Limitation of Liability in Civil Wrongs Cases - Assignment Example

Name Course Lecturer Date Question 1 One of the similarities between a condition and a warrant is that they are both terms of a contract1. They set out the obligations contract parties are supposed to undertake in order for the contract to be executed. Secondly, both warranties and conditions have a significant effect on the way a contract will be performed. However, their effect on the performance of the contract is one of the main differences between the two terms. While breach of a warrant entitles the innocent party to damages, breach of a condition is sufficient ground for the innocent party to seek termination of the contract. This distinction rises from the fact that condition go to the root of the contract while warranties are collateral to the contract2. Question 4 Plaintiffs in civil action can seek damages for losses suffered due to defendant’s action. Damages for civil wrongs are generally divided into general and special damages3. General damages derive their name from the fact that every defendant who is a victim of a civil wrong is expected to experience them. General damages include emotional trauma, pain and suffering and loss of consortium. General damages can also be distinguished from special damages in that it is not easy to assign a monetary value to them. Unlike special damages there is no evidence of general damages like receipts, bills that specify the dollar value of the damages. However, courts feel that plaintiffs have a right to be compensated for general damages that arise out of a civil wrong. In contrast, special damages are those that can easily be assigned a monetary value. Special damages are meant to compensate the victim of the expenses they incur as result of a civil wrong. They include lost wages, medical bills, cost of home care, and cost of vehicle repair among others4. Special damages derive their name from the fact that they are unique to one person. No two plaintiffs can suffer the exact same amount of special damages. Question 4(B) Issue Who between Ravi and Chen is negligently liable for the damages suffered in the accident? The law As seen in Ridge v Baldwin [1963] UKHL 2; (1963) 1 QB 539, the plaintiff bears the burden of proof in showing the court that the damages they suffer are a result of the defendant’s negligence in managing and controlling his vehicle5. Negligence is defined as the failure to exercise reasonable care to protect the safety of other road users. Nance v British Columbia Electric Railway Co (1951) AC 601 holds that defendants can be held liable for damages that arise from the failure to take care for the safety of one's own person or property6. This is referred to as contributory negligence and parties can also be found liable for contributory negligence by breaching the duty of care owed to others7. In cases where parties are guilty of contributory negligence, the court apportions damages according to each parties’ contribution to the damages. In Podrebersek v Australian Iron & Steel Pty Limited [1985] HCA 34 apportionment of damages was based on8: The culpability of both parties for the damages; Their degree of departure from reasonable man standard of care: And the relative importance of the negligent acts in causing the damage. Application In this case both Chen and Ravi are guilty of contributory negligence and thus both parties can seek damages for the loss suffered in the collision. During the accident Ravi had fallen asleep after partying all night and taking to the wheel in the morning. Ravi on his party was on his mobile phone at the time of the accident. Both parties are equally culpable for the damages but Ravi’s departure from the reasonable man standard of care is more significant. By falling asleep on the wheel, Ravi was endangering the lives of every road user. In contrast, Chen’s act of using his mobile phone when driving is a less significant departure from the reasonable man standard of care. Conclusion Both parties should be apportioned damages for the loss suffered during the accident. However, Ravi should be assigned slightly larger percentage as his act of falling asleep behind the wheel was very negligent. Question 3 One of the main reasons why entrepreneurs decide to operate businesses as companies is the fact that his form of business provides personal asset protection for the owners9. Company have limited liability protection and thus the personal assets of owners cannot be attached to take care of the company’s debt and obligations. Secondly, it is easy for the shareholders of companies to transfer their ownership in companies by selling their stake in the company. The ease of transfer of ownership also allows companies to access more capital as other investors can easily join by purchasing share in the company. Question 3 B Issue Is Jane a partner of the firm and thus jointly liable for Bob’s wrong in conduct of the partnerships activities? The law The legal definition of the partnership form of business forms the basis for determining whether a party is a partner in a business enterprise. According to Latimer, the wishes of parties are insignificant in determining whether two parties are business partners10. Section 1 of the Partnership Act 1892 (NSW) describes the three elements that are necessary for a partnership to exist as follows11: the carrying on of a business; in common; with a view to profit. Analysis In this case, Jane and Bob were carrying in a business together as Jane assisted Bob in managing the business. The two also conducted the business in common as Jane was Bob’s assistant and managed the business. Jane also receives a share of the profits from Bob’s business and is a partner in the business. Conclusion Jane is also liable for the badly constructed house as a court can be satisfied that Jane is Bob’s partner in the business. Part B Question 1(a) An invitation to treat is a representation by a party inviting other parties to make offers. An invitation to treat bears no intention to create legal relation12. In contrast, an offer is a statement of the terms an offeror is prepared to be contractually bound as set out in the offer. For example, when an organization invites organizations to bid for a contract, this is considered an invitation to treat. Once the bids are received one is selected and the contract negotiated. In contrast, an offer bears all the terms of the contract and there are no intentions to further negotiate the contract. While an invitation to treat can be negotiated an offer has to be accepted as it is. Elements of a valid contract Other than offer and acceptance, a valid contract also needs consideration. Consideration is defined as the price that a promissory asks for in exchange for the promise13. Consideration can take many forms including cash, promissory note or a promise to do something. Valid contracts must also bear the intention to create legal relation. Parties must show that the negotiations were meant to enter into a legally binding relationship. In addition, contractual parties must possess the legal capacity to enter into a contract14. Some classes of people are not considered as legally able to enter into contract. In many cases, minors are not considered to have the legal capacity to enter into valid contracts. Question 1(a) Duress or Undue Influence Duress is one of the defences for breach of contract. One can plead duress if he is forced to enter into a contract involuntarily. Duress is defined as situation where weaker parties are forced to enter into contract through threat of physical harm, blackmail or violence. Duress is closely related to undue influence where a person controls a weaker party to overrun his will to enter into a contract. Unconscionability Unconscionability is a defence where one party is able to show they were wrongly induced into entering into a contract and that the contracts terms are grossly unfair to that party15. Unconscionability is a valid defence when the party relying on the defence is in a weak bargaining position in comparison to the other contractual party. Question 2 (a) Limitation of liability in civil wrongs cases is an effort to prevent flooding of cases in court because of an infinite number of civil liabilities16. If civil liability is not limited, the occurrence of civil wrongs cases would be more frequent and the amount of damages awarded for civil wrongs would probably overwhelm the justice system. Damages paid for civil liability were linked to the near collapse of the Australian insurance industry promoting the legislation of the civil liability Acts in states and territories17. Question 2(b) Common defences for negligence include Contributory negligence Voluntary assumption of risk Contributory negligence is used as a defence where the plaintiff contributed in causing harm by failing to observe his duty of care to himself. Established in Butterfield v. Forrester 103 Eng. Rep. 926 (K.B. 1809), contributory negligence can help a defendant avoid paying for part of the damages resulting from his negligent action18. Sometime plaintiffs can be denied all their damages if their contributory negligence is found to be the major factor in the accident. Bibliography A. Articles/Books/Reports Deakin, S., Johnston, A., & Markesinis, B, ‘Markesinis and Deakin's Tort Law ( Oxford University Press, 2012) Horwitz, Henry. "Industrializing English Law: Entrepreneurship and Business Organization, Business History Review 75, no. 02 (2001): 427-429 Latimer, Paul. Australian Business Law 2012 (CCH Australia Limited, 2012) McKendrick, Ewan. Contract law: text, cases, and materials (Oxford University Press, 2014) Trinidade and Cane Law of Torts in Australia, 2nd Ed. 534 B. Cases Butterfield v. Forrester 103 Eng. Rep. 926 (K.B. 1809), Nance v British Columbia Electric Railway Co (1951) AC 601 Nance v British Columbia Electric Railway Co [1951] AC 601; [1951] 2 All ER 448; [1951] 2 TLR 137; Podrebersek v Australian Iron & Steel Pty Limited [1985] HCA 34 Ridge v Baldwin [1963] UKHL 2; (1963) 1 QB 539 C. Legislation Partnership Act 1892 (NSW), s.2 Read More