Are the Conclusions of the National Audit Office Correct - Case Study Example

 Construction Law Ans 1: Scenario: In order for any contractual obligations to exist between two parties, there must be a valid offer from an offerer and a valid acceptance from the person who accepts the offer. A tender is akin to an advertisement, it is merely like an invitation to treat.1 Therefore, the two tenders initially offered by the two companies are only offers and a valid acceptance would require further qualification. However in the case of Blackpool and Fylde Aeroclub v Blackpool BC (1990) damages were awarded for a breach by an undertaking when they did not consider all the conforming tenders2. In this case, the tender arrived on time, but lay in the letterbox, therefore it was deemed to be a valid offer. A unilateral contract would turn into a bilateral contract through a valid acceptance, signified by a performance of the stipulated terms within the offer. According to I.M. Wormser, the justification for fixing acceptance to a unilateral contract upon completed performance of the stipulated terms is based upon symmetry3. Therefore in terms of the tender, there is no obligation upon the offerer, neither is there any obligation upon the offeree unless and until the stipulated terms of the offer have been completed. An offeree need not perform the stipulated terms, in which case no contract exists. Therefore, the initial tender was sent to Widget by Dig-it Builders but when accepted by Widget, did not yet constitute a formal contract because Dig-it sent a counter offer and when it was not accepted within the stipulated time period, they sent the fax withdrawing their offer. However the original term of the tender is 60 days so the tender still remains open, since only one party has withdrawn the offer. The mail indicating acceptance by Widget was posted by the architect on the same day, and the courts have deemed acceptance when a letter is posted4. However it is received on the subsequent day (the 35th) day of the tender. Therefore, this will still be subject to the general rule regarding acceptance, which is the requirement of actual communication5. No legal commitment will be deemed to exist until the acceptance of the offer is communicated to the offerer and up to that point, either party is free to change their minds.6 However, Dig-it’s fax will be construed to be a counter offer in the sense that it is a withdrawal of the original offer, which no longer exists. But the tender is not yet closed because Dig-it has made a counter offer reducing the price, although this will still not be a contract until acceptance is obtained from Widget and communicated to Dig-it. Therefore, at no point during this process can a formal contract be said to exist. On the other hand, the architect’s letter to Just-So Construction constitutes a valid acceptance of their terms, because it specifically stipulates that work be started and this letter of Intent has also been communicated to Just-So Construction and therefore constitutes a valid contract between the two parties. In order for a contract to exist, there must also be an acceptance of the offer that has been made. When a particular offer requires the offeree to indicate acceptance of the offer through a particular action or deed, and if an offeree executes the action required, he/she would be deemed to have accepted the contract. The architect has spoken to Just-So over the telephone and their Director orally agreed to the lower price, therefore an oral acceptance will also be deemed to be a valid acceptance because it has been communicated to the Widget representative over the telephone. However in the case of Dig-it, although they have communicated their counter offer to Widget, it has not yet been formally accepted by the Company because the architect has specified that he will have to gain the approval from the Board. Therefore, Widget will be obliged to honor the commitment made to Just-So since the letter from the architect has in fact authorized that company to start work, while he has informed Dig-it that he will need to secure approval. Since the architect is acting as Widget’s representative, the Company will be obliged to honor its commitment to Just-So or arrange to pull out of the contract after paying necessary damages for breach of contract. If any arrangement is reached with the architect it would be a matter between Widget and their former employee and constitute a separate contract where the architect may be made liable for the expenses already incurred by Just-So. However when an offeree does perform the stipulated terms, then it is only reasonable to accept, that the offeror must abide with the terms of his original offer. Therefore, since Just-So has performed its side of the contract and started work, Widget will be obliged to conform to the terms of the original tender, since it has accepted, through the letter of intent, the tender offered by Just-So. However, it is Widget’s terms that will prevail which is 80% of monthly value, so Widget may be obliged to compensate Just-so for only 80% of the costs it has incurred thus far. The exchange between two parties is based upon the principle of “consideration” which Stone defines as “what one party to an agreement is giving, or promising in exchange for what is being given or promised from the other side.”7 Without a definite sign of acceptance, contracts cannot be valid; “silence cannot be regarded as evidence of acceptance when this would involve forcing a contract upon an unwilling party.”8 Therefore, Just-So’s silence in responding to Widget’s terms as communicated through the letter of intent cannot be deemed to be an acceptance of the consideration, although they have started the work. The architect functions as a third party in this contract. In a sense, the action of the architect in failing to pass on the offer of Dig-it to Widget amounts to an abrogation of the rights of a third party who has not yet offered consideration.9 The question of voiding the contract with Just-So is also unlikely to arise because the underlying principle in all contracts is still that of caveat emptor (let the buyer beware). According to Lord Atkin in the case of Bell v Lever Bros Ltd “If mistake operates at all, it operates so as to negative to in some cases, to nullify Consent.”10 Therefore, at common law, mistake is generally considered the grounds for voiding of a contract only in specific instances, where the development of an equitable remedy suggests that the contract should be voided. in the case of Bell v Lever Bros, Lord Atkin had spelt out the binding nature of a contract between two parties, so that the grounds of mistake will not void a contract even in instances where a mistake in quality has occurred, such as for example buying a painting and later discovering it to be a copy rather than an original11. In such an instance, there is no breach of contract or grounds for voiding the contract since the overriding principle is still that the buyer should beware while purchasing a product or service and takes pains to ensure that its quality is covered by a warranty or other means to ensure specific performance. Therefore, Widget’s representative, in acting on their behalf, should have ensured that the oral agreement on price should have been communicated in writing, failing which they will be obliged to either go through with the contract with Just-So or compensate the company for its expenses that have been incurred after specific notice from Widget’s representative. Ans 2: The Health and safety at work Act 1974 is the basic framework of law in the UK which establishes the extent of employer liability in ensuring the safety and well being employees, and this is especially relevant in the construction industry where the risk of injury is high. Additionally, the Management of Health and safety at work regulations 1992 also lays out regulations that govern the duties of employer sin managing the health of employees and specific guidelines have been drawn up for high risk industries such as construction. In 2004, the Health and Safety Executive issued a set of standards that employers can follow to minimise their chances of being caught out by the Health and Safety at Work Regulations 1999. They focus on how employers can avoid putting undue stress on staff, and consequently avoid legal ramifications. The Management Standards cover six areas of work design that, if not properly managed, are associated with poor health and wellbeing, lower productivity and increased sickness absence. These are: Demands - workload, work patterns and the work environment. Control - how much say employees have in the way they are expected carry out their work. Support - the encouragement, sponsorship and resources provided by the organisation, line management and colleagues. Relationships - promoting positive working to avoid conflict, and dealing with unacceptable behaviour. Role - whether people understand their role within the organisation and whether the organisation ensures they do not have conflicting roles. Change - how organisational change (large or small) is managed and communicated in the organisation. In the case of Barber v Somerset County Council [2004] in which the claimant had been one of those who made a claim in Sutherland v Hatton (2002) the increasing concern that the courts is evident as far as employee welfare is concerned as well as the insistence of the Court on holding the feet of employers to the fire so that they are not negligent in their duty of care to employees. The Barber case became the basis for the House of Lords’ deciding further on other cases involving psychiatric injury caused by a stressful and dangerous working environment, for example Melville v The Home Office12. The basic rule utilized in these cases was that foreseeable injury flowing from the employer’s breach of duty of care gives rise to liability for stress or health accident occurring at work. Barrett13 has pointed out that the courts have only required that the employer be liable only if the employee has been asked to bear more than what the contractual terms require, since some jobs may be naturally stressful however employees are accordingly paid more.14 Employer liability for employee stress is based upon its obligations under the statutory duty of care that exists in contract.15 Vicarious liability imposes a responsibility on the part of employers to know what is going on in the workplace or at least what their employees are up to.16 An action for losses caused by a breach of contract will not be effective if there was merely the opportunity or occasion for loss created but actual loss cannot be effectively established.17 This decision shows how the element of ambiguity and confusion that already exists in case law makes legal actions in construction contracts difficult and contentious to pursue. Falling from heights is another risk factor that exists in the construction industry and this was analyzed in detail in a report prepared by Bomel Ltd.18 However, as the authors of this study point out, risk index does not have much meaning because risk is an inherent aspect of the construction business and the authors have concluded that there appears to be a baseline number of accidents that occur as a result of falls wither from a low height or from a much higher elevation. Carpenters appear to be the category of employees most at risk and the authors also noted that the incidence of accidents was higher when renovations of old buildings were being carried out as opposed to fresh constructions. The authors have recommended a four pronged approach to deal with risk and safety issues that could impact upon the health and well being of employees. These are (a) improving the design of construction equipment (b) educating and training construction workers and exposing them to good and safe practices (c) increase awareness of health and safety issues among employees and (d) provide information to workers and improve work practices through enhanced knowledge and training and enforcing compliance with safety requirements in order to avoid accidents. They have also highlighted the value of good supervision on building sites, periodic health check ups for employees, good communication between employees on site in order to forewarn where accidents are imminent and provision of information for employees. Therefore, in conclusion it appears that the conclusions of the National Audit Office are correct, since employee safety can be considerably enhanced if necessary precautions are taken by the employers. However, as may be noted from the above, there is also a responsibility that accrues on employees to exercise due care and diligence in going about their duties and adhering to work related rules and regulations on site in order to minimize the chances of risk and accidents. Bibliography Books/Articles: * Atiyah, P.S., 1995. “An introduction to the Law of contract” Oxford: Oxford University Press: 355-394 * Barrett, Brenda, 2004. “Employers Liability for stress at the workplace: Neither tort nor breach of contract” Industrial law Journal, 33: 343 * Bomel Ltd, report, 2004. “Improving health and Safety in Construction. Phase 2 – depth and Breadth.” [online] available at: http://www.hse.gov.uk/research/rrpdf/rr234.pdf * Halson R, Contract Law. Longman, 2001 * Stone, R. Modern law of Contract, 5th edn. Cavendish Publishing: 74. * Trietal, Law of Contract 11th edn, p 290 * Wormser, I.M., The true conception of unilateral contracts. (1916) 26 Yale Law Journal 136 Cases: * Bell v Lever Bros Ltd (1932) AC 161 at p 217. * Blackpool and Fylde Aeroclub v Blackpool BC (1990) 3 All ER 25 (CA) * Banks v Ablex Ltd [2005] EWCA Civ 173 * Household Fire Insurance v Grant (1879) * Holwell Securities v Hughes (1974) * Melville v The Home Office [2004] EWCA Civ 06 * Offord v Davies (1862) * Spencer v Harding (1870) LR 5 CP 561 * Levy v Allied Dunbar Assurance plc [2000] WL 33148711 * Quin v. Burch Brothers (Builders) Limited [1968] 2 All Eng 283 * Smith v Baker [1891] AC 325 per Lord Watson at p 353 * Galoo Limited v. Bright Grahame Murray [1995] 1 All Eng 16; Read More