The Increasing Trends in Disputes and Court Cases - Essay Example

Essay Table of Contents Introduction 3 The Cases 4 Conclusion 7 Reference 8 Introduction With the advent of information technology and massive developments in the communication process, the terms of trade are fast changing. As the changes are taking place, the increasing trends in the disputes and court cases are also observed all across the globe. Among the various aspects upon which the court cases erupts, one of the prime segment has been that of the financial losses because of sheer negligence. Often it has been observed that the concerned parties get involved in to accusations and counter – accusations, when any loss occurs in the business. A common thing in this regard has been that a loss-suffered party accuses its partner for incurring of the loss resulting in to legal disputes. There have been many instances for such legal cases some of which are discussed below. The Cases There have been various cases in the regard of economic losses that have arisen in because of negligence misstatements. Among such cases, Hedley Byrne & Co Ltd Vs Heller & Partners Ltd has been one of the most notables. The case is regarded as the tort law case which had occurred because of the negligent misstatement. Analysing the case it is observed that, Hedley Byrne was an advertising firm. The company had a new customer in lieu of Easipower Ltd. The recent customer put up a big order to the advertising company. Hedley Byrne became suspicious of the amount of the order and tried to ensure the financial viability of the client company. In order to do so, the advertising major called up their banks, National Provincial Bank, and asked for a report about the credit worthiness of Easipower Ltd from the client’s bank named Heller & Partner’s Ltd. The banker of the client replied to the National Provincial Bank and thereby to the Hedley Byrne stating that Easipower Ltd was “considered good for its ordinary business engagements”. But an important point that had to be noted in analyzing the case was that the banker of the client, Heller & Partners Ltd also notified the reply saying “without responsibility on the part of this bank”. Perceiving the financial credibility of Easipower Ltd to be perfect, Hedley Byrne went in to the deal with the company but soon Easipower Ltd went into liquidation. As a result, Hedley & Byrne lost a hopping amount of more than £ 17,000. Hedley & Byrne, incurring the loss, sued the banker of Easipower Ltd on the grounds of negligence as the advertising company relied upon the statement of the bank. The other accusation was that of misleading information. The honourable court heard the case with due sincerity and on the judgment emphasized upon the technical facets like the relationship in between the advertising company and the banker of the client was “sufficiently proximate” and therefore arose a “duty of care”. But as there was an open disclaimer on the part of the Heller & Partners Ltd, they were not held liable for the damages faced by Hedley Byrne. The honorable court of law also emphasized on the fact of “special relationship”. The court observed that the bank should have executed enough care so that there would not have been any chance of liability because of negligence. The other important case in the periphery of the English Tort Law has been that of the Caparo Industries Plc Vs Dickman. This case is in fact one of the leading cases of the present day. Studying the case, it can be observed that Caparo Industries Plc had been targeting to acquire Fidelity Plc for acquire some time now. It was a well known fact in the concerned industry that Fidelity Plc was not in its best of the phases as the officials warned about the depleting profitability which also resulted in the massive decrease in the share price of the company. Mr. Dickman was the auditor for Fidelity Plc. Once Caparo Industries acquired Fidelity, they found out that the financial condition of the company was much worse than that declared in the audit report. In that regard, Caparo Industries sued Dickman, the auditor. But the honourable court was of the view that Dickman was not responsible for such estimation of Caparo Industries as he was not employed by them. The court of law observed that Caparo Industries could itself employ an auditor to take account of the financial ability of Fidelity Plc. Therefore, Caparo Industries did not have the right to sue a person who was employed by the third party. In the other case of the same subject i.e. tort due to negligence of James McNaughton Papers Group Ltd Vs Hicks Anderson & Co, James McNaughton Group Ltd was the plaintiff company. The paper company planned to acquire a financially stressed firm named MK Paper Group. As the acquisition was complete, James McNaughton Papers Group Ltd found that the financial position of the acquired firm was not up to the mark and sued the chartered accountants’ firm, Hicks Anderson & Co that was the auditors of MK Paper Group. The court of law was of the view that the accounts that were prepared by the accountants were for the purpose of MK Group of Papers and also was a draft version and therefore the auditors cannot be held liable for such misstatement. In this regard the honourable court of law emphasized on six specific headings to verify if there is any liability that are as follows: The purpose for which the statement was made The purpose for which the statement was communicated The relationship between the advisor, the advisee and any relevant third party The size of any class to which the advisee belongs The state of knowledge of the advisor Reliance by the advisee (Swarb, “James McNaughton Paper Group Ltd -v- Hicks Anderson & Co [1991] 1 All ER 134; [1991] 2 QB 113.”). Conclusion The case with respect to tort and negligence and misstatement resulting in the economic losses came up every now and then. In future too, whole lots of such cases are expected. As it happens in the legal industry, the future disputes would be governed by the past decisions. Also, with time it is expected that newer observations will come up that would require further assessment of the issue. Reference Swarb, “James McNaughton Paper Group Ltd -v- Hicks Anderson & Co [1991] 1 All ER 134; [1991] 2 QB 113.” No Date. Negligence – 1991. 18 January, 2010. Read More