Law Governing Tortuous Liability for Negligently Inflicted Pure Economic Loss - Assignment Example

1. The current of the law governing tortuous liability for negligently inflicted pure economic loss. Till the 1970s the law on liability for economic loss due to negligent acts were easy. Actually there was no legal responsibility with regard to pure economic loss. Economic loss due to a negligent act may result in physical harm to a third partys property. This loss due to the damage may disrupt the claimants capability to continue his business, as in: Cattle v Stockton Waterworks (1875) LR 10 QB 453 Weller v Foot and Mouth Disease Research Institute [1966] 1 QB 569 Economic torts defend people from intrusion with their business. This also includes the dogma of restraint of trade and has for the most part been sunken in the twentieth century by statutory treatments on combined labour law and modern antitrust. The "absence of any unifying principle drawing together the different heads of economic tort liability has often been remarked upon."1 Two cases established economic torts kinship to competition and labor law. In Mogul Steamship Co. Ltd.2 the plaintiff indicated he had been forced back from the Chinese tea market by challengers at a shipping conference that had come unitedly to dump his company. 1Markesinis and Deakins Tort Law (2003 5th Ed.) OUP) p.509. 2 Mogul Steamship Co. Ltd. v. McGregor, Gow & Co. (1889) LR 23 QBD 598 But this alliance was found lawful and "nothing more [than] a war of competition waged in the interest of their own trade."3 In this day and age, this cartel could be regarded a criminal cartel. In labor law the most outstanding case is Taff Vale Railway v. Amalgamated Society of Railway Servants.4 In this case The House of Lords thought that unions have the liability in tort for aiding workers to strike for improved payment and working conditions. But it irritated workers and eventually led to the creation of the British Labour Party and the Trade Disputes Act 1906. In addition to this torts applied against unions are conspiracy,5 meddling with a profitable contract6 or threats.7 A general clarification of the economic loss rule links to the ingredient of foreseeability of the harm. It has been recommended that tort principles based on foreseeability were formulated for physical damage and are not practicable outside such settings. The development of the economic loss rule is explicated as a no-nonsense progress of the law. But when the conventional foreseeability test is linked with cases of pure financial loss then it leads to disastrous levels of liability.8 But under a negligence rule, a injure rule restraining defendants’ accountability to victims’ losses will either ensue in optimum care or too little care. 314 per Bowen LJ, (1889) LR 23 QBD 598, 614 4Taff Vale Railway v. Amalgamated Society of Railway Servants [1901] AC 426 5Quinn v. Leatham [1901] AC 495 6Torquay Hotels Ltd v. Cousins [1968] 7Rookes v. Barnard [1964] AC 1129 8Feldthusen, supra note 7, pp. 10-11. The author asserts that the “remoteness” of the damage from the initial conduct of the defendant is the characteristic and endemic issue which distinguishes pure economic loss, as a practical matter, from cases involving physical damage. Thus, when required, any alteration to compensation must always be positive (Polinsky and Rubinfeld, 1988). If the litigation costs are not very high then it becomes certain that injurers will surely take due care of the victims. But since this is not the case and the costs are very high that the suit is discouraged. The chance of court making a mistake in deciding about the injurers’ accountablity under a negligence rule also affects the optimum damage rule. Particularly, if courts are prone to err in determining the due care taken by the injurer then negligence liability rule with complete compensation damage will not essentially tempt injurers to take due care. Courts may sometimes commit error in judging a careful injurer liable and a negligent injurer not liable - under reasonable conditions. Under such circumstances excessive care taking will result in additional costs. care-taking will be unwarranted if damage awards fully compensate victims for their losses. Thus injurers will react to doubtfulness by taking excessive care – unless the court does not underestimate injurers’ care degrees and the dispersion of errors is not too disseminated (Calfee and Craswell, 1984; Craswell and Calfee, 1986; Shavell,1987, pp. 79-83, 93-97). Both literally and hypothetically, therefore, the law cannot be acceptable by an unforeseeability concept. Many accidents give rise to a sequence of costly economic results. These economic consequences can be statistically calculated and causally connected to the illegal action. As a rule, the existence or nonexistence of foreseeability is a realistic and legal issue that gets into the equation of liability in the directions fixed by the legal system. At the same time it is better that no a priori difference can (or should) be made among economic and no economic effects of a tort. In addition to this, it is the plaintiff who has always to tolerate the burden of establishing the loss by a prevalence of evidence. This may discourage possible claimants from instituting suit in cases of severe estimation difficulty and decrease the probability of exaggerated and conniving claims. Finally, courts have the necessary capability to carry on with evaluation issues and collusive claims as this seems to be their everyday duty.9 They usually estimate economic losses in other circumstances, like breach of contract, misrepresentation and economic torts. 9. Kinsman Transit Co. v. City of Buffalo, 388 F.2d 821, 823 (2d Cir. 1968) (“Here, as elsewhere, the answer must be that courts have some expertise in performing their almost daily task of distinguishing the honest from the collusive or fraudulent claim.”). 3. Illustrating your answer by reference to recent case law, indicate what you consider to be the main shortcomings of the law of defamation. Broadly speaking, defamation is a fake and lowly statement of truth that is injurious to someones repute, and published "with fault," which is due to negligence or malice. State laws frequently identify defamation in definite ways. Libel is a written defamation; slander is a spoken defamation; and Vilification is the message in the form of a statement which claims, explicitly stated or instated to be truthful, which may provide an individual, group, government business, nation or product a harmful image. It is more often than not1 a must that this assertion be fake and that the publication is passed along to the claimant. Actually the law of defamation is in need of a subtle balance between the right of individuals not to be slandered and the freedom of others to engage in free speech.2 Actions for libel can be taken up in the High Court under English law. The case can be for any in print assertions which are suspected to insult a named or particular individual or individuals in a way which results in loss in their business or profession, or induces a sensible person to think bad of him, her or them. Section 1(1) of the Defamation Act 1996 states that: "In defamation proceedings a person has a defence if he shows that - (a) he was not the author, editor or publisher of the statement complained of, (b) he took reasonable care in relation to its publication, and ------------------------------- 1. E.g., in the case the offense of defamatory libel under the common law of England and Wales, where prior to the enactment of section 6 of the Libel Act 1843 (defense of justification for the public benefit), the truth of the defamatory statement was irrelevant, and it continues to be sufficient that it is published to the defamed person alone. 2 Bryan P. Werley, Aussie Rules: Universal Jurisdiction over Internet Defamation, 18 Temp. Intl & Comp. L.J. 199, 219. (c) he did not know, and had no reason to believe, that what he did caused or contributed to the publication of a defamatory statement." Even though this section is an enhancement over the ambiguity of the preexisting common law, its wording still leaves much to be wanted. The refutation of establishing "reasonable care" rendered by S1(1)(b) is only offered to individuals who are not "publishers" according to s 1(1)(a). A "publisher" is specified in S1(2) as a commercial publisher, ie, a person whose business is to supply material to the public. This surely seems to keep out non-commercial hosts such as universities. "Editor" is defined as any person "having editorial or equivalent responsibility for the content of the statement or the decision to publish it." On the other hand S1(3) states that: "A person shall not be considered the author, editor or publisher of a statement if he is only involved … (c)in … operating or providing any equipment, system or service by means of which the statement is retrieved, copied, distributed or made available in electronic form;…[or] (e) as the operator of or provider of access to a communications system by means of which the statement is transmitted, or made available, by a person over whom he has no effective control." [parts omitted and emphasis added] Even though ss 2 and 3 may be of realistic use, it appears there are no panaceas to be set up in S1 of the 1996 Act. Nevertheless it is not, just the 1996 Act which wants extra territorial reach, but the whole of UK defamation law also needs such reach. At the same time defamation also includes reports and remarks of Parliamentary proceedings, as well as information of judicial minutes and they attract qualified privilege. These remarks and reports have to be fair and accurate. Lord Denning stated in “Associated Newspaper Ltd v Dingle, if the writer garnishes and embellishes such reports with any form of circumstantial evidence, the defence cannot apply. Additionally, where there is a mutual interest between two parties, statements deemed to be defamatory are protected where it can be proved there is a duty to impart them.” The case of Watt v Longsdon illustrates this principle, and the restrictions of it. In this case the director of a company communicated the chairman of so-called sexual actus reus implying Mr. Watt. This communication was viewed as privilege, but informing of such hunch to the claimants wife was not considered as a privilege. The House of Lords in Reynolds v Times Newspapers Ltd 3 depended principally on Lord Nicholls judgement - instituted that the mass media could be ennobled to the defense. ------------------------------------------------ 3 Reynolds v. Times Newspapers Ltd and Others, 1999 UKHL 45 2. Damien and Eddy are both supporters of Westfield United, an amateur football club, who are playing at home against a professional team in a cup tie. Westfield score after only 5 minutes and Damien excitedly tugs at Eddys scarf. Unknown to Damien, just before the match began Eddy had taken some blood pressure medication which can, in some cases, cause unsteadiness. Eddy crashes to the ground and seriously injures his back. Meanwhile, on the pitch, Frank, the captain of the professional team, is fouled by George and instinctively reacts by bringing him down with a tackle that breaks Georges leg. The referee decides not to send Frank off. Ten minutes later, Frank becomes involved in a heated exchange with Herbert, a spectator sitting in the front row who has been taunting him throughout he game about his poor performance. Frank ends up punching Herbert and breaking his jaw. Herberts long term girlfriend Irene, who was sitting next to him at the time, is very shaken by the incident and has recurring nightmares for months afterwards. Discuss the rights and liabilities in tort of each of the parties involved. It is well authenticated that wounds to the back and neck are one of the contributing grounds on which people need medical care. As the spine has a broad application of nerves, wide-ranging trauma to the neck or the back can lead in spinal cord injury or other crushing situations that may end in chronic pain, everlasting disability, palsy, and, in severe cases, death. Unknown to Damien, just before the match began Eddy had taken some blood pressure medication which can, in some cases, cause unsteadiness. Eddy crashes to the ground and seriously injures his back. The defendant even though unaware of the blood pressure medication taken by Eddy is liable to about 70% of the injury. The case is some what similar to the following case discussed: McEleney v McCarron (unrep, Dec 1992) Facts: “The Plaintiff suffered irreparable brain damage after being run over by the Defendant’s car at night. Before the accident the Plaintiff had been very drunk and was helped out of a disco by two women. The Plaintiff fell off the footpath onto the roadway. The two women tried but failed to move him back to the footpath. At this time, the Defendant was driving down the road and in the darkness all he could only see were two women gesticulating and he presumed they were hitching a lift. He did not see the Plaintiff on the road and he ran over him.” HC held: “Plaintiff 70 percent contributorily liable for the road accident and the Defendant 30 percent liable.” On appeal, SC held: “The Defendant had done his utmost to avoid injury in circumstances which made it impossible to detect the inebriated Plaintiff until it was too late. It reversed the HC’s finding of liability on the basis that to impose liability on the Defendant in these circumstances would be, in effect, to impose an absolute duty of care on him. Thus the Supreme Court overturned the High Court for wrongly imposing liability on the Defendant in circumstances where he had not been shown to have been at fault.” Rights of the injured and the injurer: If a negligence action occurs then it is for the injured party who should prove that the other party had a responsibility of sensible care, did not preserve logical care, and that the failure to preserve such reasonable care ensued resulted in injuries to the distressed party. Thus in the case above Damien is the injurer and he injured Eddy due to his negligent act. Eddy has the right to claim compensation from Damien by proving that the injury was caused due to Damien’s pushing him on the ground. Of course Damien also has the right to prove that he was not negligent to escape the liability of compensating Eddy. The case of Hebbert’s girlfriend being injured due to Frank’s punching Herbert and breaking his jaw is also an injury to a person under the law of tort. In this case also it was the negligence on the part of Frank which led to the injury of Hebbert’s girlfriend. She has the right to be compensated by Frank under the tort law. Actually the law states that a person who endures legal damages can use tort law to obtain compensation from someone who is legally responsible, or liable, for those injuries. At the same time Frank also has the right to prove that he was not responsible for her injury. He has to prove that he had taken due care and was not negligent when he punched Hebbert, which resulted in the injury of Hebbert’s girlfriend. One of the main substance of tort law is finding out the standard of care— which is a legal phrase and it means differentiating between when conduct is or is not tortuous. The actual issue is whether a person endures the loss from his own injury, or if it gets channelised to someone else. In the above case the injury to Frank was transferred to Irene. Thus the injurer was responsible for her injury. George has the liability to establish that Frank owes a duty of care towards him, that the responsibility was breached and that this breach of duty ensued in the accident for which compensation may be sought. A duty of care is recognized by the rationales set out in Caparo4 which states “the damage must be reasonably foreseeable by a reasonable person, there was must be proximity of relationship between the claimant and the defendant, and that finding in favour of the defendant must be fair, just and reasonable.” In Caparo v Dickman 1990 Lord Bridge differentiated between the diverse approaches that could be followed in identifying the presence of a duty of care. -------------------------------------------------- 4 Caparo Industries plc v Dickman (1990) 2 A.C. 605 References 1. SCM (United Kingdom) Ltd v W J Whittall & Son Ltd [1970] 3 All ER 245. 2. Anns v Merton London Borough Council [1978] AC 728. 3. Perre v Apand Pty Ltd (1999) 164 ALR 606, at 611. 4. Bishop, William. 1982. Economic Loss in Tort. Oxford Journal of Legal Studies 2: 1-29. 5. Brenner, Saul, and Harold Spaeth. 1995. Stare Indecisis: The Alteration of Precedent on the Supreme Court, 1946-1992. New York: Cambridge University Press. 6. Bussani, Mauro, and Vernon Valentine Palmer (editors). 2003. Pure Economic Loss in Europe. Cambridge: Cambridge University Press. 7. Holmes, Oliver Wendell. 1897. The Path of the Law. Harvard Law Review 10: 457-478. 8. Barber Lines, 764 F.2d at 56–57; Testbank, 752 F.2d at 1030–31; Dick Meyers Towing Serv. v. United States, 577 F.2d 1023, 1025 n.4 (5th Cir. 1978); Rickards v. Sun Oil Co., 41 A.2d 267, 269 (N.J.1945). 9. 2005 PL WebJour 2. 10. Reynolds v. Times Newspapers Ltd and Others, 1999 UKHL 45. 11. Gibb, Frances (2006-10-11). "Landmark ruling heralds US-style libel laws in Britain" (in English). The Times (Times Newspapers Ltd). http://www.timesonline.co.uk/article /0,,200-2398952,00.html. Retrieved 2009-08-09. 12. http://www.open.gov.uk/lawcomm/ Read More