Part 3Business transactions
356
1 In what circumstances does the law impose liability
on a person who is not at fault? How can liability
without fault be justified?
2 ‘Death, injury and loss from manufacture is a
commonplace in our society, but compensation for
it is pure roulette.. .’, Sunday Times, 27 June 1976.
Discuss with reference to the law as it stands at
present. How did implementation of the Consumer
Protection Act 1987 improve the rights of consumers
in respect of faulty goods?
3 Steven, an accountant, returning from his office,
calls into a pub for a relaxing drink. He bumps
into Paul, an old school friend, whom he has not
seen for many years. During the course of the
conversation over a number of pints, it emerges
that Paul has recently inherited a substantial sum
of money and is interested in investing in local
businesses. Steven mentions that one of his clients,
Precarious Ltd, is seeking financial backing and
would make an attractive investment. By chance,
he has a copy of the company’s accounts in his
briefcase which he gives to Paul. Relying on these
accounts, Paul invests £10,000 in Precarious Ltd,
but loses everything when Precarious goes into
liquidation six months later. In fact, the accounts had
been prepared negligently and did not reflect the
parlous state of the company’s affairs.
Advise Paul.
4 Devise practical steps that might be taken by a
person wishing to avoid liability for professional
negligence.5 Ian and John, employees of Oldtown Council,
carelessly erect a temporary grandstand
overlooking the finishing line at the council-owned
sports arena. The grandstand collapses during an
athletics event, fatally injuring several spectators.
Discuss the civil liability of Ian and John and their
employer for the accident.6 Percy Brown’s grandchildren club together to buy
him a ‘fully guaranteed’ Warmglo Deluxe electric
blanket for his 80th birthday. As the winter evenings
draw in, Percy decides that he would be warmer in
bed with his new electric blanket than in his draughty
sitting room. He establishes a routine – he puts the
blanket on for 30 minutes before he goes to bed
and, despite warnings in the operating instructions,
he keeps the blanket switched on at the highest
setting, while he reads in bed. One particularly cold
January night, the electric blanket catches fire (as
a result of faulty wiring), just as Percy is about to go
to sleep. He suffers slight burns to his leg, but the
fire causes extensive damage to his bed.
Advise Percy.Self-test questions/activities
1 Dilip lives in a quiet residential area. Next door,
Kwickbuild Ltd is carrying out extensive building
work to a dilapidated old house. The builders, who
are working from dawn to dusk, seven days a week,
use a crane which passes over Dilip’s house. Dilip
and his family are annoyed by the dust, dirt and
noise caused by the building work.
Advise Dilip as to his legal position and any legal
remedies he may have.
2 Mr and Mrs Sharp decide to buy a holiday cottage at
Cliffville-on-Sea. They approach the Beach Building
Society for a mortgage. The building society instructs
ABC Valuers and Surveyors to carry out a mortgage
valuation. ABC send their staff valuer, Sandy, to carry
out the survey. Despite evidence of subsidence,
Sandy’s valuation report is favourable. The report
clearly states that it has been prepared for mortgage
purposes only and is not a structural survey. Mr and
Mrs Sharp, who are sent a copy of the report, decide
to proceed with the purchase without undertaking
their own survey, having secured the required loan.
Shortly after completing the purchase, they discover
that the cottage requires underpinning.Specimen examination questions