Aspects of Contract and Negligence for Business Assignment 2

Nguyễn Thị Kiều Anh - Snow - F05014 BTEC HND IN BUSINESS (Accounting) ASSIGNMENT COVER SHEET NAME OF STUDENT REGISTRATION NO UNIT TITLE ASSIGNMENT TITLE ASSIGNMENT NO NAME OF ASSESSOR SUBMISSION DEADLINE VN: Nguyễn Thị Kiều Anh EN: Snow F05-014 Aspects of Contract and Negligence for Business Negligence of (individual report) Mr John Andre 26 Dec 2013 I, Nguyen Thi Kieu Anh hereby confirm that this assignment is my own work and not copied or plagiarized from any source I have referenced the sources from which information is obtained by me for this assignment Signature _26 Dec 2013 Date -FOR OFFICIAL USE (Course Administrator) Assignment Received By: ACNB Assignment Fall 2013-2014 Date: Nguyễn Thị Kiều Anh - Snow - F05014 Unit Outcomes Outcome Evidence for the criteria Feedback Assessor’s decision First attempt Understand principles of liability in negligence in business activities Contrast liability in tort with contractual liability 3.1 Explain the nature of liability in negligence 3.2 Explain how a business can be vicariously liable 3.3 Apply the elements of the tort of negligence and defences in different business situations 4.1 Apply the elements of vicarious liability in given business situations 4.2 Internal Verification Rework LO3 Be able to apply principles of liability in negligence in business situations LO4 Merit grades awarded M1 M2 M3 Distinction grades awarded D1 D2 D3 ACNB Assignment Fall 2013-2014 Nguyễn Thị Kiều Anh - Snow - F05014 Outcome Evidence for the criteria Feedback Assessor’s decision First attempt Internal Verification Rework Assignment ( ) Well-structured; Reference is done properly / should be done (if any) Overall, you’ve Areas for improvement: ASSESSOR SIGNATURE DATE / / DATE / / NAME: (Oral feedback was also provided) STUDENT SIGNATURE NAME : FOR INTERNAL USE ONLY VERIFIED YES NO DATE : VERIFIED BY : NAME : NEGLIGENCE ACNB Assignment Fall 2013-2014 Nguyễn Thị Kiều Anh - Snow - F05014 Prepared for: Lecturer, Mr John Andre Aspects of Contract and Negligence for Business Banking Academy, Hanoi BTEC HND in Business (Finance) Prepared by: Nguyễn Thị Kiều Anh - Snow - F05A Registration No: F05-014 No of words: 2563 Submission date: 26 December, 2013 TABLE OF CONTENTS ACNB Assignment Fall 2013-2014 Nguyễn Thị Kiều Anh - Snow - F05014 INTRODUCTION In this report, I play role as business consulting firm for Mug-n-Sas, LTD - an electronics retailer in London My responsibility is giving some advices for Honky Uh Now, the CEO of Mug-n-Sas on several legal issues Through analyzing issues related to business law in specific company, readers can understand deeply about liability in tort, contractual liability, tort of negligence and defences as well as principles of vicarious liability and its important roles This report is divided into tasks as follows: • Task 1: Contrast liability in tort with contractual liability • Task 2: Explain the nature of liability in negligence and apply the elements of the tort of negligence and defences • Task 3: Explain how a business can be vicariously liable and apply the elements of vicarious liability ACNB Assignment Fall 2013-2014 Nguyễn Thị Kiều Anh - Snow - F05014 I write this report based on information in the Business Law course book and some reference books, many sources from internet Moreover, many slides which were continuously updated every week by lecturer John also help me collect information, theory, and case study in order to support applying for situations of Mug-n-Sas Company CONTENTS Task 1: Contrast liability in tort with contractual liability (3.1) Before finding out about elements of tort of negligence and defences in business situation, it is necessary to understand the differences between tortious liability and contractual liability as follows: Characteristic Tortious liability Contractual liability s Legal obligation of wrongdoer to a Legal obligation only exist when victim as a result of civil wrong, anyone two parties bound in the contract, Definition has suffered damages has right claim for a party just has right to claim the compensation which related to personal other for the loss, damage when injury, property damage or economic they has somehow breached the Relationship loss (answers, n.d.) contract (answers, n.d.) The defendant may not have any The defendant and claimant must between previous transaction or relationship with be the parties to the contract  ACNB Assignment Fall 2013-2014 Nguyễn Thị Kiều Anh - Snow - F05014 defendant and claimant Duty the claimant  The third party can Only parties in the contract can sued or be sued which related directly to sue and be sued (btecexpert, the negligence (btecexpert, 2009) 2009) - Are usually owned to people in - Are usually only owed to the general - Is fixed by the law (Elliot & Quinn, - Based on term in contract 2009) Limitation Act 1980 - • (Elliot & Quinn, 2009) Limitation Act 1980 claims for Claims for negligence: the later of breach of contract years from the date the damage is - For a simple contract: years Limitations of actions other contracting party suffered - from the date of the breach Claims for personal injury: years - For a deed: 12 years from the from the date of injury is suffered date of the breach (Beale, (Beale, 2013) 2013) Tortious liability The case Donoghue v Stevenson [1932] below is an example of liability in tort The facts: A purchased a dark, opaque bottle of ginger-beer from a retailer and gave it to B - friend of A B drank some before her friend discovered a decomposed snail in the bottle She sued C, the manufacturer for psychological harm (shock) and gastroenteritis (stomach flu) The manufactures argued that as there was no contract between himself and B, he owned her no duty of care and so was not liable for her Decision: C was liable to B In supplying polluted ginger-beer in an opaque bottle, the manufacturer must be held to contemplate that the person who drank the contents of the bottle would be affected by the consequences of the manufacturer’s failure to take care to supply his product in a clean bottle → Manufactures of defective products owed duty of care with end consumer of that product although consumers not have the contract directly with manufacturer They must to have liability for victim by the law (consumer protection) (BPP, 2010) • Contractual liability The case Carlill v Carbolic Smoke Ball Co [1893] below is an example for contractual liability The facts: The defendant, a medicine manufacturer, publishing an advertisments: a reward £100 to any person stills influenza after using the smoke ball according to printed direction Moreover, £1,000 had been deposited at a bank to show company’s sincerity in ACNB Assignment Fall 2013-2014 Nguyễn Thị Kiều Anh - Snow - F05014 this matter The claimant purchased and used the smoke ball as directed but still flu She claimed for £100 Decision: The advertisment of the Carbolic company to the public was an offer and the purchasing and using ‘smoke ball’ of Carlill was acceptance, which formed contract Carbolic Company has to pay £100 for Carill as the contract’s terms → There is the existence of a contract between customer and company When binding to the contract, customer has right to sue company for not follow what they stated in the contract and company was liable for contract’s terms by compensating £100 for customer Task 2: Explain the nature of liability in negligence (3.2) and apply the elements of the tort of negligence and defences (4.1) Negligence is a civil wrong whereby a person or party is in breach of a legal duty of care to another which results in loss or injury to the claimant (dictionary, 2013) There are many elements of negligence such as duty of care, strict liability, contributory negligence….With each element, it has the different nature of liability To succeed in an action for negligence the claimant must prove things: - The defendant must owe the claimant a duty of care: the courts will decide whether defendant owed a duty of care or not by applying some tests such as reasonably foreseeable, proximity, fair, just and reasonable… - The defendant must breach that duty of care: The claimant must prove the defendant breach the duty of care - The failure must cause damage to the claimant: The claimant also has to prove for the damages they suffered such as personal injury, damage to property, economic loss… (Elliot & Quinn, 2009) Duty of care Duty of care is the responsibility or the legal obligation of a person or organization to avoid acts or omissions (which can be reasonably foreseen) to be likely to cause harm to others (businessdictionary, 2013) Liability for economic loss Damages for economic loss are personal injury and damage to property, in which both physical damages to property and economic loss happens by damages to property (Elliot & Quinn, 2009) ACNB Assignment Fall 2013-2014 Nguyễn Thị Kiều Anh - Snow - F05014 Figure 1: Negligence and economic loss (Elliot & Quinn, 2009) The case Spartan Steel v Martin [1972] illustrated clearly liability for economic loss The defendants had negligently cut an electric cable, causing a power cut that lasted for 14 hours The claimant sued for: - Damage to the metal that was in the furnace at the time of the power cut (physical damage to property); - Loss of the profit that would have been made on the sale of that metal (economic loss arising from damage to property); - Loss of profit on metal which would have been processed during the time the factory was closed due to the power cut (pure economic loss) The court held that the first two claims were recoverable but the third was not The defendants owed the claimants a duty to pay for any loss directly arising from such damage but they did not owe them any duty with regard to loss of profit The duty of care is applied in the case of Paul v Mug-n-Sas, Mug-n-Sas breached the duty of care when they provided a defective phone for their customers, which caused fatal shock of Suzi Moreover, Mug-n-Sas can foresee the damage of defective products to the customers Therefore, Mug-n-Sas owed the duty of care to customers and must have liability for their negligence Mug-n-Sas must pay £25,000 for funeral because of providing defective phone which caused death of Suzi The fact is that Mug-n-Sas did not regularly audit the products to catch the manufacturing problem, which lead to defective phone This serious problem will continue occurring if they still continue ignoring audit Therefore, Mug-n-Sas have to pay £1 million in exemplary damage for deterring Mug-n-Sas and other company from similar mistakes in the future Paul, husband of Suzi will not win for £1 million which he estimated that his wife would have made over the lifetime plus because Paul does not suffer the damage, moreover the amount of money Suzi can earn if she alive, it is Suzi’s money, not Paul’s money Therefore, Paul does not have right to claim for that ACNB Assignment Fall 2013-2014 Nguyễn Thị Kiều Anh - Snow - F05014 Strict liability Strict liability is a tort law concept that imposes liability for harm suffered without requiring proof of negligence Strictly by owning a dangerous animal, an owner may be found liable if that animal ever escapes and causes damage or harm It does not matter if the owner has taken all the typical precautions (definitions, n.d.) A defendant who negligently creates or allows the creation of risk of danger may be liable even though a third party’s actions cause that danger to injure the claimant (Elliot & Quinn, 2009) The case of Haynes v Harwood [1935] is example for strict liability The defendant left a horse-drawn van unattended in a crowed street The horses bolted when a boy threw a stone at them A police officer tried to stop the horses to save a woman and children who were in the path of the bolting horses The police officer was injured It was held that the defendant owned a duty of care as he had created a source of danger by leaving his horses unattended in a busy street In the case scenario Apple v Mug-n-Sas, Apple owed a duty of care as they create risk of danger by carrying nitro-glycerin - an explosive material Therefore, they must be strictly liable for damages that explosive materials caused although damages also derived from negligence of Mug-n-Sas employee Apple will get nothing from Mug-n-Sas and have to pay £100,000 worth of damage Contributory negligence If both the claimant and defendant are found to be negligent, any damages or blame will be divided between them Courts use actual percentages to determine responsibility in contributory negligence cases (nelson, 2013) The courts may reject a claim for contributory negligence if the claimant suffered damage whilst engaged in illegally activity (BPP, 2010) An example of this case is Ashton v Turner [1981], where both claimant and defendant had taken part in a burglary The defendant had the job of driving the getaway car, but did it so badly that the claimant was injured The claimant attemped to sue his co-burglar for the injury, but the court held that the defence of illegally could apply to prevent the claim In the case scenario Tom v Mug-n-Sas, Tom’s claim for contributory negligence because of the exposed wire is rejected because Tom suffered damages when he illegal act (broke into Mug-n-Sas stores in order to steal new Iphone 6) He can foresee risk of danger when he entered through the roof by cutting a hole and climbed down by the rope Tom ACNB Assignment Fall 2013-2014 10 Nguyễn Thị Kiều Anh - Snow - F05014 will get nothing and must pay £4,000 to replace the TV’s he destroyed and another £3,000 to repair the roof for Mug-n-Sas Task 3: Explain how a business can be vicariously liable (3.3) and apply the elements of vicarious liability (4.2) In order to understand deeply how a business can be vicarious liable, we should find out differences between employer liability and vicarious liability because there are some confuses about these two things: • Employer liability: Employers may be held liable for the health and safety of their employees while they are at work (businessdictionary, n.d.) For example, employer will be liable for employee when they not provide a safe workplace which cause personal injury to employee while working • Vicarious liability: imposes responsibility upon employer for the failure or omissions of employee, provided it can be shown that they took place in the course of their employment (acas, n.d.) For instance, the employer will be liable for employee’s actions when they injures customer within the course of employment In order for vicarious liability to apply, the courts must ask two questions: • Was the person who committed the tort an employee of the defendant? • Was the tort committed in the course of that person’s employment? Employers are only liable if the answer to both questions is yes (Elliot & Quinn, 2009) Relationship of employer and employee In terms of vicarious liability, it is essential to establish exactly who is classed as an “employee” Employers are liable for torts committed by their employees, but not for those commited by independent contractor who does not work regularly for employer An independent contractor is under control of his employer on what he must so the employer can not control the actual manner in which he does work He is free his own method so they are usually responsible for their own torts (Matter, 2013) Torts are committed in the course of employment An employer will be responsible for torts committed by their employees if those torts are in the course of the employment The employer will be liable not only where they have permitted the employee to the wrongful act, but also in some cases where they have not given such permission (Elliot & Quinn, 2009) The case Limpus v London General Omnibus Co [1862] is example for vicarious liability A bus driver racing to a stop to collect passengers deliberately obstructed the driver of a bus ACNB Assignment Fall 2013-2014 11 Nguyễn Thị Kiều Anh - Snow - F05014 of a rival company, overturning the latter’s vehicle The bus driver had been given strict instruction against obstructing other buses The defendants were liable The driver was acting within the course of his employment at that time It was immaterial whether his act is forbidden In the case Henrietta v Mug-n-Sas, Mug-n-Sas owe no vicarious liablility so the company will not be liable for compensating £10,000 for the cost to replace her necklace because actions of Won Ton are not related to the course of his employment The task of Won Ton is to deliver and install a new LED TV, not drinking tea which create good opportunity for Won Ton stole necklace of Henrietta Mug-n-Sas owe vicarious liability in the case Vidia v Mug-n-Sas, Mug-n-Sas will be liable for paying £600 for the cost to replace the phone because actions of employee was seen as one long time from he took purse of Vidia to when she complaint and receive the purse back which stated that Mug-n-Sas’s employee was doing his job However, Mug-n-Sas will not seek exemplary damages of £1,000 because Vidia did not give out evidence to prove that the employee of Mug-n-Sas this sort of thing all the time CONCLUSION Through this report, I can understand deeply about tort of law and how to distinguish tortious liability and contractual liability by analyzing the specific real case Moreover, many elements of tort of negligence such as duty of care, strict liability, and contributory negligence are mentioned in order to find out the nature of negligence and know how to deal for each specific case This report also finds out the differences between employer liability and vicarious liability in order to identify how the business can be vicarious liable Through above analysis, I hope readers also get the useful information to support for their needs ACNB Assignment Fall 2013-2014 12 Nguyễn Thị Kiều Anh - Snow - F05014 REFERENCES acas, n.d Understanding what vicarious liability means for employers [Online] Available at: http://www.acas.org.uk/index.aspx?articleid=3715 [Accessed 15 December 2013] answers, n.d Briefly compare and contrast tortuous liability and contractual liability [Online] Available at: http://wiki.answers.com/Q/Briefly_compare_and_contrast_tortuous_liability_and_contractual _liability#slide2 [Accessed December 2013] Beale, 2013 Statutory Limitation Periods [Online] Available at: http://www.bealelaw.com/uploads/files/beale_and_company/publications/125/Contractual_Limitation_Periods _Making_Sure_the_Time_is_Right_May_13_.pdf [Accessed December 2013] BPP, 2010 In: Business Law London: BPP Learning Media Ltd btecexpert, 2009 Compare contrast Tort and Contract [Online] Available at: http://www.slideshare.net/btecexpert/0201compare-contrast-tort-and-contract1999799 [Accessed December 2013] ACNB Assignment Fall 2013-2014 13 Nguyễn Thị Kiều Anh - Snow - F05014 businessdictionary, 2013 The duty of care [Online] Available at: http://www.businessdictionary.com/definition/duty-of-care.html [Accessed 14 December 2013] businessdictionary, n.d Employer liability [Online] Available at: http://www.businessdictionary.com/definition/employer-s-liability.html [Accessed 15 December 2013] definitions, n.d Strict liability law & legal definition [Online] Available at: http://definitions.uslegal.com/s/strict-liability/ [Accessed 15 December 2013] dictionary, 2013 Negligence [Online] Available at: http://dictionary.reference.com/browse/negligence [Accessed 14 December 2013] Elliot & Quinn, 2009 In: Contract Law United Kingdom: Pearson Education Limited Matter, T S., 2013 Vicarious liability in tort [Online] Available at: http://www.slideshare.net/tuansyahmimatter/vicarious-liability-in-tort18114975?from_search=1 [Accessed 15 December 2013] nelson, 2013 Negligence and other torts [Online] Available at: www.nelson.com/aal/documents/Chapter12.ppt [Accessed 15 December 2013] ACNB Assignment Fall 2013-2014 14 [...]... http://www.slideshare.net/btecexpert/ 020 1compare-contrast-tort -and -contract1 999799 [Accessed 1 December 20 13] ACNB Assignment 2 Fall 20 13 -20 14 13 Nguyễn Thị Kiều Anh - Snow - F05014 businessdictionary, 20 13 The duty of care [Online] Available at: http://www.businessdictionary.com/definition/duty -of- care.html [Accessed 14 December 20 13] businessdictionary, n.d Employer liability [Online] Available at: http://www.businessdictionary.com/definition/employer-s-liability.html... http://wiki.answers.com/Q/Briefly_compare _and_ contrast_tortuous_liability _and_ contractual _liability#slide2 [Accessed 1 December 20 13] Beale, 20 13 Statutory Limitation Periods [Online] Available at: http://www.bealelaw.com/uploads/files/beale _and_ company/publications/ 125 /Contractual_Limitation_Periods _Making_Sure_the_Time_is_Right_May_13_.pdf [Accessed 1 December 20 13] BPP, 20 10 In: Business Law London: BPP Learning Media Ltd btecexpert, 20 09 Compare contrast Tort and Contract. .. damages of £1,000 because Vidia did not give out evidence to prove that the employee of Mug-n-Sas do this sort of thing all the time CONCLUSION Through this report, I can understand deeply about tort of law and how to distinguish tortious liability and contractual liability by analyzing the specific real case Moreover, many elements of tort of negligence such as duty of care, strict liability, and contributory... contributory negligence are mentioned in order to find out the nature of negligence and know how to deal for each specific case This report also finds out the differences between employer liability and vicarious liability in order to identify how the business can be vicarious liable Through above analysis, I hope readers also get the useful information to support for their needs ACNB Assignment 2 Fall 20 13 -20 14... - F05014 will get nothing and must pay £4,000 to replace the TV’s he destroyed and another £3,000 to repair the roof for Mug-n-Sas Task 3: Explain how a business can be vicariously liable (3.3) and apply the elements of vicarious liability (4 .2) In order to understand deeply how a business can be vicarious liable, we should find out differences between employer liability and vicarious liability because... questions is yes (Elliot & Quinn, 20 09) 1 Relationship of employer and employee In terms of vicarious liability, it is essential to establish exactly who is classed as an “employee” Employers are liable for torts committed by their employees, but not for those commited by independent contractor who does not work regularly for employer An independent contractor is under control of his employer on what he must... at: http://www.slideshare.net/tuansyahmimatter/vicarious-liability-in-tort18114975?from_search=1 [Accessed 15 December 20 13] nelson, 20 13 Negligence and other torts [Online] Available at: www.nelson.com/aal/documents/Chapter 12. ppt [Accessed 15 December 20 13] ACNB Assignment 2 Fall 20 13 -20 14 14 ... December 20 13] definitions, n.d Strict liability law & legal definition [Online] Available at: http://definitions.uslegal.com/s/strict-liability/ [Accessed 15 December 20 13] dictionary, 20 13 Negligence [Online] Available at: http://dictionary.reference.com/browse /negligence [Accessed 14 December 20 13] Elliot & Quinn, 20 09 In: Contract Law United Kingdom: Pearson Education Limited Matter, T S., 20 13 Vicarious... acting within the course of his employment at that time It was immaterial whether his act is forbidden In the case Henrietta v Mug-n-Sas, Mug-n-Sas owe no vicarious liablility so the company will not be liable for compensating £10,000 for the cost to replace her necklace because actions of Won Ton are not related to the course of his employment The task of Won Ton is to deliver and install a new LED TV,... liability: Employers may be held liable for the health and safety of their employees while they are at work (businessdictionary, n.d.) For example, employer will be liable for employee when they do not provide a safe workplace which cause personal injury to employee while working • Vicarious liability: imposes responsibility upon employer for the failure or omissions of employee, provided it can be shown ... Thị Kiều Anh - Snow - F05A Registration No: F0 5-0 14 No of words: 25 63 Submission date: 26 December, 20 13 TABLE OF CONTENTS ACNB Assignment Fall 20 13 -2 0 14 Nguyễn Thị Kiều Anh - Snow - F05014 INTRODUCTION... http://www.slideshare.net/btecexpert/ 020 1compare-contrast-tort-and-contract1999799 [Accessed December 20 13] ACNB Assignment Fall 20 13 -2 0 14 13 Nguyễn Thị Kiều Anh - Snow - F05014 businessdictionary, 20 13 The duty of care [Online]... (Elliot & Quinn, 20 09) ACNB Assignment Fall 20 13 -2 0 14 Nguyễn Thị Kiều Anh - Snow - F05014 Figure 1: Negligence and economic loss (Elliot & Quinn, 20 09) The case Spartan Steel v Martin [19 72] illustrated