An Outline of the Law of Contract

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OUTLINE OF THE LAW OF CONTRACT A contract is simply an agreement between two parties which is enforceable at law. In order for an agreement to be legally valid there must be an offer, acceptance (unqualified) and consideration. INTENTION TO CREATE LEGAL RELATIONS In commercial agreements it is normally presumed that the partied intended to create to legal relations and enter into a contract, although that presumption can be rebutted by the courts. It all depends on the circumstance of the case. It should be noted that a mere promise to pay a sum of money or do something ; (unsupported by consideration) is not enforceable at law. The intention to create a legal relations may be adduced by the conduct of the parties, by pre-contract negotiations, correspondence etc. PRIVITY OF CONTARACT Normally only the parties to a contract have rights and duties under the contract this is known as privity of contract. In other words no contractual relationship can exist with a third party. CONDITIONS AND WARRANTIES In the terms of a contract one must distinguish between conditions and warranties. Breach of a condition can empower the injured party to consider the contract and enable him to claim damages for breach of contract. On the other hand breach of warranty does it not, of itself, invalidate the contract and the injured party can only claim for damages COLLATERAL WARRANTY (OR CONTRACT) A collateral warranty (or contract) may take two forms. Either the contract contemplated maybe one between the warrantor himself and the other party or it may be between the other party and some other person. ADVICE TO DICK JONES There is no privity of contract between you and Bryn Williams and, therefore, he cannot proceed against you for breach of contract however he may bring proceedings under the law of tort and he is doing so. You do have a duty of care in tort. There are a few decided cases in this regard. Until very recently the court of appeal case of Diana Merritt v John Babb would have made the surveyor personally responsible to the buyer of the house for professional negligence. However , in the case decided as recently as August of this year, Mavis Russell v Walker & co and Robert Chisnall & Others, that decision seems to have been partly overturned. Following this case it would appear that the surveyor may be held personally responsible only if he is a sole trader (as in your situation) or gave the house buyer an indication that he would be responsible for the work. The terms of your professional indemnity insurance will specify that insurer will defend any proceedings. They will use either their in-house lawyers or external lawyers. You will only be required to follow their instruction, which you must do to the letter. Apart from that your only involvement maybe to give evidence. Let us know turn to the question of collateral damage and the measure of damages. Let us first itemise your probably liabilities: 1) The daughter's asthma. This would require expert medical opinion as to the probable cause of illness. Questions arise here. Was the damp evident on a cursory inspection so that the purchaser (the plaintiff) could have either stipulated that the vendor should have it rectified before exchange of contracts or made a suitable reduction in the asking price? If it was not so evident was it reasonable to expect you to have noted it in your report? If the answer to the latter question is yes then you will probably be liable. 2) The problem in the back rooms. The same principle may be applied here as in 1) above. 3) Damage to the neighbour's car. This is a difficult one. Was the tile so obviously loose as to e evidently a potential hazard? An experienced and qualified surveyor could not reasonably be expected to examine such minutiae as individual tile fixings. Let us now turn to the question of the measure of damages. Although one sympathises about the plaintiff's daughter's asthma this is all about money. If you are found liable how does one assess the amount of damages? It could be argues that the illness would be treated out of public fund ( i.e. NHS) so there is no monetary loss to the plaintiffs. We may then consider a claim under pain and suffering. This would be difficult to assess. I cannot predict what the court would decide. Subject to what I said earlier the plaintiff might be awarded substantial damages for this. The cost of replacing the windows in the back would be down to you. As an experienced surveyor you could estimate the cost yourself. As to item 3) I think the court might dismiss this. In 1) and 2) above it should be noted that the plaintiff has a duty to mitigate his loss. If he has not done so then the damages will be reduced. ADVICE TO BRYN WILLIAMS Although it is difficult to predict with any degree of certainty how a court will view matters and decide any particular case never the less I believe you have a strong chance of success. In Mavis Russell v Walker & co and Robert Chisnall & others the court decided that the surveyor would be held personal responsible if he was a sole trader or had given the house buyer an indication that he would be responsible for the work himself. In your case, as the defendant is a sole trader, it is clear that he would be held liable to any proven loss. If your case was brought before that date he would still be in a strong position because of the appeal court's ruling in the earlier case of Diana Merritt v John Babb, where the surveyor was held liable in tort to the plaintiff for professional negligence. Let us consider the implications under three headings of damage: 1) Your daughter asthma. Was the damp in bedroom 3 so obvious at the time that you viewed the house such that it was obvious from a cursory inspection. if so , you should have required the vendor to rectify it before exchange of contracts or made a suitable adjustment in the asking price. If not so obvious would it be reasonable to expect the surveyor to have discovered this? The answer to that, presumably, is that he could have discovered it with the use of a meter. You may require to call expert medical witness to testify the dampness is the cause of your daughters illness. 2) Similarly to 1) above, were the windows in the backrooms so poorly fitted that cursory inspection by you would have ascertained that they would be a problem? If so, again you should have required the vendor to make good at his expense before exchange of contracts or made a suitable adjustment in the asking price. If not then it is clear the surveyor is liable. There is an element of caveat emptor 1) and 2) above. Also you required to mitigate any damage or loss. Could you not have had your daughter sleeping in another room? As to 2) above, the least you could have done is to adopt the cheap expedient of using draught proving material to reduce heat loss. 3) The damage to the neighbours car. Here again we are dealing with the remoteness of damage. The court will probably decide that it will be unreasonable to expect a surveyor to examine, minutely and individuality, the fixing of roof tiles. In the light of this you will be advised to delete this from your claim. Depending on the excess under the policy and the terms of the policy you could probably claim this amount or part of it from your buildings insurer. 1) Your daughter's illness. If it is proved that the illness is caused by the damp, then you have a right to expect damages. It is difficult to determine how damages would be assessed. Medication and treatment would be provided free under the NHS. so that the claim in this regard would have to be for pain and suffering; not an easy task to determine the monetary value if this. If your daughter is of working age and working and the illness has caused loss of wages this should be added to your claim. 2) You would most probably succeed in a claim for the cost of repaving the windows in all the back rooms. You could obtain an estimate from a builder. However, I doubt id=f you would be granted reimbursement for any electric and heating bills (see comment below regarding the duty to mitigate). 3) This has already been discussed and there no claim for financial reimbursement under this heading. As I said earlier, you have a duty to mitigate any loss or damage and the court will take this into consideration. In conclusion, I feel obliged to point out that costs follow the event. In other words if the case goes against you, you will not only have the burden of your own costs but will have to pay the defendants costs as well. Even your own costs might be high. You might win the case and you will finish up with little reward for your effort, if the court decides that, in all the circumstances not to award you costs.
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