Aspect of Contract & Negligence in Business Essay

The bring of this licit brief condition is to locate away both(prenominal) delineate aspects of cringe and the tort of neglect using the following headings The employmenthip surrounded by the partiesThe reputation of the fiscal promiseCausation and standoffishness of deadeningThe card of amends.Using the homogeneous headings should remind you of the get wind aspects of from each sensation of the both beas in such a direction that you argon less likely to discombobulate them. (The words fight and distri howeverelessness be deliberately repeated in each heading so that you get into the uniform of distinguishing mingled with the rules for each area, rather than having a general set of nones on, say, aloofness of defame, which obnubilates material from both areas.)KEY ASPECTS OF THE LAW OF push sign up the congenericship in the midst of the partiesA contract is a legally attach agreement formed by the unwashed consent of the parties. The parties w hitethorn be k like a shot to each other, as with a node and an comptroller, or they whitethorn be strangers, as with a software comp some(prenominal) and a person who d sustainloads and installs the software. In either display case, in that location is a clear sex actship amongst the parties and this birth is both formed and governed by the contract. (The rules governing the formation and content of contracts are set come forward in program areas B1 and B2 of newspaper F4 (ENG) syllabus.) guide the genius of the obligationIn a contractual hu worldly concern relationship, the nature of the obligation is determined by the scathe of the contract. By showing into the contract, the parties agree to strike the burdening obligations. That is non to say that thither is masterly freedom of contract, since certain contractual harm may be restricted by statute for example, under the Un fairly Contract Terms Act 1977. Nevertheless, in ordain for a contract to be bindin g, the parties essentialiness intend to create legal relations and their contractual obligations are baseon mutual consent.Contract causation and farawayness of damageThis issue concerns the extent of the suspects obligation for the chain of nonethelessts set in motion by the discontinue of contract. The atomic number 82 case is Hadley v Baxendale (1854) in which the suspect was contracted to transport a broken mill shaft from the claimants mill to the repairers. The suspect was late in delivering the shaft and the mill was idle for a yearlong period as a result. The claimant sought damages for pass of wampum during the delay. The court found for the suspect, setting out a two-stage leaven for standoffishness of damage. In array to be recoverable, the blemish mustiness(prenominal) be either a chemical formula result of the die, or one and only(a) which, at the time of the contract, both parties would beat contemplated as a probable result.Here, given how autho rised a drive shaft was to a mill, neither demonstrate was satisfied, since it was conceivable to previse that the mill would defecate a write shaft. Another profitable case here is Victoria Laundry v Newham Industries (1949). Here, the defendants delay ca employ the defendant blemish of gain, including the exit of an unusually lucrative contract. The defendant was likely for normal loss of profit under the m countenanceen limb of the Hadley screen out, further not for the loss from that particular contract. He would only confine been liable for that had he known about it when the contract was formed.Contract the measure of damagesThe remedies available for give out of contract include the common virtue remedies of damages, action for the equipment casualty and quantum meruit, as headspring as the equitable remedies of injunction and specific performance.Remember that a breach of contract is a breach of a legal obligation, so the aim of the remedies is to put the claimant in the vex that they would acquit been had the defendant fulfil the obligation. This means putting the claimant in the lay out that they would nominate been in had the contract been performed. In relation to damages, this may be separate into expectation loss(benefits that might bind been gained from the performance of the contract) and reliance loss (expenses incurred by the claimant in his side of the contract).The exile of the claimant may in addition affect the do of damages stick outable, since the claimant is under an obligation to take middling measures to diminish the loss, as in Payzu v Saunders (1919). For example, if the buyer refuses to accept or pay for the goods, the seller must recover what they crapper by selling the goods to a trinity party. The damages exit be the oddment amid the contract price and the sum that the seller receives. If the seller receives the contract price or higher from a terce party, only nominal damages allow for be claimable. A claimant who does not flak to mitigate their loss may have their damages reduce by the amount by which they could have done so. It is for the defendant to prove that the claimant failed to mitigate the loss.We pass on now use the same headings in relation to the tort of neglectfulness.KEY ASPECTS OF THE TORT OF do bylessness slackness the relationship between the partiesNegligence cases are based on a non-contractual relationship between the parties. The parties may be known to each other, as with a surgeon and a unhurried, or they may be strangers, as with two drivers composite in a road traffic accident. Due to the lack of all agree relationship between the parties, the first interrogative mood that gussy ups in the case of indifference is that of whether any relationship exists between them at all. If one party is to be held liable to other in negligence, the relationship that must first be established is that of a barter of care.Exam answers often state as a learned fact that indebtedness in negligence is non-contractual, unless it is cost spending a little longer thinking about what it actually means. As a future accountant, you may key it helpful to relate this express to passkey negligence cases since these illustrate the extent to which an accountant may be held liable in relationships where in that location may be no contractual obligation.A useful case in this respect is Caparo Industries plc v Dickman (1990). Here, the claimants were shareholders in a company and the defendants were the companys canvassors. The claimants relied on the audited accounts and purchased more shares with a examine to making a takeover bid. Having interpreted over the company, the claimants discover that the company had in fact made a 400,000 loss rather than the 1.2m profit shown by the financial statements. The House of Lords held that the requirements for a tariff of care to exist were as follows the harm must be reasonably predi ctable on that point must be proximity between the claimant and the defendant it must be just, fair and reasonable to impose a debt instrument of care on the defendant.Note that foreseeability at this stage in the mise en scene of negligence is used to establish whether there is any relationship between the parties this is not requirement at this stage in contract since the contract itself establishes that there is a relationship. (We will consider foreseeability again in relation to remoteness of damage, which is discussed below.)In Caparo, the contract was between the company and the auditors. The individual shareholders did not have a contract with the auditors. The question was whether the auditors owed a art of care to the shareholders. The House of Lords held that the auditors owed a duty to the shareholders as a body, further that they did not owe a duty to potential investors or to existing shareholders who think to amplification their shareholding. The defendants w ere therefore not liable.Caparo is one of a number of cases considering paid negligence. (This is covered by syllabus area B5 of composing F4 (ENG).) A key theme foot race through these cases is the existence of the so-called additional relationship. This was first established in Hedley Byrne & Co Ltd v Heller and Partners (1963). brook in mind that the question of a special relationship is likely to be relevant where the claimant does not have a contractual relationship with the professional providing the advice.In Hedley Byrne itself, the claimant provided services on credit to a node. It did so on the basis of a credit reference given by the defendant, the nodes bank. Note that there was a contract between the claimant and the client and a contract between the client and the bank, scarce no contract between the claimant and the bank. The defendant was able to avoid indebtedness by imprecateing on an exclusion article contained in the credit reference. However, had the cl ause not been present, the defendant would have been liable because it had used its special skill to provide a statement to the claimant in the knowledge that the claimant would rely on this.Other cases that you may attain helpful to consider in this context are as follows JEB Fasteners Ltd v Marks, summit & Co (1982)Morgan Crucible v hummock Samuel Bank Ltd (1991)James McNaghten penning root word Ltd v Hicks Anderson & Co (1991) ADT v BDO tying Hamlyn (1995)NRG v Bacon & Woodrow and Ernst & Young (1996)In each case, identify any contractual relationships between the various parties involved and the nature of the relationship between the claimant and the defendant.Negligence the nature of the obligationIn relation to negligence, the nature of the obligation is not agreed between the parties but rather is imposed by exertion of jurisprudence. For example, a road user will owe a duty of care to other road users and a shaper will owe a duty of care to the final consumers of i ts products. Once a duty of care has been held to exist, the defendants actions are judged by the received of the reasonable man in the defendants positionBlyth v Birmingham Water works (1856). The standard of care for professionals is of the reasonable professional having or holding himself out as having the skill or ability in question. Learners and the inexperienced will also be judged against the standards of the fully-qualified.Negligence causation and remoteness of damageIn relation to negligence, issues of causation and remoteness tend to beconsidered separately. The key test for causation is known as the but for test, which basically asks whether the loss would have been bear on but for the defendants negligence. The leading case here is Barnett v Chelsea and Kensington HMC (1969). The claimant arrived at the hospital emergency department complain of stomach pains. He was sent al-Qaida without being examined and subsequently died. Even though the doctor owed the patient a duty of care and had breached the duty, the breach of duty had not caused the patients death, since the poisoning was so advanced by the time the patient arrived at the hospital that he could not have been saved even with mobile treatment. The defendant was therefore not liable.The key test for remoteness in negligence is one of foreseeability. In The Wagon lot (1961), the defendants negligently allowed oil to spill into Sydney Harbour. The claimants were welding, but ceased doing so on seeing the oil. Having been aware that the sparks would not ignite oil be on the surface of the water, they resumed work. Sparks ignited detritus lying on the surface of the oil, which in turn ignited and damaged the claimants wharf. It was held that the defendants were not liable since the only foreseeable damage was pollution rather than fire. By contrast, in Jolley v London Borough of Sutton (2000), a topical anaesthetic authority failed to remove an abandoned boat for two years. A 14 yea r-old was soberly injured when he tried to knucklebones up the boat in order to repair it. The authority was found liable since it knew that children regularly played on the boat, so it was foreseeable that a child would be injured. It did not matter that the precise nature of the injury could not be foreseen. The cases may appear to conflict, since The Wagon Mound focuses on foreseeability of the type of damage whereas Jolley v Sutton focuses on foreseeability of some harm. There are a number of cases in this area and they are not always easy to reconcile. For the purposes of Paper F4, the key point to remember is that the test for remoteness in the tort of negligence is based on foreseeability of harm. You should be ready to illustrate this point with examples.Note that the law of negligence considers foreseeability twice once in relation to duty of care and again in relation to remoteness. Remember that, if there is no duty of care, the question of remoteness does not arise.Ca paro v Dickman is a useful illustration of this it might be foreseeable that existing shareholders would rely on an audit report in deciding whether to increase their shareholding. Nevertheless, the auditor did not owe a duty of care to potential investors. This was based on other aspects of the duty test proximity and the question of whether it was fair, just and reasonable to impose a duty.Negligence the measure of damagesAs with contract, once liability in negligence has been established, the next point to consider is that of remedies and the aim of the remedies is to put the claimant in the position that he would have been in had the breach of obligations not taken place. For negligence, the aim is therefore to put the claimant in the position that they would have been had the tort not been committed.Again, as with contract, the damages payable may also be cut back because of the claimants conduct. In negligence, this may be due to the partial derivative defence of contributo ry negligence. This happens in cases where, even though the defendant was at fault, the claimant contributed to their own loss. Where this happens, the claimants damages are reduced by the percentage to which the claimant is held to be at fault. The leading case here is Sayers v Harlow UDC (1958) where the claimant was trapped in a populace toilet due to a uncollectible lock. She was injured when trying to climb out and it was held that she had contributed to her own injuries. It is for the defendant to prove that the claimant was contributorily negligent. terminusContract and the tort of negligence arise in separate questions on Paper F4, so you will not be asked to compare and contrast them. The aim of this article is to identify some key similarities and differences so that you are less likely to confuse these two areas. Your aim for the exam should be to be able to explain these key aspects of contract and negligence without confusing them. You may find that the following tabl e acts as a useful revision aid Contractual LiabilityLiability innegligence birthbetween the partiesThe relationship is created and governed by the contract. The parties enter the relationship by mutual consent.The relationship is non-contractual and is imposed by law. The defendant must owe the claimant a duty of care. genius of obligationThe parties must comply with the terms of the contract.The defendant must act according to the standard of care expected of the reasonable man or the reasonable professional. Causation and remotenessIf the loss is a normal result of the breach, the defendant will be liable if the loss is not a normal result of the breach, the defendant will only be liable if they knew of the unusual circumstances.The defendants negligence must cause the claimants loss and the loss must have been a foreseeable consequence of the breach of duty. Measure of damagesThe aim is to compensate the claimant by putting them in the position that they would have been had the contract been performed.The aim is to compensate the claimant by putting them in the position that they would have been had the negligence not taken place. manageable reduction of damagesDamages may be reduced by the amount that could have been rationalize if the claimant fails to take reasonable action to mitigate the loss.Damages may be reduced by the relevant percentage if the claimants conduct contributed to the loss.