Tort%and%Contract+%Summary% % Introduction%to%Tort%and%Contract:% % Two$key$questions$regarding$the$relationship$of$tort$and$contract$ 1.

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1 TortandContract+Summary IntroductiontoTortandContract: Twokeyquestionsregardingtherelationshipoftortandcontract 1. Whatistheconceptualdistinctionbetweenliabilityintortandliabilityin contract? 2. Whatarethepracticalimplicationsofthisconceptualdistinction? (particularlyincasesofconcurrentliabilityintortandcontract) ConceptualDistinctionbetweenTortandContract: Basicconcernsintortandcontract o BasicconcernoftortAcompensationforinjuryanddamageamongstawide rangeofinterests o BasicconcernofcontractAenforcementofagreementsasthesingleinterest Impositionofliabilityintortandcontract o ImpositionofliabilityintortAbylawwithouttheagreementoftheparties,so dutiesareowedtothewholeworld,suchasthecommonlawdutyofcarein tortowedbythemanufacturerofaproducttoaconsumer o ImpositionofliabilityincontractAbytheagreementoftheparties,soduties areonlyowedtotheothercontractingparty o IntersectionoftheimpositionofliabilityintortandcontractAforexample, consentintheagreementofthepartiesmaynegativewhatwouldotherwise beatrespassoryinterferencetotheperson Liabilitythroughfaultintortandcontract o Liabilityintort! GeneralruleAliabilityintortisbasedonfault,comprisingintentional wrongdoingornegligence! KeyexceptionstothegeneralruleAstrictliabilityinparticular breachesofstatutoryduty o Liabilityincontract! GeneralruleAliabilityincontractisstrict,inthesensethata contractingpartywhofailstoperformthecontractisliableforbreach withoutregardtofault! ThiswasheldinDaniels(v(R(White(and(Sons(and(Tarbard(1938), wheretheplaintiffboughtasealedbottleoflemonadefromthe retailer,mrstarbard,whichwasmanufacturedbyrwhiteandsons, andsufferedpersonalinjuryafterdrinkingitscontentswhich containedcarbolicacid! Theplaintiff sactionintortagainstthedefendantmanufacturer,r WhiteandSons,onthebasisofDonoghue(v(Stevenson(1932),failed duetoaninabilitytoprovearelevantbreachofduty! However,theplaintiff sactioninbreachofcontractagainstthe defendantretailer,mrstarbard,wassuccessfulbecauseshebreached

2 theimpliedtermthatthepurchasedgoodswereofamerchantable quality:thisimposedstrictliability,sonoproofoffaultwasrequired! Similarly,inGrant(v(Australian(Knitting(Mills(Ltd(1936),theplaintiff purchasedandwore GoldenFleece woollenunderwearfroman Adelaideretailer,JohnMartin&CoLtd,andcontractedacute dermatitisduetothepresenceofachemicalirritantwhichthe manufacturer,australianknittingmills,hadnegligentlyfailedto removeduringthemanufacturingprocess! Theplaintiffwassuccessfulinhisclaimagainstthemanufacturerin tortunderthedonoghue(v(stevenson(1932)principleandinhisclaim inbreachofcontractagainsttheretailerforbreachofanimpliedterm thatthepurchasedgoodswereofamerchantablequality! Notingthedistinctnatureofthecausesofactionintortandbreachof contract,lordwrightstatedthat noquestionofnegligenceis relevanttotheliabilityincontract inregardtotheclaiminbreachof contractagainsttheretailerwhichinvolvedstrictliability! KeyexceptionstothegeneralruleAforexample,whereaprofessional personlikeamedicalorlegalpractitioner,engineerorarchitect providestreatmentoradvicetoapatient/client,thecontractual obligationoftheprofessionalpersonistoexercisereasonablecare andisnotaguaranteeof success PracticalImplicationsoftheConceptualDistinctionbetweenTortandContract: Remotenessofdamageintortandcontract o Remotenessofdamageintort! Testofthe naturalandprobableconsequence forintentional wrongdoing! ThiswasheldinTCN(Channel(Nine(v(Anning(2002),wheremental harmtotheplaintifffollowingtrespasstolandconductedbya televisioncrewandajournalistfor ACurrentAffair wasdeemedtoo remotetoberecoverable,becausetrespasstolandprotectstheright toexclusivepossessionandnottherighttobodilyintegrity! TestofreasonableforeseeabilityfornegligenceAsothatdamageis recoverableifitisofakindthepersoninthepositionought reasonablytohaveforeseen! ThistestwasoutlinedinOverseas(Tankship((UK)(v(Morts(Dock(and( Engineering(Co((Wagon(Mound((No(1))(1961),whereduetothe carelessnessofthedefendant,thechartererofthe WagonMound, oilspilledintomortsbaywhichdestroyedtheplaintiff swharfwhen welderssetdebrissittingontopoftheoilalightwhichinturnsetthe oilalightandcreatedafire! ThisdamagewasdeemedtooremotetoberecoverableAbecausethe defendantdidnotknowandcouldnotreasonablyhaveknownthat theoilwascapableofcausingdamagebyfire,whiletobe recoverable,damagebyfirerequiredreasonableforeseeabilityof damageinthatmanner(fire)

3 o Remotenessofdamageincontract! GeneraldamageAmusthavebeenofakindwhicharises naturally or accordingtotheusualcourseofthings! SpecialdamageAmust reasonablybesupposedtohavebeeninthe contemplationofbothparties! ThisrulewasfirstestablishedinHadley(v(Baxendale(1854),wherethe defendantsbreachedtheircontractincarriageofabrokencrankshaft ofasteamenginefromtheplaintiffs flourmillingloucestertoafirm ofengineersingreenwichthroughanunreasonablefiveadaydelay! However,theplaintiffswereunabletorecovertheconsequential damageoflossofprofitsduetotheirinabilitytoproduceflourduring thisfiveadayperiod,asthespecialcircumstancesthattheplaintiffs wereunabletocontinueproductionwithoutacrankshaftwasnot communicatednoracceptedbythedefendants Measureofdamagesintortandcontract o MeasureofdamagesintortApurposeof placingtheplaintiffintheposition inwhichhewouldhavebeenhadthetortnotbeencommitted o MeasureofdamagesincontractApurposeof placingtheplaintiffinthe positioninwhichhewouldhavebeenhadthecontractbeenperformed, includingexpectationdamagesforlossofbargainandreliancedamagesfor expenditureincurredinrelianceonthecontract o ThedistinctionwasoutlinedbyMason,WilsonandDawsonJJinGates(v(City( Mutual(Life(Assurance(Society(Ltd(1986),wheretherewasdifficultyover whetherthemeasureofdamagesshouldbeintortorcontractfor contraventionofss52a53ofthetrade(practices(act(1974(cth),involving falsestatementsmadebyaninsurer sagent Contributorynegligenceintortandcontract o Contributorynegligenceintort! Atcommonlaw,contributorynegligenceisacompletedefencetoa claimintortfornegligence! ThiswasheldinButterfield(v(Forrester((1809),wherethedefendant hadnegligentlyleftaridingpolelyingonthehighwaywhereitwas runintobytheplaintiffatduskwhosufferedinjuries;buttheplaintiff wascontributorilynegligentwhiledrivinghishorseandcartsothe defendantavoidedliability! Thisledtotheapportionmentlegislationsothatthereisonlya reductionindamagesforcontributorynegligence,asprovidedbys9 ofthelaw(reform((miscellaneous(provisions)(act(1965(nsw) o Contributorynegligenceincontract! Contributorynegligenceisnodefenceinaclaimfoundedonbreachof contractandsotherewouldbenoreductionofdamagesunder apportionmentlegislation! ThiswasheldinAstley(v(Austrust(1999),wheresolicitorswere negligentinfailingtoadviseatrusteecompanythatitshouldinsert clausesdenyingpersonalliabilitysothatitsufferedloss,butthe

4 plaintiffwascontributorilynegligentinfailingtoprotectitsown interests;however,thisdidnotreducetheamountofdamagesfor breachofcontract(animpliedtermthatthesolicitorswouldexercise reasonableskillandcare)! ThisrulewaspertinentinHarper(v(Ashtons(Circus(Pty(Ltd(1972), wheretheplaintifffellandsufferedpersonalinjurywhilechanging seatswithhiswifeatacircusperformance;theplaintiffbroughtthe claiminbreachofcontract(beingthedefendant sfailuretoprovidea safetyrailforthetoptierofseats),ratherthantortashewas concernedaboutcontributorynegligencewhichwasacomplete defenceinnewsouthwalesatthetimebuthadnoeffectonbreach ofcontract! However,theapportionmentprinciplenowappliesincasesof breachofacontractualdutyofcarethatisconcurrentandcoa extensivewithadutyofcareintort,asprovidedbys9(1)ofthelaw( Reform((Miscellaneous(Provisions)(Act(1965(NSW);butstillno applicationtocaseswhereliabilityincontractisstrict,asindaniels(v( R(White(and(Sons(and(Tarbard(1938) ConcurrentLiabilityinTortandContract: DefinitionofconcurrentliabilityintortandcontractAwherethereiscoAextensive liabilityinbothtortandcontractforthesamewrongfulactoromission,as acknowledgedbylordmacmillanindonoghue(v(stevenson(1932) Keyexampleofconcurrentliabilityintortandcontract:workplacesafety o LiabilityintortAanemployerisunderacommonlawdutyofreasonablecare inrespectoftheworkplacesafetyoftheiremployees o LiabilityincontractAimpliedtermineveryemploymentcontractthatthe employerwilltakereasonablecarefortheworkplacesafetyoftheir employees o Therefore,ifanemployeeisinjuredinanaccidentcausedbytheiremployer s failuretotakereasonablecareinrespectofworkplacesafety,theemployee maysuetheemployerintort,contractorbothtortandcontractatheelection willbebasedonremotenessofdamage,measureofdamagesandchoiceof lawconsiderations o InMatthews(v(Kuwait(Bechtel(Corporation(1959),theplaintiffsuffered personalinjuryinthecourseofemploymentcausedbythefailureofhis employer,thedefendant,apanamaabasedcorporation,totakereasonable careinrespectofworkplacesafetyataconstructionsiteinkuwaitwherethe plaintiffwasemployed o JurisdictionalissueAintheabsenceofconcurrentliability,thisclaimwould nothavebeenmaintainable,becausetheplaintiffwouldonlyhavebeenable tobringaclaimintortagainstthedefendantinanenglishcourtifthetort wascommittedinengland,butthetortwascommittedinkuwaitasthelex( loci(delicti

5 o However,theplaintiffwasabletobringaclaiminbreachofcontractinan EnglishcourtAbecausetheemploymentcontractcontainedanexpressterm thatenglishlawwastheproperlawofthecontract,sotheenglishcourthad jurisdictionovertheforeigndefendant Keyexampleofconcurrentliabilityintortandcontract:passengersafety o LiabilityintortAacarrierisunderacommonlawdutyofreasonablecarein respectofthesafetyoftheirpassengers o LiabilityincontractAimpliedtermineverycarriagecontractthatthecarrier willtakereasonablecareforthesafetyoftheirpassengers o Therefore,ifapassengerisinjuredinanaccidentcausedbytheircarrier s failuretotakereasonablecareinrespectofsafety,thepassengermaysue thecarrierintort,contractorbothtortandcontractatheelectionwillbe basedonremotenessofdamage,measureofdamagesandchoiceoflaw considerations o InKelly(v(Metropolitan(Railway(Co(1895),theplaintiffwasafarepaying passengeronthedefendant ssteamtrainandsufferedpersonalinjurywhen theenginedrivernegligentlyfailedtoturnoffsteamintimetopreventthe trainrunningintoawall o NatureoflegaldisputeAwhethertheplaintiff sclaimwasproperlyfoundedin tort,astheplaintiffcontended,orbreachofcontract,asthedefendant contended,becausetherewasahigherscaleoflegalcostsrecoverableintort o TheEnglishCourtofAppealheldthattheplaintiff sclaimhadproperlybeen triedasanactionintorteventhoughtheclaimcouldalsohavebeentriedas anactionincontractalordeshermrstatedthat aplaintiffmayframehis claimineitherway o InDonoghue(v(Stevenson((1932),LordMacmillanobservedthat thebest illustration[ofconcurrentliabilityintortandcontract]istherightofthe injuredrailwaypassengertosuetherailwaycompanyeitherforbreachofthe contractofsafecarriageorfornegligenceincarryinghim Rationaleforconcurrentliabilityintortandcontract o TestforconcurrentliabilityintortandcontractfromProsser(and(Keeton(on( the(law(of(tortsa whenevertherewouldbeliabilityforgratuitous performancewithoutthecontract o Thus,furtherexamplesofconcurrentliabilityintortandcontractin professionalrelationshipsabetweenmedicalandlegalpractitioners, engineersandarchitectsontheonehandandpatientsandclientsonthe otherhand Practicalimpactsofconcurrentliabilityintortandcontract o Incasesofconcurrentliabilityintortandcontract,theliabilityofthe defendantintortisnotaffectedbythedefendant slackofcontractual capacityonaccountoftheirminorityaasprovidebys48oftheminors( (Property(and(Contracts)(Act(1970(NSW)

6 o Liabilityintortfornegligentmisrepresentationinrespectofastatement madebyonepartytotheotherduringpreacontractualnegotiationsis conceptuallydistinctfromconcurrentliabilityintortandcontract o ThiswasheldinEsso(Petroleum(Co(v(Mardon(1976),whereinpreA contractualnegotiations,thedefendant,esso,madeanegligentstatementto apotentiallesseeofanewservicestationforecastinganannualconsumption of200000gallonsofpetrol,uponwhichtheplaintiff,mrmardon,entered intotheleasebutafter15monthstherewasonlyconsumptionof78000 gallons,causing financialdisaster formrmardon o Theargumentthattherightsanddutiesofpartiesinrelationtonegligent misrepresentationinpreacontractualnegotiationsaregovernedbycontract lawtotheexclusionoftortlawwasrejected;rather,essowasliableforboth breachofacollateralwarrantyandintortunderaparticularapplicationof thehedley(byrneprinciple(fromhedley(byrne(&(co(v(heller(&(partners (1964)) ChoiceofLawConsiderationsforTortandContract: NatureofchoiceoflawconsiderationsAwhereatortorcontracthasaintranational orinternationaldimension Liabilityintortisgovernedbythelawoftheplacewherethetortwascommitted, thelex(loci(delicti John(Pfeiffer(Pty(Ltd(v(Rogerson(2000):lex(loci(delictiforintranationaltorts o Inthiscase,theplaintiff,acarpenter,hadanemploymentcontractwithhis employer,thedefendant,inwhichtheproperlawofthecontractwas AustralianCapitalTerritorylaw,butwasinjuredatQuenbeyanHospitalin NewSouthWalesduetothenegligenceoftheemployerinfailingtoensure workplacesafety o ThiswasclearlyacaseofconcurrentliabilityintortandcontractA unfortunately,theplaintiffonlybroughtaclaimintortduetotheassumption thataustraliancapitalterritorylawwouldbeinvoked,butthehighcourt heldthatthelex(loci(delictigovernedliabilityintortsonewsouthwaleslaw wasinvokedandmuchlessdamageswereawardedthanwouldhavebeen availableunderaustraliancapitalterritorylaw o Thisproblemwouldhavebeenavoidediftheplaintiffhadbroughtaclaimin breachofcontract,asthatwouldhavebeengovernedbyaustraliancapital Territorylawastheproperlawofthecontract Regie(Nationale(des(Usines(Renault(v(Zhang(2002):lex(loci(delictiforinternational torts o Inthiscase,theplaintifftravelledtoNewCaledoniatoseekpermanent residencyinaustraliabutwaspermanentlyinjuredinacaraccidentdueto thenegligenceofthecarmanufacturer o TheHighCourtheldthatthelex(loci(delictiappliestoclaimsintort committedoutsideaustraliabutthatanaustraliancourtisnotan

7 inappropriatecourttobringtheclaiminjustbecauseitmustapplyforeign law Liabilityincontractisgovernedbythelegalsystemwhichisidentifiedastheproper lawofthecontract o Thisisthelegalsystemwhichistheexpressorinferredchoiceoftheparties astheproperlawofthecontract o Intheabsenceofanexpressorinferredchoice,thisisthelegalsystemwith whichthecontracthasitsclosestandmostrealconnection Boynthon(v(Commonwealth(of(Australia(1950):properlawofthecontract o Inthiscase,thePrivyCouncilinvestigatedtheproperlawofthecontract regardinga 2millionloanraisedbytheQueenslandgovernmentin1895, mainlyinlondon,andrepayableinbrisbane,sydney,melbourneorlondon atthecreditor soption o Intheabsenceofanexpressorinferredchoiceastheproperlawofthe contract,theprivycouncilheldthatthecontracthaditsclosestandmostreal connectionwiththequeenslandlegalsystem,becausetheloanhadbeen raisedontheauthorityofanactofthequeenslandparliamentandwas securedonthepublicrevenuesofqueensland o Therefore,thewords poundsterling intheamountoftheloanwas interpretedtobereferringtothelawfulcurrencyinqueenslandatthedate ofrepayment,beingtheaustralianratherthantheenglishpound Concurrentliabilityintortandcontract:threeworkplacesafetycases o Whereanemployeehasbeeninjuredastheresultoftheiremployer s negligentfailuretoprovideasafeworkplace,theexistenceorextentofthe employer sliabilitymaybesignificantlydifferentdependingonwhetherthe employee sclaimisframedintort(governedbythelex(loci(delicti)or contract(governedbytheproperlawofthecontract) o InGarstang(v(Cedenco(JV(Australia(2002),theplaintiff,aNewSouthWales resident,wasemployedbythedefendant,anewsouthwalesabasedagria business,asacasuallabourerharvestingtomatoes,butwasinjuredin Victoriaduetotheemployer snegligentfailuretoprovideasafeworkplace o Thiscaseillustratestheimportanceofidentifyingwhetheritisadvantageous tomakeaclaimintortorbreachofcontractathekeydistinctionherewas thattheworkerscompensationregimeinnewsouthwalesallowedlump sumdamages,buttheworkerscompensationregimeinvictoriadidnot o Thus,theplaintiffpreferredtomakeaclaiminbreachofcontractasthe properlawofthecontractwasnewsouthwaleslaw:intheabsenceofan expressorinferredchoice,thecontracthaditsclosestandmostreal connectionwithnewsouthwalesbecausethecontractwasenteredintoin NewSouthWales,theplaintiffwasaresidentofNewSouthWales,the defendanthadaplaceofbusinessinnewsouthwalesandtheplaceof performancewithinthecontemplationofthepartieswhenthecontractwas enteredintowasnewsouthwales