V London Borough Council of Merton [1978] AC 728 Caparo Industries Plc V Dickman [1990] UKHL 2 Donoghue v Stevenson [1932] UKHL 100 Read More