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 format suitable 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.
Commercial law revision questions unit 2: Torts
DET © 2006
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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’?
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Commercial law revision questions unit 2: Torts
DET © 2006
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?
Commercial law revision questions unit 2: Torts
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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.
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Commercial law revision questions unit 2: Torts
DET © 2006
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.
Commercial law revision questions unit 2: Torts
DET © 2006
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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 v Shaw (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?
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Commercial law revision questions unit 2: Torts
DET © 2006
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: Torts
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