Liability in Contract Versus Liability in Tort - Essay Example

Name Course Lecturer Date Contract Discussion Introduction Magistrates play an important role in the UK justice system. Magistrates are volunteer members of the community who undertake to deliver justice on behalf of their community. They are not lawyers but are trained in the legal procedures of the English court system1. Magistrates deal with less serious criminal cases including criminal damage, theft, and public disorder and motoring offences. More than 90 per cent of criminal justice cases in the UK are handled by the Magistrates courts hierarchy2. However, magistrate courts also have jurisdiction over some civil and family law disputes. Generally, magistrates decide over the following types of cases3: Summary offences: These are offences were the accused is not entitled to trial by jury. They include minor assaults and motoring offence which get disposed off in the Magistrates’ court. Either-way offences: These types of cases can either be handled by Magistrates or through trial by jury. Handling of stolen goods and theft are some of the offences classed as either way offences. Magistrates hand over the cases to the Crown court: if the defendant insists on his right of judgment by the jury or in cases where the magistrate feels the cases should be dealt with by the Crown Court due to its seriousness. Indictable offences: Magistrate courts decide whether or not to grant bail for indictable offences. All indictable offences including manslaughter, murder, robbery and rape must be dealt with by the Crown court. Magistrates dispense justice by either fining offenders or jailing them for a maximum of 1 year4. At the start of the case defendants can enter a plea of guilty as requested by the court. If a defendant is proved guilty, the magistrate imposes a sentence. Where they are found not guilty, the magistrate acquits him/her and he is considered innocent in the eyes of the law. Magistrates provide an opportunity for the community to participate in the delivery of justice in England and Wales. Since of Magistrate come from the local community they represent the views and concern the residents in the delivery of justice5. Ordinary persons of high standing in their community volunteer for service as Magistrates. They are given some training on court procedure and the justice systems including visits to courts and prisons. However, no formal legal requirement is required to be appointed a Magistrate. Conclusion Magistrate courts are therefore an important part of the justice system that enables it fulfill its function. Magistrates play a great role in reducing crime, punishing offenders, protecting the public and providing victims with reparation. It is in this case system where criminal cases commence and over 90 per cent are completed here. Magistrates also act as representatives of the community in the delivery of justice. Liability in contract vs Liability in Tort A contract can be defined as “an agreement between parties outlining their duties and responsibilities to one another”6. Contracts deal with many of the interaction between humans and are mostly for the exchange of goods and services. Liability in contract arises when a party fails to do what is set out in the contract. In many cases, remedies for breach of the contract are set out in the contract document. In contrast, liability in tort arises when a person harms or injures another person. Tortuous liability is defined as liability that arises from a breach of a duty set out by common or statutory law. Tort damages arise in cases of intentional harm like in battery7. Negligent defendants may also be held liable in tort even if they had no intentions of harming the defendant. For example, negligence is a tort that is concerned with the breach of duty of care. In conclusion, liability in tort arises when there is a disagreement or misunderstanding between two parties who are in a contractual relationship. It requires that two parties have some kind of agreement and liability arises when on party breaches the terms of the agreement. In contrast, tort law does not necessitate agreement between the two parties. Liability in tort occurs when one breaches a duty to someone else that is set out by statute or common law. Question 2 (a) Issue: Does a buyer have a right of ownership over gifts involving transfer of consideration? Law In Esso Petroleum v Customs & Excise [1976] 1 WLR 1, it was ruled that a buyer has a right to claim a gift transferred as part of a contractual promise8. The majority held that the garage had a contractual obligation to give the world cup coins to customers as long as they bought fuel. Application According to John McLeod, a “gift” is considered to be a valid gift if it is not based on transfer of consideration9. The only obligation the person receiving the gift has is that of paying for the cost of delivery of the gift. A contractual relationship does not arise when gifts are transferred without requiring the transferee to provide any consideration. However, in trade and commerce, sellers regularly offer “gifts” on condition the buyer buys other goods under a related contract. In Esso Petroleum v Customs & Excise [1976] 1 WLR 1, Esso Petroleum run a promotion where they would give “World cup coins” to customers who purchased 4 gallons of Petrol. Esso argued that they were under no contractual obligation to provide the coins to customers. However, the majority of Lords held that Esso was under contractual obligation to give the coins on condition customers had purchased 4 Gallons of gas. Similarly, PEL ordered glasses for delivery and payment during the month of July when TSOL would have a promotion. TSOL representatives informed Edward that for each dozen glasses he bought he would be offered two extra glasses. Unfortunately, TSOL did not deliver the extra glasses they had promised to Edward. PEL have a right to claim the free glasses from TSOL. TSOL had made a contractual promise to supply two extra glasses for each dozen bought by customer in the month of July. By failing to supply TSOL with the glasses they were acting in breach of the contract. Conclusion Businesses must be aware that they will be obligated to provide gifts they claim to be offering on condition that customers purchase their goods or services. Question 2(b) Issue Can implied terms of contract be excluded legally from contracts through the use of exclusion clause? Law Section 6 of Unfair Contract Terms Act 1977 asserts that exclusion clauses that seek to exclude implied terms set out in the Sale of Goods Act 1979 and the Supply of Goods (Implied Terms) Act 1973 are invalid10. Under the act, exclusion clauses that pertain to the following implied term cannot be included into a sale of goods contract: Exclusion clauses that pertain to the title-absolute of the sales. Exclusion clauses cannot also exclude liability for quality, description and fitness for purpose for consumer contracts. For non-consumer contractual liability for quality, description, fitness for purpose or sample cannot be excluded from the contract unless it is reasonable to do so. It was held in Olley v Marlborough Court [1949] 1 KB 532 that an exclusion clause can be incorporated into a contract through notice11. However, the party relying on the exclusion clause needs to show that the other party attention was brought to the existence of the exclusion before the contract was closed. Application Clause (a) sought to exclude TSOL from liability for the quality and fitness of the supplied good to the purpose they were supplied. The clause stated contrary to Section 6 of the Unfair Contract Terms Act 1977 that goods supplied did not have to be fit for any particular purpose. This clause is unfair as it allows TSOL to supply any types of glasses it wishes. On the other hand, Clause (b) could not be included into the contract as it is not on a signed document and the buyer’s attention was not brought to its existence prior to entering the contract. The clause seeks to force Edward’s hand in accepting that he had consented to the quality of glass supplied by inspecting them. However, the glasses supplied by TSOL are not of same quality as the glasses Edward had earlier inspected. The clause claiming he had inspected the goods and accepted their quality came into his knowledge after the contract had been closed. Conclusion Therefore, TSOL cannot legally incorporate the clauses (a) and (b) into the contract for the sale of glasses. Question 2 © Under the Unfair Contract Terms Act 1977, control of unfair contract terms is based on the reasonableness test12. To decide whether a clause in a contract is unreasonable, the court takes into consideration the following factors: whether the contract was standard form or negotiated, the relative bargaining power of the two contract parties, and whether the party affected by the clause was offered any incentive to enter into the contract. Unfortunately, the courts may find the two clauses reasonable as both PEL and TSOL are commercial organizations that can be regarded as having equal bargaining power. As seen in SAM Business Systems v Hedley and Co, unusually oppressive contract terms can be allowed in cases where the contracting parties are of relatively equal bargaining power13. However, the Edward had not been given a chance to negotiate the clauses as they were not even included in the contract documents. In addition, TSOL offered the incentive of free glasses to get Edward to enter into the contract to purchase the glasses. The two clauses in the contract are onerous and can only be enforced if the party relying on them makes them very clear. The court of appeal in Interfoto v Stiletto (1987) asserted that inclusion of onerous clauses must be preceded with adequate notice to the affected party14. Unfair terms in contract are also controlled by the Unfair Terms in Consumer Contracts Regulations (1999) (`UTCCR'). The UTCCR seeks to control the use of any “unfair terms”; terms that imbalance rights significantly or cause detriment to the consumer15. The UTCCCR considers contract clauses “unfair” if they allow businesses a right to terminate the contract without doing the same to the consumer. Contract terms that allow one party to vary their contractual obligation are also considered unfair under the UTCCR. Question 2(d) Remedies or Breach of Contract They are several remedies available to those affected by breach of contract by other parties. Remedies include award of damages, restitution and rescission16. Award of damages is the most common remedy as it falls within the jurisdiction of the magistrate court. Rescission and specific performance are referred to as equitable remedies and are beyond the jurisdiction of the magistrate’s court17. A party affected by breach of contract may be awarded compensatory and punitive damages. Compensatory damage seeks to compensate for the actual loss suffered by the contractual party due to the breach of contract18. Compensatory damage seeks to replace the claimant’s loss by offering a monetary equivalent of the loss. Compensatory damages are classed into General damages and Special damages. General damages directly cover the loss suffered by the non-breaching party. For example PEL may ask TSOL to supply the right quality and quantity of glasses19. If the dispute goes to court, general damages would be those that cover the amount paid by PEL and any expense incurred in buying or sending the glasses back to TSOL. Special damages or “consequential damages” arise if a predictable loss occurs due to the breach of contract20. For example, if PEL was rented new glasses to serve customers as a consequence of the inconvenience caused by TSOL, special damages may be awarded. Punitive damages may also be awarded for breach of contract in rare circumstances. Punitive damages or exemplary damages seek to punish the breaching party for malicious, wilful and fraudulent behavior21. However, exemplary damages are more commonly awarded in tort law rather than in contract. Bibliography A. Article/Books/Reports Beale, Hugh, Denis Tallon, Stefan Vogenauer, Jacobien W. Rutgers, and Bénédicte Fauvarque-Cosson. Cases, materials and text on Contract law (Hart, 2010.) Burrows, Andrew S. Remedies for torts and breach of contract, (Oxford University Press, 2004) Hunter, Howard O. Modern Law of Contracts, (Thomson Reuters, 2014) Macleod, John. Consumer sales law: the law relating to consumer sales and financing of goods, (Routledge, 2009) Slapper, Gary, and David Kelly. The English Legal System: 2012-2013 (Routledge, 2013) W. V. H. Rogers, Winfield & Jolowicz on Tort (16th edn, Sweet and Maxwell, 2002) Ward, Richard, and Amanda Akhtar. Walker & Walker's English legal system (Oxford University Press, 2011). B. Cases Esso Petroleum v Customs & Excise [1976] 1 WLR 1 SAM Business Systems Ltd v Hedley & Co Ltd (2003)1 All ER Comm 34 Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ Olley v Marlborough Court [1949] 1 KB 532 c. Legislation Unfair Contract Terms Act 1977, s 6 Unfair Contract Terms Act 1977, s. 11 Read More