Revision of Unit 2: Torts

Problem questions

Here are some problem questions for you to attempt.

Before you proceed you may wish to refer to your textbook, in the introductory chapter, and read the section on ‘answering problem questions’.

Alternately, you can apply the format set out below to assist you in setting out an answer to the problem questions that follow.

How to answer a legal problem question
A suggested short formatsuitable for use in examinations.
1.ISSUE: Identify the main legal issue.
(perhaps one sentence or a paragraph at most)
2. LAW:Briefly set out the relevant legal principle/s from either case law and/or legislation.
3. APPLICATION: Apply the law to the facts given in the question and state your conclusion or give your advice.

2. short answer questions

1. Define ‘tort’.

2. Give an example of a wrong that could be both a tort and a criminal offence.

3. List the elements of a tort.

4. List three defences to defamation.

5. What is ‘negligent misstatement’?

3.

Larry Lovett inherits $200,000 from his late aunt, Julie Roberts. He has no knowledge or skill about investments and so he seeks advice from Rodney Rivkin, an expert professional investment and financial adviser. Lovett strictly follows Rivkin’s written advice and invests half of his funds in Miracle Films. One month later the company goes broke and Lovett discovers that the poor financial health of that company was well known and it had even been the subject of a television program and an article in the financial sections of all the major newspapers. As a result of the poor financial advice, Lovett loses $100,000.

Advise Lovett.

Would your advice be different if the written advice contained this warning: “All care has been taken on these suggested investments, but no responsibility will be accepted for the advice contained herein”?

Structure your approach along the following lines:

  • Unintentional false statement?
  • Claim of special skill or knowledge?
  • Serious circumstances?
  • Reliance on advice?
  • Loss resulted?
  • Reliance reasonable foreseeable?
  • Disclaimer?

4.

Edmund and Hilary share a couple of bottles of wine and then decide to go for a skinny dip in a neighbouring hotel’s swimming pool. Edmund gets into difficulties and nearly drowns. An ambulance is called for and the paramedics arrive six minutes later. Although they manage to revive Edmund, he has severe brain damage.

Discuss whether the hotel owners have any liability towards Edmund.

5.

Christopher is an entrepreneur. On a flight to Port Douglas he meets Pixie, a glamorous lady looking for Mr Right. Christopher tells Pixie that he is a highly successful businessman and knows a great deal about making lots of money. Christopher suggests that Pixie should invest in Quinine Ltd, a company that is about to launch a car with a revolutionary new engine that runs on hot air. On the basis of this advice, Pixie invests $100,000. She loses $50,000.

Does Pixie have a claim in tort against Christopher?

Outline what must be proved for Pixie to succeed.

Feedback for short answer questions

1.A tort is a civil wrong.

2.A drunk driver running over a pedestrian.

3.

  1. defendant owes a duty of care
  2. breaches that duty of care
  3. damage or injury is caused by that breach of the duty of care
  4. the cause is not too remote.

4.

  1. justification
  2. absolute privilege
  3. qualified privilege.

5. Negligent misstatement refers to a situation when a person relies on specialist advice and suffers some harm.

Feedback for question 3

There was a clear unintentional false statement and Larry would be able to sue Rodney for negligent misstatement. Rodney did claim special skill or knowledge as he was a professional financial adviser. Larry did obtain and rely on the advice and written instructions on the investments. Larry did suffer a loss of $100, 000. This loss was foreseeable.

If there was a disclaimer however and if the court considers it to be sufficient Lovett would not succeed in his action.

Feedback for question 4

This deals with occupier’s liability and contributory negligence. Edmund is drunk and trespassing. Even so, applying Hackshaw vShaw(1984) 155 CLR 614, Edmund may have a case.

Feedback for question 5

For a claim in negligent misstatement three elements must be established. Was there a duty of care? Was there a breach of that duty? Was there damage? Did the damage flow from the breach?

In Hedley Byrne & Co v Heller & Partners ltd (1964) AC 465 it was established that if a person holds special skills or expertise and gives advice in the course of their business, that person owes a duty to take reasonable care in supplying accurate advice.

MLC v Evatt (1968) 12 CLR 556 established that a professional adviser owed a duty of care to clients to whom they supplied information.

In Shaddock and Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225 the duty was widened to include any persons supplying information to others where they knew that the information would be relied upon for a serious purpose. In addition, the matters to be canvassed could include: special skill or knowledge; serious circumstances; reasonable reliance; provider of information knows or ought to know there is reliance on his/her judgement or skill.

The losses are the direct result of the breach of duty and were foreseeable by any reasonable person. Thus Pixie must prove that Christopher owed her a duty of care and that he breached that duty of care, causing her to suffer damage.

Commercial law revision questions unit 2: Torts1

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