Business Law: Case Study

Business Law: Case Study

In advising the potential parties as to whether they have a prima facie case in the tort of negligence we must consider which parties have been wronged and then establish if they are owed a duty of care, whether there was a breach of that duty and whether the breach caused the damage for which the parties wish to claim damages. We must consider who is entitled to claim compensation and for what type of damage they sustained. To have a potential claim in tort against either Tom or Technology Investments, the specialist magazine, he must prove on the balance of probabilities that there was negligence. He must first establish if there was a duty of care owed by either party to Henry. It has been the general presumption of tort law that recovery for "pure" economic loss was not actionable save in exceptional cases, to impose such a duty would lead to "...liability in an indeterminate amount for an indeterminate time to an indeterminate class...". However the landmark case of Hedley Byrne-v-Heller allowed recovery in certain situations. The scope of Hedley Byrne is somewhat limited by dicta in Caparo-v-Dickman which excluded liability for general statements to the public and Mutual Life & Citizens' Assurance-v-Evatt where the Privy Council sought to limit the scope to advice given in the course of business. However the Court of Appeal has held there to be a duty of care between friends in circumstances where there is sole reliance placed upon the statement but this case has been suggested to stand on its own facts although technically still binding on courts of first instance and the Court of Appeal. Thus the scope of Hedley Byrne is confined to negligent statements not negligent acts. To prove a duty of care there must be foreseeability of damage, sufficient proximity and it must be "just and reasonable" to impose a duty of care. It is foreseeable that those who offer advice professionally regarding share deals can foresee such a loss and Mrs. Arnold may be in a proximate relationship with Henry. It is not clear however whether Technology Investments is in such a close proximity to owe such a duty. Technology Investments may also be covered by the dicta in Caparo-v-Dickman in which Lord Bridge refused to recognise a duty of care where "...the statement is put into general circulation...[and] relied on by strangers...[for] a variety of different purposes which the maker of the statement has no specific reason to anticipate..." Technology Investments, although a specialist magazine, would therefore argue that its primary purpose was to inform and not to advise individual parties on individual investments.

Mrs. Arnold however is holding himself out as a specialist and as such it is questionable whether he could claim a duty of care from the magazine as it could be argued that he would not place reliance on one single article. Miss Brown would however claim that the advice given to him was from someone ...