CAPE Law Question 1

Devon is out of a job and without any money.
He writes a book entitled “How to Win at the Races

Everytime”. Devon makes a large amount of money from the sale of the book through its wide
circulation to the public.
Arthur a talk show host features the book on his show, including an interview with Devon. Arthur places
the book on his Top Ten List and recommends the formula contained in it as “foolproof”.
Sasha who is facing foreclosure of her home, watches the show and goes out and buys the book. After
reading it she uses the $10 000 her mother lends her to stop the foreclosure proceedings and places a
bet at the race following the precision the formula in Devon’s book. Sasha loses all her money and her
house.
In fact, Devon knows very little about horse racing and the book is erroneous in many aspects.
(a) Explain the elements of the tort of negligent misstatement. [10 marks]
Negligent misstatement is an wrong statement of information provided from a person who possesses a
certain skill or knowledge to a person who lacks that particular skill or knowledge.
The elements of the tort of negligent misstatement with respect to economic loss was shown is the case
of Hedley Byrne v Heller . The claimants in Hedley Byrne v Heller (1964) were an advertising
agency, who had been asked by a firm called Easipower Ltd to buy substantial amounts of advertising
space on their behalf. To make sure their clients were creditworthy, Hedley Byrne asked their own bank,
the National Provincial, to check on them. National Provincial twice contacted Heller, who were
Easipower’s bankers and were backing them financially, to enquire about Easipower’s creditworthiness.
Heller gave favourable references on both occasions, but each time included a disclaimer stating that
the information was being supplied ‘without responsibility on the part of this Bank or its officials’. The
second enquiry asked whether Easipower was ‘trustworthy, in the way of business, to the extent of
£100,000 per annum’, and Heller answered that Easipower was a respectably constituted company,
considered good for its ordinary business engagements. This message was conveyed to Hedley Byrne,
and, relying on that advice, they entered into a contract with Easipower Ltd. Easipower later went into
liquidation, leaving Hedley Byrne to pay the £17,000 due to companies from whom they had bought
advertising space. Hedley Byrne claimed this amount from Heller. In view of the words disclaiming
liability, the House of Lords held that no duty of care was accepted by Heller, and none arose, so the
claim failed. However, the House also considered what their conclusion would have been if no words of
disclaimer had been used, and this is where the importance of the case lies. Their Lordships stated
obiter that, in appropriate circumstances, there could be a duty of care to give careful advice, and that
breach of that duty could give rise to liability for negligence. The fact that the sole damage was
economic loss did not, they said, prevent this. The House of Lords laid down a number of requirements
which claimants would need to satisfy in order to establish a duty of care under Hedley Byrne . There
must be:
 a ‘special relationship’ between the parties;

 a voluntary assumption of responsibility by the party giving the advice;
 a reliance on that advice by the party receiving it; and
 it must be reasonable for that party to have relied on the advice.
The legal principle decided on this case is that there is a duty of care not to cause economic loss where
there is a special relationship between the parties, the defendant voluntarily assumed a responsibility to
the defendant, the claimant relied on the defendant’s advice, and it was reasonable to do so.
The tort of negligence has three main elements:
 The defendant must owe the claimant a duty of care;

 The defendant must breach that duty of care;
 That failure must cause damage to the claimant.
As explained above, the basic test for a duty of care is now the one set down in
(b) Does either Devon or Arthur owe a duty of care to Sasha? [15 marks]
Support your answer with well-reasoned arguments.
In determining whether or not Arthur or Devon owe a duty of care to Sasha it can be decided in the case
of Caparo v Dickman (1990). This will usually be applied to duty of care questions in cases involving
physical injury and/or damage to property, and those which do not fall into any of the special categories
listed above. In some cases, it is also applied alongside the special rules in those categories, and some
experts suggest that those special rules are in fact simply a more detailed application of the principles in
the Caparo test. The test requires the courts to ask three questions:
 Was the damage reasonably foreseeable?

 Was there a relationship of proximity between defendant and claimant?
 Is it just, fair and reasonable to impose a duty in this situation?
The legal principle established on this case is that the basic test for a duty of care is whether the damage
was reasonably foreseeable, whether there was a relationship of proximity between claimant and
defendant, and whether it is just and reasonable to impose a duty.
In order for a duty to exist, it must be reasonably foreseeable that damage or injury would be caused to
the particular defendant in the case, or to a class of people to which he or she belongs, rather than just
to people in general. In other words, the duty is owed to a person or category of persons, and not to the
human race in general. A good example of this principle can be seen in Palsgraf v Long Island Railroad
(1928). The case arose from an incident when a man was boarding a train, and a member of the railway
staff negligently pushed him, which caused him to drop a package he was carrying. The box contained
fireworks, which exploded, and the blast knocked over some scales, several feet away. They fell on the
claimant and she was injured. She sued, but the court held that it could not reasonably be foreseen that
pushing the passenger would injure someone standing several feet away. It was reasonably foreseeable
that the passenger himself might be injured, but that did not in itself create a duty to other people
With relationship of proximity between defendant and claimant In Muirhead v Industrial Tank
Specialities (1985), Goff LJ pointed out that this does not mean that the defendant and claimant have to
know each other, but that the situations they were both in meant that the defendant could reasonably
be expected to foresee that his or her actions could cause damage to the claimant.
Lastly with respect to justice and reasonableness an example is McFarlane v Tayside Health Board
(1999). The claimant had become pregnant after her partner’s vasectomy failed, and claimed for the
costs of bringing up the child. The courts denied her claim, on the basis that it was not just and
reasonable to award compensation for the birth of a healthy child – something most people, they said,
would consider a blessing.

CAPE Law Question 1

Uploaded by

Copyright:

Available Formats

CAPE Law Question 1

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CAPE Law Question 1

Uploaded by

Copyright:

Available Formats

Devon is out of a job and without any money.

He writes a book entitled “How to Win at the Races

 a ‘special relationship’ between the parties;

The tort of negligence has three main elements:

 The defendant must owe the claimant a duty of care;

Support your answer with well-reasoned arguments.

 Was the damage reasonably foreseeable?

You might also like