Business and Company law 1500 words 2.1

Question 1:

The primary area of law engaged by the facts is that of product liability which is formed part of contract law, negligence and by the Consumer Protection Act 1987, Part 1. (CPA) (Tilson 2011: 164).  Under the law of contract a consumer who suffers loss as a direct result of a defective product can sue for breach of the express or implied terms of the contract of sale.  The terms implied into contracts for the sale of goods is sections 12-15 of the Sale of Goods Act 1979 which requires goods to be of satisfactory quality, fit for the purpose intended and in compliance with any sale description.  It can be strongly argued outdoor lighting should comply with a basic capability to form the function they were intended to do safely.  Any damage caused as a result of defective lights would be actionable firstly under contract law.  The level of compensation recoverable under breach of contract will depend upon whether a chain of causation can be established between the breach of contract and the damaged caused by the breach.  Normal losses which arise from the breach are recoverable and abnormal losses can only be recovered if the loss could be within the contemplation of the parties when the contract was made. (Hadley v Baxendale (1854)).The very existence of the fact that XLIGHT had knowledge of a safety issue with the lights would be likely to increase the chances of a successful claim in contract for losses and damages resulting from the defective lights.

Any damages and losses resulting from defective products can be taken by an action in the law of negligence.  In order to determine liability in the tort of negligence it is necessary to establish all three elements of negligence on the basis of the facts:

(1)   Whether a duty of care existed between the defendant and claimant.

(2)   Whether the actions taken by the defendant broke that duty of care.

(3)   Whether the breach caused the damage of a legally recognisable kind to the claimant. (Bermingham and Brennan 2010: 38).

In applying the facts to the law it is likely that a duty of care will exist between XLIGHT and their customers in that the parties are within the neighbourhood principle where XLIGHT must take reasonable care to avoid acts or omission likely to be foreseen to cause damage or injury to their customers (Caparo Industries plc v Dickman(1990)).  The fact that they were aware of a potential safety issue will be likely to satisfy the requirements that there was reasonable foresight of risk and injury,and by virtue of the fact that XLIGHT would or should have realised that their actions of failing to take reasonable steps to ensure the safety of the lights would be likely to affect their customers.  In these types of claims the courts are also likely to impose liability as it is fair and just to impose liability where a defendant was a aware of a risk to failed to take reasonable steps to avert that danger. (Marc Rich & Co AG v Bishop Rock Marine Co. Ltd [1996]).  The final step in considering a claim in negligence is to establish the factual and legal causation.  Firstly the claimant would have to establish that the damage and/or injury would not have happened but for the existence of the danger posed by the defective product.(Cork v Kirby MacLean Ltd [1952]).  Secondly they would also have to prove thatthe kind of injury sustained by the claimant could be reasonably foreseeable at the time of the breach of duty.(Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961]).  It is likely that as the XLIGHT are aware of safety issue this would heighten their responsibilities to ensure the safety of their products prior to putting them on commercial sale.  It would be likely that as all the principles of negligence appear to be present, XLIGHT could be successfully sued in an action for negligence if the damage/injury sustained was directly caused by the defect in the product.

The third potential action a consumer may take is under the CPA 1987 where section 2(1) states that ‘where any damage is caused wholly or partly by a defect in a product …’ liability will arise. Under section 2(2) XLIGHT will be liable as they are the producer of the product.  Liability under the CPA 1987 is set out in section 3(1) where it states that if the safety of the product is not as persons generally are entitled to expect.  It has been held by the courts that where a defect occurs in the manufacturing of a product which causes a failure by the manufacturer to meet the safety standards liability can be established. (Abouzaid v Mothercare (UK) Ltd [2000]).  Similar to negligence any potential claimant must establish on a balance of probabilities that the defective product caused the damage.  It is only necessary to show that a defect occurred and as result the damage/injury resulted. (Ide v ATB Sales Ltd [2007]).  One final hurdle is section 5 CPA 1987 which states that damage will be defined as: (1) death or personal injury, (2) damage to property in excess of £275 and (3) not the damaged product itself.  Any action brought by consumer must be brought within three years from the date the damage was caused but no longer than ten years after the product was brought into circulation.  In applying the law to the facts of XLIGHT it is likely a claim under the CPA 1987 will be possible in that the safety checks showed a defect in the manufacturing process, and any damage resulting from the defect will be liable in line with section 5 CPA 1987.


Question 5:


The first element in establishing negligence is to determine whether any duty of care existed between the defendant and the claimant.  In Wilson and Clyde Coal v English [1938] it was held that the defendant employer owed the claimant employee a duty of care as their employers, which includes three distinct parts:

(a) An obligation to provide a safe place to work.

(b) An obligation to provide competent fellow employees.

(c) An obligation to provide a safe system of work. (McDermid v Nash Dredging &                           Reclamation Co Ltd [1987]).

It can be accepted that as the Claimant was an employee of the Defendant a duty of care exists between the Defendant and Claimant to take all reasonable care to securethe health and safety of their employees.  The employer’s duty is a general duty to take reasonable care for the physical safety of the employee.  Key question was the duty breached by the actions of the employer?  In Latimer v AEC Ltd [1953] AC 643 the standard of care expected of an employer was held to be that of a reasonably competent employer in the same circumstances.

In Butler v Fife Coal Company Ltd [1912] it was held that a defendant employer will be liable if they fail to ensure that those in management or supervising roles are competent.

In Joseph Smith v Charles Baker and Sons [1891] it was held that an employer was under a duty at common law to ensure that his employees have a safe place of work to carry out their duties.  This includes the equipment and the facilities on site as well as the premises.  In Woods v Durable Suites LD [1953] the duty to exercise effective supervision does not require that an employer must provide a corps of overseers to ensure that their process for safe working conditionsfor their employees is at all times executed with precision.  Each case will depend upon its own facts, the case establishes that the principle that an employer needs not take every step to ensure that the employee uses the safety process enacted.  The employer will only be required to take reasonable steps to ensure a safe workingenvironment.

Factual and legal causation would need to be proved beyond reasonable doubt by the claimant.  Firstly, the claimant would be required to prove that the injuries and damages would not have occurred but for the fact of the accident.  Additionally, the claimant would have to prove that the type of injuries sustained are of the type would could have been within the reasonable contemplation of a reasonably competent employer.


Section 1(1) of the Law Reform (Contributory Negligence) Act 1945 allows the courts the power to apportion responsibility where any person suffers damages as the result partly of his own fault and partly the fault of another.  It was held in Jones v Livox Quarries [1952] that employees can be held contributory negligible where they ought to have foreseen that if he did not act as a reasonable prudent man, he might be hurt       himself.  Although the courts have been reluctant to find employees contributory negligible, it is possible to establish contributory negligence where injury could have been foreseeable as a consequence of their own behaviour even though the injury may         havebeen caused by the employer.




Abouzaid v Mothercare (UK) Ltd [2000] EWCA Civ 348.

Bermingham, V. and  Brennan, C. (2010) Tort Law Directions, Oxford: Oxford University Press.

Butler v Fife Coal Company Ltd [1912] AC 149.

Caparo Industries plc v Dickman [1990] 2 AC 605.

Cork v Kirby MacLean Ltd [1952] 2 All ER 402

Hadley v Baxendale(1854) 9 Exch 341.

Ide v ATB Sales Ltd [2007] EWHC 1667.


Jones v LivoxQuarries  [1952] 2 QB 608.


Joseph Smith v Charles Baker and Sons [1891] AC 325.


Latimer v AEC Ltd [1953] AC 643.


Marc Rich & Co AG v Bishop Rock Marine Co. Ltd [1996] AC 211.


McDermid v Nash Dredging & Reclamation Co Ltd [1987] AC 905.

Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961] AC 388.


Tilson, J. (2011) Consumer and Commercial Law,  Essex: Pearson Education.

Wilson and Clyde Coal v English [1938] AC 57.

Woods v Durable Suites LD [1953] 1 WLR 857.