Essay On Contract Elements, Validity Of Exclusion Clauses, Negligence As A Tort.

Questions:

1.Whether the Exclusion Clause Contained in Clause 4 of the Contract Valid, or Not?

2.Whether Elizabeth is liable for the Injury to Lesley, or Not?

1.A contract is established when an exchange between two or more parties takes place, to do some specific thing, for a consideration (Kelly, Hammer and Hendy, 2014). It can be either a written or a verbal contract. In a written contract, the terms of the contract are put down on a piece of paper and signed by the contracting parties. Conversely, in verbal contract, the terms of contract are exchanged verbally (Mulcahy, 2008). In order to form a contract, it needs to have the essential elements of offer, acceptance, consideration, clarity, capacity and intention (Gibson and Fraser, 2014).

As per the Parol Evidence Rule, when a written contract is formed on the basis of a verbal contract, the assumption is made that such written document covers all the points of the verbal contract. So, once a written contract is drawn, the other party cannot make a point that a part of verbal contract has not been included in the written contract (McKendrick and Liu, 2015).

An exclusion clause is such a clause in the contract which has the power of restricting or limiting the rights, as well as, the liabilities of the contracting parties. In order for the exclusion clause to be valid, it has to be properly incorporated into the contract. Moreover, an exclusion clause cannot contradict the law or its applicability. The exclusion contract has to be incorporated at the time of making the contract, and if it is incorporated later on, it is invalid (Abbott, Pendlebury and Wardman, 2007). The exclusion clause has to be brought to the notice of the parties, especially against whom it is being applied. In the case of Chapelton v Barry UDC (1940) 1 KB 532, the exclusion clause was stated at the back of the ticket, and was also not brought to the notice of the party, and so, the exclusion clause was held as invalid (Roach, 2016).

However, an exclusion clause will be valid, when it is contained within the contract. And a claim cannot be made that the plaintiff had not read the exclusion contract, as was established in the case of L'Estrange v Graucob [1934] 2 KB 394. In this case, the written contract was signed by the parties and hence, the exclusion clause was deemed as a part of the contract (Swarb, 2017).

In this case, Elizabeth owed a duty of care towards the people visiting her restaurant. Elizabeth failed in making the floor anti-slippery. Since Lesley slipped on the slippery floor, and broke her legs, she was significantly injured. There was a direct causation between the floor being slippery, and the fall of Lesley. Moreover, a slippery floor is prone to such injuries, hence the harm was foreseeable. Due to presence of all these factors, Elizabeth would be held liable for negligence. Applying the case of Donoghue v Stevenson, she would have to compensate Lesley for her loss.

Essential Elements of a Contract

Elizabeth has an option of raising a claim against Lesley for contributory negligence. This is because Lesley was intoxicated and was wearing high heels. This acted as a contributory factor in Lesley’s injury, in the same manner as standing on the side of Lorry was for Davies in Davies v Swan Motor Co.

The facts of this case are very similar to Raad v KTP Holdings Pty Ltd as Trustee for VM & KTP Nguyen Family Trust as Elizabeth cannot show that she undertook any action to make the floor anti-slippery. And as per this case, the contributory negligence would only reduce the damages by a small percentage.

In the given case, an offer was made Ben for purchase of Australian truffles, which was accepted by Glenn. The consideration was fixed at A$100 per kilo. The parties were clear that 5kg of Quality Australian Truffles were to be supplied each week for the price fixed. The intention was there to form legal relations and the parties had the contractual capacity, as there is nothing to suggest otherwise. So, a contract was formed between Ben and Allen after discussing it mutually. As per the Parol Evidence Rule, it is deemed that the oral communication was put down in the written contract.

Upon receiving a call from Glenn, Ben was told that instead of the promised Australian truffles, the second rate Norwegian truffles would be supplied. When Ben referred to the promise made in the contract, Glenn highlighted clause 4. This clause 4 was the exclusion clause. This clause would be valid, as it was clearly inserted in the written contract and the parties had signed the contract. Moreover, it did not violate any law. Applying Chapelton v Barry UDC, the clause was within the contract and not at the back, which could have necessitated it being brought to the attention of Ben. Ben also cannot raise an issue that he had not read the clause. Applying L'Estrange v Graucob, it does not matter if the clause is read, as long as it is properly incorporated into the contract.

By signing the contract, Ben not only affirmed the oral communication, but also the exclusion clause.

Conclusion

It can be concluded, Elizabeth is liable for the injury to Lesley due to negligence and would have to pay Lesley the damages. However, the amount of damages could be reduced marginally by a claim of contributory negligence.

It is recommended to Elizabeth that in case Lesley initiates legal action against her, arising out of negligence, she should raise the counter issue of contributory negligence of Lesley to reduce the amount of damages. Moreover, she should initiate claims against Steve, for his faulty services resulting in the injury to Lesley.

From this analysis, it can be concluded that exclusion clause contained in clause 4 of the contract is valid, due to it being properly incorporated into the contract.

On this basis, it is recommended to Ben to take the supply being offered by Glenn or else, he would breach the contract. Further, from the next time, he should carefully read each and every term of the contract, before signing the contract.

Validity of Exclusion Clauses

2.A tort is considered as a civil wrong done, due to which, the actions undertaken by one party, results in a harm or injury to another party. Negligence is covered under the tort law in Australia (Latimer, 2012). When a person fails to fulfill the duty which was owed by them to some another person, and such failure results in a loss or harm to the other person, negligence occurs. To establish a case of negligence, the elements of negligence have to be present, which include the duty of care, breach of this duty and resulting loss or harm (Lambiris and Griffin, 2016). The loss or harm has to be foreseeable and there has to be a direct causation between the loss and the party being blamed, to establish negligence (Greene, 2013).

A case quoted in every negligence and which forms as a base for the negligence cases, is the case of Donoghue v Stevenson [1932] UKHL 100. In this case, the bottle manufacturer, Stevenson, was held to owe the duty of care towards Donoghue, who consumed a drink from the bottle manufactured by Stevenson. Due to the snail found in this bottle, which made Donoghue very sick, the duty of care was breach and Stevenson had to compensate Donoghue for his negligence (Harvey and Marston, 2009).

A defense available in negligence cases is contributory negligence, where it can be shown that the plaintiff contributed towards their injury. And in such cases, the damages are reduced by the amount of plaintiff’s contributory negligence, the decision of which is based on the discretion of the court (Dongen, 2014). In the matter of In Davies v Swan Motor Co [1949] 2 KB 291, as Davies was standing on lorry’s side, which was held to be a contributing factor to his injuries, the damages were reduced accordingly by the court (E-Law Resources, 2017).

In the case of Raad v KTP Holdings Pty Ltd as Trustee for VM & KTP Nguyen Family Trust [2016] NSW 2016 888, the plaintiff was injured after slipping on the wet tiles and sued for damages arising out of negligence of the defendant. The defendant failed in establishing that he had taken the necessary steps to keep the non-slippery and dry and hence, was held guilty of negligence. Though, due to the contributory negligence of plaintiff, the damages were reduced by 10% (Devitt, 2016).

References

Abbott, K., Pendlebury, N., and Wardman, K. (2007) Business Law. 8^th ed. London: Thomson.

Devitt, S. (2016) A slip up - shopping centre liable for slip and fall on wet tiles. [Online] Lexology. Available from: https://www.lexology.com/library/detail.aspx?g=bdcef724-3c2e-482d-9d74-540bc1a44d6c [Accessed on: 02/03/17]

Dongen, E.V. (2014) Contributory Negligence: A Historical and Comparative Study. Boston: Brill Nijhoff.

E-Law Resources. (2017) Davies v Swan Motor Co [1949] 2 KB 291 Court of Appeal. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Davies-v-Swan-Motor-Co.php [Accessed on: 02/03/17]

Gibson, A., and Fraser, D. (2014) Business Law 2014 8th ed. Melbourne: Pearson Education Australia.

Greene, B. (2013) Course Notes: Tort Law. Oxon: Routledge.

Harvey, B., and Marston, J. (2009) Cases and Commentary on Tort. 6th ed. New York: Oxford University Press.

Kelly, D., Hammer, R., and Hendy, J. (2014) Business Law. 2nd ed. Oxon: Routledge.

Lambiris, M., and Griffin, L. (2016) First Principles of Business Law 2016. Sydney: CCH.

Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia Limited.

McKendrick, W., and Liu, Q. (2015) Contract Law: Australian Edition. London: Palgrave Macmillan.

Mulcahy, L. (2008) Contract Law in Perspective. 5^th ed. Oxon: Routledge.

Roach, L. (2016) Card and James' Business Law. 4^th ed. Oxford: Oxford University Press.

Swarb. (2017) L’Estrange v F Graucob Limited: CA 1934. [Online] Swarb. Available from: https://swarb.co.uk/lestrange-v-f-graucob-limited-ca-1934/ [Accessed on: 02/03/17]