Tort Law - Definition and System Examples - Essay Example

?The court must be careful to avoid a situation whereby there would be "....liability in an indeterminate amount for an indeterminate time to an indeterminate class (of claimant)" (Per Cardozo CJ in Ultramares Corporation v Touche (1931) 255 NY 170). In view of this assertion, this analysis seeks to critically discuss this statement with reference to the establishment of a duty of care in the tort of negligence. The essay starts by defining the meaning of key concepts which are tort of negligence as a way of attempting to gain a clear understanding of the whole scenario. The main discussion will be centred on the discussion of the facts surrounding the case and the extent to which duty care can be established in the tort of negligence. Basically, a tort law can be described as a civil wrong not arising from a contract and in the case of negligence, one should owe due consideration to one’s neighbour (Capiro Industries vs. Dickman 1990). It generally refers to the duty of care owed by somebody to his or her neighbour. Cooke (2010) suggests that in the event that it can be proved beyond any reasonable doubt by the court that the plaintiff has suffered a civil injustice, a claim can be raised and a remedy in the form of compensation can be instituted. On the other hand, negligence can be described as a civil wrong arising from the act of negligence by doing something a reasonable man would not do and a plaintiff must prove that the defendant owes a duty of care (Donoghue V. Stevenson 1932). It is of paramount importance for the plaintiff to be able to prove that the defendant had duty to take care of and that duty of care has been breached in order to win the claim. In order to prove the existence of day care duty, some conditions should prevail where a defendant can be taken to task if this duty is breached. Under the case of Capiro Industries vs. Dickman (1990), the following conditions should be taken into consideration which include; foreseeability, proximity as well as reasonability. In some cases it may not always be the case that a duty of care exists. Indeed, some situations are foreseeable to any reasonable person before he or she does a particular action that may be harmful to the other person. It is the obligation of the plaintiff to prove that he or she has suffered an economic loss as a result of the action of the person who has been dealing with him or her. In the above case of Ultramares Corporation v Touche (1931) 255 NY 170), the facts are: Justice Cardozo created a special rule with regards to accountants and auditors. He suggested that mass liability should not exist but that only the client and the intended third party could hold an accountant liable for the accountant's negligence (Wegman 2007). Thus the court must be careful especially when it comes to establish negligence in the case involving an unmarked amount of money for an unfixed time with regards to an indefinite third part. An accountant can facilitate a loan transaction between a financial institution and a third party and in this case, only the financial institution and the third party can hold the accountant liable in the event of losses as a result of negligence. In this case, negligence is a common form of tort law which can be punishable if carelessness is proved and the victim will be entitled to get compensation. Failure to protect others from harm as a result of somebody’s conduct is known as negligence whereby a duty care will have been ignored. From the above explanation of tort, it is clear that the accountant in this particular case has a duty care to make sure that their actions do result in financial losses to the client or the other third party which can be the plaintiff. With regards to this normal test, it does not always follow that duty care is owed by the third party which may result in loss of something which requires the plaintiff to prove that the resultant loss has been a result of the action of the accountant. In the case of Paris v Stepney Borough Council (1951) the editor of Salmond on the Law of Torts says: “There are two factors in determining the magnitude of a risk - the seriousness of the injury risked, and the likelihood of the injury being in fact caused.” Certain actions are potentially very dangerous and any right thinking and reasonable person ought to see that such kind of careless behaviour may expose others to danger. The defendant in the event of harm in the form of financial loss should always be concerned about taking safety precautions in order to avoid the situation. In view of the above scenario involving an accountant, the client and the third party, tort of negligence can be labelled in the event that the plaintiff can prove beyond any reasonable doubt that the actions of the accountant have been costly and have resulted in financial losses. With regards to the Ultramares Corporation v Touche (1931) 255 NY 170) case, it requires the court to be very care when it approaches such an issue which may involve financial loses that can be attributed to reasonability. Indeed any reasonable accountant may not engage in practices that can result in financial loses that can have a negative impact on the credibility of the financial house. In some cases it can be a genuine mistake and this cannot be considered as negligence. Against this background, the court has to be considerate when it deals with such kind of cases. In the case that the plaintiff has suffered economic losses as a result of fraud, then the accountant in this particular case can be held liable for tort of negligence. This emanates from the view that being a reasonable person, the accountant should not engage in such malpractices which can cause losses on behalf of the unsuspecting clients. Duty care can be established in cases involving fraud given that the accountant has the duty to ensure that the funds belonging to the third parties ought to be safeguarded so as to avert the chances of resultant losses that can be incurred in the event of negligent behaviour when handling these. In actual fact, financial houses have the duty to care for their clients who are the third parties hence activities involving fraud can be held liable under tort of negligence. In the case of Donoghue V. Stevenson (1932) proximity is described as a situation where a neighbour is a person who is closely and directly affected by somebody’s actions and ought to reasonably take that fact into account. Simply put, the aspect of proximity loosely refers to closeness to somebody which should be taken into consideration to ensure that somebody’s actions should not harm the next person since there is a duty of care that exists. In this case of Ultramares Corporation v Touche (1931) 255 NY 170), proximity can be referred to mean the relationship that exists between the accountant, financial institution and the third party. As far as negligence is concerned, the element of proximity plays a crucial role as it would seek to establish the extent to which the defendant can justify his actions. Where it can be proved that the actions of the defendant have resulted in loss to the plaintiff, negligent charges can be raised given that in the case of the accountant he should have taken every care to protect the duty of care owed to the plaintiff. However, unless it is fraud especially in the case of Ultramares Corporation v Touche (1931) 255 NY 170), the aspect of foreseeability which forms a component of tort of negligent may not be used. When it comes to financial matters, genuine mistakes may not be foreseeable and this cannot be treated as negligence on behalf of the accountant who will be responsible for the resultant economic loss. In some cases, tort of negligence is unintentional where the defendant would have no intention of causing harm or to the plaintiff. Damages for tort of negligence are not easily given until the plaintiff can be able to prove that the day of duty care has been breached. Tort laws in this case are specifically designed to compensate someone who has suffered a wrong resulting in injury or loss of property at the hands of the defendant and to deter persons from acting in such a way that would infringe another person’s rights. They are also designed to protect personal property, security as well as economic interests by providing legal capacity upon which damages can be claimed in the event that there has been injury caused to someone or there has been loss of property. According to Terry & Giugni (2009), there are traditionally four elements of the tort of negligence which the plaintiff has to prove in order to be successful in winning the claim. There is need to prove that the defendant owed the plaintiff a duty of care, the defendant breached that duty by falling below expected standards, the defendant’s conduct caused the plaintiff to suffer physical or economic harm (causation) and the harm suffered by the plaintiff was reasonably foreseeable (remoteness). This brings us to the assertion that the court must be careful to avoid a situation whereby there would be "....liability in an indeterminate amount for an indeterminate time to an indeterminate class (of claimant)" (Per Cardozo CJ in Ultramares Corporation v Touche (1931) 255 NY 170). Over and above, it can be concluded that a tort can be described as a civil wrong not arising from a contract. Everyone has a duty care for his or her neighbour and it is the role of the courts to establish is this duty care has been breached whereby compensation will be given as a remedy. In the discussion above, it can be noted that the court should not approach cases involving financial institutions and the third parties in the same way they will approach ordinary tort of negligence cases involving individuals. References Cooke, J. Law of Tort. London. Pearson. Donoghue v. Stevenson [1932] All ER Rep 1; [1932] AC 562; House of Lords. Retrieved 9 February 2011, From: http://www.safetyphoto.co.uk/subsite/case%20abcd/donoghue_v_Stevenson.htm Elliott & Quinn (2008) Tort Law, Pearson, London Negligence: duty of care and breach of duty, Retrieved on 08 February 2011, from: http://www.londonexternal.ac.uk/current_students/programme_resources/laws/subject_guides/tort/tort_ch3.pdf Paris v Stepney Borough Council [1951] AC 367 13 December 1950, Retrieved on 09 February 2011, From: http://www.a-level-law.com/caselibrary/PARIS%20v%20STEPNEY%20BOROUGH%20COUNCIL%20%5B1951%5D%20AC%20367%20-%20HL.doc Richards, Ludlow & Gibson (2009). Tort Law in Principle. 2nd Edition. LBC Terry A. & Giugni D. (2009). Business and the law. 5th Edition. Cengage Learning Australia. Wegman J (January 2007). Impact of the Sarbanes-Oxley act on accountant liability. Retrieved on 9 February 2011 from: http://findarticles.com/p/articles/mi_m1TOS/is_1_10/ai_n25009718/pg_7/?tag=content;col1 Read More