Tort Law Essay Example | Topics and Well Written Essays - 1500 words

Tort Law - Essay Example In this case the appellant had suffered damage as a result of a snail in her ginger beer bottle and she brought a claim against the manufacturer for damages. It was held in this case that even though the appellant had not bought the ginger beer and therefore had no rights under the law of contract, she could successfully pursue a claim against the manufacturer in the law of tort. Lord Atkin asserted that a manufacturer owed a legal duty of care to the ultimate consumer of his product. In discussing duty of care as a legal concept, Lord Atkin established the â€Å"neighbour† principle†2. Lord Atkins went on to define the term â€Å"neighbour† in the legal sense as being â€Å"persons who are so closely and directly affected by my act that I ought to reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called into question.3† All the same, there are limitations to the application of duty of care principle. For instance, in the case of Dorset Yacht Co Limited v Home Office4 Lord Reid opined that â€Å"Donoghue v Stevenson may be a milestone†¦but it is not to be treated as if it were a statutory definition. It will require qualification in certain circumstances†5. The development of a test for establishing a legal duty of care in tort has been gradual. In Caparo v Dickman6, the House of Lords specified a three stage test to determine the absence or existence of a duty of care. The different states in this test are first, whether the consequences of the defendant’s actions were reasonably foreseeable. Second, whether there was sufficient proximity to impose a duty of care; and lastly, whether it is fair, just and reasonable to impose a duty of care. In applying this test to the appellant’s position, it must first and foremost be established, whether the respondent could have been

Contemporary issues in accounting and finance Essay

Contemporary issues in accounting and finance - Essay Example A recent FEE (Federation of European Accountants) publication states that â€Å"an individual’s objectivity must be beyond question when conducting and reporting on a statutory audit† (FEE). This paper will critically evaluate this statement with particular reference given to some fundamental financial/accounting/auditing concepts and external studies. Objectivity of statutory auditors There are many situations where a statutory auditor’s objectivity would be questioned when auditing financial statements of a firm. To illustrate, an auditor faces this challenge while dealing with the valuation of assets. In order to understand this situation clearly, it is necessary to discuss the difference between fair value and historical cost. Under historical cost accounting, assets and liabilities are valued at original acquisition price and any increase or decrease in their market value over the years is not taken into account (Shome 1995, p.135). In contrast, assets and l iabilities are valued at the market price in the current date under the fair value accounting method (Wood 2009, p.344). Traditionally, books of accounts were kept at historical costs. However, fair value accounting replaced this conventional accounting practice nearly two decades ago and since then the assets and liabilities are measured at their current value estimates (Ramanna 2013). Today, most of the firms value assets and liabilities at the estimates of their current market value in order to give the stakeholders a detailed view of the financial status of the business. Since dubious assets/liabilities valuation practices have led to many corporate failures over the last decade, it is a challengeable task for auditors to certify the reliability of fair value accounting. Under such circumstances, a statutory auditor’s objectivity is likely to be questioned if he has any specific interest in the firm. Fair value accounting represents the social construction of reality wher eby legitimacy, power, and illusions are created. As experts point out, new epistemic criteria have to be created to address the socially constructed reality of fair value accounting. Fair value accounting clearly represents socially constructed reality, and auditors are expected to maintain professional ethics and legitimate practices (Jeppesen & Liempd 2011). In order to verify this socially constructed reality, auditor’s independence has to be specifically promoted. The auditor’s independence can significantly affect the credibility of financial statements (Olagunju 2011). Hence, there is a positive relationship between independence of an auditor and credibility of the financial statement (Ibid). In addition, an auditor’s independence can justify his objectivity to a great extent. The auditor’s independence has two distinct aspects including real independence and perceived independence (Sucher & MacLullich n.d.). Accomplishment of both these aspects is essential to achieve the ultimate goals of auditor’s independence. Real independence can be simply defined as the independence of the auditor or independence of the mind (Palmrose & Saul 2001). More precisely, real independence is related to the state of mind the auditor maintains and how he manages a particular situation. A really independent auditor would make independent decisions even though he is forced to handle a compromising condition by the company’