Kids riding their new bikes on Christmas Day is as close to an ubiquitous experience as there is so yes the driver should have been more aware of what was going on.
He may not have technically been at fault but I agree with AlmostTrick; he probably could have done more. Without knowing him at all I'll assume that he's as grief stricken as anybody else in this sad story and I won't pile on him any more.
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“Life is not one damned thing after another. Life is one damned thing over and over.”
Edna St. Vincent Millay