Is the Current State of the Law Satisfactory in the Way It Deals With the Right to Claim in Tort - Essay Example

Introduction The broad range of claims for misrepresentations in tort and contract law possess the capability to provoke a lot of people to have the opinion that damages are too far easily recoverable, and the form of damages overlie and contradict one another. The steady shift from restrictive fraudulent misrepresentation towards more modern forms of misrepresentation has confirmed to be an essential advancement in both tort and contract law. The paper examines and compares the law’s stance regarding the right to claim for economic losses emanating from negligent statements. Damages delivered for negligent misrepresentation are especially prominent and examines whether the law’s stance on damages for misrepresentation is satisfactory, or unnecessarily contradictory. This paper explores these queries and ultimately demonstrates that the present forms of misrepresentation are unique, complementary, and rational. The court may sometimes decline to find a duty in tort in cases where parties are within a contractual relationship or may hold that a term of a contract has barred or limited what would be a tortuous duty, pre-contractual events such as misrepresentation may give rise to an action in tort. Moreover, it is apparent that, in numerous cases exhibited by negligent failure by professionals to perform their undertakings as per the expectations of their clients, a defendant may be legally responsible for the same claimant in both tort and contract (Wright 22). Voluntary Assumption of Liability A blanket denial of liability can be considered improper, and the law remain engaged in pursuit of a new basis of practical, limited liability in tort for the incurred losses. The English Law seeks the means to limit liability in Negligence in which, under the initial design of this tort would only hinge on proof of foreseeable harm. Within the English law, the notion of assumption of liability is now expressly utilized as an autonomous basis for a Duty of Care in Negligence (Mulcahy and Tillotson 7). Voluntary assumption of liability details the notion that naturally belongs to the prefecture of the law of contract and forms the foundation of contractual liability. Whereas it is apparent that it is difficult to have a contract devoid of assumption of liability by the parties, the contrary is not obvious as the law should only award effect to an assumption of liability in case there is an enforceable Contract (Mulcahy and Tillotson 8). Allowing for the assumption of liability to operate as the grounds for extra-contractual liability can remedy the injustice. Moreover, although, the parameters detailed in the formation of a valid Contract are reasonably wide the restrictions obliged within a legal system on liability in Tort (limitation of claims in time and narrowly defined vicarious liability) may not permit the fair treatment of claims emanating out of direct dealings between the parties within circumstances in which a valid contract cannot be interfered (Wright 23). The assumption of liability may be employed as the grounds of extra-contractual liability so as to avail a means of limitation of liability for complex forms of negligent harm. The notion of assumption of responsibility as the grounds for extra-contractual, first came into manifestation within the English law in line with claims for compensation of forms of non-intentional harm such as pure economic loss. These forms of harm are complex to compensate, and the main difficulty emanates from serious policy objections to the compensation, grounded on their possibility of lack of specificity creates a risk of liability beyond what the courts can practically oblige the defendant and society to honour in absorbing the losses (Nicholas 417). Background The law of negligence can be considered as a reasonably recent development of the English Law. The notion of voluntary assumption of responsibility outside a Contract first gained prominence in English law in connection with claims regarding the claims for the compensation of economic loss, as well as in the seminal decision of the House of Lords within Hedley Byrne v Heller, whereby it concluded that the bank can be answerable in case of negligent information supplied devoid of consideration to a regular client. In Henderson v Merrett Syndicate Ltd case, the judge referred to passages within the speeches of Lord Morris and Lord Devlin, which awarded a duty towards those acting on the information delivered or advice rendered and, therefore, generated a Duty of Care towards the person so acting. The judge noted that from their application within Hedley Byrne, “we can comprehend the breadth of the principle underpinning the case and appreciate that it hinges on a relationship between the parties that can be general or specific to the certain transaction. In White v Jones case, Lord Goff outlined that the Hedley Byrne principle grounded “upon an assumption of responsibility.” Voluntary assumption of liability within Tort is “objective” given that it does not hinge on the real will or knowledge of the defendant. As a result, the tort duty that stems from it can be, and is reliant on the will of the parties as outlined in any concurrent contract that depicts the assumption of responsibility. In the event that the personal assumption of responsibility forms the ground of liability, dependence by the plaintiff on the advice or information awarded is also essential to launch the causal link between the assumption of responsibility and the loss (Mulcahy and Tillotson 9). Reasonable reliance details the assumption of responsibility, control, possession of professional skill or expertise, and engendered expectations. Voluntary assumption of responsibility may derive the Duty of Care to safeguard from physical harm. English law can be considered as developing a considerable amount of jurisprudence that is neither contractual nor grounded in the existence of a positive Duty of Care. The assumption of responsibility is manifest in instances in which the relationships between the parties perceived as one of proximity, in light of the severity of the mutual interests of the mutual interests of the parties that have exposed to risk of injury in the event that due care is not demonstrated (Nicholas 418). Economic loss The English law has endeavoured to provide ways of limiting liability in negligence that depends on the proof of foreseeable harm. The assumption of liability can presently be utilized as independent grounds for a duty of care in negligence and is also accompanied by two other techniques, namely: three-fold test of duty of care and the incremental approach to broadening liability. The current state of the law has sometimes been deemed as unsatisfactory from the standpoint of those impacted by law with regard to responding to the right to claim in tort, or contract for economic losses, which can be regarded as pure. As the laws stand today, economic loss comprises of consequential economic loss, as well as pure economic loss attended by other subgroups on matters regarding negligent misstatements, economic loss emanating from defects within buildings and products, failure of a professional to carry out an undertaking or service as necessary, or economic loss flowing from damage rendered to property belonging to a third party (Banakas 5). Consequential losses emanate from physical injury or damage to property (see Spartan Steel v Martin 1972) and are relatively uncontroversial compared to pure economic losses. Several arguments have been advanced establishing why courts are reluctant to permit full scale recovery for all economic losses: a) the floodgates argument detailing the concern that, in establishing a broad class of action for economic loss, the courts would be overflow with cases subsequently over-stretching judicial resources; b) there should be some priority awarded between by the diverse forms of loss that might be incurred by individuals and the law should be receptive to the rights of individuals within cases where his/her personal health and safety could be unfavourably affected; c) economic loss cannot be subject to any physical limitations given that the Defendant’s possible liability is unpredictable. Close to five decades ago, Hedley Byrne & Co Ltd v Heller & Partners Ltd (1963) case eliminated the limit of a general exclusionary rule relating to claims of economic loss that until that point being guided by common law based on Derry v Peek (1889) case. The logic behind the exclusionary rule derives from a policy consideration centring on indeterminate liability, whereby the defendant would be burdened with a liability that is disproportionate to their culpability. This was first and still remains the most dominant policy consideration cited by the courts (presently referred to as floodgates principle). In Hedley v Heller & Partners [1964] case, Lord Morris noted: “...if individual posses of a special skill undertakes, regardless of contract, to employ that skill to the assistance of another who depends on such a skill, then a duty of care will occur.” This marked the birth of the category of negligent misstatement in which the presence of this ‘special relationship’ and in the deficiency of any disclaimers, an individual may seek damages for incurred pure economic losses (Nicholas 417). A prominent reason, which have made this a controversial case, derive from the fact that this can be interpreted in two ways, first, the lack of the requirement to be under contract can be deemed as opening the floodgates. Nevertheless, the case does limit the scope of claims by stipulating that the defendant ought to be skilled in the area commenting on, thus creating a special relationship. The Mutual Life & Citizens Assurance Co v Evatt [1971] case enhanced this restriction adding that, for a duty to arise, it ought to be concise right from the beginning that the claimant was seeking advice, and the claimant proposed to act upon the counsel given. The court highlighted the urge to establish these rules on proximity to ensure that people would be held accountable for the odd throwaway comment within social situations. Although, this was initially a minority view, this view has gained momentum with courts moving towards favouring a more restrictive approach. The floodgate principle continues to be frequently cited to legitimize the restriction as per Hedley Byrne and has generated a significant and complex case law. Failure to take care performing a service This forms one of the categories of economic loss and entails the failure of a professional to perform a duty properly. White v Jones (testator [1995] case is considered as the reference in evaluating when duty of care is owed, further limiting to those that have contravened the ‘reasonably expected’ level of care of an individual’s acting within the ‘special relationship.’ The other category of economic loss entails economic loss that flows from a defect of a product or building. It is essential to note that further categories are always emerging as emanating from distinguishing facts. As demonstrated, duty of care restrictions relative to defective products have progressed right from the ‘neighbour principle’ originally emanating from Donoghue v Stevenson [1932]. The case also relates to the issues of defective products would bear an initial action under contract (Banakas 4). Conclusion The parameters detailing the formation of a valid contract can be perceived as too narrowly defined within the legal system. The parameters may be maintained narrowly defined to satisfy wider policy reasons that fail to meet the legal system’s developing judgements regarding what is conceived as just, fair, and reasonable. The duty of care derive from economic loss that requires that: it is reasonably expected that in the event care is not undertaken such a damage may follow; there must be a certain degree of “special” facet of the association between the Plaintiff and Defendant that grants enhanced level of proximity than ordinarily necessary in the event of physical injury or damage. The special relationship may emanate from: known reliance or dependence; as an assumption of responsibility, and the contractual provisions between the parties. Although, the courts have been widely successful in delineating the boundaries of tortuous liability where interest pursued to safeguarded is physical or property related, the courts have largely failed to avail sufficient certainty with regard to instances in which the loss suffered is economic, and the question of who within the law should be perceived as the neighbour remain largely unanswered. Nevertheless, it is essential to award credence to myriad of changes registered within the development of the English Law regarding the right to claim in tort or contract for pure economic losses. Works Cited Banakas, Stathis. “Voluntary Assumption of Tort Liability in English Law: A Paradox?” In Dret 4, 2009. Web. 25 Feb. 2013. http://www.indret.com/pdf/679_en.pdf Mulcahy, Linda and Tillotson John. Contract Law in perspective. Portland: Cavendish Publishing, 2004. Print. Nicholas, MCBRIDE . “Duties of Care-Do they really exist?” Oxford Journal of Legal Studies 24.3 (2004): 417-441. Print. Wright, Christopher. “Restricting negligence claims for economic loss: The approach of the English Courts.” The New Researcher 4.1 (2011): 22-24. Print. UK Cases Donoghue v Stevenson [1932] A. C. 562. Headley Byrne & Company Limited v. Heller & partners Limited [1964] AC 465; [1963] 2 All ER 575. Henderson v. Merrette Syndicate Ltd [1995] 2 AC 145, [1994] 3 All ER 506 Johnson v Woods & Co [1998] WL 1043972 (CA(Cir Div)) Mutual Life and Citizens Assurance Co Ltd v Evatt [1971] A.C 793, PC. White v Jones [1995] 2 AC 207, [1995] 1 All ER 691 Read More