Analysis of Pontecaster Car Rally - Case Study Example

Order#: 174373 Topic: Pontecaster Car Rally case report 1. Introduction This paper seeks to analyze and discuss the case of Pontecaster Car Rally (See Appendix A for case facts) by answering given questions for the purpose of resolving relevant legal issues involved using appropriate sources including case laws and Acts of Parliament, although discussion of other legal comment or commentary may be relevant to illuminate any areas of controversy. 2. Analysis and Discussion 2.1 Q1- Advise Pontecaster in relation to any issues relating to their contract with “Grubs up”. In particular, can “Grubs up” rely upon the doctrine of frustration, and what counter argument, if, Pontecaster may raise? The advice that could be given to Pontecaster depends on its rights or responsibilities in the contract. But before the obligation could arise from the contract, there is a need to establish whether there is a contract. A contract exists when the following elements occur: offer and acceptance, consideration, certainty of agreement and intention to create legal relations (University of London, 2007). If such a contract does exist between the parties, it could now be asked whether the rights of Pontecaster are being protected. On the other hand, Pontecaster may have responsibilities to be done under the contract which may make it at fault. As far as the issue on whether there is a contract between the parties on the basis of the presence or absence of offer and acceptance, consideration , certainty of agreement and intention of create legal relations, this paper submits that they parties are presumed to have a contract because the question presupposes the existence of such contract. As far as its rights under the contract (which is presumed to exist based on the question), it becomes an issue whether it can it ask “Grubs up” to pay for breach of contract. The case facts provide that there was confusion as to actual date of the sports event but it was also provided that Pontecaster had already contracted “Grubs up” (Emphasis supplied). The fact that there was contract already, “Grubs up” must have been ready to meet the obligations including the day when the car rally event would have been held. As far as its responsibilities in the contract is concerned, Pontercaster may be held liable for its failure to conduct the event in its earlier designated time, if there is any, as per its contract with “Grubs up”. On the other hand, in the absence of the of a definite dates of the event that was agreed upon, such may indicate lack of intention to be bound for which “Grubs up” may not be liable. To clarify whether there was really contract that had bound the parties, case facts only made mention about some confusion in relation to the date of the event which means that there was an indeed an contract between the parties. To argue that it was until a week before the rally that “Grubs up” had thought about the taking of the event the following month is a freedom of “Grubs up” to do so but the latter must be liable for consequences for failing to anticipate about the said date. “Grubs up” appeared to be negligent in making the necessary follow up. Negligence is defined in law as that having the duty of care under the circumstances and there was failure to fulfil such duty. It is clear from the facts that “Grubs up” was negligent. This is supported by fact that despite the absence of booking for the actual date the manager of “Grubs up” had instead planned a weekend away, and such carefree attitude resulted to not having fulfilled the duty under the contract when it was time to do so. For “Grubs up” therefore to argue that Pontecaster should have advised the definite date would seem to lose it logic as borne by its lack of foresight to have anticipated the actual date of the event considering that the duty already existed based on its contract with Pontecaster. It must also be noted that the event was supposed to be well known to the parties since the rally is “an important event in the world class rallying calendar”. Thus for Grubs up” not to be able to know it a day or two before the actual event smacks of a negligent party in a contract. Another important circumstance that would bolter the position of Pontecaster is the fact that Pontecaster was able to get a new caterer despite the absence of a supposed a definite period of time to prepare. If another new caterer was able to deliver the service in the contract is so short a period of time, there is no reason that Grubs up could not have done the same but the act of having the staff spending a vacation away where the event could be held is an evidence of lack of foresight despite its responsibilities under the contract. As to whether “Grubs up” can rely on the doctrine of frustration is doubtful since under the said doctrine, the parties should have the complied under the given conditions. To understand these conditions, there is a need to find the definition doctrine of frustration. Doctrine of frustration is a mode of discharge of party in contract which, “operates in situations where it is established that due to subsequent change in circumstances, the contract is rendered impossible to perform, or it has become deprived of its commercial purpose by an event not due to the act or default of either party.” (Couturier v Hastie (1856) 5 HL Cas 673) It is also different from “initial impossibility, which may render the contract void ab initio.” (Couturier v Hastie (1856) 5 HL Cas 673) Based on this definition of frustration, the facts of the case could not apply because one of the parties was at fault. “Grubs up” was at fault in failing to anticipate the date of the actual event. To examine further whether frustration, two alternative tests could be applied according to Law Teacher (2006), the first test is the implied term theory, as in: Taylor v Caldwell (1863) 3 B&S 826 and FA Tamplin v Anglo-Mexican Petroleum [1916] 2 AC 397. It was in the latter case of FA Tamplin where Lord Loreburn explained that the court: '… can infer from the nature of the contract and the surrounding circumstances that a condition which was not expressed was a foundation on which the parties contracted … Were the altered conditions such that, had they thought of them, the parties would have taken their chance of them, or such that as sensible men they would have said "if that happens of course, it is all over between us".' Based on this implied term theory, “Grubs up” could not invoke frustration since it could be argued that “from the nature of the contract and the surrounding circumstances… a condition which was not expressed was a foundation on which the parties contracted …" (Law Teacher, 2006). It could not be presumed that the actual date of the car rally event is a condition which should not have been expressed since the event should have been known by the participants of the car rally as case facts say that “it is an important event in the world class rallying calendar.” The word condition in this context means a future event that may or may not happen but the fulfilment of which will create the obligation. The actual date of the event for Grubs to be there is not a condition that may or may not happen because it is a period that must necessarily come to fulfilment. The arrival of the actual date is therefore not a condition to be used in order to appreciate the obligation. The second test for frustration is the radical change in the obligation which was adopted by the majority of the House of Lords in: Davis Contractors v Fareham UDC [1956] AC 696. Using the principle in the latter case, “Grups up” could not validly claim that a radical change in obligation happened; hence the doctrine of frustration is not applicable. There was no radical change to talk about the facts of the case. The obligation to provide catering services was the same service provided by another caterer hired by Pontecaster. If there could be any hint of any change in the obligation it was the fault of the Grubs by having to spend a week of vacation away from the place where is should have provided the service. To further prove whether there is possibility of invoking the doctrine of frustration, there is a need to look at decided cases as examples to compare with. The first group of example is on destruction of the specific object which is the essential for performance of the contract. The case to support this is the case of Taylor v Caldwell (1863). From the facts one could not find any change in the specific object since the obligation to render catering service was the same. Another instance of frustration is in terms of personal incapacity, where the personality of one of the parties is significant in possibly frustrating the contract. The cases of Condor v The Baron Knights [1966] 1 WLR 87, Phillips v Alhambra Palace Co [1901] 1 QB 59, Graves v Cohen (1929) 46 TLR 121 and FC Shepherd v Jeromm [1986] 3 All ER 589 could provide the needed argument of for Grubs up but there is just no reason to invoke the said cases as there was no change to make the one of the parties incapacitated to pursue the contract. The third group is the non-occurrence of a specified event. The leading cases include: Krell v Henry [1903] 2 KB 740 and Herne Bay Steamboat Co v Hutton [1903] 2 KB 683. The fourth group is interference by the government under the leading case of Metropolitan Water Board v Dick Kerr [1918] AC 119. In could be argued that in the case at bar the occurrence of a specified event was never part also of the contract since as argued earlier, the arriving of actual date could not be treated as a condition. Neither was there interference of government that could have excuse Grubs up not to fulfill the obligation under the contract. The fifth instance is in case of supervening illegality using the case of Denny, Mott & Dickinson v James Fraser [1944] AC 265, Re Shipton, Anderson and Harrison Brothers [1915] 3 KB 676. There is no evidence of supervening illegality for the Grubs to invoke. Under the existing jurisprudence, what could excuse Grubs up is where there is a case of inordinate and unexpected delays that may frustrate a contract (Jackson v Union Marine Insurance (1873) LR 10 CP 125). Under this latter principle, it could be argued that ‘Grubs up’ took its staff on a one week vacation until it found out that the event has happened after not more than a week. However, it could not be inferred that Pontecaster was in delay to cause frustration to set in since it was indeed able to get another caterer to provide the service under such emergency situation. Using the principles from the decided cases, Pontecaster could just use the benefits to support its stand that nothing of the examples could be applied against it. Another way of the possibility of evaluating frustration as a way to avoid liability is whether the case at bar falls under the limitations of the frustration doctrine. The courts instructed that the doctrine of frustration must be applied within very narrow limits. In the case of Pioneer Shipping v BTP Tioxide [1982] AC 724, Lord Roskill had the chance to rule that the doctrine of frustration was 'not lightly to be invoked to relieve contracting parties of the normal consequences of imprudent commercial bargains (Law Teacher, 2006). The case mentioned two limitations where the first one states that the doctrine of frustration cannot override express contractual provision for the frustrating event. To apply the principle in the case at bar, it could be argued that the contract provision was not clear as to date but as to the significance of the event which could not be left to chance and which could not be left undiscoverable. The second limitation as mentioned in the case Pioneer Shipping v BTP Tioxide [1982] AC 724 is that the mere increase in expense or loss of profit is not a ground for frustration. The fact the Grubs up needed to pay to the staff for the lost days is not a ground therefore, frustration cannot be invoked. The third limitation is that frustration must not be self-induced (Maritime National Fish v Ocean Trawlers [1935] AC 524.). The fact that Grubs might have known the date makes the frustration self induced hence invoking now to discharge the contract cannot be made. Another limitation is the foreseeability of the frustrating event. Under this limitation, a party is not allowed to rely on an event which was, or should have been, foreseen by him but not by the other party (Walton Harvey Ltd v Walker & Homfrays Ltd [1931] 1 Ch 274). Since the case facts say that there was confusion as to the actual date of the event, the event was still foreseeable due to the kind and familiarity of the event. Therefore, it would appear that there in no clear case where frustration may be invoked as defense of “Grubs up” because the event was foreseeable. 2.2 Q2- Consider whether any action in negligence may be brought against Bodgit and Scarper. What defences/counter arguments would be available, if any? As to whether any action in negligence may be brought against Bodgit and Scarper, there is need to define negligence. In order to hold another person liable for negligence, it must be made clear that negligence requires certain elements such as duty of care (Donoghue v. Stevenson [1932] AC 532) on the part of Bodgit and Scarper, the breach of that duty (Murdoch, 2002, 14) of care, factual causation, legal causation and damage. The contract of Bodgit and Scarper with the Pontercaster is to provide catering service and duty of care (Murdoch, 2002, 1) as far as its contract is concerned is to deliver the catering service which may be presumed to have been complied. As to the injured protester in the scene, Bodgit and Scarper has no obligation to protect the said person. Although Bodgit and Scarper may have duty of care in providing catering service to Pontercaster, there was no breach of duty nor could damages caused under the given facts, hence there be no ground for liability on negligence. Not being possibly charged for negligence, Bodgit and Scarper need not do anything to defend themselves. What could possibly be raised as an issue of negligence against Bodgit and Scarper is the adequacy of the barriers. But to make the caterer liable for adequacy of barriers smacks of putting into the shoulder or responsibility of the caterer to securing the area which is not normally a part of the catering service. Moreover, it was the fault of the protester to climb the barriers when she threw herself at a passing car, and thereby getting minor injuries in the process. If there was any fault in assisting the injured protester, the fault did not come from Bodgit and Scarper but from an employee of Pontecaster who on his lunch break saw the incident and rushed to help. The fact also that it was the result of said employee’s lack of skill that the protester received further injuries makes it clear for Bodgit and Scarper to be free from any responsibility for the injury of the protester. 2.3 Q3- Consider what issues arise in relation to the action of Pontecaster`s employee in coming to the aid of the protester? In what circumstances will an employer be vicariously liable for the acts of his or her employee? Before this question must be answered it is important to know when a rescuer be made liable and when employers could be vicariously liable for the acts of its employees. Rescuers despite their good intentions could not be freed from liability if they are negligent. Again since negligence could be defined at the failure to provide the duty of care required under the circumstances, one could still be liable in the case at bar. In vicarious liability, the employer could be made liable for the acts of its employees under certain conditions. One condition is that the employees must have erred while performing their functions during proper period. In the case at bar, a Pontecaster’s employee came to the aid of the protester while said employee of Pontecaster when he was already lacking of authority as it was his lunch break and in addition to the fact that he or she was not member of the safety staff. Applying the rule as laid down above, it would appear that employer could not be liable to the victim under the doctrine of vicarious liability. To understand liability under the vicarious liability concept, if could be stated that negligent acts or omissions of employees in the course of their employment could make their employers liable vicariously under the respondeat superior doctrine (Nolo, 2007). The critical factors therefore to impose vicarious liability to employers on acts caused by their employees include the following requirements: (1) That the act done causing damage must be within the course of employment and to be such, and (2) that must either be authorized or be so connected with an authorised act. If the act is referred to as a mode as a source of liability, it should be made clear that there made clear that this an an improper mode of performing it. In determining the employees act, a distinction between an employee's "detour" and "frolic" is emphasized by the courts (Wikipedia, 2007). To illustrate, an employer will be held answerable if there is a showing that the employee had gone on a mere detour or deviation in carrying out their duties. On the other hand, in case an employee acts in his or her own right rather than on the employer's business is considered under a "frolic" and will make the employer liable. It will be different if there is assault or battery committed by employees which will exempt the employer from liability unless the use of force was part of their duties in their work as in the cases of police officers, nightclub bouncers (Wikipedia, 2007). Vicarious liability of employer also does not apply in case the employer employs an independent contractor for the tortious acts of the contractor, except where the injuries committed by contractor are made to person for whom employer owes a non-delegable duty of care. To apply this principle in the case Pontecaster, it could have been possible for Pontecaster to avoid vicarious liability if tortuous acts on catering service were committed by the employees of Bodgit and Scarper, which may be presumed to be an independent contractor for providing catering service. 2.4 Q4- Advise Pontecaster in relation to any liability arising from the advertisements? The liability of Pontecaster in relation to any liability arising from advertisement could come from the falsity of representation that the car rally would be “the biggest event” is a normal business phrase for advertisers that would not make the company under the circumstances liable. Although the advertisement is being made to promote its business, advertisement may form part of the representations or warranties of the seller that may entail liability for damage should they turn out to be false. As to the possibility of false advertising, the combined Code of the British Codes of Advertising and Sales Promotion (BCASP) as crafted by the Committee of Advertising Practice (CSP), guides non-broadcast advertising. Under the rule on of BCASP, “all advertisements must be legal, decent, honest and truthful; they must be prepared with a sense of responsibility to consumers and to society; and adverts must respect the principles of fair competition generally accepted in business.” (Azim-Khan, R., n.d.) It was also provided that aall claims made by an advertiser must be capable of substantiation and supported by relevant documentary evidence and that advertisers are also obliged not to mislead consumers with inaccuracy and ambiguity, exaggeration or omission (Azim-Khan, R.n.d.). It is submitted under these rules that Pontecaster was not making an exaggeration or ambiguity misled customers. To say that the rally would be “biggest, best event ever” is not misleading customer. It was stating an expectation and fore cast. It was not telling an unconfirmed fact in the past. It was just a pure speculation which is normal in business advertising. Therefore as to advice to Pontecaster in relation to any liability arising from the advertisements, it is submitted that the company be advised not to worry as it has not done any act that would the company liable to the consumers. 3. Conclusion This paper found that each of the parties in the case has its responsibility to do under the contract and that fulfilment of this responsibility will lead to faithful compliance but parties are both having their argument on their side. On the part of the Pontecaster, it wants to charge Grubs for breach on the part of Grubs up for not being able to comply with the contract. On the other hand ‘Grubs up’ want to invoke frustration to discharge itself from the contract. It was however established the case should be decided in favour of Pontecaster on the ground that the defense of frustration does not apply as far as the tests are concerned as well as using examples of decided case to look for possible similarity. In addition condition or limitations for the application of frustration was also examined and it was found out that frustration cannot be invoked. As to whether any action in negligence may be brought against Bodgit and Scarper, it was found that there is no basis in fact and in law. As to the vicarious liability of the Pontecaster for the unauthorized act of its employee, the liability could not attach. Finally, as to Pontecaster’ possible liability in relation to any liability arising from the advertisements, it is submitted that there is no exaggeration in that speculation made as this could be considered a normal business practice because it could not be said that customers were misled. 4. Appendix – Case Facts: Case facts The annual (fictitious) Pontecaster Car Rally is an important event in the world class rallying calendar. This year the organizers (Pontecaster) contracted with “Grubs up”, a well respected company of outside caterers, to provide a range of catering facilities for participating teams. Unfortunately there had been some confusion in relation to the date of the event. Until a week before the rally “Grubs up” had thought that the event was to take place the following month. Although they had no other booking for the actual date the manager of “Grubs up” had planned a weekend away, and he argued that the contract was frustrated as he would have had to pay his staff extra because of the loss of their weekend at such short notice. Pontecaster argue that “Grubs up” were simply in breach of their contract. On order to salvage the event Pontecaster found another firm of caterers who were able to provide a good service at short notice, although the cost was significantly above that of “Grubs up”. In order to protect the public at the event temporary barriers were erected around the route of the rally. This year Pontecaster engaged the services of “Bodgit and Scarper”, an unknown company, who substantially undercut all other tenders. Concerns were voiced after the event in relation to what some experts viewed as insufficient protection of spectators on some key parts of the route, but no one was hurt as a result However, on the final straight a protester climbed the barriers and threw herself at a passing car, receiving minor injuries. An employee of Pontecaster on his lunch break saw the incident and rushed to help. As a result of his lack of skill the protester received further injuries. All employees of Pontecaster (apart from safety staff) are expressly prohibited by the terms of their contract of employment from entering the track for what ever reasons. Further, after the event, many spectators have argued that Pontecaster`s advertisements promising that this year’s rally would be the “biggest, best event ever”, have not been fulfilled. 5. Bibliography Cases Cited: Denny, Mott & Dickinson v James Fraser [1944] AC 265, Donoghue v. Stevenson [1932] AC 532 FA Trampling v Anglo-Mexican Petroleum [1916] 2 AC 397. Graves v Cohen (1929) 46 TLR 121 and FC Shepherd v Jeromm [1986] 3 All ER 589 . Herne Bay Steamboat Co v Hutton [1903] 2 KB 683. Metropolitan Water Board v Dick Kerr [1918] AC 119 Jackson v Union Marine Insurance (1873) LR 10 CP 125 Krell v Henry [1903] 2 KB 740 Maritime National Fish v Ocean Trawlers [1935] AC 524. Pioneer Shipping v BTP Tioxide [1982] AC 724, Re Shipton, Anderson and Harrison Brothers [1915] 3 KB 676 Taylor v Caldwell (1863) 3 B&S 826 The Baron Knights [1966] 1 WLR 87, Phillips v Alhambra Palace Co [1901] 1 QB 59 Walton Harvey Ltd v Walker & Homfrays Ltd [1931] 1 Ch 274 References cited: Azim-Khan (n.d) Advertising on the Net, UK, {www document} URL http: //www.leginetcy.com/articles/Advertising%20on%20the%20Net.pdf. Accessed June 17,2007 Companies Act (2006), Briefing on First Commencement Order and Regulations Implementing First Company Law Amendment Directive, {www document} URL, http://www.dti.gov.uk/files/file36201.doc, Accessed June 17, 2007 Couturier v Hastie (1856) 5 HL Cas 673 (Handout on Mistake). Law Teacher (2006) Discharge Of Contract{www document} URL http://www.lawteacher.net/Contract/Discharge%20and%20Remedies/Discharge%20Lecture.htm, Accessed June 17,2007 Murdoch, j. (2002) Negligence in Valuations and Surveys , Royal Institution of Chartered Surveyors, pp 1 to 15 Nolo (2007), Employer Liability for an Employee's Bad Acts, http://www.nolo.com/article.cfm/pg/2/objectId/315FE0E9-D6B6-479B-A8005EED919D3D5F/catId/5DF453C7-2180-4035-AD75304A83BC6543/111/259/183/ART/ ], Accessed June 17,2007 Pricing The Consumer Protection Act 1987 Wikipedia, (2007), Vicarious liability, , {www document} URL http://en.wikipedia.org/wiki/Vicarious_liability, Accessed June 17,2007 Read More