Duty of care-negligence - Free Essay Example

Sample details Pages: 4 Words: 1329 Downloads: 5 Date added: 2017/06/26 Category Law Essay Type Narrative essay Tags: Duty Essay Did you like this example? Under the duty of care, there is another test used by the court in determining whether there is negligence in carrying out the duty of care which lead to the other person suffering from the damage as a consequences of the act. The test said in the above is called the Caparo( composite) test. This test is based on the principle established in the case of Caparo Industries plc V Dickman. Don’t waste time! Our writers will create an original "Duty of care-negligence" essay for you Create order In the case, Lord Bridge acknowledged that the lawà ¢Ã¢â€š ¬Ã¢â€ž ¢s tendency had been reverted to the traditional categories of recognizable situations in the imposition of a duty of care. In accordance to this principle, instead of the plaintiff needing to establish a duty, proving that his situation falls squarely into any of the recognized categories, the plaintiff only needs to established that the duty of care arises in his situation because it accords with existing policy and decisions in other comparable cases.[1] The general rule of this principle is that a plaintiff who suffers physical damage to his property will not have difficulty in establishing a duty of care. This situation is seen in the case of Marc Rich Co AG V British Rock Marine Co Ltd. In the case, it involve a vessel belonging to the first defendant carrying the plaintiffà ¢Ã¢â€š ¬Ã¢â€ž ¢s cargo. In the mid of the voyage, the ship had developed a crack. The first defendant called in the marine classificat ion society, the third defendant, which then surveyed the ship and eventually gave the ship a certified proof to continue its voyage. Unfortunately, after a several days, the ship sank, in consequence the plaintiffà ¢Ã¢â€š ¬Ã¢â€ž ¢s cargo which worth about six million pound was lost. Part of the sum was recovered from the first defendant, the balance is claimed from the third defendant.[2] In the case above, it is not difficult to see that the surveyor had acted in negligent while inspecting the ship before giving the green light for the ship to continue its voyage. It is also foreseeable in the case that the said act could possibly cause the ship to sink, causing physical damage suffered by the plaintiff after his goods was lost. But in this case, the House of Lord, in a majority judgment founded that the third defendant did not owe any duty of care, this decision is according to policy factors, primarily insurance plays a bigger role. As a result from the case, the principl e was established in the development, from its establishment the English court are more cautious when faced with cases involving facts showing duty of care and facts not showing the duty of care. By referring to the case of March Rich, it is decided that in cases like this there are three factors that must be fulfilled to established a duty of care. First is the damage is reasonably foreseeable. Second, is there a close and direct relationship of proximity between the plaintiff and the defendant and third, the circumstances as a whole must be such that it is fair, just and reasonable for the imposition of a duty of care. Under the principle, it uses the foreseeable concept to measure, the court will determine whether or not the plaintiff is a foreseeable victim or not. This concept also involve the use of proximity between the parties, is it close enough to satisfy the proximity that is needed to establish the duty of care. In Malaysia, the application of this test is straight forward, in ascertaining the existence of the duty of care. For the first element, an early example of its usage in Malaysia is in the case of Sathu V Hawthornden Rubber Estate Co Ltd. In this case, it involve nineteen heads of cattle which belonged to the plaintiff strayed onto the estate of the defendant while grazing. The estate had been sprayed with sodium arsenate a few days before and resulting in the death of the plaintiffà ¢Ã¢â€š ¬Ã¢â€ž ¢s cattle grazing in the area of the estate. In this case, the plaintiff alleged the breach of common law duty to a à ¢Ã¢â€š ¬Ã‹Å"neighbourà ¢Ã¢â€š ¬Ã¢â€ž ¢ committed by the defendant under the principle from the case of Donoghue V Stevenson. It was held that the principle cannot be apply in this case because the death of the cattle was not foreseeable because the defendant does not know that the plaintiffà ¢Ã¢â€š ¬Ã¢â€ž ¢s cattle would stray into the estate.[3] The above case is used in the test that the circumstances must be just an d reasonable, it is the same as in the case of Lok Kwan Moi Ors V Ramli B. Jamil Ors Government of Malaysia. The case involve the arrest of fisherman who are gambling, they all jumped into the river but was arrested in upon reaching the land, but one particular fisherman having difficulty swimming was drown. It was alleged that before the drowning another fisherman was trying to help but was chased off by the police, in the circumstances it was thought to be foreseeable for any reasonable man to foreseen that the fisherman would likely drown. It was held that the policeman and the Government were liable to the death of the fisherman. [4] For the second element, it involve the use of the neighbor principle as used in the case of Donoghue V Stevenson and used in the case of Sathu V Hawthornden Rubber Estate Co Ltd. This can be seen also on the case of Abdul Malik bin Idrus Ors V Tan Jee Han. This case uses the neighbor principles in proving the duty of care of the first appella nt towards the respondent had been breached. This can also be seen in the case of Syarizan bin Sudirman Ors V Abdul Rahman bin Bukit Anor. In this case, it involve the plaintiff receiving injury caused by a pursuing policeman, kicking his motorcycle in order to force him to stop, which caused him to crash and sustain serious injury. The question before the court was whether the policeman had breach his duty of care towards the plaintiff when he kicked the motorcycle, the court in this case found in favor of the plaintiff that the policeman did not exercise care and skill as was reasonable in all circumstances.[5] In the two cases of Abdul Malik bin Idrus Ors V Tan Jee Han and Syarizan bin Sudirman Ors V Abdul Rahman bin Bukit Anor it could also be used in determining the existence of the third element, which is whether the circumstances as whole must be such that it is fair, just and reasonable for the imposition of a duty of care. For example in the two cases, the court established in what situation is the policeman is liable to have breach their duty of care and when do the duty of care is impose on them. There is also questions raised, whether in using this principle does it apply in cases involving damages which is purely economic in nature. In the case of Arab-Malaysian Finance Bhd V Steven Phoa Cheng Loon Ors, it involves the collapse of several block after a continuos rainfall for ten days many lost their lives as a consequence to the collapse. There were three blocks of apartment involve in this litigation, the 2nd and 3rd block brought an action against ten defendants because the first block caused the collapse of the two blocks. Some defendant was dismissed, there is only a few defendant left the local authority, the owner, the engineer, another owner of the adjacent land and the person who provides management services. In this case it did not refer to the case of Uniphone Sdn Bhd V Chin Boon Lit Anor in determining the duty where the loss occasionally was purely economic, in this case it was thought that the foreseeability test and neighbor principle was sufficient in proving the duty of care towards the plaintiffs.[6] [1] [1990] 1 All ER 568, HL [2] [1995] 3 All ER 307, HL [3] [1961] MLJ 318 [4] [1984] 1 MLJ 46 [5] [2010] 8 MLJ 530 [6] [2003] 2 AMR 6, CA

A Formalist Analysis Of Williams Othello - 880 Words

A Formalist Analysis of Williams Shakespeare s Othello, reveals a central theme of friendship and loyalty that veils the truth of envy and betrayal. The main antagonist of the play, Iago, appears to have the trust and friendship of every character,as the are unaware of his grim intentions. Iago is described as kind, good, wise and compassionate, as well as loyal and trustworthy. He masks his evil and is able to display innocence as pure as an angel, resulting in easy manipulation. To our main character, Othello, he is an adviser and a most devoted soldier. To the lieutenant, Michael Cassio, Iago is a wise comrade. To his wife, Emilia and the fair Desdemona he is a scoundrel, but as a man, should be respected. And to Roderigo, Iago is a partner in crime. The relationships and faithfulness of each character to another are dependent on how the play unfolds dramatically in each Act. Act I of the play begins with Roderigo and Iago trying to inform Desdemona s father, Brabantio, that she has married the Moor, Othello against his wishes and they were doing unspeakable things. While Roderigo and Iago would not be exactly defined as friends, they are working together for a benefit. Roderigo is in love with Desdemona but her father has refused her and has shared no feelings of the same interest. Iago wants to be Othello s right-hand man instead of his ancient, and it can be inferred that he sees the relationship as a threat or he just wishes Othello no happiness. Iago uses his

Chapter 8 Mishkin Notes Free Essays

An Economic Analysis of Financial Structure Why do Financial Institutions Exist? (Why is Indirect Finance so Important? ) Chapter 8 Chapter Preview W e take a closer look at why financial institutions exist and how they promote economic efficiency. Topics include: †¢ A Few Basic Facts About Financial Structure †¢ Transaction Costs †¢ Asymmetric Information: Adverse Selection and Moral Hazard Chapter Preview (cont. ) †¢ The Lemons Problem: How Adverse Selection Influences Financial Structure †¢ How Moral Hazard Affects the Choice Between Debt and Equity Contracts †¢ How Moral Hazard Influences Financial Structure in Debt Markets 1 Basic Facts About Financial Structure Throughout the World †¢ The chart on the next slide shows how non-financial business get external funding in the U. We will write a custom essay sample on Chapter 8 Mishkin Notes or any similar topic only for you Order Now S. , Germany, Japan, and Canada. †¢ Notice that, although many aspects of these countries are quite different, the sources of financing are somewhat consistent, with the U. S. being different in its focus on debt. Sources of External Finance Copyright  © 2007 Pearson Addison-Wesley. All rights reserved. 8-5 Eight Basic Facts of Financial Structure 1. Stocks are not the most important source of external financing for businesses [Direct Finance] 2. Issuing marketable debt and equity ecurities is not the primary way in which businesses finance their operations [Direct Finance] 2 Eight Basic Facts of Financial Structure 3. Indirect finance, which involves the activities of financial intermediaries, is m any times more important than direct finance, in which businesses raise funds directly from lenders in financial markets. 4. Financial intermediaries, particularly banks, are the most important source of external funds used to finance businesses. Eight Basic Facts of Financial Str ucture 5. The financial system is among the most heavily regulated sectors of economy. 6. Only large, well -established corporations ave easy access to securities markets to finance their activities. Eight Basic Facts of Financial Structure 7. Collateral is a prevalent feature of debt contracts for both households and businesses. 8. Debt contracts are typically extremely complicated legal documents that place substantial restrictions on the behavior of the borrowers. 3 W hy is Indirect Finance so Important? †¢ Transactions Cost †¢ Information Cost Transaction Costs †¢ Financial intermediaries to reduce transaction costs (and make profits) through – †¢ Economies of scale †¢ Expertise †¢ Read the municipal bond article. Transaction Costs †¢ Transactions costs ? ? ? E. g. a $5,000 investment only allows you to purchase 100 shares @ $50 / share (equity) No diversification Bonds even worse—most have a $1,000 size 4 Transaction Costs †¢ Financial intermediaries make profits by reducing transactions costs – Take advantage of economies of scale (example: mutual funds) – Develop expertise to lower transactions costs – provide investors with liquidity and diversification Information Costs – Asymmetric Information †¢ symmetric information—the case where all parties to a transaction or contract have the same information. †¢ In many situations, this is not the case. We refer to this as asymmetric information. Asymmetric Information: Adverse Selection and Moral Hazard †¢ We will focus on two specific forms of asymmetric information: ? Adverse selection ? Moral hazard 5 Asymmetric Information: Adverse Selection and Moral Hazard †¢ Adverse Selection 1. Occurs when one party in a transaction has better information than the other party 2. Before transaction occurs 3. Potential borrowers most likely to produce adverse outcome are ones most likely to seek loan The Lemons Problem: How Adverse Selection Influences Financial Structure †¢ If quality cannot be assessed, the buyer is willing to pay at m ost a price that reflects the average quality Sellers of good quality items will not want to sell at the price for average quality †¢ The buyer will decide not to buy at all because all that is left in the market is poor quality items †¢ This result, when bad quality pushes good quality from the m arket because of an information gap, is known as â€Å"adverse selection† †¢ This problem explains fact 2 and partially explains fact 1 Asymmetric Information: Adverse Selection and Moral Hazard †¢ Moral Hazard 1. Occurs when one party has an incentive to behave differently once an agreement is made between parties 2. After transaction occurs 3. Hazard that borrower has incentives to ngage in undesirable (immoral) activities making it more likely that won’t pay loan back 6 Health Insurance †¢ Symmetric Information: Suppose, if you get sick, drugs cost $10,000/year †¢ Everyone has a 1/10 chance of getting sick †¢ Solution – Insurance will be offered at $1,000 per year Health Insurance – Symmetric Information continued †¢ Suppose 10% of the population (2 out of 20) is sickly and has a 50%(1/2) chance of getting sick – independent. †¢ Other 90% (18 people) only has 1/18 chance of getting sick. †¢ This information in known to everyone. †¢ How do you price the insurance? Health Insurance – Symmetric Information ontinued †¢ Sickly types pay? †¢ Healthy types pay? 7 Health Insurance – Asymmetric Information Adverse Selection †¢ Same as previous example, but one’s type (sick or healthy) is private information. Suppose insurance company offers policy at $1,000 per year? Suppose insurance company offers policy at $1,000 per year? †¢ Sickly type happy to save $4,000. †¢ Healthy drop out and go without insurance. †¢ Adverse selection: Bad quality pushes good quality from the market because of an information gap. 8 How about charging less say $555. 56 to everyone? How about charging less say $555. 56 to everyone? Break even on the healthy type, but lose on sickly type. †¢ Only way for insurance company in this case to break even is to charge $5,000 ? Healthy will go without insurance. Adverse Selection and Financial Structure Lemons Problem in Securities Markets †¢ Suppose investors cannot distinguish between good and bad securities, willing to pay only the average of the good and bad securities’ values. †¢ Result: Good securities undervalued and firms won’t issue them; bad securities overvalued, so too many issued. 9 Lemons Problem in Securities Markets †¢ Investors won’t want to buy bad securities, so m arket won’t function well. ? Explains Facts 1 and 2 ? Also explains Fact 6: only large well established firms have access to securities m arkets †¢ Bad quality pushes good quality from the m arket because of an information gap. Tools to Help Solve Adverse Selection Problems †¢ Private Production and Sale of Information ? Free-rider problem interferes with this solution †¢ Government Regulation to Increase Information (explains Fact # 5) Tools to Help Solve Adverse Selection Problems †¢ Financial Intermediation ? Analogy to solution to lemons problem provided by used car dealers ? Avoid free-rider problem by making private loans (explains Fact # 3 and # 4) ? Also explains fact #6—large firms are more likely to use direct instead of indirect financing 10 Tools to Help Solve Adverse Selection Problems †¢ Collateral and Net Worth ? Explains Fact # 7 How Moral Hazard Affects the Choice Between Debt and Equity Contracts †¢ Called the Principal -Agent Problem ? Principal: less information (stockholder) ? Agent: more information (manager) †¢ Separation of ownership and control of the firm ? Managers pursue personal benefits and power rather than the profitability of the firm Tools to help solve the Principal-Agent Problem: †¢ Monitoring ? Expensive †¢ Government regulation to increase information Fact 5 †¢ Financial Intermediation ? Venture capital firms provides the equity and place there own people in management †¢ Debt Contracts ? Reduces the need to monitor as long as borrower is performing. Explains Fact 1, why debt is used more than equity 11 How Moral Hazard Influences Financial Structure in Debt Markets †¢ Even with the advantages just described, debt is still subject to moral hazard. ? Debt may create an incentive to take on very risky projects. How Moral Hazard Influences Financial Structure in Debt Markets †¢ Most debt contracts require the borrower to pay a fixed amount (interest) and keep any ash flow above this amount. †¢ For example, suppose a firm owes $100 in interest, but only has $90? It is essentially bankrupt. The firm â€Å"has nothing to lose† by looking for â€Å"risky† projects to raise the needed cash. Tools to Help Solve Moral Hazard in Debt Contracts Lenders need to find ways ensure that borrower’s do not take on too much risk. ? A good legal contract ? Bonds and loans often carry restrictive covenants †¢ Restrict how funds are used Require minimum net worth, collateral, bank balance, credit rating. †¢ Financial Intermediaries have special advantages in monitoring[Facts 3 and 4] ? 12 STOP HERE!! 13 How to cite Chapter 8 Mishkin Notes, Essay examples

Chapter 8 Mishkin Notes Free Essays

An Economic Analysis of Financial Structure Why do Financial Institutions Exist? (Why is Indirect Finance so Important? ) Chapter 8 Chapter Preview W e take a closer look at why financial institutions exist and how they promote economic efficiency. Topics include: †¢ A Few Basic Facts About Financial Structure †¢ Transaction Costs †¢ Asymmetric Information: Adverse Selection and Moral Hazard Chapter Preview (cont. ) †¢ The Lemons Problem: How Adverse Selection Influences Financial Structure †¢ How Moral Hazard Affects the Choice Between Debt and Equity Contracts †¢ How Moral Hazard Influences Financial Structure in Debt Markets 1 Basic Facts About Financial Structure Throughout the World †¢ The chart on the next slide shows how non-financial business get external funding in the U. We will write a custom essay sample on Chapter 8 Mishkin Notes or any similar topic only for you Order Now S. , Germany, Japan, and Canada. †¢ Notice that, although many aspects of these countries are quite different, the sources of financing are somewhat consistent, with the U. S. being different in its focus on debt. Sources of External Finance Copyright  © 2007 Pearson Addison-Wesley. All rights reserved. 8-5 Eight Basic Facts of Financial Structure 1. Stocks are not the most important source of external financing for businesses [Direct Finance] 2. Issuing marketable debt and equity ecurities is not the primary way in which businesses finance their operations [Direct Finance] 2 Eight Basic Facts of Financial Structure 3. Indirect finance, which involves the activities of financial intermediaries, is m any times more important than direct finance, in which businesses raise funds directly from lenders in financial markets. 4. Financial intermediaries, particularly banks, are the most important source of external funds used to finance businesses. Eight Basic Facts of Financial Str ucture 5. The financial system is among the most heavily regulated sectors of economy. 6. Only large, well -established corporations ave easy access to securities markets to finance their activities. Eight Basic Facts of Financial Structure 7. Collateral is a prevalent feature of debt contracts for both households and businesses. 8. Debt contracts are typically extremely complicated legal documents that place substantial restrictions on the behavior of the borrowers. 3 W hy is Indirect Finance so Important? †¢ Transactions Cost †¢ Information Cost Transaction Costs †¢ Financial intermediaries to reduce transaction costs (and make profits) through – †¢ Economies of scale †¢ Expertise †¢ Read the municipal bond article. Transaction Costs †¢ Transactions costs ? ? ? E. g. a $5,000 investment only allows you to purchase 100 shares @ $50 / share (equity) No diversification Bonds even worse—most have a $1,000 size 4 Transaction Costs †¢ Financial intermediaries make profits by reducing transactions costs – Take advantage of economies of scale (example: mutual funds) – Develop expertise to lower transactions costs – provide investors with liquidity and diversification Information Costs – Asymmetric Information †¢ symmetric information—the case where all parties to a transaction or contract have the same information. †¢ In many situations, this is not the case. We refer to this as asymmetric information. Asymmetric Information: Adverse Selection and Moral Hazard †¢ We will focus on two specific forms of asymmetric information: ? Adverse selection ? Moral hazard 5 Asymmetric Information: Adverse Selection and Moral Hazard †¢ Adverse Selection 1. Occurs when one party in a transaction has better information than the other party 2. Before transaction occurs 3. Potential borrowers most likely to produce adverse outcome are ones most likely to seek loan The Lemons Problem: How Adverse Selection Influences Financial Structure †¢ If quality cannot be assessed, the buyer is willing to pay at m ost a price that reflects the average quality Sellers of good quality items will not want to sell at the price for average quality †¢ The buyer will decide not to buy at all because all that is left in the market is poor quality items †¢ This result, when bad quality pushes good quality from the m arket because of an information gap, is known as â€Å"adverse selection† †¢ This problem explains fact 2 and partially explains fact 1 Asymmetric Information: Adverse Selection and Moral Hazard †¢ Moral Hazard 1. Occurs when one party has an incentive to behave differently once an agreement is made between parties 2. After transaction occurs 3. Hazard that borrower has incentives to ngage in undesirable (immoral) activities making it more likely that won’t pay loan back 6 Health Insurance †¢ Symmetric Information: Suppose, if you get sick, drugs cost $10,000/year †¢ Everyone has a 1/10 chance of getting sick †¢ Solution – Insurance will be offered at $1,000 per year Health Insurance – Symmetric Information continued †¢ Suppose 10% of the population (2 out of 20) is sickly and has a 50%(1/2) chance of getting sick – independent. †¢ Other 90% (18 people) only has 1/18 chance of getting sick. †¢ This information in known to everyone. †¢ How do you price the insurance? Health Insurance – Symmetric Information ontinued †¢ Sickly types pay? †¢ Healthy types pay? 7 Health Insurance – Asymmetric Information Adverse Selection †¢ Same as previous example, but one’s type (sick or healthy) is private information. Suppose insurance company offers policy at $1,000 per year? Suppose insurance company offers policy at $1,000 per year? †¢ Sickly type happy to save $4,000. †¢ Healthy drop out and go without insurance. †¢ Adverse selection: Bad quality pushes good quality from the market because of an information gap. 8 How about charging less say $555. 56 to everyone? How about charging less say $555. 56 to everyone? Break even on the healthy type, but lose on sickly type. †¢ Only way for insurance company in this case to break even is to charge $5,000 ? Healthy will go without insurance. Adverse Selection and Financial Structure Lemons Problem in Securities Markets †¢ Suppose investors cannot distinguish between good and bad securities, willing to pay only the average of the good and bad securities’ values. †¢ Result: Good securities undervalued and firms won’t issue them; bad securities overvalued, so too many issued. 9 Lemons Problem in Securities Markets †¢ Investors won’t want to buy bad securities, so m arket won’t function well. ? Explains Facts 1 and 2 ? Also explains Fact 6: only large well established firms have access to securities m arkets †¢ Bad quality pushes good quality from the m arket because of an information gap. Tools to Help Solve Adverse Selection Problems †¢ Private Production and Sale of Information ? Free-rider problem interferes with this solution †¢ Government Regulation to Increase Information (explains Fact # 5) Tools to Help Solve Adverse Selection Problems †¢ Financial Intermediation ? Analogy to solution to lemons problem provided by used car dealers ? Avoid free-rider problem by making private loans (explains Fact # 3 and # 4) ? Also explains fact #6—large firms are more likely to use direct instead of indirect financing 10 Tools to Help Solve Adverse Selection Problems †¢ Collateral and Net Worth ? Explains Fact # 7 How Moral Hazard Affects the Choice Between Debt and Equity Contracts †¢ Called the Principal -Agent Problem ? Principal: less information (stockholder) ? Agent: more information (manager) †¢ Separation of ownership and control of the firm ? Managers pursue personal benefits and power rather than the profitability of the firm Tools to help solve the Principal-Agent Problem: †¢ Monitoring ? Expensive †¢ Government regulation to increase information Fact 5 †¢ Financial Intermediation ? Venture capital firms provides the equity and place there own people in management †¢ Debt Contracts ? Reduces the need to monitor as long as borrower is performing. Explains Fact 1, why debt is used more than equity 11 How Moral Hazard Influences Financial Structure in Debt Markets †¢ Even with the advantages just described, debt is still subject to moral hazard. ? Debt may create an incentive to take on very risky projects. How Moral Hazard Influences Financial Structure in Debt Markets †¢ Most debt contracts require the borrower to pay a fixed amount (interest) and keep any ash flow above this amount. †¢ For example, suppose a firm owes $100 in interest, but only has $90? It is essentially bankrupt. The firm â€Å"has nothing to lose† by looking for â€Å"risky† projects to raise the needed cash. Tools to Help Solve Moral Hazard in Debt Contracts Lenders need to find ways ensure that borrower’s do not take on too much risk. ? A good legal contract ? Bonds and loans often carry restrictive covenants †¢ Restrict how funds are used Require minimum net worth, collateral, bank balance, credit rating. †¢ Financial Intermediaries have special advantages in monitoring[Facts 3 and 4] ? 12 STOP HERE!! 13 How to cite Chapter 8 Mishkin Notes, Essay examples