QUESTION ONE
Sometimes, circumstances beyond the control of either party may discharge the contract. In such instances, the contract is deemed to have been discharged by frustration. For one to establish frustration, he/she must show: (1) the unexpected occurrence of an intervening act; (2) that the risk of the unexpected occurrence was not allocated by agreement or custom; (3) that the occurrence made the performance impossible. The doctrine of frustration releases all parties from performance in extreme circumstances.[1] A contract may be deemed to be discharged by frustration if the contract’s subject matter is destroyed through no fault of either party. For example, if parties contract for the sale of cabbages which are on the farm, if the cabbages are destroyed by disease, then the contract can be discharged because the subject matter of the contract is destroyed in Taylor v Caldwell (1863)[2], whereby the parties entered into a contract, Caldwell agreed to let the plaintiff use the Music Hall and the Surrey Gardens. The hall was destroyed by fire, and the destruction was not due to fault by either party, and it was so extensive that the concert could not happen as planned. The Court held that Caldwell was discharged from performing his obligations under the contract because of unforeseen circumstances that rendered the contract impossible to perform.
Secondly, a contract can be discharged by frustration when the contract requires a party to receive or render personal services requiring a particular skill; the death, illness, or incapacity of the party to either receive or render the personal services excuses both sides’ duty perform. In most instances, it is stated that “the death of either party is the death of the contract.” However, the rule does not apply in instances where (1) the acts can be performed by others, such as the personal representatives of the dead, and (2) the contract’s terms contemplate survival, even after the death of either party. A case in point is Jenkins Subway., Inc. v. Jones 990 S.W 2d 713[3], whereby, the defendant in a contract with the plaintiff, the defendant was to acquire new franchises with Jenkins’s funding and operate the Subway Sandwich shops. After the plaintiff’s death, the defendant claimed that the contract no longer bound him. However, the contract’s contractual terms were that the contract could be binding among the “assigns and heirs” of the contracting parties. The judge held that the agreement survived the plaintiff’s death, and Jones could continue to perform his obligations under the contract. Also, Robinson v. Davison (1871) LR ex 269 [4]whereby a piano player was to perform at a concert, she fell ill and could not play on the appointed date. The Court held that it was not her fault for failure to perform because the circumstances were beyond her control. The Contract was considered discharged by frustration. In this case, Wakari contracted with the entertainment company to perform concerts for three nights from 29 November to 1 December 2020. However, he died on 1st November; the contract can be discharged by death since the party rendering personal services requiring a particular skill is dead. In such circumstances, the death of either party is the death of a contract.
Thirdly, a contract may be discharged by frustration if there is a change of circumstances from those which the contracting parties contemplated, for example in Wong Lai Ying v. Chinachem Investment Co Ltd. [1980] HLKR 1,PC [5], whereby a developer agreed to construct flats within a period of time agreed upon by both parties and then sell undivided shares to the buyers. However, a major landslip occurred. The landslip was unforeseeable by both parties, and it delayed the performance of the work under the contract. The work was completed two years after the time contemplated in the agreement, and the designs had to be performed differently than contemplated. The contract was frustrated by a change of circumstances. In this case, the contract may be discharged due to a change of circumstances; the parties to the contract contemplated that from 29 November to 1 December 2020, Wakari would be available to perform at the concert. However, he died on 1 November. Therefore, the death of Wakari can be considered a change of circumstances, and the contract can be discharged by frustration.
Fourthly, the agreement can be discharged by frustration due to the occurrence of a force majeure. The occurrence of a force majeure means an occurrence of an uncontrollable event. The occurrence of force majeure release the contracting parties from liability or obligations. Examples of force majeure include floods, lightning, tornadoes, pandemics, accidents, strikes, work stoppages, acts of war or terrorism, civil or military disturbances, nuclear and natural catastrophes, interruptions, loss or malfunctions of utilities. A case example is Bugh v Protravel International, 746 N.Y.S 2d 290 (Civ. Ct. N.Y C 2002)[6]whereby after a terrorist attack which occurred on September 11, 2011, on the World Trade Center, the occurrence of the terrorist attack made it impossible for the plaintiff to communicate her cancellation of travel of 60 days before her scheduled flight as stated in the contract. The contract was deemed frustrated due to the occurrence of a force majeure. In this case, an accident occurred whereby a few birds got trapped in the aircraft engines, causing a dysfunction of the propellers, and hence the aircraft crashed into the sea. The accident’s occurrence can be considered force majeure hence discharging the parties from the contract by frustration.
A contract may be discharged by frustration if the basis of the contract is defeated, for example, in Krell v Henry (1903) 2KB 740[7], whereby Henry hired a room that overlooks King Edward VII’s procession coronation route. The King was ill, and the coronation was canceled. The Court held that the contract was frustrated because the procession was the basis of the contract. Similarly, Wakari and the Company’s contract can be frustrated since Wakari is the basis of the Contract.
In conclusion, in this case, the contract can be deemed discharged by frustration due to the death of Wakari, change of circumstances, the occurrence of an accident which is considered force majeure, and the basis of the contract is defeated.
QUESTION TWO
For Jane to claim under the tort of negligence, she shows that Jack was under the duty of care, the duty of care was breached, and Jane suffered consequential damage. To establish the duty of care, Jane has to show reasonable foresight of harm, sufficient relationship of proximity or the neighborhood principle, and whether it is fair, just, and reasonable that a duty of care should be imposed this is as held in Caparo v. Dickman (1990).[8]To establish foreseeability of harm, Jane must establish that she belongs to a class of people who are likely to be affected by the defendant’s negligent act or omission. In Bourhill v Young(1943) AC 92[9], whereby the plaintiff was a pregnant wife, she got off a tram, and she reached to get her basket off the tram, Young drove a motorcycle past the tram at an excessive speed and collided with a car 50 feet away from where the plaintiff was standing. Bourhill heard the collision, but she did not see it. A few minutes later, she walked past where the incident occurred, and the body had been removed, but there was a lot of blood on the road. Bourhill claimed that she went into shock, and her baby was stillborn. She brought a negligence claim against the defendant’s estate. In this case, it was held that the defendant owed no duty to Bourhill as there was not sufficient proximity between the plaintiff and the defendant when the incident occurred. In this case, there was foreseeability because a road user is likely to cause harm to other road users. Therefore, Jane is likely to show foreseeability of harm. Secondly, to show the proximity of harm, the condition requires the court to look for a close and direct relationship between the parties to justify the imposition of a duty of care. Proximity may be found if both parties are users of the same road. In this case, Jack and Jane were both road users, and they have a close and direct relationship. Hence, Jane can establish proximity. Thirdly, to establish the duty of care, one must show that it is fair and reasonable to impose a duty of care on the defendant. For example, in White v. Jones (1995) 2 AC 207[10], Mr. White asked the defendant to alter his will to benefit his two daughters. The defendant took a substantial amount of time to respond to Mr. White’s request, and Mr. White died during that time. Mr. White’s daughters did not benefit from the will, and they claimed losses from Jones. The Court held a special relationship between the client and his will’s beneficiaries, and there were no reasons why liability could not be fair, reasonable, and just. In this case, Jane can establish that it is fair, just, and reasonable to hold Jack liable because as a result of his carelessness, Jane suffered injuries.
After establishing a duty of care, Jane must show that the duty of care was breached. Breach of duty of care is characterized by the defendant’s failure to measure up to an objective and impersonal standard, namely, that of a reasonable man. If a defendant does not act as the reasonable man would have acted, he will be “at fault.” The Courts will consider whether reasonable and practical precautions had been taken and the practices of the relevant industry or profession. For example, in Haley v. London Electricity Board (1965) AC 778-D[11], the defendant dug a trench in the street and took precautions to avoid injury to persons of normal sight. Yet, there were sufficient numbers of blind people going about the streets alone whom the Defendant ought to have foreseen and taken the precaution to protect from injury. Even though the plaintiff need not even exist at the time of the negligent act as long as the injury was foreseeable, the defendant can be held to be in breach. The reasonable man test determines a breach of duty of care. In Jack’s case, a reasonable man who is a motorcycle rider is supposed to pay attention and take reasonable steps to ensure his actions do not cause harm to the third party. However, Jack has a habit of listening to music through headphones when he was riding on the motorcycle during work without paying attention to the road. Secondly, Jack did not take practical and reasonable precautions that are required of a motorcycle rider. Upon reaching a junction where he needed to turn, Jack did not slow down, and as a result of his actions, his motorcycle crashed into a fruit stall at the side of the junction. Because of the failure to take reasonable and practicable precautions required of a motorcycle rider, Jack can be held to have breached the duty of care. Secondly, the more serious the injury is likely to be, the more precautions should be taken. In this case, Jack should breach the duty of care because his actions were likely to cause serious injury to a third party. Thirdly, the magnitude of risk is considered in establishing duty; the greater the likelihood of the injury to occur, the greater the amount of caution required. In Bolton v. Stone [1995] AC 850, [1951] 1 All ER [12], a ball was hit out of the bounds of a cricket field onto the highway about 100 meters away, where it struck and injured the plaintiff. Evidence showed that incidences where a ball had been hit out of the grounds, were very few-in a span of 30 years; a ball had been hit out on only 6 occasions-it was such a rare occurrence that there was little likelihood of injury hence not requiring the defendant to take any measures further than it had already taken (erecting a tall fence). In this case, there was a greater likelihood of an accident occurring because Jack failed to pay attention while on the road. Therefore, Jack can be held to have breached the duty of care.
After establishing a breach of duty of care, Jane has to show causation. When proving causation, the question the courts ask is whether the plaintiff’s injury or loss was, in fact, caused by the defendant. The most common way to determine the question is to apply the “but-for test.” The Court asks itself, “would the injury or damage have occurred but for the negligence of the defendant?” if the injury or loss would have occurred despite the actions or inactions of the defendant, then the case is said to lack causation. A case in point is Barnett v. Chelsea & Kensington Hospital Management (1969)1QB 428[13], whereby the plaintiff went to the hospital complaining of severe stomach pains and vomiting. He was examined by a nurse who called the doctor on duty. The doctor told the nurse to send Barnett home and contact his GP in the morning. Mr. Barnett died a few hours later from arsenic poisoning. The doctor alleged that if he had examined him at the time, there would have been nothing he could have done to save Mr. Barnett. The Court held that the hospital was not liable because the doctor failed to examine the patient was not the reason for the defendant’s death. The Courts introduced the “but-for” test, inferring that the defendant’s actions must be the cause of death for the patient. In this case, Jane can establish causation because were it not for Jack’s failure to slow down while turning at the junction, Jane would not have been seriously injured, leading to loss of both her legs.
The next issue is whether Lightyear is liable for Jane’s claim. Lightyear can be held liable through the principle of vicarious liability. Vicarious liability refers to the liability of a person or organization for the tort committed by another person, such as the liability of an employer for the employer’s omissions or actions. As a general rule, an employer should be held liable when the employee’s wrongful act can be reasonably foreseen as an event that would take place due to the employee’s duty. Sometimes, the employer can be held liable for the employee’s acts or omissions even though he or she did not authorize the employee to perform such acts. A case example is Ming An Insurance Co. (HK) Ltd v. Ritz Carlton Ltd [2003] 1HKC 225,[14] whereby two pedestrians were injured by a limousine driven by a doorman employed by the defendant. The limousine belonged to a service company from which the Hotel hired its chauffeurs and limousines. The forecourt staff of the Hotel developed a practice of buying food elsewhere. One of the forecourt staff members would collect the food, and sometimes the staff may persuade a limousine driver to drive him to the location and back. On the night of the accident, a bell-boy was designated to collect food for the forecourt staff. As the limousine’s chauffeur had gone off-duty at that time and the keys were left with the doorman, the doorman became the limousine driver. The accident happened when the doorman drove the bell-boy in the limousine to collect food. The Court of Final Appeal held that even though the doorman’s use of the limousine to collect food was unauthorized by the Hotel, such an act was still within the scope of his employment with the Hotel. The test for vicarious liability is that employers are liable for the torts committed by their employees in the course of their employment. An employee’s tort is deemed to have been committed in the course of his employment if it is either (a) something authorized by his employer or (b) an authorized mode of doing something authorized by his employer. In this case, Jane can claim against Lightyear Delivery while relying on the principle of vicarious liability.
[1] Island Development Corp. v. District of Columbia, 933 a. 2d 340, 350 (D.C 2007)
[2] Extracted from powerpoint on “LAW B262 (2015) PPT”, Dec 2020, p.17
[3] See website- https://caselaw.findlaw.com/tn-court-of-appeals/1129977.html
[4] See website- https://www.studentlawnotes.com/robinson-v-davison-1871-lr-6-ex-269
[5] Extracted from powerpoint on “LAW B262 (2015) PPT”, Dec 2020, p.18
[6] See Website- https://casetext.com/case/bush-v-protravel-international-inc
[7] Extracted from powerpoint on “LAW B262 (2015) PPT”, Dec 2020, p.20
[8] Extracted from powerpoint on “LAW B262 (2015) PPT”, Dec 2020, p.109
[9] Extracted from powerpoint on “LAW B262 (2015) PPT”, Dec 2020, p.111
[10] Extracted from powerpoint on “LAW B262 (2015) PPT”, Dec 2020, p.115
[11] See website- https://www.lawteacher.net/cases/haley-v-london-electricity-board.php
[12] See Website- http://www.e-lawresources.co.uk/Bolton-v-Stone.php
[13] Extracted from powerpoint on “LAW B262 (2015) PPT”, Dec 2020, p.129
[14] See Website- http://www.onc.hk/en_US/employers-liability-towards-unauthorized-act-of-employees/
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