Caparo Industries plc v Dickman [1990] 2 AC 605 (HL)

Facts

  • Caparo Industries plc brought a negligence claim against Dickman regarding the accuracy of audited accounts used during the purchase of shares.
  • The Caparo case led to the formulation of a structured test for determining the existence of a duty of care in tort law.
  • The test was developed amidst evolving case law, responding to the need for a clear standard in establishing negligence liability.
  • The context includes factual review of the parties’ relationship, nature of harm, and circumstances of interaction.

Issues

  1. Whether the defendant owed a duty of care to the claimant given the circumstances of the case.
  2. What criteria should guide the court in establishing the existence of such a duty of care in negligence.
  3. Whether policy considerations, in conjunction with foreseeability and proximity, limit the imposition of liability in negligence cases.

Decision

  • The House of Lords articulated a three-stage test requiring foreseeability of damage, a relationship of proximity between claimant and defendant, and the imposition of a duty being fair, just, and reasonable.
  • The Court emphasized the test is not a rigid rule, but a framework to guide analysis in varied factual contexts.
  • It was held that the duty of care should not be automatically imposed merely because harm was foreseeable; proximity and policy considerations must also be satisfied.
  • The outcome established that the auditors did not owe a duty of care to Caparo in these particular circumstances, due to the absence of sufficient proximity and the role of policy concerns.

Legal Principles

  • The Caparo test for duty of care in negligence comprises three elements: (1) the harm must be reasonably foreseeable; (2) the relationship between claimant and defendant must be sufficiently proximate; (3) it must be fair, just, and reasonable to impose a duty.
  • Foreseeability alone is insufficient; proximity and fairness are separate and necessary inquiries.
  • Policy considerations, such as floodgates arguments and impacts on public functions, play a role in determining the imposition of liability.
  • The test is a flexible analytical framework rather than a strict checklist and requires contextual application.
  • Alternatives, such as the assumption of responsibility approach and incremental development, may also guide the court where relevant.

Conclusion

The Caparo test remains central to establishing duty of care in negligence, ensuring liability is grounded in foreseeability, proximity, and fairness, while allowing courts the flexibility to consider policy and contextual factors in each case.

The answers, solutions, explanations, and written content provided on this page represent PastPaperHero's interpretation of academic material and potential responses to given questions. These are not guaranteed to be the only correct or definitive answers or explanations. Alternative valid responses, interpretations, or approaches may exist. If you believe any content is incorrect, outdated, or could be improved, please get in touch with us and we will review and make necessary amendments if we deem it appropriate. As per our terms and conditions, PastPaperHero shall not be held liable or responsible for any consequences arising. This includes, but is not limited to, incorrect answers in assignments, exams, or any form of testing administered by educational institutions or examination boards, as well as any misunderstandings or misapplications of concepts explained in our written content. Users are responsible for verifying that the methods, procedures, and explanations presented align with those taught in their respective educational settings and with current academic standards. While we strive to provide high-quality, accurate, and up-to-date content, PastPaperHero does not guarantee the completeness or accuracy of our written explanations, nor any specific outcomes in academic understanding or testing, whether formal or informal.
No resources available.

Job & Test Prep on a Budget

Compare PastPaperHero's subscription offering to the wider market

PastPaperHero
Monthly Plan
$10
Assessment Day
One-time Fee
$20-39
Job Test Prep
One-time Fee
$90-350

Note the above prices are approximate and based on prices listed on the respective websites as of May 2025. Prices may vary based on location, currency exchange rates, and other factors.

Get unlimited access to thousands of practice questions, flashcards, and detailed explanations. Save over 90% compared to one-time courses while maintaining the flexibility to learn at your own pace.

All-in-one Learning Platform

Everything you need to master your assessments and job tests in one place

  • Comprehensive Content

    Access thousands of fully explained questions and cases across multiple subjects

  • Visual Learning

    Understand complex concepts with intuitive diagrams and flowcharts

  • Focused Practice

    Prepare for assessments with targeted practice materials and expert guidance

  • Personalized Learning

    Track your progress and focus on areas where you need improvement

  • Affordable Access

    Get quality educational resources at a fraction of traditional costs

Tell Us What You Think

Help us improve our resources by sharing your experience

Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

Saptarshi Chatterjee

Saptarshi Chatterjee

Senior Associate at Trilegal