Disputes between businesses are usually based on contract, but they can also be based on negligence. They can be based on negligence in addition to breach of contract, or there can be a claim in negligence where there is no contractual relationship between the parties.
What is Negligence?
In a nutshell, negligence is carelessness. A claim in negligence can only arise where the defendant owed a duty of care to the claimant. However, there is no general duty not to be careless; not every person or company owes a duty of care to every other; the relationship between them must be sufficiently close. The duty was originally described as the duty to avoid acts or omissions which would injure your “neighbour”. It includes persons so closely and directly affected by your acts or omissions that they should have them in contemplation as being so affected. The potential damage must be sufficiently foreseeable for the duty of care to arise, and there must be a sufficiently proximate relationship between the parties. If the parties are too many steps removed from each other, and neither would have foreseen the damage, no duty of care will be established and there can be no negligence. It must be fair, just and reasonable to impose the duty of care. Sometimes the duty of care is considered from the point of view of whether the defendant undertook a responsibility towards the claimant.
If a duty of care can be established, the next thing to consider is whether the defendant has breached that duty. The standard of care expected in each case will vary depending on the circumstances, but the main principle is that a reasonable standard of care is expected of the defendant.
If the standard of care by the defendant was not reasonable, there has been a breach of duty. The next step is to consider whether the breach of duty caused loss or damage to the defendant. Would the loss still have been sustained were it not for the defendant’s negligence? Sometimes the loss may have been caused by more than one factor, including the claimant’s own contributory negligence. Sometimes another factor or party might intervene which breaks the chain of causation between claimant and defendant.
A claimant in negligence is entitled to be put in the position they would have been if the defendant had discharged their duty of care. They are entitled to claim for actual damage directly caused, but not for purely economic loss caused by the negligence.