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Master of Accounting

Week 6 Tutorial Questions

(Based on Lecture 5)
Law of Tort - Negligence

Business and Corporations Law

Tutorial Questions

Barron, M.L. Fundamentals of Business Law, 6th Edition, McGraw-Hill, 2009
Gibson, A Commercial Law in Principle, 3rd ed, Lawbook Co, 2005

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Tutorial 6 Law of Tort Negligence

In this week, you are introduced to the law of torts. The meaning of tort will be explained and the role of tort
law in relation to commerce will be outlined. The tort of negligence is considered and its significance to the
area of commerce will be discussed.
Tutorial Questions
1. What is a tort? What is the aim of the law of torts? How does a tort differ from a crime?
2. One of the most important torts is the tort of negligence. What does negligence mean?
What are the elements of negligence?
3. In the tort of negligence, for a duty of care to arise what must be shown?
4. In the tort of negligence, how is it ascertained whether a breach of duty has occurred?
5. In the tort of negligence, what is the test that determines the issue of causation?
6. What is meant by remoteness of damage?
7. Carol usually finishes her full time job at 5.00pm and takes a bus to a call centre where she starts
her part time job at 6.00pm. However, on this occasion she is delayed leaving her full time job and
misses the usual bus to get to the call centre on time. While waiting for the next bus a work
colleague, George, stops and offers to give her a lift to the call centre. Georges speech is slurred
and there is a strong smell of alcohol on his breath. Carol strongly suspects George is intoxicated
but she is concerned that if she continues to wait for the next bus she will get to the call centre late
and might be dismissed. Carol cannot really afford to lose her second job because she has a lot of
credit card debt. Carol gets into Georges car. A short time later, George loses control of the car and
drives off the road and hits a power pole. Carols arm is broken and she suffers minor head injuries.
Carol sues George, seeking damages for negligence. Will Carol be able to successfully sue George
in negligence? What does she need to establish in order to succeed in such an action?
Questions where economic (financial) loss is suffered.
8. Is it time that all Australian jurisdictions provided protection for auditors from unlimited liability in the
carrying out of their auditing duties, or is the current law satisfactory? Discuss.

What elements need to be satisfied to establish liability for negligent misrepresentation?

10. The plaintiff agreed to purchase a business from the defendant.

During negotiations the defendant stated that the business earned $300,000 per year but was only
able to produce financial statements and other documents showing that the business earned
$150,000 per year. Notwithstanding this the plaintiff entered into a contract to purchase the
business on the faith of the representation that it brought in $300,000 and paid a deposit as required
by the terms of the contract. The balance of the purchase moneys was due for payment on
completion of the sale (scheduled for 6 weeks time). There was no provision in the contract
concerning the earnings of the business. The plaintiff has now found out that the business has
never earned anywhere near $300,000 per year and refuses to complete the sale.
Discuss the merits of any claim by the plaintiff in negligence raised by these facts.