QUESTION 1

(a) Whether Fancy Fabrics owed him a duty of care and whether the duty had been
breached.

The issue that arises from the situation is whether Fancy Fabric breach the duty of care
towards Woody after ensuring that their product is the best one when it comes to fabric?

There is an area where a court would be cautious before imposing duty of care, one of it
is when the damage suffered by the defendant is in the form of pure economic loss. Pure
economic loss is the actual financial loss suffered by a party. The general rule for this loss is the
court only allows claims if there exist special relationships between parties concerned. Usually,
pure economic loss may be incurred either as a result of negligent misstatement which will use a
different principle to be considered.

Therefore, for cases of Negligent Misstatement that causes Economic Loss the formula to
establish duty would be to prove that there is Proximity + Foreseeability of the Defendant and
there is also a special relationship between them. In order to further explain this, in the case of
Hedley Byrne & Co Heller & Partners Ltd where In this case, the House of Lords held that the
exclusion clause made had disclaimed the duty of care. Thus, the disclaimer had effectively
precluded any duty of care for the defendant and they were not liable to the plaintiff. The court
went on and explained, which liability arises for careless statements. It was held that a duty of
care would only arise only when there is a special relationship between the plaintiff and the
defendant. In order to establish a special relationship, there are several tests that have been laid
down and need to be fulfilled conjunctively.

First and foremost, the voluntary assumption of responsibility by the party giving the
advice. In referring to Hedley’s case, the defendant replied in the letter mentioning that “For
private use and no responsibility on the part of the bank and its officials.” Based on these
words,the defendant voluntarily gave advice to the plaintiff that there was indeed a duty of care
imposed by Heller & Partners Ltd, the defendant. The reason why the defendant's advice was
solicited by the plaintiff was because the defendant can be considered an expert in advising
financially hence the finance knowledge of the defendant was reliable for the plaintiff. In
applying to the situation of Fancy Fabric and Woody, Mina has assured woody that FF imposed
duty of care towards woody based on what Mina told that is FF's employee are well-trained and
are capable of assisting him. Therefore there assited duty of care towards woody.
 Next, the second element is the plaintiff did rely upon the defendant. In contrast to
Hedley’s case, Penny is the defendant who holds a career specialising in fabrics and
conveyancing deals with clients. For that reason, Penny holds a skill and judgement on which
Woody relies on. This is why Woody, who inquired for advice on a good fabric, sought out
Penny. If Woody wants to buy a good fabric for his workers uniform, he would rely on Penny.

The third factor lies in where the reliance is reasonable. This means that the action of
the plaintiff to rely solely on the advice given by the defendant should be reasonable. This can be
further explained by referring to the case of Caparo Industries PLC v Dickman, the court held
that the auditor was not liable as the auditor does not owe the plaintiff any duty of care because
the report made was meant to the management of Fidelity and not the investors. To apply with
the situation of Fancy Fabric and woody. Woody was appointed with the assistance of penny who
have better acknowledgement about Fancy Fabric's materials and give recommendations of the
fabric that woody should buy. Woody, In the state of mind of trusting and relying on Penny's
recommendations, Woody bought the fabric.

The fourth test that the defendant knows that his statement will be communicated to
the plaintiff. This means that the adviser is aware that the advisee will receive his advice, either
directly or indirectly for the adviser to use that advice based on their purpose. Applying with this
situation Penny should be aware that her advice and statement would be communicated to
Woody, as he is the expert and person incharge on that day.

The fifth test is whether the defendant knows or ought to know that his statement
will be relied on by the plaintiff. This means that the advisor is aware that the advisee will rely
on the communicated statement without further inquiry from another party. This can be seen in
the case of Hedley V Bryne, Applying with the case, in the situation between Penny and Woody,
since Penny is the person in charge assigned by Fancy Fabric, Penny should know that Woody is
relying on every statement made by him regarding the fabrics, as he believes that by relying on
his statement, Woody would buy the fabric and believe that the fabric is suitable for the new
Uniform.

After the defendant's duty of care has been appropriately established, the plaintiff must
prove that the obligation has been breached. In the case between Penny and Woody, it can be
concluded that Penny is an expert in the field. Therefore, the standard of care must be the same
as other persons who is expertise in the same field because someone who professes to have a
special skill will not be judged in the same category as an ordinary person. The standard of care
of the expertise is to be assessed on the basis of what a reasonably skilled person would do.
Applying with this situation Penny is categorised as an expertise defendant. Therefore there was
a breach of duty of care. This is because of Penny’s negligence due to her recommendations,
Woody bought the fabric.
 In conclusion , Fancy Fabric owned duty of care towards Woody as a special relationship
was established between them and Fancy Fabric has breached a duty of care which caused
damages to Woody.