Exclusion Liability Terms
Question 1- Exclusion Of Liability
About three months ago,Catherine decided to have central heating installed in her house. After obtaining various estimates,she accepted one from Tropic Heat Ltd.The job was completed on time,and she paid on completion.Two days ago,Catherine was in the kitchen when the boiler burst,scalding her down her left arm.She needed treatment at the Casualty department but there will be no permanent scarring or loss of function.
The boiler had flooded the kitchen.When Catherine returned from Casualty she telephoned Tropic Heat,but there was no reply.She had an engineer from another firm inspect the boiler.He told her that a hairline crack in the casing had given way. However,he could not tell whether the fault had been in the boiler at manufacture,or whether the boiler had been damaged by rough handling on installation.He suggested that she keep the boiler for further,more detailed examination.
The next day she was able to contact Tropic Heat,who said they were not liable for the boiler defect,relying on the"terms and conditions"printed on the back of their estimate.In particular they drew her attention to the following clause:
"Our quality is high and our prices are low.In the event of any complaint we shall,at our discretion,do our best to promote customer satisfaction,but shall not be liable for any failure of materials or workmanship resulting in loss or damage of any kind no matter how arising".
Catherine had not previously read Tropic Heats terms and conditions.
Catherine tells you that the boiler will have to be replaced and the damage to her kitchen repaired.
ADVISE CATHERINE AS TO HER RIGHTS (IF ANY)AGAINST TROPIC HEAT.
QUESTION 2-PSYCHIATRIC INJURY(essay)
The courts have established different principles to determine liability in psychiatric injury cases for different categories of claimants.
OUTLINE THE DIFFERENT PRINCIPLES APPLIED BY THE COURTS IN PSYCHIATRIC INJURY CLAIMS AND DISCUSS WHETHER THE COURTS ARE JUSTIFIED IN APPLYING DIFFERENT PRINCIPLES TO DIFFERENT CLAIMANTS.
QUESTION 3-ECONOMIC LOSS.
One morning Joe was traveling to work when he was delayed due to a road traffic jam which resulted from a road traffic accident caused by Sams negligent driving.This meant Joe missed an important meeting with a new client to formally sign a lucrative business contract.As Joe failed to attend the meeting the client decided to give the business to a rival company.
Donna was also delayed by the accident but she did make it to her meeting with her financial advisor,Paolo,in time .Donna was looking for advice on investing a recently acquired inheritance. Paolo, who was new to the job of financial advisor,advised Donna to invest in ABC Ltd,which he described as an "up and coming"company. Unfortunately Paolo had failed to read articles in recent financial magazines confirming ABC Ltd had just lost one of its major clients and was rumoured to be in difficulties.
Donna took Paolos advice and invested in ABC Ltd.The rumours about ABC Ltd turned out to be true and the company was wound up.As a result Donna lost money.
Donna decided to invest rest of her inheritance without any help.She obtained the audited company accounts from a number of different companies. After studying these she decided to invest in Mobile Mania Ltd.She saw this company as a good investment and told her friend Kate about it one night whilst they were drinking in a pub.Both Donna and Kate went ahead and invested in Mobile Mania Ltd. Unfortunately the accounts were in fact inaccurate and misleading and Mobile Mania was wound up.Both Donna and Kate lost money as a result.
ADVICE JOE, DONNA AND KATE, EXPLAINING TO THEM ANY RIGHTS THEY MAY HAVE IN TORT.
QUESTION ONE
To advise Catherine as to her rights against Tropic Heat the situation must be taken in parts to determine if Catherine has any action against the company. As the case of Donoghue v Stevenson states, if was stated that there could be liability in negligence for defective products. As the boiler, after three months, burst resulting in damage to Catherine and her kitchen. Catherine was right to get the boiler inspected to see where the damage came from. The conclusion of the inspection was that it could not be determined whether the manufacturer was at fault, or whether the damage was caused by the installation performed by Tropic Heat.
Catherine might be successful Tropic Heat in an action of Contract, as it is seen that they have tried to waiver liability away from them by what is stated in their terms and conditions on the back of the quotes they gave to Catherine before they started the installation of the boiler. For the clause to be effective, it must be incorporated before the contract is concluded, therefore as the term was written and given to Catherine at the same time as the quotes would satisfy the rule, as confirmed in Olley v Malborough Court Ltd. A similar case to Catherine's situation is that of Chapleton v Barry UDC. In this case The ticket was given to the plaintiff after he had paid for the deckchair, and therefore the exclusion clause contained on the ticket was void as it was classed as a mere receipt and not actually within the contract before there was consideration.
The clauses would be classed as an exclusion clause within contract law. For that to be effective, the clause must be properly inserted in to the contract, it must be interpreted to cover what was lost and finally there must not be another rule in law that would invalidate the clause. The construction of the clause about negligence liability must be examined to determine its validity. The rules of construction were formed within the case of Canada Streamship lines ltd v The King. The first rule being that there must be express language that takes away the liability of the negligence away from the party. Within the clause of Tropic Heat does mention workmanship. Secondly the scope of the words must be wide enough to cover the notion of negligence by that party who is relying on the exclusion clause. Catherine may, however, be more successful in action against tropic Heat, by using the Unfair Contract Terms Act 1977. Section 2 of this act shows that the exclusion term created by Tropic Heat is unfair as it is attempting to restrict their liability for personal injury resulting from negligence. The section also looks at reasonableness when considering the liability for other loss and damage. Therefore, Catherine has rights by stating that the exclusion term created by Tropic Heat is void, as the term is trying to exclude personal injury. The reasonableness of the term should also be examined, as the term is wide by stating that they are no liable for any damage, no matter how it arose, is very wide, and highly unreasonable.
QUESTION TWO
Courts have been very wary to order compensation for psychological injuries. The damages that courts have ordered in the past have historically been related to a physical injury, as was merely an increase of damages usually awarded for the physical injury sustained to compensate for the psychological injury.
The main issue that the courts found difficult, as compensating for a psychological injury without a physical injury present. Case law did not allow compensation for such injury, however this changed after the case of Dulieu v White. The courts took this notion one step further and defined two classes of psychiatric damage victims; primary and secondary victims. The test for this was shown in the case of Alcock v Chief Constable of South Yorkshire Police. Before a distinction was made between primary and secondary victims it was assumed that the test of reasonable foreseeabilty of psychiatric illness applied to all cases where the plaintiff claimed damages for negligently inflicted psychiatric illness (except where the illness was suffered as a result of a physical injury. It was Lord Oliver in the Alcock case that made the distinction between the two types of victim.
Those cases in which the plaintiff was involved wither immediately or mediately as a participant, or those in which the plaintiff was no more that the passive unwilling victim of injury caused to others.
The primary victim is easiest to recognise and was stated in Page v Smith, by Lord Lloyd that the primary victim was:
directly involved in the accident and well within the range of foreseeable physical injury.
It is the immediate involvement in the accident that distinguishes between the primary and secondary victims. It was also noted in the case of Page, where it was held that the primary victim's injuries can be compensated for, however trivial the even that he was involved in was, but a secondary victim cannot claim.
The House of Lords in the case of White v Chief Constable of South Yorkshire police stated that it is necessary that the claimant should be with the range of foreseeability of physical injury in order to be a primary victim. This allows for a wider scope for claims of psychological damage as it states that anyone who was at risk of a physical injury in any type of situation that arises from the event may have a claim for damages due to psychological injury. However, this case did put a limit upon such claims, especially for those secondary victims by the idea of proximity, if you are outside the boundaries of the event then you would not have grounds for a claim.
Proximity to the event was examined in the case of McLoughlin v O'Brian. It was the House of Lords accepted that that proximity to the accident should close in time and space because the claim is for shock induced illness and therefore must be closely within the boundaries of the event that caused the shock. One of the leading cases about immediate aftermath is Alcock v Chief Constable of South Yorkshire, where forseeabilty was shown to be second requirement and is only needed for claims by the secondary victim. This was examined in the case of Page v Smith.
The secondary victim was also may try to establish a claim for shock caused by fear or injury to others. This was seen in the case of Hambrook v Stokes Brothers. The fear of the mother was enough for the court to award recovery of damages only on the basis that the injury was caused by the sight of the runaway lorry, and not the news after the event of the accident involving her children. However in amore recent claim in the case of King v Phillips the claimant was held to be an unforeseeable plaintiff, as she was looking out of her house window when the accident happened. The third requirement of having a close tie of love and affection is where the claim for a secondary victim is very narrow. There must be relationship proximity between the primary and secondary victim for the secondary victim to claim damages. The most successful claims have been those of family ties such as children or spouses.
The risk of bogus claims is also prominent in academic thought. The idea of fraudulent claims is feared, as there is a belief that symptoms for nervous shock can easily be faked. However this could also be a criticism of the courts as it is for the courts to decide whether the claim is true, and by having such a fear puts doubt in the judicial system. In conclusion, the principles created by common law are justified as they restrict claims in a correct manner by which the courts times are not wasted when trying to define what psychological injury should be compensated.
QUESTION THREE
In order to advise Joe to any rights he has, one must identify what he has lost, why he lost it, and can he recover it. Joe was delayed to a business meeting, where he could have potentially benefited from a business contract if he attended this meeting. It has been stated that a person cannot claim for what he could have potentially lost. However loss of potential earnings can be generally included within a personal injury claim. This was reinforced in the case of Murphy v Brentwood District Council. Joe would not have any rights, as he is not directly a victim of the accident, and would be classed as an unforeseeable victim. If the courts allowed such a claim, the floodgates would be opened for a vast amount of similar claim, which would lead to unjustified economical loss claims. The fact that he may not have got the contract even if he did make it to the meeting also falls against him, as there could have been a chance that he would not have received the contract anyway.
Donna might be more successful with her rights, but her situation must be placed into two parts. Firstly the reliance upon Paolo's advice to invest her money in ABC ltd, resulting in a large loss in vestment, due to Paolo's lack of professionalism. It was stated in Mutual life & Citizen's Assurance Ltd v Evatt that it was held by the Privvy Council that a duty was applied to the defendants who were in the business of giving advice that would be relied upon. The reliance upon is advice is important, as stated in the case of Caparo Industries Plc v Dickman. As from this case it would seem that Paolo, as a financial advisor, knew Donna would have relied upon that his advise. Donna could place an action against Paolo in tort and if he was found to be negligent, then he would be found responsible for all the foreseeable loss which is a consequence of the advise he gave Donna.
The second limb to Donna's situation is relying upon the statements given to her regarding Mobile Mania Ltd. She relied upon audit reports. Caparo Industries case also covered this situation and an auditor's duty appears to be narrower. It was stated in this case that audits are for the company's use, and not to influence or protect other's who may use this information. Therefore, Donna has no right to claim against the companies she obtained the audit reports.
Kate relied upon Donna's advice about financially investing in Mobile Mania Ltd. Unfortunately for Kate; she does not have a right to claim against Donna for her losses. Using the main theme of Caparo Industries, Donna does not have any specific knowledge about financial investment; she is merely a member of the public without any specific knowledge. The advice Donna gave was not with the intention of Kate to rely upon it, as the social environment that the conversation took place seems to suggest. Therefore Kate could not make a claim in tort against Donna for her financial loss.
Bibliography
Cases:
Donoghue v Stevenson[1932] AC 562
Olley v Malborough Court Ltd[1949] 1KB 532
Chapleton v Barry UDC[1940] 1 KB 532
Dulieu v White[1901] 2 KB 699
Alcock v Chief Constable of South Yorkshire Police[1991] 4 All ER 907
Page v Smith[1996] AC 155
White v Chief Constable of South Yorkshire police[1999] 2 AC 455
McLoughlin v O'Brian[1981] 1 All ER 809
Hambrook v Stokes Brothers[1925] 1 KB 141
Murphy v Brentwood District Council[1990] 2 All ER 920
Mutual life & Citizen's Assurance Ltd v Evatt[1971] AC 793
Caparo Industries Plc v Dickman[1990] 1 All ER 568
Books:
Textbook on Tort Micheal A Jones
Contract Law, Ewan McKendrick
Nervous shock - when is it compensable? 'Christopher Gardner Q.C May 1995 Page 1
Please note: The above essays and dissertations were written by students and then submitted to us to display and help others. Thanks to all the students who have submitted their work to us.
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