The Unfair Contract Terms Act

Controle has caused a traffic accident and injured another driver. He has acted negligently, his conduct falling below the standard expected of a reasonably competent and experienced driver (Nettleship v Weston) 1. This standard is enshrined in the duty of care which, imposes obligations on individuals to exercise care towards others. A duty arises when there is (1) reasonable foresight of harm to persons who are likely to be harmed by carelessness (Donaghue v Stevenson),2 (2) a sufficient 'proximate' relationship between the parties (Watson v British Boxing Board)3; and (3) it is just and reasonable to impose a duty (Caparo v Dickman).

4 It is foreseeable that careless driving can cause harm, road users have a relationship of proximity, and that imposing a duty is fair as a matter of policy (McLoughlin v O'Brian)5, as this encourages vigilance on the highways6. However, Mr Loaded is vicariously liable for the accident. Vicarious liability is where an employer7 is liable for the tortious acts of employees, committed in the course of employment.

Liability stands if three requirements are present; (1) has loss/injury occurred as a result of Controle's actions, (2) is Controle an employee? (3) was Controle acting in the course of his employment? The first requirement is satisfied, as whilst driving Controle has collided with another car, and caused injury. Secondly, we must ensure that Controle is an employee. We must distinguish whether he is employed under a contract "of" service or a contract "for" services. This distinction is important, employers not usually being vicariously liable for the acts of independent contractors (Salsbury v Woodland)8.

There are numerous tests which can establish whether Controle is an employee,9 however, with reference to the case of (Ready Mixed Concrete ( South East ) Ltd v Minister of Pensions and National Insurance)10, it was held that three conditions must be satisfied for a contract of service to exist11. Although Mr Loaded exercises a degree of control, the accident must have occurred in the course of Controle's employment.

Although the traditional " test"12 asks (1) was it a wrongful act authorised by the master (Poland v John Parr and Sons)13, or (2) a wrongful and unauthorised mode of performing an authorised act (Rose v Plenty)14, it was held in (Lister v Hesley Hall Ltd)15 , that the correct approach was not simply to enquire whether the acts were modes of performing authorised acts, but rather expand the test, and ask, were the wrongful acts so closely connected with the employment, that it would be fair to hold the employer liable.

However, if the act is committed outside the course of his employment, then he is said to be "on a frolic of his own16"(Joel v Morris). This occurs when acts are committed outside the scope of employment, as where a journey for refreshments is commenced after an allotted lunch break17. On this basis of (Lister v Hesley Hall Ltd), Controle is in the course of employment. 18 His detour, albeit minor, is "inextricably interwoven"19 in performance of his duties.

Although Mr Loaded is vicariously liable, Controle is a tortfeasor and is liable to pay a contribution to Mr Loaded under s. 1(1)of the Civil Liability(Contribution ) Act 197820. Alternatively, Control's "primary liability" could give rise to an action in negligence, and in light of his recent wealth may be an alternative course for the injured party. Inker's Liability Pre 1963, no liability existed for misstatements unless a fiduciary relationship existed.

( Nocton v Lord Ashburton)21 or deceit was involved (Derry v Peek)22. The case of (Hedley Byrne v Heller & Partners)23 expanded that liability via the definition of relationship. "Special relationships", the House said, existed when (1) the claimant relied on the defendant's skill and judgement or his ability to make careful enquiry (2) the defendant knew, or ought reasonably to have known, that the claimant was relying on him (3) it was reasonable in the circumstances for the claimant to rely on the defendant.

In (Caparo v Dickman)24 Lord Bridge stated that in order for a duty to arise, it was necessary to show that the defendant knew his statement would be communicated to an individual or a member of a specified class in connection with a transaction of a particular kind and that the plaintiff would more than likely rely on this whether or not to enter into a transaction. These requirements were interpreted in (Henderson v Merrett Syndicates)25 with emphasis on the notion of "assumed responsibility" and subsequent reasonable reliance by the claimant, irrespective of contract, giving rise to a duty.

In conclusion, duty arises where (1) the statement was made for a specific purpose (Mutual Life & Citizens Assurance Co. Ltd v Evatt)26 (2) the class of the claimant was particular (3) the defendant had knowledge or ought reasonably to have had knowledge that the claimant would rely on the statement (Esso Petroleum Co. Ltd v Mardon)27 and (4) the claimant reasonably relied on the statement (McNaughton Papers Group v Hicks Anderson)28.

In Sellit's position, they could rely on points 1 and 2, but fail on points 3 and 4. Could they argue Inker had known they would rely on his reference alone? Furthermore, were they entitled to rely on this reference alone? (South Australia Asset Management Corporation v York Montague Ltd)29. It seems not. Sellit could easily have obtained another reference to support Inker's opinion and could not argue reasonable reliance in light of the clear disclaimer.

Inker therefore carries no liability. If this disclaimer had arisen within contractual circumstances, the test of reasonableness, provided for by s11 of the Unfair Contract Terms Act 1977 would have come into effect. Kay's and Sellit Plc's Liability Kay has given "careless" financial advice to Rummey which, has resulted in economic loss. The general rule is that "pure economic loss" is not recoverable, (Cattle v Stockton Waterworks Co)30.

However, applying the aforementioned principles31, we can conclude that (1) advice was given to Rummey for a specific purpose, (although Kay may argue that her advice was of a general nature and was not to be relied on for the specific purposes that Rummey used it ( Al Saudi Banque v Clarke Pixley)32, (2) Rummey was a particular person to whom the advice was given and not a member of a larger class (3) Kay knew, or ought reasonably to have known that Rummey would rely on the advice, (this would not be reasonable if said "off the cuff "33 on a social occasion)34 and (4) Rummey reasonably relied on Kay's advice, there being a fiduciary relationship.