Extra Payment of 1000 Pounds - Case Study Example

Case Study Extra Payment of 1000 Pounds: The Law: The law that will apply in this case is the general principles of contract and consideration, equitable estoppel and relevant legislation that may apply is the Trade Practices Act of 1974. The dispute over the 1000 extra pounds: In regard to the payment made to Seats R Us, one of the reasons why this Company was selected over others was their lower prices, and their claims in their advertisements are akin to a promise, In the case of First Energy (UK) Ltd v Hungarian Bank International Ltd1 the Court of Appeal held that the law of contract between two commercial parties would be based upon the reasonable expectations of honest businessmen being protected. In this case, Seats R Us had agreed to perform the service for a given sum of money, therefore their additional demand is akin to a collateral contract. According to Collins2, the law of contract seeks to achieve justice in the market and will therefore be regulated more by the element of fairness of a transaction rather than the freedom of the parties to enter into any terms they like. Therefore, in assessing the transaction, the Courts will examine whether it is fair to both parties, and in this case, despite Phoenix having paid up the extra 1000 pounds, the transaction is not fair to it, nor does the demand for extra payment after contracting satisfy the reasonable expectations of honest businessmen. In the case of DeLassale v Guildford3 a contract was signed but an additional oral assurance on condition of drains was sought. When the drains were later found defective, the Court held that the defendant was liable since the consideration covered in the contract also included satisfying the oral assurance on drain condition. Therefore, applying this criterion, it appears that the original contract between Phoenix and Seats R Us contains the complete consideration to be paid for the services and therefore an existing contractual duty is to be performed without expectations of extra consideration. For example, in the case of Stilk v Myrick4 a ship’s crew was not entitled to extra payment since their services were already compensated through consideration spelt out in the contract. Therefore, on this basis, it appears that Seats R Us cannot demand extra payment for services that are already covered through the consideration spelt out in the contract. In the case of Williams v Roffey Brothers and Nicholls (Contractors) Ltd5 the defendants hired the Plaintiffs as subcontractors, but later offered them extra consideration to complete the work on time. In this case, the Court held that the defendant were bound to pay the extra consideration they had offered. However, this case does not indicate that Phoenix cannot recover the extra 1000 pounds paid, because the extra consideration was not paid at its request a sin the case of Williams, rather it was paid under duress, in order to ensure that the work was completed on time. Equitable estoppel could also apply in this case, since Seats R Us has essentially gone back on its promise and has demanded more payment from Phoenix when it was in a position of duress. The contract was initially concluded with Seats R us assuring to complete the work in the given duration for a specified consideration, in accordance with their promises in their advertisements, which were the basis upon which Phoenix entered into the contract. Therefore, the lower prices offered by Seats R us were an important factor influencing Phoenix’s decision to enter the contract and without this representation, Phoenix might not have entered into the contract at all6. Hence it may also be argued that Seats R Us have gained the contract through misrepresentation and Section 52 of the Trade Practices Act of 1974 imputes strict liability for any form of misrepresentation. As a result, Seats R Us may be expected to return the extra amount paid for having misrepresented the amount in the first place. In the case of Hughes v Metropolitan Railway7 the court set out three conditions where the defence of equitable estoppel will apply (a) There must be a promise made (b) the promise (Phoenix in this case) should have relied upon the promise and (c) the result of going back on the promise would be inequitable. All these conditions are satisfied in this case, because Phoenix has relied upon the assurance of Seats R Us as spelt out in the contract between the parties and paid the consideration. However, the further demand of extra payment is in effect, going back on the original promise to carry out the work for the earlier consideration mutually agreed between the parties. Furthermore, it has produced an inequitable result because it has deprived Phoenix of the opportunity it could have had to get the work done by another Company for a more economical rate, therefore in effect it is a contract that has been secured through false promises and is therefore inequitable to Phoenix. Secondly, the extra payment has been obtained under duress, three days before the event, which limited Phoenix’s options in repudiating the contract, hence the extra payment thus obtained may be returnable. Occupiers’ Liability for injury to 11 year old: The Law: The relevant statute that will apply in this case is the Occupiers Liability Act of 1957, specifically Sections 2 and 3. This Act encompasses land and buildings,8 therefore the well on the premises belonging to Phoenix will come under the scope of this act. Duty of care to children: In the case of British Railways Board v Herrington9, the guideline established was that occupiers owed trespassers a duty of “common humanity.” This common duty of care has been set out in Section 2(2) as an obligation on the Occupier to ensure that he takes care to see that his premises are reasonably safe at all times and in all circumstances so that a visitor will be reasonably safe in using the premises. When the claimant for injury is a child, Occupier liability increases in view of a child’s lack of appreciation for danger and their “ingenuity in finding unexpected ways of doing mischief to themselves should never be underestimated”, as stated by Lord Hoffman10. The House of Lords ruled against the occupier in the case of Jolley because occupier knew that the boat the victim (an adolescent) was repairing was dangerous but did not bother to warn the child. In fact, Section 2 (3) (a) of the Occupier Liability Act specifies that “an occupier must be prepared for children to be less careful than adults.” Thus, while trespassers are excluded from the Occupier Liability Act, the situation is different when the trespassers are children. Therefore, applying the precedents in the above cases and the requirements of the statute, it would appear that liability may be imputed, because the victim in this case is a 11 year old child. But it is also necessary to consider the liability of an occupier as spelt out in the case of Stevenson v Glasgow Corporation11 where Lord M’Laren explained that “precautions which have been rejected by common sense as unnecessary and inconvenient are not required by law.” This position was recently cited by Lord Hutton in the case of Tomlinson v Congleton Borough Council12 where the defendants were not held liable for Tomlison’s injuries, because the injury had come about due to Tomlinson’s choice to undertake a dangerous activity rather than because the premises were dangerous. Similarly, the case of Simms v Leigh13 clearly set out the limits on Occupier Liability. In this case the victim was injured when he hit against a concrete wall surrounding field. But the Occupier was not held liable in this case because although the danger existed, it was not one where the chances of its happening were very high and therefore, the Occupier could not be held liable for damages for injuries sustained due to dangers that were foreseeable but not very probable. As opposed to this, the case of Cunningham v Reading14 loose tiles on the terrace were the cause of police injury for which the Occupier was held liable, because unlike the Simms case, this was an instance where injuries were foreseeable and chances of occurrence were also higher, therefore the Occupant was held liable. The Duty of care of the Occupier can be fulfilled through using warnings as well. For example in the case of Roles v Nathan14, the occupier warned two chimney sweeps about the dangers of cleaning when the boiler was switched on, so he was absolved of liability for the sweeps’ death. In some instances where the danger is clear, Occupiers are not expected to even issue warnings.15 This is also related to contributory negligence where damages that may be payable for negligence under the Law reform (Contributory Negligence) Act of 1945, will be reduced if the visitor was also partly responsible through his/her negligence for the injury that occurred.16 Applying the above precedents to the instant case, it may be noted that warning signs have been posted two days before the event and the area has also been fenced off. Therefore, it may be argued that the duty of care under occupier liability has been fulfilled, therefore the victim undertook the injuring activity at his own risk (volenti non fit injura) by ignoring the signs and the fence and venturing out at night, without any torch or lamp. Hence, there may be some contributory negligence attributed to the victim. But in view of the fact that the victim is a child, there is a higher standard of liability that is imputed, which may not be adequately satisfied in this case. It is possible that some damages may have to be paid to the victim for his injuries because of the child’s lack of appreciation for his own danger, in his excitement and curiosity to view the behind the scenes action. As per Section 2(1) of the Unfair Contract Terms Act of 1977, any attempt to escape liability where there has been a personal injury that is caused by negligence will not be entertained. However, in the event that occupier liability is imputed, it is unlikely that Phoenix will be held responsible, rather it will be Fawkes, the Company that has been contracted to provide the fireworks which will be responsible. It is this Company that has failed to erect a cordon around the well and has negligently piled up boxes around it, posing an unnecessary risk to everyone using the area. Where independent contractors are concerned, the occupier will not be liable for potential risks caused by the contractor’s work, so long as he took necessary steps to ensure that the contractor was competent.17 For example, in the case of Haseldine v Dew18 the contractor engineer was held responsible for injuries caused to a visitor rather than the landlord. On the basis of the above, it may be concluded that Fawkes may be held responsible under the inquiry caused to the 11 year old, however it is possible that to some degree contributory negligence may be viewed as relevant and damages payable may be reduced. Negligence action by Visitors: The Law: The law that will apply in this case is the tort of negligence. The relevant statute that could apply in this case is the Supply of Goods and Services Act of 1982. Duty of care: In the case of Donoghue v Stevenson (1932) AC 562, the requirement of duty of care under the tort of negligence was spelt out by Lord Atkin on the basis of the neighbour principle as follows: “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour…”19 The subsequent cases of Home Office v Dorset Yacht Co20 and Anns v Merton LBC21 this broad principle attributing liability was further refined, such that proximity had to exist between the parties, or there had to be some overriding factor justifying such a negligent act. However, the applicable standard that has emerged from these cases is that the duty of care that will be applied in a case of negligence will be that which a reasonable person22 could be expected to apply in a particular situation.23 Moreover, as spelt out in Caparo v Dickman24, it must also be fair and reasonable to impose such a duty of care, however extent of damage must be considered. In the case of Sutherland Council v Heyman, Brennan J commented; “The question is always whether the defendant was under a duty to avoid or prevent that damage…..”25 Applying the above precedents to the case of injuries caused to people through the collapsing of the seats, Seats R Us are professionals/specialists26 in the business, therefore they were under a duty of care to avoid or prevent damage and injury to others. Hence it is reasonable and fair to attribute a duty of care to them. Moreover, they could have also foreseen that defective or improper execution of seating could have resulted in injury27 and were obliged to take greater care because the safety of so many people was involved. A failure to take necessary precautions, as Seats R Us should have done, may therefore be attributed to be a negligent act, applying the standard of the reasonable man spelt out by Aldershot B in Blyth v Birmingham Waterworks Co.28 In the case of Gray v Stead29 the Court held that an employer will not be considered negligent if he acted in accord with the common practice of others. But in the case of Seats R Us, the maxim of res Ipsa Loquitor (the thing speaks for itself) seems to apply, which is also proof of negligence. This maxim applies because (a) the employees had the control over the thing that caused the damage30, i.e, the seats and the faulty element in setting them up caused the injury and (b) such an accident would not have normally happened without carelessness or inexperience.31 Therefore, the employer Seats R Us will be vicariously liable, applying the standard set out in the case of Lister v Hesley Hall32 because he took a foreseeable risk by using inexperienced and novice employees for a job of such magnitude, which would also not be the common practice of others claiming to be professionals as Seats R Us did. Therefore, the people who were injured can undoubtedly make a claim for damages from Seats R Us. Phoenix will not be liable applying the precedent from Haseldine because it took reasonable steps to hire a Company that claimed to be professionals and thereby satisfied its duty. In fact, Phoenix may be able to make a claim against Seats R Us for the supply of faulty equipment, since the SOGA that governs contracts for supply of services and goods implies that where the service provider is a business, it must be carried out with reasonable care and skill33 and in this case, there has been a breach of that implied duty as well. Whistler’s dismissal: The Law: The law that is relevant in this case is unfair dismissal and the legislation that will apply is the Employment Rights Act of 1996. Whistler’s case: Whistler has excellent grounds to bring action against his employers for unfair dismissal. Employees have been provided the rights under Section 91(1) not to be dismissed unfairly. In assessing his claim, the Courts will determine the substantive and procedural fairness of the decision taken by Seats R Us, which has not adhered to the three step dispute resolution procedure, which employers are obliged to follow before dismissal of an employee.34 In the case of British Home Stores v Burchell35 Arnold J clarified that the belief an employer has about the guilt of an employee must be based upon reasonable grounds with the matter being investigated as far as possible. Viscount Dilhorne in Devis & Sons Ltd v Atkins36 had stated that an assessment of the reasonableness of an employer’s actions must be considered “in accordance with equity and the substantial merits of the case.”37 Therefore, the question that will be posed is whether other reasonable employers would have taken the same decision under the circumstances?38 In the case of West Midlands Co Op Society v Tipton39 Lord Bridge held that unless it is an instance of gross misconduct by an employee, in the event that guilt is discovered during an appeal hearing, oral and written warnings should be administered and alternatives to dismissal must be considered, such as demotion. In Whistler’s case, he has been arbitrarily fired despite being a long term employee, without the three step grievance redressal procedure employers are expected to take. Even a guilty employee cannot be fired outright – all alternative measures should be considered, none of which have been applied in Whistler’s case. There is also the issue of hurt feelings and potentially negative consequences that could arise out of this manner of dismissal of a long term employee, such as the psychiatric illness in the case of Johnson v Unisys.40 Barmes has argued that the decision in Johnson which went against the employee, has created a conceptual instability in common law in reference to a breach in a contract for employment and the existence of the breach has been made contingent on the employee reaction41. However, Lord Hoffman’s observations in Johnson on non economic losses in unfair dismissal claims being non recoverable by law42 were held to be incorrect in the recent case of Dunnachie v Kingston upon Hull City Council43. In this case, recoveries by way of damages were allowed to an employee for injury of feelings, since the meaning of the word “loss” under Section 123(1) of the ERA did not necessarily exclude non economic losses caused as a result of the manner of unfair dismissal. Therefore, this is yet another aspect of relief that may be available to Whistler apart from claims for wrongful dismissal, which may include his reinstatement in his position. 2995 words Bibliography Books/Journal Articles/websites: * ACAS Guidelines: “New Laws for resolving disputes. It’s a simple as 1,2,3” [online] available at: www.dti.gov.uk. * Atiyah, P.S, 1990. “Essays on contract” Clarendon Press * Barmes, Lizzie, 2004. The continuing conceptual crisis in the common law of the contract of employment. The Modern Law review, 67 (3) pp 435 * Collins, Hugh, 2005. “Regulating contracts” Oxford University Press Cases: * Anns v Merton LBC [1977] 2 All ER 492 * Bannerman v White (1861) CB (NS) 844 * Blyth v Birmingham Waterworks Co (1856) 11 Exch 781 * British Home Stores v Burchell [1978] IRLR 379 * British Railways Board v Herrington (1972) AC 877 * Caparo Industries plc v Dickman and others [1990] 2 AC 605 at 627. * Cotton v Derbyshire Dales Dc (1994) Times LR 20 June * Cunningham v Reading FC (1991) Times LR 153 * Devis & Sons Ltd v Atkins (1976) AC 931 * Delassale v Guildford (1901) 2 KB 215 CA * Donoghue v Stevenson (1932) AC 562 * Easson v LNER (1944) 2 All ER 425 * First Energy (UK) Ltd v Hungarian Bank International Ltd(1993) 2 Lloyds Rep 194 CA * Gray v Stead (1999) 2 Lloyds Rep 559 * Glasgow Corporation v Muir (1943) HL * Haseldine v Dew (1941) 3 All ER 156 * HSBC v Madden (200) ICR 1283 * Hughes v Metropolitan Railway (1877) 2 App Cas 439 (HL) * Home Office v Dorset Yacht Co [1970] AC 1004 * Iceland Frozen Foods v Jones[1982] IRLR 439 * Jolley v Sutton LBC (2000) 3 All ER 409. * Johnson v Unisys [2001] 2 All ER 801 HL * Lister v Hesley Hall [2001] UKHL 22 * Philips v William Whiteley (1938) 1 All ER 566 * Revill v Newberry (1966) 1 ER All 291 * Roles v Nathan (1963) 2 All ER 908 * Scott v London and St Katherine Docks (1865) 3 H & C 596 * Simms v Leigh RFC (1969) 2 All ER 923 * Stevenson v Glasgow Corporation (1908) SC 1034 at 1039 * Stilk v Myrick (1809) 2 Camp 317 * Sutherland Shire Council v Heyman (1985) 60 ALR 1 at 48. * The Wagon Mound PC (1961) AC 388 * Tomlinson v Congleton Borough Council (2004) 1 AC 46 * West Midlands Co Op Society v Tipton10 (1986) 1 AC 536; (1986) 2 WLR 306 * Williams v Roffey Brothers and Nicholls (Contractors) Ltd (1991) 1 QB 1 CA Legislation: * Employment Rights Act of 1996 * Supply of Goods and Services Act of 1982 * Occupiers Liability Act of 1957 * Trade Practices Act of 1974 Read More