Laws Relating to the Liability of Vendors - Case Study Example

Case Law MIKE VS FF LTD Introduction Before we cross the threshold to the solution we must discuss certain terms and its relevancy in this given case to comprehend what should be the ultimate solution which will be helpful to the plaintiff to realize the damages from the defendants. The terms which should be figured out to the plaintiff are, 1. Extent and scope of liabilities of vendors 2. Extent and scope of liabilities of builder 3. Various aspects of the term vicarious liability. We shall discuss these aspects one by one to arrive at a precise suggestion. Liabilities of vendors There are laws relating to the liability of vendors, builders and lessors of defective premises suffers, from a variety of defects. These raise both contractual and tortious liabilities on such vendors, builders and lessors. In this sense it can be say that a vendor will be liable to the purchaser if there is any defect in the goods, buildings or any other dwelling places. And it infers that the purchaser can claim damages for these defective constructions from the vendor under the above said rule. But here the rule related to the ample scope of "caveat emptor "plays an important role in impeding the purchaser in taking the action against the vendor for the disposal of defective constructions. The doctrine of Caveat emptor (1) 2 The doctrine of Caveat emptor -Let the buyer beware- involves the purchaser's risk to have the premises surveyed and to determine whether they are fit for the purpose intended. Under the doctrine of Caveat Emptor, the buyer could not recover from the seller for defects on the property that rendered the property unfit for ordinary purposes. It is an obligation in any commercial transaction that the seller is to allow the buyer prior to entering into an agreement to inspect the goods in order to ensure that the goods to be purchased are free from any unknown defects. Under this circumstance the buyer should investigate whatever the goods purchased, whether it is movable or immovable, are free from any defect before the actual agreement is completed, so as to protect him from any future risk arising from a defective product. i.e. the implication is that the purchaser/buyer after such inspection will shoulder the responsibilities of any risk after the completion of the said sale or purchase agreement. This aspect is clearly enumerated in the case McGowan v. Harrison (2).In this case it was held that in the sale of property the purchaser is presumed to have examined the property and to have taken it with knowledge of all its defects. Furthermore, the vendor is further protected by the rule of evidence which limits proof as to the terms of the contract to the written document itself. In the present context, it is well to note that this is the rule even when the real property sold supports a completed building: in the absence of a warranty (express, or implied from the conduct of the parties), the vendor is under no duty to see that the house is sound and fit for human habitation. It is to be remembered that the doctrine of caveat emptor does not lay down any obligation in the seller to point out the defects in goods to be sold. The only exception ----------------------------------------------------------------------------------------------------------- 1. Caveat emptor Vs Khiyai al -"aib" Dictonomy Mohd.Masum Billah Vol.13 no.3 1998 278- 299 2. McGowan Vs Harrison 1941 I.R 331 3 was if the seller actively concealed latent defects and he is under the duty to allow the buyer to inspect the goods/property himself . In the light of above aspects we shall check whether Mike, the claimant can claim to indemnify him by Jones the vendor of the building. Whether Jones, the vendor/defendant is liable to indemnify the purchaser/claimant In the given problem even if Mike files the case against Jones as the party to the case since he is the vendor the court may not uphold the claims of mike as the doctrine of Caveat emptor will protect the contention of Jones. So filing a case against Jones as defendant is immaterial and he is not liable to indemnify Mike. Liabilities of a Builder There are so many aspects are to be discussed while we speak about the liabilities of the builder to the claimant. Since the English law completely relies upon the decision in the Donogue Vs Stevenson (3) regarding the duty of care prima facie it can be doubted that builder is liable to pay off the damages to the claimant. But here the question is regarding the builder's liability to subsequent purchaser is purely economic loss i.e. where there is no physical injury to person or property, consequent upon the defective structure. Here in the light of famous case Bryan Vs Maloney(4) it was held that if a commercial building is constructed defectively ,recovery of purely economic loss by a ------------------------------------------------------------------------------------------------------------ 3.Donogue Vs Stevenson 1932 A.C 562 4.Bryan Vs Maloney 1995 HCA 17 4 subsequent owner is possible if it can be shown that the subsequent owner is inter alia "vulnerable to risk". There are number of cases has been decided upon this decision also. But recently in another case, Woolcock Street investments Pty Ltd Vs CDG Pty Ltd,(5) there was a controversial decision was held that the claimant had not been vulnerable to risk at the time of purchasing the commercial premises. Moreover there may arise some contentions against the claimant that, a) the claimant did not seek a warranty of freedom of defect from the vendor b) the claimant did not seek to have assigned to it any right ,the vendor may had against the defendant in respect of the defects, c) it was not alleged or agreed that the defects in question could not have been discovered if a suitable inspection of the property had been under taken. More over there is a chance of contention that the first owner of the commercial premises is able to bargain for contractual remedies against the builder and the subsequent purchaser is only for the contractual warranties from the vendor. Whether Mike is entitled to get damages from Bob ,the builder Prima facie we can say that Mike is liable to get indemnified. But the above said decision in woolcock's case and so mentioned contentions weaken the claims of Mike against Bob, the builder. Moreover in Woolcock's case it was also held that the existence of duty of care involving purely economic loss is that of "indeterminate liability". Hence Mike cannot claim the damages from the Bob even on the basis of Donogue Vs Stevenson also. ------------------------------------------------------------------------------------------------------------ 5. Woolcock Street investments Pty Ltd Vs CDG Pty Ltd 2004 HCA 16 5 Whether FF Ltd, ABC Surveyor Ltd, and Fred are liable or not Now let's have a glance in the cases of FF Ltd, ABC Surveyor Ltd, and Fred. Whether they are liable or not is mainly related to the aspect of vicarious liability. Vicarious Liability The term vicarious liability is related to the word respondeat superior - the responsibility of the superior for the acts of their subordinate, or, in a broader sense, the responsibility of any third party that had the "right, ability or duty to control" the activities of a violator i.e. when one person is liable for the negligent actions of another person, even though the first person was not directly responsible for the injury. There are three types of vicarious liabilities. 1. Master-servant' relationship; 2. Principal-agent' relationship. 3. Business partnership. But problems usually crop up where the tort-feasor is a self-employed person, acting under a contract to perform a specific task. In Collins Vs Hertfordshire (6), it was suggested that a health authority could be vicariously liable for some of its staff, but not for a surgeon because the authority could not dictate the manner of his work. This reasoning was doubted in ------------------------------------------------------------------------------------------------------- 6. Collins Vs Hertfordshire 6 Cassidy Vs Ministry of Health (7) -- the health authority was liable for the torts of people it routinely employed, notwithstanding the professional nature of their duties. So as per the above case, FF Ltd is vicariously liable for the act done by either ABC surveyor or its employee, since FF Ltd employed the surveyor firm to conduct a survey for Mike. FF ltd cannot raise a contention on the basis of ignorance and bonafide belief .Whatever it may be, the firm is answerable to the claimant, Mike. Moreover the liquidation of the company does not constitute a valid claim on behalf of the FF Ltd. The cause of action rose during the existence of the company. Under these circumstances Mike can claim for the damages from the FF Ltd for its vicarious liability. Since the ABC Surveyor Ltd is the employer of the Fred, ABC Surveyor is responsible for the negligent act of its employee Fred. So Mike can sue against the ABC Surveyor foe its vicarious liability. Whether Fred is liable to pay off damages to Mike or not Fred inspected the property did not make any enquiries about the availability of construction drawings or planning and building regulation consents. He produced a report of confirmation that the valuation is in line with the purchase price and that there are no significant defects affecting the property. By conducting such negligent and improper enquiries the claimant gives him rights to be compensated for the harm, mental well-being and financial status. Secondly Fred has breached the duty towards the claimant. Moreover he has not exercised the duty of care i.e. a legal obligation imposed on an individual requiring that they exercise a reasonable standard of care while performing any acts that could -------------------------------------------------------------------------------------------------------- 7. Cassidy Vs Ministry of health 1951 1 All ER 574 7 foreseeably harm others. Apart from this, by putting the claimant in mental stress, economical loss he has caused for the damage also. Conclusion In nutshell, since the doctrine of Caveat emptor and provisions and decisions in various case laws regarding liabilities of builder to that of subsequent owner protects Jones the original owner of the building and Bob, the builder, Mike cannot claim damages from them. Due to the provision of vicarious liability and negligence, FF Ltd, ABC surveyor Ltd, and Fred are liable to compensate Mike. ********************************** Bibliography Books and Authors 1. Carl F. Stychin Dangerous liaisons: New developments in law of defective premises Vol.16 pp.387-416 1996 publ.by Blackwell Synergy 2. John W. Dykstra The Realm of caveat emptor Vol. 85 No.3 pp.280-286 publ. by Lawrence Erlbaum Associates 3. Joseph W Glannen The Law of Torts: Examples and Explanations 2nd edn. Aspen Publishers 4. Mohd. Masum Billah Caveat Emptor Vs Khiyai Al - Aib : A Dichotomy Arab law quarterly Vol.13 No.3 1998 Pp.278-299 publ. Brill 5. Law Commission No.40 Civil liabilities of vendors and lessors for Defective Premises 1970 Table of cases 1. Bryan Vs Maloney 1995 HCA 17 2. Cassidy Vs Ministry of health 1951 1 All ER 574 3. Collins Vs Hertfordshire 4. Donogue Vs Stevenson 1932 A.C 562 5. McGowan Vs Harrison 1941 I.R 331 6. Woolcock Street investments Pty Ltd Vs CDG Pty Ltd 2004 HCA 16 Read More