Law Assignment

Student Number 220036024

Page 2 of 9

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It appears that Jack may be able to claim compensation from Kelly's Bank based on the law of the tort of negligence. In order to be successful in his claim Jack would have to be able to prove that Kelly’s bank owed him a duty of care, that they breached that duty of care and that the breach resulted in damage to Jack, and that such damage was not too remote1. *A %B-C)12334@6)7-8/)=D2E),-./)-)EFC4)=>).-:2) I would explain to Jack that as his bank manager, the courts would hold that Ned the bank manager ought to have taken reasonable care to ensure that Jack understood the risks and benefits of taking out a margin loan. Lord Atkin in describing the “neighbor principle” in Donoghue v Stevenson 2 stated that people owe others a duty of care if it is reasonable to think that their acts or omissions may cause them harm. I suggest that as a long time friend and bank manager to Jack, Ned would have been aware of the potential harm to him of taking out a margin loan without understanding the risks and benefits.

1 2

See Andy Gibson, Commercial Law in principle (3rd ed, 2005) 539; Clive Turner, Australian Commercial Law (27th ed, 2009) 646.
[1932] AC 562.

Student Number 220036024 GA %B-C)12334@6)7-8/)H:2-.B2E)).-:2)

Page 3 of 9

Because Jack relied and depended on Ned to explain the relevant facts before taking out a margin loan, Ned’s failure to do this represents a negligent failure to act which amounts to a breach of his duty of care to Jack 3. IA %B-C)CB2)H:2-.B)=>)EFC4):26F3C2E)