Defences against successful actions in negligence can be used to avoid, reduce, or limit liability in the following ways:
a) Avoid – an employee can claim under the principle of vicarious liability that it is their employer who is liable for their own negligence
b) Reduce – the contributory negligence of the claimant can result in a reduction in damages where it can be proved that the claimant had contributed to their injury in some way. In exceptional circumstances damages have been reduced by 100%
c) Reduce - ‘Volenti non fit injuria’ (no wrong is done to one who consents) applies when there is a known risk on behalf of the claimant, such as a boxer entering a ring to fight. In such cases though it must be proved that the claimant knew of, and consented to, such risks
d) Limit – The Limitation Act 1980 states that claims in tort should be brought to court within six years from the date of negligence. In personal injury claims this has been reduced to three years
Breach Of Duty Of Care (Defences)
Breach Of Duty Of Care (Causation)
1) The final hurdle in a negligence case is for the claimant to prove a clear link between the harm caused, and the breach of duty of care. The ‘but for’ test is used to establish this link.
2) The claimant must prove that ‘but for’ the defendant’s actions the damage would not have occurred – Barnett V Chelsea.
3) Furthermore the claimant must prove the losses sustained were foreseeable per the rules in Hadley V Baxendale as in the case of The Wagon Mound.
4) The impact of the defendant’s negligence can be further restricted where it can be proved that ‘ novus actus interveniens ‘ (a new act intervening) has occured. In such cases the actions of a natural event, third party, or the claimant themselves may break the chain of causation limiting a tort claim up to the point of the new act.
Breach Of Duty Of Care
1) Once it has been successfully proved a duty of care exists (generally) the claimant next has to prove that this duty has been breached. In order to do this it must be proved that the other party has ‘failed to act reasonably’. This is an objective test, not one intended to condone the incompetence of the wrongdoer.
2) The standard of care owed by an individual in any given set of circumstances can be adjusted by the following:
(a) Skills and experience – a qualified accountant owes a higher duty of care to a client than an unqualified bookkeeper
(b) Likelihood of injury – where this is high, the defend will have to do more to fulfill his duty
(c) The degree of risk – the ‘thin skull principle’ states that ‘you must take your victim as you find them’, hence a higher duty of care is owed to children than adults
(3) Ordinarily the burden of proof in tort lies with the claimant. However, where the facts speak for themselves the burden is reversed ‘Res Ipsa loquitur’. It is now the duty of the defendant to prove they have not acted negligently.
Money Laundering
1) Money laundering is the process by which the proceed of crime, which have illegitimate origins, are converted into assets that appear to be legitimate. The process usually comprises of three distinct phases:
a) Placement – The disposal of the proceeds of crime into an apparently legitimate business property or activity.
b) Layering – The transfer of money from place to place, in order to conceal its criminal origins.
c) Integration – The culmination of placement and layering, giving the money the appearance of being from a legitimate source.
2) Money laundering was first made a criminal offence in the UK under the Drug Trafficking Offence Act 1986, but is now regulated by the Proceeds of Crime Act 2002 (PCA 02) amongst others.
3) The PCA 02 has defined three categories of offence, being:
a) Laundering – Being the offences of concealing, disguising, converting, transferring, or removing criminal property from the UK.
b) Failure to report – It is an offence for someone who knows or suspects that another person is engaged in money laundering not to report that fact to the appropriate authority. This offence only relates to individuals working in a regulated industry, i.e. accountants.
c) Tipping off – It is an offence to make a disclosure likely to prejudice a money laundering offence already being undertaken, or which may be undertaken.
4) The penalties for those found guilty of money laundering are:
a) Laundering – A maximum 14 year prison sentence is possible, and/or a fine. Additionally the police may seize the megitimate assets.
b) Failure to report – Punishable by a maximum five year sentence, and / or a fine.
c) Tipping off – Punishable by a maximum five year sentence, and / or a fine.
Liability of Agent and Principal
1) The rights of any agent are:
- To claim remuneration for services performed.
- To be indemnified by the principal for expenses incurred.
- To exercise lien over property owned by the principal.
2) Additionally where an agent is acting in a commercial capacity the regulations state that:
- The principal must provide the agent with all the necessary documentation required to perform their duties.
- The agent is entitled to notice of termination of the agreement, and compensation may be payable.
- Agreements in restraint of trade are only enforceable if they are in writing.
3) In return agents own their principals the following duties:
- To perform their duties in line with the instructions of the principal.
- To exercise due care and skill.
- To act in person.
- To be accountable for all transactions.
- To avoid a conflict of interests.
- Not to make a secret profit.
- Not to accept bribes.
4) An agent acting with no authority, actual or apparent, is liable for breach of warrant of authority, and in these circumstances the agent has personal responsibility for contractual relations entered into.
Authority of Agents
1) Where an agent’s authority has been agreed with the principal, verbally or in writing then their authority is said to be actual express authority.
2) In the absence of express authority the agent’s power to bind may be implied in the following ways:
(a) Actual implied authority – as implied by the position held. For example, the Managing Director and company secretary are assumed to have the power to bind the company in all commercial and administrative contracts respectively.
(b) Apparent authority – created either through the rules of estoppel, or where a principal has previously informed a third party that the agent has the power to bind.
Employment Contractual Duties
The common law and statue have imposed the following duties on:
a) Employers:
- to provide work for piecemeal workers
- to pay wages
- to provide and itemized payslip
- to treat the employee with mutual respect
- to identify the employee
- to provide for the care and safety of the employee
b) Employees:
- to obey reasonable and lawful orders
- to act faithfully
- to use skill and care
- not to take bribes or make a secret profit
Employment Contract Formation
1) Although there are generally no formalities involved in forming the contract of employment the Employment Rights Act 1996 (ERA 96) Stipulates that a written document outlining the main terms of employment be supplied within two months of the date of commencement of employment. The particulars must include the following express terms:
- Job title and description
- Length of notice period
- Names of both parties and commencement
- Rate and method of calculating pay
- Frequency of payment
- Holiday pay entitlements and relates
- Hours of work
2) Additionally the employment contract will be supplemented by terms implied from three main sources:
- Statue, such as:
> Employment Rights Act
> National Minimum Wage Act
> Health & Safety at Work Act
> Sexual Discrimination Act
> Gender Reassignment Regulation
- Common Law, such as the duties imposed on employees and employers is discussed in further article
- Custom, for example deductions for poor workmanship were once common place in the cotton industry