Gibson, Business Law 11^th Edition

Chapter 8: Applications of negligence to business

LO8.1 Identify the protection provided to consumers under the tort of negligence

Multiple choice: Choose the one alternative that best completes the statement or answers the question.

1. Which of the following statements about product liability is not correct?
   • • • 1. Sellers and repairers are under similar duties as manufacturers and distributors.
         2. Where there is a possibility for an intermediate inspection of the goods and the inspection is done negligently, the intermediary may be liable.
         3. A distributor of a product which is dangerous per se owes a duty to give adequate warning to take precautions.
         4. A manufacturer will only be liable under the Australian Consumer Law if they are shown to have been negligent.

Difficulty: Moderate

Topic: Product liability (defective products): What is the legal position of manufacturers?

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.1 Identify the protection provided to consumers under the tort of negligence.

1. In Grant v Australian Knitting Mills [1936] AC 85, the manufacturer:
   • • • 1. W as liable to the customer based on criminal law.
         2. W as not liable to the customer for breach of an implied term in the contract.
         3. W as not liable because the customer had the opportunity to inspect the product.
         4. W as liable for breach of duty of care owed to the customer.

Difficulty: Moderate

Topic: Product liability (defective products): What is the legal position of manufacturers?

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.1 Identify the protection provided to consumers under the tort of negligence.

True/False: Identify whether the statement is True or False

1. In Australian product liability cases, a ‘neighbour’ refers to the end consumer or purchaser of a product.
2. True
3. False

Difficulty: Moderate

Topic: Product liability (defective products): What is the legal position of manufacturers?

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.1 Identify the protection provided to consumers under the tort of negligence.

1. Consumer protection legislation provides injured parties with an easier route to compensation because the manufacturer is strictly liable for costs.
2. True
3. False

Difficulty: Complex

Topic: Product liability (defective products): What is the legal position of manufacturers?

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.1 Identify the protection provided to consumers under the tort of negligence.

1. A person who suffers injury as a result of a defective product may take action in negligence or under consumer protection legislation.
   • • • 1. True
         2. False

Difficulty: Basic

Topic: Product liability (defective products): What is the legal position of manufacturers?

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.1 Identify the protection provided to consumers under the tort of negligence.

Essay: Write your answer in the space provided or on a separate sheet of paper.

1. What is meant by the term ‘pure economic loss’?

Difficulty: Basic

Topic: Product liability (defective products): What is the legal position of manufacturers?

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.1 Identify the protection provided to consumers under the tort of negligence.

LO8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages

Multiple choice: Choose the one alternative that best completes the statement or answers the question.

1. In which case did the House of Lords first suggest that a negligent misstatement could give rise to an action for financial loss?
   • • • 1. Donoghue v Stevenson [1932] AC 562.
         2. L Shaddock & Associates v Parramatta City Council (No 1) (1981) 150 CLR 225.
         3. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.
         4. Esanda Finance Corporation v Peat Marwick Hungerfords (1997) 71 ALJR 448.

Difficulty: Basic

Topic: Negligent misstatements

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages.

1. In which of the following circumstance(s) will a person giving negligent advice be liable for harm which arises from their negligence?
   • • • 1. Where one person gives advice to another.
         2. Where the advice is given in serious circumstances to a person where the advisor knew they would reasonably rely upon it.
         3. Where the person giving the advice is a professional advisor.
         4. Where the advice is given in relation to commercial business activities.

Difficulty: Complex

Topic: Negligent misstatements

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages.

1. In which case did the High Court decide that a duty of care could arise in relation to both the giving of information and the giving of advice?
   • • • 1. Esanda Finance Corporation v Peat Marwick Hungerfords (1997) 71 ALJR 448.
         2. L Shaddock & Associates v Parramatta City Council (No 1) (1981) 150 CLR 225.
         3. Donoghue v Stevenson [1932] AC 562.
         4. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.

Difficulty: Basic

Topic: Negligent misstatements

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages.

1. What was the court’s reasoning in the case of San Sebastian Pty Ltd v The Minister Responsible for Administering the Environmental Planning and Assessment Act [1986] HCA 68?
2. There was no fiduciary relationship between the two parties.
3. There was evidence of an actionable misrepresentation by the respondents.
4. There was no evidence of specific representation by the respondent that the plans were to be acted upon.
5. The respondent failed to convey valuable information or statements to the appellant.

Difficulty: Complex

Topic: Negligent misstatements

Standard/Graduate Attribute AACSB: Analytical thinking

Learning Outcome: LO 8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages.

True/False: Identify whether the statement is True or False

1. There are no circumstances upon which an auditor owes a duty of care to a third party.
   • • • 1. True
         2. False

Difficulty: Complex

Topic: Negligent misstatements

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages.

1. The case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 set in motion the trend for professional liability suits.
2. True
3. False

Difficulty: Moderate

Topic: Negligent misstatements

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages.

1. Claims for misrepresentation resulting in personal injury must be commenced within two years of the incident according to the Limitations Act.
2. True
3. False

Difficulty: Basic

Topic: Negligent misstatements

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages.

Essay: Write your answer in the space provided or on a separate sheet of paper.

1. Would you agree that medical negligence law is a particularly turbulent area of law within Australia? Discuss.

Difficulty: Complex

Topic: Negligent misstatements

Standard/Graduate Attribute AACSB: Reflective thinking

Learning Outcome: LO 8.2 Discuss and explain negligent misstatement and the prerequisites for recovery of damages.

LO8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms

Multiple choice: Choose the one alternative that best completes the statement or answers the question.

1. Which of the following would be classed as a ‘non-delegable duty of care’?
   • • • 1. Employer-employee
         2. Hospital-patient
         3. Teacher-pupil
         4. All of the above

Difficulty: Basic

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. Vicarious liability is liability imposed on a defendant for the actual negligence of someone in the defendant’s control. Why was the appellant successful in Cassidy v Ministry of Health [1951] 1 ALL ER 574?
2. The employer was liable for the tortious acts of the independent contractor.
3. The employee had acted negligently in carrying out their duty of care towards the appellant.
4. The employer had not acted in a professional manner and neglected their duty of care.
5. The employee was recognised as an insurer and therefore is liable for the negligence.

Difficulty: Complex

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Analytical thinking

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. The decision in Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13 was based on the fact that:
   • • • 1. T he landlord of the premises allowed a dangerous substance to escape and damage another’s property.
         2. T he landlord of the premises employed a contractor to enter and carry out a dangerous activity.
         3. T he tenant employed a contractor who was negligent.
         4. T he landlord failed to have premises properly inspected.

Difficulty: Moderate

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. Under the civil liability acts, the definition of ‘Community work’ excludes work done for:
   • • • 1. tourism.
         2. financial gain.
         3. sport and recreation.
         4. amusement.

Difficulty: Basic

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. Under the civil liability acts for the majority of Australian States, a ‘Good Samaritan’ will still be liable for an act done for which of the following situations?
   • • • 1. While assisting a person who has been injured to prevent further injuries, but the person still ends up with further injuries.
         2. While giving advice about the assistance of a person who has not been injured but who is at risk of being injured.
         3. While the Good Samaritan is intoxicated.
         4. Assisting in an emergency medical situation.

Difficulty: Moderate

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

True/False: Identify whether the statement is True or False

1. In certain circumstances, the wrongful acts of an employee can render an employer liable.
   • • • 1. True
         2. False

Difficulty: Basic

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. The decision in Northern Sandblasting Pty Ltd v Harris [1997] HCA 39 found that landlords have a non-delegable duty of care to ensure that reasonable care is taken by the person carrying out work on their behalf.
2. True
3. False

Difficulty: Moderate

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Analytical thinking

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. A driver of a vehicle registered in the Northern Territory, who is injured in NSW can be compensated without proof of fault.
   • • • 1. True
         2. False

Difficulty: Complex

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Analytical thinking

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

Essay: Write your answer in the space provided or on a separate sheet of paper.

1. Describe the non-delegable duty of care concept.

Difficulty: Basic

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. What is meant by the term ‘vicarious liability’?

Difficulty: Basic

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. Do you think it appropriate that volunteers and ‘Good Samaritans’ are protected from the consequences of their carelessness? Explain your answer.

Difficulty: Complex

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Reflective thinking

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

1. Do you agree with the reasoning in Harmer v Cornelius (1858) 5 CB (NS) 236 that all employees have an implied duty of reasonable competence within their contracts and are thus liable to be sued? Give a reason for your answer.

Difficulty: Complex

Topic: Employer liability or vicarious liability

Standard/Graduate Attribute AACSB: Reflective thinking

Learning Outcome: LO 8.3 Explain the concepts of vicarious liability, breach of statutory liability and impact of other civil liability reforms.

LO8.4 Identify and explain the application of the tort of negligence to occupier’s liability

Multiple choice: Choose the one alternative that best completes the statement or answers the question.

1. To establish a case of occupier’s liability, a plaintiff must establish that:
   • • • 1. T he hazard was in the nature of a ‘trap’ and not obvious.
         2. T he defendant was negligent in not putting some protection in place or giving a warning.
         3. T he defendant has occupation or control of the land or structure.
         4. A ll of the above.

Difficulty: Moderate

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

1. The ‘occupier’ of a premises is best described as:
   • • • 1. T he person who has occupation or control of the premises.
         2. T he person who owns the premises.
         3. T he person who has entire control over the premises.
         4. T he person in possession of the premises.

Difficulty: Moderate

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

1. The decision in Australian Safeway Stores Pty Ltd v Zaluzna [1987] HCA 7 means that:
   • • • 1. Occupiers of property owe a duty of care to anyone who enters their premises.
         2. The duty of an occupier varies with the circumstances of a person’s entry.
         3. An occupier’s duty of care is measured by their response to a foreseeable risk.
         4. All of the above.

Difficulty: Moderate

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Reflective thinking

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

1. Which of the following is not a factor a court must take into account in deciding whether a public authority has breached its duty of care?
   • • • 1. Evidence of compliance with general procedures.
         2. The financial and other resources reasonably available to the authority.
         3. The broad range of the authority’s activities.
         4. Whether they are in occupation or control of the premises.

Difficulty: Basic

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

True/False: Identify whether the statement is True or False

1. In order to succeed in an action against an occupier, the plaintiff does not have to establish that the defendant has occupation as long as ownership can be established.
   • • • 1. True
         2. False

Difficulty: Basic

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

1. Hackshaw v Shaw [1984] HCA 84 supports the rule that an occupier of a premise does owe a duty of care towards trespassers or uninvited persons.
   • • • 1. True
         2. False

Difficulty: Moderate

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

1. For an occupier, where the risk is obvious, as seen in Neindorf v Junkovic [2005] HCA 75, duty of care is minimal.
   • • • 1. True
         2. False

Difficulty: Basic

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

1. Participants of dangerous recreational activities must be issued with a risk notice prior to engaging in the activity. This act is sufficient to prove the organisers duty of care.
2. True
3. False

Difficulty: Basic

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

Essay: Write your answer in the space provided or on a separate sheet of paper.

1. What is occupier’s liability?

Difficulty: Basic

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

1. Under common law, an occupier owes a duty of care to all people coming onto their premises, including trespassers. Why do you think the courts extended this duty of care to trespassers? Do you think that the courts’ approach was justified?

Difficulty: Complex

Topic: How does the tort of negligence impact the application of occupier’s liability

Standard/Graduate Attribute AACSB: Reflective thinking

Learning Outcome: LO 8.4 Identify and explain the application of the tort of negligence to occupier’s liability.

LO8.5 Discuss the requirements to prove criminal negligence and obtain a conviction of the defendant

Multiple choice: Choose the one alternative that best completes the statement or answers the question.

1. Liability for criminal negligence might arise because:
   • • • 1. The accused failed to exercise reasonable care and this caused death or injury to a member of the community.
         2. There was a very serious departure from reasonable standards of care.
         3. T he accused was reckless in the face of it being reasonably foreseeable that the injured person would suffer serious harm.
         4. A ll of the above.

Difficulty: Basic

Topic: Requirements of criminal negligence

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.5 Discuss the requirements to prove criminal negligence and obtain a conviction of the defendant.

True/False: Identify whether the statement is True or False

1. A prosecution for criminal negligence means a civil action cannot be taken.
   • • • 1. True
         2. False

Difficulty: Basic

Topic: Requirements of criminal negligence

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.5 Discuss the requirements to prove criminal negligence and obtain a conviction of the defendant.

1. The standard of proof in a criminal negligence case is beyond a reasonable doubt.
   • • • 1. True
         2. False

Difficulty: Basic

Topic: Requirements of criminal negligence

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.5 Discuss the requirements to prove criminal negligence and obtain a conviction of the defendant.

Essay: Write your answer in the space provided or on a separate sheet of paper.

1. What are the two elements required by the courts to establish a duty of care?

Difficulty: Basic

Topic: Requirements of criminal negligence

Standard/Graduate Attribute AACSB: Application of knowledge

Learning Outcome: LO 8.5 Discuss the requirements to prove criminal negligence and obtain a conviction of the defendant.

1. Do you agree with the judgment of the court in each case of R v Bbd [2006] QCA 441? Give a reason for your answer.

Difficulty: Complex

Topic: Requirements of criminal negligence

Standard/Graduate Attribute AACSB: Reflective thinking

Learning Outcome: LO 8.5 Discuss the requirements to prove criminal negligence and obtain a conviction of the defendant.