Aspects and Contract And Negligence for Business

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Aspects of Contract and Negligence for Business

105649/Nipuna Weerakoon

Page 1

Business Management

Assignment: Aspects and Contract

AndNegligence for Business

Mr. Ibrahim Conteh

I.D No: 105649

NIPUNA WEERAKOON

Higher National Diploma


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Table of contentsExecutive summary

Acknowledgements

Introduction to Law

Case Study 1: Contract......................

1.1Offer 9

1.2 End of offer and Counter offer 9-10

1.3Invitation to Treat 10

1.4

Acceptance and Communications of Acceptance 111.5 The Postal Rule 12

Case Study 2: I ntenti on to create Legal Relations..............................

2.1 Domestic Arrangements 14

2.2 Commercial agreement 14

Case Study 3: Part payment .

3.1 Consideration 15-16

3.2 Part payment 16-17

Case Study 4: Warranty and Condition

4.1 Condition 19

4.2 Warranty 20

Case Study 5: Exclusion Clause, UCTA 1977 and UTCCR 199

5.1 Exclusion Cause 21-22

5.2 The contra preferential rule 22

5.3 Unfair Contract Terms Act 1977 (UCTA) 23-25

Case Study 6:Potential l iabil ity f or economic loss, Tor t of Negli gence..

6.1 Tort of Negligence 26

6.2 Duty of care 27-28


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Case Study 7: Occupiers Liability

7.1 The Neighbor Principle 30

7.2 Occupier 31

7.3 Occupiers Liability 32

7.4 Trespasser 32-33

7.5 Visitor 34

7.6 Occupiers Liability to a Visitor 36

Case Study 8: Negli gent M isstatement, Proximi ty Test.

8.1 Negligent Misstatement 37

8.2 Proximity Test 38

Conclusion

Bibliography


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Acknowledgements

I would like to acknowledge the advice and guidance of Mr. Ibrahim Conteh. Thanks very

much for Mr. Ibrahim Conteh provided lecture for students every Wednesday, and he

patiently explained and analyzed from the most basic knowledge, help me step by step

understand the questions of assignment and how to do it. Also I want to thanks for my

classmates, thanks for your enthusiasm to help me solve the problems which I meet during

the assignment.

The major materials for the research from the library books, so thanks college library support

books and social library staffs introduce some books for me.

Nipuna Weerakoon,


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Executive Summary

This report is prepared by the author addressing various influences that will impact on

English Law. Furthermore, it will relate to other areas such as Contract law, Intention to

create Legal Relation, part payment, Warranty and Condition etc, this report has been

divided into eight chapters which have been discussed briefly as follows:

Chapter 1 about, law of contract which clarify an issue arise in a deal of printing press.

judgment was based on the cases [Partridge v Crittenden 1968] and [Hyde v Wrench 1840] .

In the second scenario the judgment was based on the postal rule and relevant case is [Adam

v Lindsell 1818].

Chapter 2 highlight on the law term of intention to create legal capacity also talk about

domestic and commercial relationship according to cases [Balfour v Balfour 1919] and

[Merritt v Merritt 1970]

Chapter 3 emphasizes about the law terms of consideration, part payment and promissory

estople. The previous cases decided relevant to these law terms which are [Foakes v Beer

1884], and [Pinnels case 1602],

Chapter 4 describe that Condition and warranty [Poussard v Spiers & Pond 1876] and [Bettni

v Gye 1876] are the cases which relevant to this

Chapter 5 highlights about the exclusion clause and the requirement for a valid exclusion

clause. [LEstrange v Graucob 1934] [Curtis v Chemical Cleaning Co 1951] and Unfair

Contract Terms Act 1977 and Unfair Terms in Consumer Contract Regulations 1999 and its

provisions to the exclusion clause all have been explained. [R & B Customs Brokers Ltd v

United Dominions Trust Ltd 1988].

Chapter 6 directly connected to the potential liability for economic loss, Tort of Negligence

[Donoghue v Stevenson(1932)] and [Hedley Byrne & Co Ltd v Heller & Partners Ltd

(1964)], are the cases which helps to describe decision.


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Chapter 7 highlights that occupiers liability, the definitions of occupier, trespasser and the

visitor and the occupiers liability to the trespasser and to a visitor. The cases of[Donoghue v

Stevenson 1932], [Blyth v Birmingham Waterworks Co 1856], [Nicholas H Marc Rich & Co

v Bishops Rock Marine 1995], [Glasgow Corporation v Taylor 1992], [Wheat v E Lacon and

Co Ltd 1966], and many other cases helpful to justify the decisions.

The final chapter 8 focused on the duty of care and under that it was discussed about the

negligent misstatement. [Headley Byrne & Co Ltd v Partners Ltd 1964], and many other

cases helps to justify the decisions.


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Introduction to Law:

English Law

English law is the legal system of England and

Wales. The body of English law includes

legislation, Common Law, and a host of other legal

norms established by Parliament, the Crown, and

the judiciary.It is the fountain from which flowed

nearly every facet of U.S. law during the

eighteenth and nineteenth centuries.

Structure of English court system.

Common Law

Common law is in effect legal precedent that is

made by judges sitting in court. Judge-declared

law, Law which exists and applies to a group on

the basis of customs and legal precedents

developed over hundreds of years in Britain.

Contract Law

Contract is an agreement between two or more

competent parties in which an offer is made and

accepted, and each party benefits. The agreement

can be formal, informal, written, oral or just plain

understood.
http://legal-dictionary.thefreedictionary.com/Common+Lawhttp://legal-dictionary.thefreedictionary.com/Common+Law


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Analysis:

Explanation:

Legal Elements of a Contract:

If the law of contract were not already entrenched in the traditions of legal education,

would anyone organize a course around it, let alone produce books expounding

it?(Wightman 1989)

A contract is a promise or a set of promises for the breach of which the law gives a

remedy, or the performance of which the law in some way recognizes as a duty

[Restatement (Second) of Contracts 1 (1981)]

The scenar io deals about Advertisement of A printi ng Pr ess.

Augustine has advertised his painting press in a journal for the sale of 20,000

so this is invitation to treat (Par tr idge v Crit tenden 1968)

Then Christina made the offer for 15,000

Augustine made a counter offer which was for 17,000.

Case Study 1

a.) Augustine and Chr istina: Adverti sement of Printing press

Augustine Christina

Invitation to Treat

15000Offer

17000Counter Offer

15000Invalid Acce tance


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The essential elements necessary to form a binding contract are usually described as

An Offer

An Acceptance in strict compliance with the terms of the offer

Legal Purpose/Objective

Mutuality of Obligationalso known as the meeting of the minds

Consideration

Competent Parties

1.1Offer :

An offer is defined as the manifestation of the willingness to enter into a bargain so made as

to justify another person in understanding that his assent to the bargain is invited and will

conclude it.[Restatement (Second) of Contracts 24 (1981)]

An offer can be oral or written as long as it is not required to be written by law. It is thedefinite expression or an overt action which begins the contract. It is simply what is offered

to another for the return of that person's promise to act.

1.2Counter offer and End of offer:

Counter offer:A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the

original offer and proposing a substituted bargain differing from that proposed by the original

offer. [Restatement (Second) of Contracts 39 (1981)]


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End of offer

The below chart shows that, circumstances when the original offer is terminated and

afterwards it is not possible to be accepted Rejection automatically terminates an offer as

well as counter offer also terminates the original offer.

1.3Invitation to TreatAn invitation to treat is made at a preliminary stage in the making of an agreement, where

one party seeks to ascertain whether the other would be willing to enter into a contract. The

types these are,

Advertisements

Exhibition of goods for sale

An invitation for Tenders

Auction sales


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1.4 Acceptance and Communications of Acceptance

Acceptance:

Acceptance of an offer can occur in several ways: Acceptance of an offer is a manifestation

of assent to the terms thereof made by the offeree in a manner invited or required by the

offer. [Restatement (Second) of Contracts 50 (1) (1981)] . An acceptance must not change

the terms of an offer. If it does, the offer is rejected [Uni ted Concrete Pipe Corp. v Spin-L ine

Co., 430 S.W.2d 360, 364 (Tex. 1968)] .A material change in a proposed contract constitutes a

counteroffer, which must be accepted by the other party[Antonini v. Harris County

Appraisal Dist. 999 S.W.2d 608, 611 (Tex.App.-Houston [14th Di st] 1999, no pet.)]

Communications of Acceptance:

The general rule is that an acceptance must be communicated to the offeror. The acceptance

is generally only validly communicated when it is actually brought to the attention of the

offeror. The operation of this rule was illustrated by Denning LJ in Entores v. Miles Far East

Corporation [1995] 2QB 327.

Decision:

So the counter offer terminates the original offer [H yde v Wrench 1840], final decision of this

case Christinas original offer for 15,000 is not valid for a contract even later Augustine

accept it for 15,000 Christina is not bounded to enter in to a contract with Augustine.


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b.) Augustine and F lorence: Sale of Of fi ce Computer:

Analysis:

Explanation:

1.5 The Postal Rule

The offeror may expressly or by implication indicate that he expects acceptance by means of

a letter sent through the post. The postal rule states that the acceptance is complete and

effective as soon as a letter is posted. [Adam v Lindsell 1818]

Decision:

Augustine and F lorence: Sale of Of fi ce Computer

This scenario relates to the principle of acceptance of an offer by post.

Augustine wrote to Florence by offering office computer for 12,000

The day which she received the letter she replied to Augustine by accepting

his offer.

Augustine Florence

Offer - 12000

Acceptance by PostPostal Rule

Invalid Revocation

According to the postal rule by the time she posted the letter to Augustine the contract

was created.[Adam v L indsell 1818]

even later she changed her mind and sent a fax to Augustine to ignore the

Acceptance though it was not delivered, there is a valid contract exists

between Augustine and Florence for the computer.


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Analysis:

Explanation:

Intention to create Legal Relations :

When talking intention to create are two main types,

Traditionally, the law has distinguished between domestic and social agreements and

commercial agreements. In the case of domestic and social agreement, it is presumed that

there is not an intention to create legal relations. In the case of commercial agreements, it is

presumed that there is an intention to create legal relations.

Intention to create

Legal Relations

Domestic

ArrangementsCommercial

Arrangements

Case Study 2

Daniel and Cather ine: Pay mortgage on the house

The scenario is about the whether such a Domestic arrangement amount to the intention to

create legal relation in the law of a contract.

Daniel agreed to pay Catherine 1,500 per month (money had to be used to pay off the

mortgage on the house that Daniel and Catherine jointly owned)

In this case when the informal agreement is made between husband and wife they had not been

separated and it was not intended to be legally binding.


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2.1 Domestic Arrangements:

Agreements between a husband and wife living together as one household are presumed not

to be intended to be legally binding, unless the agreement states to the contrary butagreements between those parties relate to the property matters the courts are ready to

assign an intention to create legal relations. [Balfour v Balfour [ 1919] 2 KB 571.

2.2 Commercial agreement:

In relation to commercial agreement, courts will generally presume that an intention to create

legal relations is present. Esso Petroleum L td v Commissioners of customs and Excise

(1976)

Decision:

[Merr itt v Merr itt 1970] In this case the wife had taken a written agreement from the

husband to transfer the house into her sole name when the mortgage had been paid off and

she paid off the mortgage. The judgment was given in favor of wife after considering the

circumstances.

In this case when the agreement was signed, Daniel and Catherine had been

legally separated and the domestic relationship between them can be treated as an intention tocreate a legal relations. [M err itt v Merri tt 1970]Since Daniel agreed to pay 1500 monthly to

Catherine as a part of the agreement and it had been given in writing and with that he had

promised to transfer his share after the mortgage was paid off, and later though he refuse to do it,

Catherine can sue against him under the term of intention to create relations.


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Analysis:

Explanation:

3.1 Consideration:

In the classic definition the essence of consideration is said to be benefit to the promisoror

detriment to the promisee, see: Curriev Misa(1875). Because of the rule that consideration

must move from the promisee, detriment to the promisee will be present in nearly all cases

and benefit to the promisor is often merely a by-product of this detriment, but either one is

sufficient. It must be remembered, however, that detrimentdoes not necessarily imply

suffering net loss or disadvantage: the promisee incurs a detriment by doing an act, making a

promise or refraining from doing an act, however small or insignificant, provided that it has

been agreed that she should do the act, etc. in return for the promise. See: Combev Combe

(1951). Note also the difficulty of deciding whether doing the act is in return for the promise

or merely a condition attached to it the test is the intention of the parties as shown

(objectively) by what they said and did. See:Chappell v Nestle (1960).

Case Study 3

Richmond and Susana: Small consul tancy business

The scenario in this question law relating to part payment problem and its related to use

cases such as Pinnels Case (1602) and Foakes V Beer (1884).

Richmond is sole proprietor personal taxation adviser.

He entered contract with Susana under which he agreed to prepare some draft business for

her account.

After complete work Susan told that she only can afford to pay 400 to Richmond.

Finally Richmond accepteda cheque for 400 from Susana, also its mention that it is

full and final settlement of the debt.


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Rules of consideration

There are various rules governing the law of consideration:

The consideration must not be past.

The consideration must be sufficient but need not be adequate.

The consideration must move from the promisee.

An existing public duty will not amount to valid consideration.

An existing contractual duty will not amount to valid consideration.

Part payment of a debt is not valid consideration for a promise to forego the balance.

3.2 Part payment:

It is as well established that a person can vary its contractual right. When a person is under a

contractual duly and with the consent of the other party performs less that he is bound to do

in discharge of the full obligation, the question is can he legally enforce the performance of

the balance of his obligation. The legal basis will be established on whether he has furnished

consideration or not. The rule at common law was established in the PINNELS CASE

(1602)Where the court HELD that part payment of a debt is not a good consideration for a

promise to forgo the balance, however, there are circumstances where part payment can be

regarded as good consideration in Pinnels case as affirmed by the House of Lords in

FOAKES V. BEER (1884) The rules are:

Acceptance of part payment on an earlier date that the due date or,

Accepting a chattel instead of money even if it worth loss or,

Acceptance of part payment in a different location or place to that originallyspecified.

Subject to possible exceptions in Equity, those principles still representing the law, and there

are two exceptions to this rule.

COMPOSITION AGREEMENT: Where a group of creditors who are owed by a

single debtor agree to accept 60kobo in the Naira as absolute discharge. Despite the

absence of consideration, it is established that no individual debtor can subsequentlysue for the balance owed.


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PART PAYMENT TO A THIRD PARTY: where this is accepted by the creditor to

receive the balance.

PROMISSORY ESTOPPEL OR EQUITABLE ESTOPPEL: it purposes is to

provide a means of making promise binding in certain circumstances in the absence of

consideration. In CENTRAL LONDON PROPERTY TRUST LTD V. HIGH TREES

HOUSE LTD. The land Lord leased a block of flats to tenants for 99yrs in 1937. He

agreed to accept from the tenants half the ground rent stipulated in the lease because

of war time conditions of shortage of tenants. As a result of war many young men

were dragged into the Army, thus, the flats were not fully occupied, the land Lord

agreed that the tenant should pay half rent. By 1945, when the flats were fully

occupied again, a new management had taken over and the defendant wrote to the

tenants that the rent must be paid at full rate and claimed areas between 1939 and

1945 in defense, the defendant contended that the plaintiff were estopped exceeding

rent. Alternatively, that the plaintiff had waived their right to any rent in excess of the

reduced rent from commencement of the lease. LORD DENNIN applying the

principle of equitable estoppels HELD that the plaintiffs were bound by the promise

to reduce the rent payable up till 1945 when the flat were underlet. According to him

where a promise is made which is intended to create legal relation and which to the

knowledge of the person making it was going to be acted upon by the person to whom

it was made and which was infract acted upon, the promise will be HELD bound by

the promise despite the absence of consideration.

The principles in high trees case does not create new causes of action where none existed

before, it can only prevent a party from insisting upon his strict legal rights when it would be

unjust for him to do so having regard to the dealings that have taken place between theparties.

Promissory estoppels definition:

A promise made to another party to a contract that the contract will not be enforced in

whole or in part and which, once acted upon, prevents subsequent proceedings to

enforce the contract as against the person who relied on the promise.


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Decision:

Part payment of a debt is not valid consideration for a promise to forebear the balance

unless at the promisor's request part payment is made either:

a). before the due date or

b). With a chattel or

c). To a different destination

According to above case between Richmond and Susana, The Richmond has right to claim rest

of money 600 from Susana. [Pi nnels Case (1602)]


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Analysis:

Explanation:

Warranty and Condition:

4.1 Condition:

A condition is a term (oral or written) which goes directly to the root of the contract; or is

so essential to its very nature party can treat the contract as discharged. That party will nottherefore be bound to do anything further under that contract. [Poussard v Spiers & Pond

1876]

In this case the scenario base with contractual terms relating to the law of contract

The company orders 300 mobile phones which they can use them in UK.

But supplier supplies the phones which were illegal in UK.

So When the contract was created, the in nominate term was there by ordering the

phones which suitable to use in UK and the supplier has breached the term. That

term is vital to the contract and the contract was formed on it since it goes to the

root of the contract. The prime responsibility of the supplier was to supply the

phones which are suitable to use in UK. Since that it was a breach of condition, the

company has the right to terminate the contract or refuse to accept the order or

perform on that and later sue to the supplier for the damages.

Case study 4

Mobile phone Supplier Company


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4.2 Warranty:

A warranty is a term of the contract which is collateral or subsidiary to the main purpose of

the contract. It is therefore not so vital as to affect a discharge of the contract. A breach of

warranty only entitles the innocent party to an action for damages; he cannot treat the

contract as discharged.

According to the definition a warranty is a subsidiary requirement which is not vital to the

overall agreement, and in relation to which failure to perform does not totally destroy the

whole purpose of the contract. A warranty is a less important term of the contract, which is

minor to the main purpose of the contract.

Breach of a warrant results in damages only and does not give the right to terminate the

agreement. The injured party must complete their own part of the agreement, and then they

can sue for damages. [Bettni v Gye 1876]

Decision :

In this scenario the supplier has provided the phones which can be used in UK

according to the contract which they originally wrote and those phones need to turn to

particular frequencies for two minutes. In this situation the contract did not fail because after

it was turned to that particular frequency that can be used in UK. This incident can be treated

as a breach of warranty but in this situation company should give extra effort to turn it and it

will cost them some additional amount of money. The company does not have a right to void

the contract and the option available for them is claim for the damages which cost them.


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Analysis:

Explanation:

5.1 Exclusion Cause:

The simple definition for the exclusion clause is a Clause in a contract or a term in a notice

which appears to exclude or restrict a liability or a legal duty which would otherwise arise

(Yates, 1982, p.1). The law relates to this is governing by the common law, the Unfair

Contract Terms Act 1977, the Unfair Terms in Consumer Contract Regulations 1999and some other Acts as well.

Case study 5

Grace and off ice Suppl ies L td: Purchase of mobi le phone

There are two contracts in related to this case. The first one is the contract between Grace

and the Expansion Limited to undertake all the companys payroll work. Second one Grace

and Office supplies Ltd, hired laptops.

Grace and Expansion Ltd,

Grace and Office Supplies Ltd,

There was an exclusion clause in the contract which she was signed by saying

Office Suppliers Limited is not liable for the financial loses cased after using

hardware or software products supplied by them.

Payroll Work6 Months Contractual TermRenewable on a 12 month basis if work is satisfactory

Incorrect Accounting

Refuse to renew the Contract

Contract (not properly read)Laptop, Software

Negligent designedDid not operate properly Financial Losses - Claim Damages

Exclusion ClauseDenied Liabilities


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Function of exclusion clauses

Help allocation of risks under the contract.

Help reduce litigation costs by making clear the division of responsibility between

the parties.

Exclusion clauses are often used in standard form contracts which, by enabling

people,

Also the exclusion clause can be incorporated by signature, notice and also the previous

dealings. In the above case Grace has signed the contract and accepted the exclusion

clause without reading and due to that reason she bound to the exclusion clause.

[LEstrange v Graucob 1934] [Curtis v Chemical Cleaning Co 1951]

5.2 The contra preferential rule:

Hollier v Rambler Motors [1972] 1 All ER 399 (CA) Car towed to garage for repairs. Whilst

at the garage, the car was damaged by a fire caused by the defendant's negligence. In

response, the defendant argued that there was a clause that the company was not responsible

for damage caused by fire to Law 232 L 07 customer's cars on the premises. Court of Appeal

said - ambiguity not valid -clause could mean damage however caused - intentional and

negligence Ambiguous. Therefore, since ambiguous, cannot exclude their liability. - "Rule of

Strict Construction" or "Rule of Hostile Construction".

In the above case, since Grace signed and accepted the agreement even though without

reading properly, she had given her consent to the exclusion clause was stated in the

agreement by the Office Supplies Limited. Even if the exclusion clause passes the common

law through its requirements it must also satisfy the statutory rules requirements which are,

Unfair Contract Terms Act (UCTA) 1977.

Unfair Terms in Consumer Contract Regulation (UTCCR) 1999


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5.3 Unfair Contract Terms Act 1977 (UCTA):

Unfair contract terms Act 1977 is a major attempt to regulate the use of excusion clauses in

Britain. The Act provide the provisions to the exclusion clause in following scenarios,

Negligence liability

The first issues which Act deals with are attempts to exclude or restrict liability for

negligently inflicted loss also this covers breach of contractual obligations of skill and care,

the common law duty of skill and care, and the common duty of occupiers of premises under

the Occupiers Liability Acts 1957 and 1984.

Person cannot by reference to any contract term or to a notice given to persons

generally or to particular persons exclude or restrict his liability for death or personal

injury resulting from negligence.

In the case of other loss or damage, a person cannot so exclude or restrict his liability

for negligence except in so far as the term or notice satisfies the requirement of

reasonableness.

Where a contract term or notice purports to exclude or restrict liability for negligence

a persons agreement to or awareness of it is not of itself to be taken as indicating his

voluntary acceptance of any risk.


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Liability of breach of contract

The person who imposes the exclusion clause, or who deals with the consumer cannot claim

unless the term is reasonable.

Dealing as a consumer

I. A party to a contract deals as consumer in relation to another party if-

he neither makes the contract in the course of a business nor holds himself out as

doing so; and

the other party does make the contract in the course of a business; and

In the case of a contract governed by the law of sale of goods or hire-purchase, or by

section Miscellaneous contracts under which goods passof this Act, the goods passing

under or in pursuance of the contract are of a type ordinarily supplied for private use

or consumption.

But if the first party mentioned in subsection (1) is an individual paragraph (c) of that

subsection must be ignored.]

II. But the buyer is not in any circumstances to be regarded as dealing as consumer

if he is an individual and the goods are second hand goods sold at public auction at

which individuals have the opportunity of attending the sale in person;

If he is not an individual and the goods are sold by auction or by competitive tender.]

III. Subject to this, it is for those claiming that a party does not deal as consumer to show

that he does not.

A contract is only made in the course of a business where it is integral to the business or it

forms part of the regular course of dealing of that business (R&B Customs Brokers Ltd v.

United Dominions Trust Ltd [1988] 1 WLR 321)


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Indemnity Clauses

An indemnity clauses is a clause under which one contracting party promises to indemnify

(that is to say, reimburse) the other for any liability incurred by him in the performance of the

contract. (Philips v. Hyland and Thompson v.Lohan (plant Hire) both of cases essentially

involved commercial indemnity clauses.)

Decision:

After considering this in to the above case between Grace and Office Supplies

Ltd, the company is liable to pay the damages suffered by Grace due to the negligent designed. The

company cannot claim on the exclusion clause, since the clause is not reasonable. Grace can sue the

Office supplies Ltd for the loss in her profits which she suffered due to the mistake. But she cannot

do anything about the contract which was refused to renew by the Expansion Ltd since she could not

perform her duties.


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Analysis:

Explanation:

Explanation:

6.1 Tort of Negligence

Case study 6

Alfred: Renting a Flat

This case study concerns the potential liability for economic loss caused by negligent advice

and information.

Alfred

Who was wishing to rent a flat was approached George the landlord, with the

reference of Alfreds work place accountant Charles. When George approached

Charles regarding the reference, Charles negligently provides wrong information

about Alfred confused with another one. The reference supplied by the Charles had an

exclusion clauseof This firm will not accept any liability for inadequacy contained

this reference or any loss incurred as a consequence to avoid the firms liability

towards the reference. Based on the reference, George agrees to rent the flat to Alfred.

Some months later, Alfred disappears from the flat with several months rent arrears.

The breach of a legal duty to take care,

resulting in damage to the claimant

which was not desired by the defendant:

L.B. Curzon,

Dictionary of Law.

Negligence is the omission to do

something which a reasonable man,

guided upon those considerations which

ordinarily regulate the conduct of human

affairs, would do, or doing something

which a prudent and reasonable man

would not do. Per Alderson B.,Blyth v

Birmingham Waterworks Co. (1856)


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This can be identified as the breach of a legal duty to care, resulting in damage to the

claimant who was not desired by the defendant. But there are three key elements which must

always be established for a successful action in negligence, which are mentioned below.

6.2 Duty of care

A duty of care was originally established by

applying Lord Atkins Neighbour Test from:

Donoghue v Stevenson (1932).

The modern three-stage test was laid down by the

HL in: Caparo Industries v Dickman (1990). The

court must now consider:

DUTY OF

CARE

(A) Whether the

consequences of the

defendants act were

reasonably

foreseeable.

For example, damage or

harm

was held to be

reasonably

foreseeable in:

Kent v Griffiths (2000);and

Jolley v Sutton LBC

(2000).

But not in:

Bourhill v Young

(1943); or

Topp v London Country

Bus

Ltd(1993)

(B) Whether there is a

relationship of

proximity

between the parties, ie

a

legal relationship or

physical closeness.

For example, there was

proximity in:

Home Office v Dorset

Yacht Club (1970).

But not in:

Caparo v Dickman

(1990).

(C) Whether in all the

circumstances it would

be

fair, just and reasonable

that the law should

impose a

duty.It was held not to be fair,

just

and reasonable to impose

a

duty on the police in:Hill v C.C. of W.

Yorkshire

(1988).

However, a duty was

imposed

on the fire brigade in:

Capital v Hampshire

County

Council(1997).


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The case ofDonoghue v Stevenson(1932)was the first case based to establish this concept

On 9th April 1929 Mrs Mary M'Alister or Donoghue brought an action against David

Stevenson aerated water manufacturer Paisley, in which she claimed 500 as damages for

injuries sustained by her through drinking ginger beer which had been manufactured by the

defender.

Mrs. Donoghue and her friend went to a shop occupied by Francis Minchella, and known as

Wellmeadow Caf, at Wellmeadow Place, Paisley where the friend purchased ice cream, and

ginger beer suitable to be used with the ice cream as an iced drink. for Mrs. Donoghue to

drink. Mrs. Donoghue had no direct or indirect claim against the manufacturer based on

contractual obligations because she did not purchase the product. The ginger beer was

contained in an opaque bottle that prevented the contents from being viewed clearly. Mrs.

Donoghue consumed some of the product after which the decomposed remains of a snail

emerged from the bottle when the remaining ginger beer was poured into her glass. She

sought damages against the manufacturer, Stevenson, from the resulting nervous shock and

gastro-enteritis, which she claimed was caused through the incident. The trial judge found

that the plaintiff could bring an action. The Court of Appeal overturned this decision.

The plaintiff appealed to the House of Lords.

Hedley Byrne Co. L td v. Hell er & Partners L td. 1964 House of L ords

Hedley Byrne was a firm of advertising agents. A customer, Easipower Ltd, put in a large

order. Hedley Byrne wanted to check their financial position, and credit-worthiness, and

subsequently asked their bank, National Provincial Bank, to get a report from Easipowers

bank, Heller & Partners Ltd., who replied in a letter that was headed,"Without

responsibility on the part of this bank"

It said that Easipower was,

"Considered good for its ordinary business engagements". The letter was sent for free.

Easipower went into liquidation and Hedley Byrne lost 17,000 on contracts. Hedley Byrne

sued Heller & Partners for negligence, claiming that the information was given negligently

and was misleading. Heller & Partners argued there was no duty of care owed regarding the

statements, and in any case liability was excluded.
http://en.wikipedia.org/w/index.php?title=Credit-worthiness&action=edit&redlink=1http://en.wikipedia.org/wiki/National_Provincial_Bankhttp://en.wikipedia.org/wiki/National_Provincial_Bankhttp://en.wikipedia.org/wiki/National_Provincial_Bankhttp://en.wikipedia.org/w/index.php?title=Credit-worthiness&action=edit&redlink=1


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Decision:

Duty of care to Charles - because, George were to be rely on his

reference and to rent his apartment to Alfred.

Charles falls under condition of negligence of duty to carebecause Charles has been

provided misinformation about Alfred with confusing someone else and without even checking

his file.

According to this scenario Charles and he was breach the duty by providing misinformation by

negligently and finally that breach has caused damage of several thousand pounds to Georg.

Hedley Byrne & Co Ltd v Heller & Partners L td (1964),

Hedley Byrne & Co Ltd v Heller & Partners L tdscenario is concerned, Charles has clear duty

to care on the reference made to George since the type of damage was reasonably foreseeable

and in the meantime, he has breached the duty to care by providing misinformation on whichGeorge made his decision. Therefore, based on all these factors, George is eligible to claim his

losses from Charles.


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Analysis:

Explanation:

7.1 The Neighbor Principle

Neighbor principle is a principle of English law which says that a person should take

reasonable care to avoid acts or omissions that she/he can reasonably foresee as likely to

cause injury to the neighbor. Neighbor includes all persons who are so closely and directly

affected by the act that the actor should reasonably think of them when engaging in the act or

omission in question. The standard was set by Lord Atkins in the famous English case

Donoghue v Stevenson. The neighbor principle is based on the Christian principle of "loving

your neighbor."

The case of[Donoghue v Stevenson 1932]was the first to establish that a duty of care may

be owned to a person, (for more details question 6.2 duty of care)

Case study 7

This case base on the occupiers a of premises liability to visitors and Trespassers.

In the given case Driscoll, who is considered as a trespasser entered in to the leisure

centre which was under custody of tourism board.

The purpose of visit was to have a look around the site

Unfortunately in doing so he tears his jacket and cuts his arm on a rusty barbed-

fence laid around the top of the wall.


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7.2 Occupier

Under common law, the test as to who can be considered an occupier is one of control, i.e.

someone who has some degree of control over the premises. This means that the occupier

need not necessarily be the owner of the land or premises but may instead be a tenant or an

independent contractor employed to carry out work. Indeed, there may be more than one

occupier at the same time (see WheatvE. Lacon and Co., 1966)

Duty of Care (Neighbour Principle) [Donoghue v Stevenson 1932]

This case involved two ladies. A friend of the claimant purchased a bottle of ginger beer. The

claimant drank some of the beer in which was found the remains of a decomposed snail. She

was subsequently ill and sued the manufacturer. She was unable to sue the manufacturer for

breach of contract because the only contract that existed was with the claimants friend who

had bought the ginger beer and the manufacturer.

The House of Lords held that the defendant being the manufacturer of the ginger beer owed a

duty of care to the claimant as the consumer of the beer to take reasonable care to ensure that

the bottle did not contain anything that might cause harm.

In this case the judge said that reasonable care must be taken to avoid acts or omissions

which, with reasonable foresight, you would know would be likely to injure your neighbour.

This is known as the Neighbour Principle. Therefore the test whether someone is a

neighbour, in the legal sense, can be established if it can be reasonably foreseen that the act

or omission may cause harm to them.


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7.3 Occupiers Liability

Occupiers liability concerns the duty owed by those who occupy land (and premises upon

it) towards the safety of those who enter onto the land. This area of tort is similar to

negligence and was originally developed through common law, although today it is

governed by statute:

The duty owed to lawful visitors or those with permission to enter onto the land is

defined in the Occupiers Liability Act 1957.

The duty owed to those who enter onto land without permission (trespassers) is

defined in the Occupiers Liability Act 1984.

To analyze the given case it is important to talk about the occupiers liability to the visitors

and to the trespassers.

7.4 Trespasser

A trespasser is someone who enters land or premises without permission. His or her presence

must either be unknown to the occupier or, if known about, be objected to.

A person can enter land or premises as a visitor and then become a trespasser. For example, if

the occupier told a visitor to remain downstairs, and the visitor then went upstairs, the visitor

would be trespassing in that area.

Occupiers Liability (Trespass)

[Robert Addie and Sons (Collieries) Ltd v Dumbreck 1929]

The is the operator of a winch and pulley system at a coal mine. The system consists of a

large wheel, which drives a long cable to hoist coal ashes out of the mine. The wheel is

driven by a motor, and is only operated intermittently. The wheel assembly is located in an

open field, owned by the many kids play in the field, but the warns them away, and tries to

keep people out of the field. The son was playing in and around the wheel, when it started up,

killing the boy.A landowner owes no duty of care to protect a trespasser from injury, even

from concealed danger.


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[Br iti sh Railways v Herr ington 1972]

The board was held liable for injuries to a six year old child who had been playing on the

railway line. The child had got through a gap in the fence near the railway line. The board, asoccupiers, were aware of previous trespasses but had failed to maintain the integrity of the

fence. The House of Lords held that the occupier of the railway premises owed a duty of

common humanity to the child. Until this case no duty of care was owed to trespassers. (The

Occupiers Liability Act 1984 extended the duty of care to include trespassers).

A.) First scenario:

Decision:

The Tourism Board is considered as the occupier in this case and it is

the duty of them to display a warning sign about the danger, to the people who enter in to

the premises.

But they have not taken any action to avoid the danger they are liable to pay the physical

damages happened to Driscoll.

Driscoll can claim only for the cut on his arm and he cannot claim for the damages happen

to his jacket since occupiers liability does not cover the personal properties of the


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7.5 Visitors.

A visitor is someone who has express or implied permission from the occupier to be on the

premises anyone who enters the premises without such permission is classed as a trespasser

whose rights are governed by the 1984 Occupiers Liability Act.

Express Permission.

This is where the person has been invited on to the premises.

Implied permission

Permission can be implied through conduct or circumstances. Certain classes of people are

treated as having implied permission automatically: a police officer with a search warrant,

meter readers. Post people, even door to door sales people.

Conduct

This is where the conduct of the occupier has been held to mean that they do not mind people

being on their premises.

Lowery v Walker (1911)

A farmer had not taken legal action against people using one of his fields as a short cut, this

had been going on for 35 years. He decided to put a (wild) horse into the field. The horse bit

an unfortunate short cut taker who then sued the farmer. The farmer claimed the plaintiff was

a trespasser but the claim but the claim was upheld because the court ruled that he had notpreviously taken any action to stop people crossing the field and therefore had given implied

permission.

7.6 Occupiers Liability to a Visitor

The common duty of care is a duty to take such care as in all the circumstances of a case is

reasonable to see that the visitor will be reasonably safe in using the premises for the

purposes for which he is invited or permitted to be there. Common duty of care standard is

the same as in common law of negligence. All the circumstances of the case occupiers

liability will be judged by the conduct of plaintiff (claimant) if he by is own conduct causes

himself injury, he will be regarded as having Consented or the plaintiff might be held to have

been contributory negligent. Is reasonable to see that forseeability is relevant because in

Ryalnds versus Fletcher damage which was not reasonably foreseeable will not be actionable

soJolly v Sutton (1998)boys in the boat case.

Reasonably safe: reasonable precautions only need to be taken by the occupier. This will

depend on the occupiers financial situation see Herrington handout. Trespassers.


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For the purposes if a visitor starts using premises for the purposes other than those for

which he was invited on to the property he will have no claim if he is injured. (Again volenti)

Warnings.

If an occupier gives sufficient warning so as to render a visitor reasonably safe, the occupier

will not be liable for any damage suffered by the visitor as a result of that danger.

(See Roles v Nathan)

However

Simply following a warning will not be enough if the visitor cannot avoid the danger in using

the property for the purposes for which he was invited.

Lord Denning illustrated this with his two bridges analogy inRoles v Nathan

Wheeler v Copas [1981] 3 All ER 405, Chapman J

A builder P working on D's property was injured when a ladder lent to him by D broke under

him. The judge said a ladder could under some circumstances be "premises", but D was no

longer the "occupier" since he had no control over the ladder at the relevant time. (D was

found liable in ordinary negligence; subject to a 50 per cent deduction for P's own

contributory negligence in using a clearly unsuitable ladder.)

B.) Second scenario:

Decision:

In the second scenario Spencer a local authority building inspector, visits

the site to inspect the work done by Tourism Board and on his duty he was injured from a tile

fallen from the roof.

In this scenario, Spencer is treated as a visitor to the place controlled by tourism board and the

duty of care exists to the tourism board to take a reasonable care on Spencer while he was

inspecting. Due to the negligence of Tourism board Spencer was injured and Tourism board is

liable to pay the damages for him.


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Analysis:

Case study 8

Negligent Misstatement, Special Relationship, Proximity Test

This case base on legal requirement for negligence and proximity, and special

relationship with them also assumption of responsibility.

Mary, Barnett hospital and comfort Home.

Mary was an employee in Barnet Hospital for seventeen years and Mary was

expecting to get the job in Comfort home.

Mary who suffered the lost due to the negligent misstatement made by Barnett

Hospital.

Duty of care - Barnett Hospital had duty of care to provide the correct information

to the comfort home.

Mary, Joe (Investment Advisor) and ex-primary school

Mary invested her redundancy money in her ex-primary school which is now

offering private education, with the advice of Joe who is an investment Advisor and

old friend of Mary who met for a drink.

Unfortunately due to the allegations of the company share price fallen.

Mary and Thomas (Investment Guru)

Thomas published the article online and it was not specifically addressed to the

Mary to make the investment by using her own decision.


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Explanation:

8.1 Negligent Misstatement

The majority of professionals are aware that the provision of negligent advice or a negligent

misstatement may expose them to liability. However, such professionals may not be aware of

the extent of their potential liability. Negligent misstatement relates to a representation of

fact, which is carelessly made, and is relied on by another party to their disadvantage. For

some time it has been possible to claim for economic loss arising out of a negligent

misstatement where no contractual or fiduciary relationship exists between the parties. This is

provided however that a special relationship or a sufficient proximity1 exists between the

parties. (For more details question number 6 Hedley Byrne Co. Ltd v. Heller & Partners Ltd.

1964 House of Lords)

Special Relationship

Generally, a special relationship will exist where the adviser knows that the other party is

justifiably relying on him for his skill, expertise or knowledge. Where a person voluntarily

takes it upon themselves to act on behalf of, or to advise, another in a professional capacity,

they assume a duty to that other person to act or advice with care. A court will not impute a

duty of care following informal discussions or during social courtesies. In attempting to

define the scope of the term special relationship, a court will consider whether or not:-

The plaintiffreliedon the defendants skill and judgement,

The person who gave the advice knew, or ought to have known, that the other party

was relying on him, and

It was reasonable in the circumstances for the plaintiff to rely on the defendant.


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8.2 Proximity Test

The Supreme Court recently addressed the issue of whether or not a claim could arise when

the negligent misrepresentation was not made to the plaintiff directly but to another

individual making an inquiry of the defendant which concerned the plaintiff. The defendant

asserted that as the statement was not made to the plaintiff directly there could be no liability.

The Supreme Court unanimously rejected the defendants argument. It held that if it was

foreseeable that a statement made would be relied upon by the plaintiff and there was

sufficient proximity between the parties, it was fair just and reasonable that the party in

question should be liable and that they should compensate the plaintiff for the losses incurred.

The Supreme Court held that in order to fulfil the proximity test in respect of negligent

misstatement:-

The person effected must include persons in a limited and identifiable class,

The maker of the statement can reasonably expect that they will rely on this

statement, and

Such person or persons will act or not act in a particular manner on foot of the

statement or advice.

This test of proximity embraces persons who could reasonably be expected to rely on the

inaccurate information provided by the adviser even if the adviser has had no direct contactwith that person. Of further note is a recent High Court3 decision which reaffirmed the

principle that an adviser is under a duty to ensure that the information they provide, for the

benefit of a limited category of persons, is reasonably accurate in the circumstances provided

that the relationship between the parties is sufficiently proximate to give rise to a special

relationship. In this case the Court also addressed the issue of whether or not the presence of

a waiver could exempt a party from liability arising out of a negligent misstatement. The

defendant argued that the existence of a disclaimer on the material containing the

misstatement precluded the existence of a special relationship and that it would make it

unfair, unjust and unreasonable for the Court to impose an obligation on them. The Court in

finding for the plaintiff held that the waiver was not sufficient to relieve the defendant of

liability. The Court held that the publication of the disclaimer was immaterial due to the fact

that the information was directed at the plaintiff and he was influenced by it. These cases

illustrate the potential exposure of financial institutions and other professionals arising out of

a negligent misstatement which detrimentally affects an individual deemed to have been

sufficiently connected to the adviser. Clearly advisers should be wary of their potential


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liability due to the onus placed on them when providing advice, not only to a particular

individual, but also to a third party making an inquiry about the individual in question.

Decision:

Mary, Barnett hospital and comfort Home.

According to this scenario and previous law terms author can be decided that Mary who

suffered the lost due to the negligent misstatement made by Barnett Hospital, has the rights to

sue the hospital for the financial losses caused to her.

Barnett Hospital - had a duty of care to provide the correct information to the

comfort home.

By relying on the references given by the Barnet Hospital there is a special

relationship between them.

Comfort Home also relied on the first references provided by the Barnett hospital

and it fulfill the requirement of proximity test to confirm the relationship amongthe parties.

Because of this reasons, it can be said that Barnett Hospital is liable for the damages

caused to Mary.

Mary, Joe (Investment Advisor) and ex-primary school

In this scenario according to the special relationship definition, generally a special

relationship will exist where the adviser knows that the other party is justifiably relying on

him for his skill, expertise or knowledge.

Mary met Joe for a drink and in that occasion he gave his advice to her

regarding the investment opportunity.

Even though Joe is a skilful and experienced person in trade, the law defines

that the statements made in social gatherings such as given occasion and

informal discussions cannot make a special relationship between the parties.

So in this reason Mary cannot claim for the lost occurs to her in the first investment.


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Mary and Thomas (Investment Guru)

In this case advertisement published generally and it does not create a special relationship

between Thomas and Mary.

Mary made her decision

But Thomas dont know what Marys decision

According to this case the decision made by Mary does not cover the requirement

which need to fulfill the elements of special relationship and Mary cannot sue on it.


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Conclusion:

This report is mainly based on contract law and law of torts which considered as two key

areas in business law. For the introduction author has briefly explained the English law,

Common Law and Contract Law and its origin. Throughout the report the given eight cases

have been explained with relevant theories and appropriate past cases

After all this case worthy to note that the court will not enforce an illegal contract and that for

the court to enforce a contract the offeree must always show by proving that something has

been exchanged or given for a promise made as a prove of acceptance in a bargain and that

which has been given in exchange even if not valuable but with the consent of parties will be

enforceable as it need not be adequate but sufficient in the eyes of the law.


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Aspects and Contract And Negligence for Business