Assessment 3: Problem-solving exercise

Format

Problem scenario, students are required to identify the relevant issues, state the applicable principles of law, supported by authority, and apply the law to the given facts to arrive at a conclusion.

Scenario (the facts)

Ralph is a student at the Savoy University (SU) where he is enrolled for a Master of Accountancy. One of the requirements for the award of the M.Acc. is that the student completes a 6 month internship with a firm of chartered accountants. Ralph obtains an internship with the accounting firm of Gilbert & Sullivan & Co (G&S). Under the terms of the internship agreement with SU, Ralph is not paid for his time with G&S but is mentored by a senior partner in the firm.

As part of his internship Ralph acts as an assistant auditor and is sent to a client of G&S, The Oily Cart Ltd (OCL), a producer of vegetable oils. Before going on site the G&S audit team receive a safety brief which includes an absolute, total, no exceptions, smoking ban. This is reinforced by the senior partner who is mentoring Ralph, and who is one of the audit partners, making it clear to the whole team that anyone caught with tobacco or a means of ignition will be dismissed for serious misconduct.

Unfortunately Ralph is hopelessly addicted to cigarettes. While engaged in checking the level of sunflower oil in a storage tank, being out of sight, Ralph takes the opportunity to smoke a cigarette. He negligently drops the cigarette into the tank where it causes the oil to catch alight. Although Ralph is able to escape the conflagration, the fire destroys the tank and two adjoining tanks and their contents at a total cost of $2m.

OCL and their insurers are somewhat upset by this, especially when they learn that Ralph was not employed by G&S.

Required: Advise with reasons, whether G&S would be vicariously liable to OCL and their insurers for the damage caused by Ralph’s accident with his cigarette.

Assessment 3: Problem-solving exercise Format Problem scenari...