Contract Liability

GENERAL TORTUOUS LIABILITY AND CONTRACT TO CONTRACT LIABILITY

1.1 INTRODUCTION

A tort is a legal wrong. Tort law is a branch of the civil law; the other main branches are contract and property law. Whereas in criminal law the plaintiff is always the state and the defendant, if found guilty of a crime, is punished by the state, in civil law the dispute is typically between private parties. In the case of torts, the plaintiff is the victim of an alleged wrong and the unsuccessful defendant is either directed by the court to pay damages to the plaintiff or else to desist from the wrongful activity. Examples include intentional torts such as defamation, and invasion of privacy and unintentional torts such as negligence.

Generally tort refers to private and civil offenses for which law may provide monetary compensation to the aggrieved party as a remedy. Some torts such as assault, however, are crimes. Whereas breach of a contract does not ordinarily fall under tort law, negligent driving by a taxi driver is a breach of contract to carry the passenger safely to his or her destination. In the case of tort, it usually must be shown that the wrong was committed with intention or negligence, however tort of strict liability does not require any such proof. The common legal relief for a tort is monetary compensation. In some cases, such as nuisance to a neighbour an injunction to prevent recurrence of the act may be granted.

1.2 DEFINITION OF TORT

The term tort is the French equivalent of the English word ‘wrong’ and of the Roman law term ‘delict’. The word tort is derived from the Latin word tortum which means twisted or crooked or wrong and is in contrast to the word rectum which means straight. Everyone is expected to behave in a straightforward manner and when one deviates from this straight path into crooked ways he has committed a tort. Hence tort is a conduct which is twisted or crooked and not straight. As a technical term of English law, tort has acquired a special meaning as a species of civil injury or wrong. It was introduced into the English law by the Norman jurists.

Tort now means a breach of some duty independent of contract giving rise to a civil cause of action and for which compensation is recoverable. In spite of various attempts an entirely satisfactory definition of tort still awaits its master. In general terms, a tort may be defined as a civil wrong independent of contract for which the appropriate remedy is an action for unliquidated damages.

According to Winfield and Jolowicz, tortuous liability arises from the breach of a duty primarily fixed by law; this duty is towards persons generally and its breach is redressible by an action for unliquidated damages.

According to Salmond and Hueston, a tort is a civil wrong for which the remedy is a common action for unliquidated damages, and which is not exclusively the breach of a contract or the breach of a trust or other mere equitable obligation.

However, according to Sir Frederick Pollock, every tort is an act or omission (not being merely the breach of a duty arising out of a personal relation, or undertaken by contract) which is related in one of the following ways to harm (including reference with an absolute right, whether there be measurable actual damage or not), suffered by a determinate person:-

a) It may be an act which, without lawful justification or excuse, is intended by the agent to cause harm, and does cause the harm complained of.

b) It may be an act in itself contrary to law, or an omission of specific legal duty, which causes harm not intended by the person so acting or omitting.

c) It may be an act violation the absolute right (especially rights of possession or property), and treated as wrongful without regard to the actor’s intention or knowledge. This, as we have seen is an artificial extension of the general conceptions which are common to English and Roman law.

d) It may be an act or omission causing harm which the person so acting or omitting to act did not intend to cause, but might and should with due diligence have foreseen and prevented.

e) It may, in special cases, consist merely in not avoiding or preventing harm which the party was bound absolutely or within limits, to avoid or prevent.

1.3 NATURE OF GENERAL TORTUOUS LIABILITY COMPARING AND CONTRACT TO CONTRACTUAL LIABILITY

Strict liability is a legal doctrine that holds a person responsible for the damages or loss caused by his or her acts or omissions. This doctrine holds a person liability regardless of culpability. Strict liability is important to tort law, particularly in product liability lawsuits. It is also important for corporation law and criminal law.

In torts, strict liability is the doctrine that imposes liability on a party or person without a finding of fault. A finding of fault would be negligence or tortious intent. The plaintiff needs to prove only that the tort happened and that the defendant was responsible. Strict liability is imposed for legal infractions that are malum prohibitum rather than malum in se. Malum prohibitum means that an act is wrong because it violates a statute. Malum in se means that an act is wrong because it is evil in and of itself. Because the act was prohibited by statute, neither good faith nor the fact that a defendant took as many precautions as possible are valid defenses. Strict liability frequently applies to those who were engaged in a hazardous or inherently dangerous venture.

Strict liability typically applies to hazardous activities (like construction), animal owners, and product manufacturers. For example, a product manufacturer is strictly liable for any injury caused by a defective product regardless of the care taken to prevent injury or the absence of intentional wrongdoing or negligence. Anyone involved in the manufacturing of a product may be held liable for damages caused by the defective product if the injury or harm occurred while a consumer was using the product in a reasonably foreseeable way—even if the product was not being used for its intended purpose.

Another example of how strict liability comes into play is dog bites. No matter how many precautions a dog owner takes to train his or her dog or keep his or her dog away from other people, the owner is strictly liable if the animal bites another human being.

The purpose of strict liability is to discourage reckless behavior, careless product development and manufacturing, and negligent animal control. By holding people strictly liable for actions that are inherently dangerous, damage caused by animals, and products developed for consumers, people and companies are more likely to take extreme care to prevent damages or injury.

Although the laws of tort and contract both deal with obligations, it is possible to distinguish between them on the basis that in the case of a contract the parties are voluntarily assuming obligations whereas tortious liability is compulsorily imposed by law. Thus, for example in respect of the “general” tort of negligence, the law imposes an obligation not to breach the duty of care as defined in the leading case of Donoghue v Stevenson.The definition given by P.H. Winfield clearly brings about the distinction between tort and contract. It says, Tortuous liability arises from the breach of a duty primarily fixed by law; this duty is towards persons generally and its breach is repressible by an action for unliquidated damages. A contract is that species of agreement whereby a legal obligation is constituted and defined between the parties to it. It is a legal relationship, the nature, content and consequence of which are determined and defined by the agreement between the parties. Like the law of torts, contract law is concerned with civil obligations. However, unlike tort law, the law of contract is largely concerned with the enforcement of duties that one person has by agreement, bound himself or herself to perform for the benefit of another. Even though the law of torts is also concerned with breaches of duties, those duties are not established by any agreement between persons but rather by the law itself.

In some cases, a breach of contract may also constitute a tort. However not every breach of a contractual obligation is also a tort. According to Salmond, a contract arises out of the exercise of the autonomous legislative authority entrusted by the law to private persons to declare and define the nature of mutual rights and obligations.

At the present day, tort and contract are distinguished from one another in that, the duties in the former are primarily fixed by law while in the latter they are fixed by the parties themselves. Agreement is the basis for all contractual obligations. “People cannot create tortious liability by agreement. Thus I am under a duty not to assault you, not to slander you, not to trespass upon your land because the law says that I am under such duty and not because I have agreed with you to undertake such duty.

Some of the distinctions between tort and contract are given below:

1) A tort is inflicted against or without consent; a contract is founded upon consent.

2) In tort no privity is needed, but it is necessarily implied in a contract.

3) A tort is a violation in rem (right vested in some person and available against the world at large.); a breach of contract is an infringement of a right in personam( right available against some determinate person or body).

4) Motive is often taken into consideration in tort, but it is immaterial in a breach of contract.

5) In tort the measure of damages is not strictly limited nor is it capable of being indicated with precision; in a breach of contract the measure of damages is generally more or less nearly determined by the stipulations of the parties.

In certain cases the same incident may give rise to liability both in contract and in tort. For example, when a passenger whilst traveling with a ticket is injured owing to the negligence of the railway company, the company is liable for a wrong which is both a tort and a breach of a contract.

The contractual duty may be owed to one person and the duty independent of that contract to another. The surgeon who is called by a father to operate his daughter owes a contractual duty to the father to take care. If he fails in that duty he is also liable for a tort against the daughter. In Austin v. G.W. Railway, a woman and her child were traveling in the defendant’s train and the child was injured by defendant’s negligence. The child was held entitled to recover damages, for it had been accepted as passenger.

There is a well established doctrine of Privity of Contract under which no one except the parties to it can sue for a breach of it. Formerly it was thought that this principle of law of contract also prevented any action being brought under tortuous liability. But this fallacy was exploded by the House of Lords in the celebrated case of Donoghue v. Stevenson. In that case a manufacturer of ginger beer had sold to a retailer, ginger beer in a bottle of dark glass. The bottle, unknown to anyone, contained the decomposed remains of a snail which had found its way to the bottle at the factory. X purchased the bottle from the retailer and treated the plaintiff, a lady friend (the ultimate consumer), to its contents. In consequence partly of what she saw and partly of what she had drunk, she became very ill. She sued the manufacturer for negligence. This was, of course, no contractual duty on the part of the manufacturer towards her, but a majority of the House of Lords held that he owed a duty to take care that the bottle did not contain noxious matter and that he was liable if that duty was broken.

The judicial committee of the Privy Council affirmed the principle of Donoghue’s case in Grant v. Australian Knitting Mills Ltd. Thus contractual liability is completely irrelevant to the existence of liability in tort. The same facts may give rise to both.

Another discrepancy between contracts and torts is seen in the nature of damages under each. In contracts the plaintiff will be claiming liquidated damages whereas in torts he will be claiming unliquidated damages. When a person has filed a suit or put a claim for the recovery of a predetermined and fixed sum of money he is said to have claimed liquidated damages. On the other hand when he has filed a suit for the realization of such amount as the court in its discretion may award, he is deemed to have claimed unliquidated damages. There is more freedom in contractual law where as in tortuous liability it is more of imposed nature. The claimant will receive compensation for damages and expected earnings in the case of contract liability where as the claimant can only claim damages as in the case of tortuous liability. There is more privacy in the contract in the case of contractual liabilities as the parties who are involved in the contract are the one who can actually sue for damages as in the case of ATKIN V SOUNDERS(1942) whereas in tortuous liabilities any one as a third party who had suffered losses or damages can claim compensation from the defendant.

1.4 CASE EXAMPLE

Case example: Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd.

The case concerned a misrepresentation as to the mileage of a car. The plaintiffs claimed and were awarded damages for breach of contract. The difficulty with this decision is that the statement was made before the conclusion of the contract and it is by no means certain that it became a term of the contract. Salmon LJ somewhat disingenuously argued that the representation, although not a term of the contract, became in effect a collateral contract. Markesinis & Deakin comment that contract theory was here advancing into the pre-contract stage achieving results almost identical to those of a negligence action.

Case example: Donoghue v. Stevenson

In that case a manufacturer of ginger beer had sold to a retailer, ginger beer in a bottle of dark glass. The bottle, unknown to anyone, contained the decomposed remains of a snail which had found its way to the bottle at the factory. X purchased the bottle from the retailer and treated the plaintiff, a lady friend (the ultimate consumer), to its contents. In consequence partly of what she saw and partly of what she had drunk, she became very ill. She sued the manufacturer for negligence. This was, of course, no contractual duty on the part of the manufacturer towards her, but a majority of the House of Lords held that he owed a duty to take care that the bottle did not contain noxious matter and that he was liable if that duty was broken.

Case example: Ashby v. White

The plaintiff was wrongfully prevented from exercising his vote by the defendants, returning officers in parliamentary election. The candidate fro whom the plaintiff wanted to give his vote had come out successful in the election. Still the plaintiff brought an action claiming damages against the defendants for maliciously preventing him from exercising his statutory right of voting in that election. The plaintiff was allowed damages by Lord Holt saying that there was the infringement of a legal right vested in the plaintiff.

Case example: Saif Ali v Sydney Mitchell & Co

Although public policy requires that a barrister should be immune from suit for negligence in respect of his acts of omissions in the conduct and management of litigation which causes damage to his client, such immunity is an exception to the principle that a professional person who holds himself out as qualified to practise that profession is under a duty to use reasonable care and skill and is not to be given any wider application than is absolutely necessary in the interests of the administration of justice. Accordingly, a barrister’s immunity from suit extends only to those matters of pre-trial work which are so intimately connected with the conduct of the cause in court that they can fairly be said to be preliminary decisions affecting the way that cause is conducted when it comes to a hearing. Where a barrister’s advice and settling of the pleadings in fact prevents plaintiff’s cause from coming to court as it should have done, it cannot be said to be intimately connected with the conduct of plaintiff’s cause in court and is therefore not within the sphere of a barrister’s immunity from suit for negligence.

Case example: Caparo Industries plc v Dickman

Following their take-over of a company, the respondents brought an action against the company’s auditors, alleging that the company’s accounts were inaccurate and misleading. The respondents contended that the auditors had been negligent in auditing the accounts, that the take-over bid had been made on the basis of the audited accounts, and that the auditors owed them a duty of care either as potential bidders or as existing shareholders. It was held that the auditors owed the respondents a duty of care as shareholders although not as potential investors. The auditors appealed and the respondents cross-appealed against the decision that they could not claim as potential investors: Held the auditor of a public company’s accounts owed no duty of care to members of the public who were potential investors. To do so would give rise to unlimited liability on the part of the auditor. Nor was a duty of care owed to individual shareholders in the company who wished to buy more shares, since individual shareholders were in no better position than members of the public at large. The auditor’s statutory duty to prepare accounts was owed to the body of shareholders as a whole to enable them to exercise informed control of the company, and not to enable them to buy shares with a view to profit. Accordingly, the appeal would be allowed and the cross-appeal dismissed.

Case example: Haley v London Electricity Board

Appellant, a blind man, while walking along a pavement in a residential area in Woolwich on his way to work (as he had done for six years) tripped over an obstacle placed by servants of London Electricity Board near the end of a trench which they were excavating in the pavement under statutory authority; appellant fell and was injured. The obstacle, a punner hammer some five feet long, was resting across the pavement, with its handle at one end two feet above the ground on railings on the inside of the pavement, while the other end lay on the pavement about a foot from the outer edge, so that the hammer was at an angle of thirty degrees to the pavement. It had been placed there by the board’s servants to protect pedestrians from the trench and to deflect them into the road. Appellant was alone and had approached with reasonable care, waving his white stick in front of him to detect objects in his way and also feeling the railings with it, but the stick missed the hammer and his leg caught it about four and a half inches above his ankle causing him to be catapulted over onto the pavement. The hammer gave adequate warning of the trench for normally sighted persons. In an action for damages on the ground of the board’s negligence there was evidence that about one in five hundred people were blind; that in Woolwich there were 258 registered blind; that the Post Office took account of the blind in guarding their excavations, using for the purpose a light fence some two feet high, and that more than once appellant had detected such fences with his stick: Held the duty of care owed by persons excavating a highway, in guarding the excavation made by them, extended to all persons whose use of the highway was reasonably likely and thus reasonably foreseeable, not excluding the blind or infirm, and the use of a city pavement such as this by a blind person was reasonably foreseeable; on the facts, the punner hammer was not an adequate or sufficient warning for a blind person who was taking the usual precautions by use of his stick and accordingly appellant was entitled to recover damages at common law for negligence.

Case example: Hodge & Sons v Anglo-American Oil Co

The law seems to be (1) if a barge which has carried petrol is an article dangerous in itself, it is the duty of the owners to take proper and reasonable precautions to prevent its doing damage to people likely to come in contact with it. These precautions may be fulfilled by entrusting it to a competent person with reasonable warning of its dangerous character, if that danger is not obvious. If such precautions are not taken, the owner will be liable to third persons with whom he has no contract for damage done by the barge, which they could not have avoided with reasonable care; (2) if the barge which has carried petrol is not dangerous in itself, but becomes dangerous because it has been insufficiently cleaned, and the owner is ignorant of the danger, the owner is not liable for damage caused by it to persons with whom he has no contract; (3) in the case of a thing dangerous in itself, where either the danger is obvious or the owner has given proper warning to the person entrusted with it, not being his servant, the owner is not liable for negligence of such person causing injury to a third party; such negligence is nova causa interveniens (Scrutton, LJ).

Case example: McLaren v British Columbia Institute of Technology

A teacher brought an action for wrongful dismissal. He sought to include a claim that his former employer and fellow employees had caused his dismissal, in that their negligent acts had induced the breach of his contract of employment. A number of incidents had taken place whilst the teacher was employed at the college, which he claimed had undermined his standing as a teacher. These included the questioning of his teaching ability in front of the students, the rebelling of students which, he claimed, was encouraged by the other teachers and the making of statements by the teachers which, he alleged, were reckless and negligent. Furthermore the college was negligent in that it had failed to recognise the situation and take steps to prevent it from affecting the teacher’s ability to continue teaching: Held there was no right of action for negligence inducing breach of contract and the categories of negligence should not be extended to include such a right. The parties to a contract were free to impose any rights and obligations they wished on each other, but if there existed a right of action in negligence for inducing breach of contract, the parties could impose a limitless variety of duties of care on third parties. The amendments sought would therefore be refused.

Case example: Thake v Maurice

A husband and wife who had a healthy baby after the husband had undergone a vasectomy were awarded damages for breach of contract against the surgeon who performed the operation. On appeal by the surgeon, held, Kerr LJ dissenting on the issue of liability in contract, (i) although both parties to the contract expected that sterility would be the result of the operation, a reasonable person might not necessarily have taken that to mean that the surgeon was giving a binding promise that the operation would achieve its purpose. Therefore, the surgeon was not liable in contract for the revival of the husband’s fertility. (ii) However, in contracting to perform a vasectomy operation the surgeon was subject to the duty implied by law to carry it out with reasonable skill and care. His failure to give his usual warning before the operation of the possibility of a natural reversal of the operation was in breach of his contractual duty of care amounting to negligence. It should have been within his reasonable contemplation that by failing to warn the husband there was a risk that the wife would not appreciate her pregnancy at a sufficiently early stage to enable her to have an abortion if she wished. Accordingly, although not liable in contract, the surgeon was liable in tort.

Case example: Thompson v Bradford

The claimant, H, was born on 1 November 1997. On 29 December, H was taken to the clinic for an eight week check up and for immunisation. The health visitor found a hard inflamed area on the anal edge. Without examining H, a doctor prescribed antibiotic cream. The parents asked about whether they should proceed with the immunisation and the health visitor indicated they should. The parents then took H to the practice nurse who was to undertake the immunisation. The parents explained that he had a boil and that he had had a previous spot on his buttock, which had cleared and faded away. The nurse asked the defendant general practitioner to examine H. He asked questions designed to elicit whether H was systemically unwell in accordance with the guidance given to GPs, in order to determine whether there were any contradistinctions to immunisation. The guidance suggested that minor infections without fever or systemic upset were not reasons to postpone immunisation. The defendant did not go into the question whether the immunisation should be postponed nor did he explain that H’s presentation of a recurring perianal abscess was unusual and that he might require surgery. H was vaccinated. By 1 January 1998, the abscess became much larger and more inflamed. He was taken to a hospital where a surgeon, having been told of the vaccination, lanced the boil and then packed the wound. On 8 January, H developed a high temperature and was eventually diagnosed as having contracted polio subsequently confirmed as vaccine strain of polio (VAPP). He brought proceedings, by his father and litigation friend. The judge held that the advice to proceed with the immunisation was proper advice, but he went on to hold that there were certain matters about which the doctor should have informed the parents in relation to which ‘fault’ was established. He further held that although no doctor could have foreseen that the lancing of the boil might provide a greater potential for H contracting polio than existed in any case where a baby was vaccinated, factually it was the boil via which polio had been contracted. On that basis he ruled that the defendant was liable in damages for the injury flowing from the contracting of polio from the vaccine. The defendant appealed against the finding of liability. H cross appealed against the finding that the defendant was not negligent to advise that immunisation could proceed.

Case example: A v Essex County Council

The claimants, a married couple, were prospective adoptive parents. The defendant authority was the relevant adoption agency pursuant to the Adoption Act 1976. The adoption panel recommended two children, a brother and sister, for adoption. The male child had serious behavioural and emotional problems. The claimants agreed to have the children placed with them. They alleged that they found the male child impossible to control, to such an extent that he damaged their home, health and family life. At the end of the placement, the claimants went on to adopt both children. The claimants sought damages from the authority, arguing, inter alia, that it had been negligent in that its social workers who had dealt with the adoption had failed to inform them of the extent of the male child’s difficulties of which they had known, and that had the claimants been properly informed, they would not have agreed to the placement. The authority denied that it owed the claimants a duty of care, and that if it did, that it had been negligent. Only liability was at issue.

Held – A person exercising a particular skill or profession might owe a duty of care in its performance to those who might foreseeably be injured if its skill was exercised carelessly. It was plain that a child with serious behavioural problems, particularly one displaying violence towards property and people, was foreseeably likely to cause injury. Moreover, there was sufficient proximity between prospective adoptive parents and the social workers dealing with the adoption. In the circumstances, it was reasonable to impose a duty of care, since it was in the public interest that professionals and those with special skills who were paid to offer their skills to the public, should act to the appropriate standard. It followed that the social workers who had dealt with the adoption had owed the claimants a duty of care, and the authority was vicariously liable for any breaches established. On the evidence, the social workers had failed to provide the claimants with all the relevant information of which they knew, and as such had acted in breach of duty. Had the claimants been aware of that information, they would not have taken the placement and therefore causation had been established for loss suffered during the placement. However, during the placement, the claimants came to know the substance of the information that they had not been given previously, and as a result, any loss suffered by them after the adoption was not caused by the authority’s negligence. Accordingly, judgment was given for the claimants.

Case example: Ashton v Turner

Three men spent an evening drinking together. Two of them then committed a burglary and attempted to escape in a car belonging to the third man. While doing so they were involved in an accident in which one of them, the passenger, was injured. He brought an action in negligence against the driver and against the car owner, on the ground that he had permitted the driver to use the car: Held in certain circumstances, as a matter of public policy, the law might not recognise that a duty of care was owed by one participant in a crime to another in relation to an act done in the course of the commission of the crime. On the facts, the defendants did not owe a duty of care to the plaintiff during the burglary or while trying to escape. Alternatively, in the circumstances of the present case of burglars who had been drinking and were fleeing in a getaway car, the defendants were entitled to rely on the maxim volenti non fit injuria.

Case example: Asiansky Television plc v Bayer Rosin

The defendant solicitors acted for the claimants in connection with the purchase of a development site for £1.4 million. The site was affected by implemented compulsory purchase orders (CPOs), under which the Department of Transport enjoyed rights extending over a significant area of the site. The claimant issued proceedings in professional negligence in respect of advice given by the defendants. At trial, Hunt J dismissed the claim save for an award of nominal damages (see [2002] All ER (D) 371 (Dec)). The claimants appealed successfully against that decision (see [2003] All ER (D) 133 (Nov)), the Court of Appeal finding that there had been a breach of duty by the defendants, in particular as regarded the advice given as to the effect of the implemented CPOs on the title. A re-trial was ordered to determine whether the breach of duty had been causative of any loss suffered by the claimants.The claimants argued, inter alia, that they should have been informed that an implemented CPO represented a serious blot on title, and that if so advised they would not have proceeded with the purchase of the site. The defendants contended, inter alia, that given proper legal advice, the claimants would still have gone ahead, or would have gone ahead but negotiated a price reduction for so doing, since they were keen to acquire the site.

Held – On the evidence, the claimants should have been properly advised, inter alia, as to the effect of the implemented CPOs. They had been keen to purchase the site and, had they been properly advised, would have continued with the purchase having negotiated a reduction in the price in the sum of £300,000.

Case example: Bates v Parker

Plaintiff was employed by defendant as an independent contractor to clean the windows of his hairdressing shop every fortnight. When cleaning a window with three panels, in order to steady himself, he had made a practice of putting his hand through a hole in a piece of pl