Introduction to Liability

[Virtual Presenter] This comprehensive guide aims to introduce the fundamental concepts and principles associated with the subject matter, delving into the crucial elements and offering valuable insights into its importance. We will embark on a thorough exploration of these ideas, starting from the beginning of this presentation..

[Audio] The word "tort" originated from the French language, where it means "twisted" or "crooked". In medieval Latin, the term "tortum" conveyed the notion of something being wrong or unjust. Additionally, the Latin verb "torquēre", meaning "to twist", sheds light on the word's etymology..

[Audio] A tort is a wrongful act or omission, for which compensation or other remedy may be awarded to the claimant against the defendant/tortfeasor. It is a civil wrong or wrongful act, whether intentional or accidental, from which injury occurs to another..

[Audio] Tort is a branch of civil law that deals with obligations imposed by the operation of law. Both individuals and entities like institutions, corporations, and others owe these obligations. They can arise independently of or in addition to contractual and trust obligations. Tort allows the party owed the obligation to seek a remedy when there's a breach of a recognized norm of conduct..

[Audio] Torts are legal wrongs that can be committed against individuals or groups. They are defined by specific criteria that a claimant must meet before bringing a claim. Negligence, for example, involves the protection of personal rights and other interests. Nuisance protects rights in land, while liability under Rylands v Fletcher safeguards the use of land. Occupiers' liability ensures the protection of both people and land. Defamation defends one's reputation, trespass to land preserves the right to possess and use land, and trespass to the person shields individuals from assault and battery..

[Audio] A tort is committed when someone fails to uphold their duty of care towards another person, resulting in harm or damage being caused. In these situations, the injured party may seek compensation for the loss, damage, or injury incurred. Alternatively, the remedy could involve obtaining an injunction, which is a court order compelling the defendant to take specific actions or refrain from certain behaviors. This can encompass mandatory orders, prohibitions, or even relief granted due to the fear of future harm, known as Quia timet..

[Audio] The monetary award made by a court in consequence of a breach of contract, a tort, or an equitable wrong aims to put the claimant in the position they would have been but for the wrong that has been occasioned. Although the objective is the same in relation to each action, the measure of damages varies. In tort, factors such as remoteness of damage, the compensability of non-pécuniary loss, and the effect of contributory negligence must be considered..

[Audio] The criminal law aims to safeguard the public's interests, whereas the law of tort seeks to protect individual rights and interests. Another significant difference lies in the consequences of a violation. Criminal law entails punishment, whereas tort law involves damages and injunctions. Furthermore, the standard of proof required differs between the two systems. In criminal cases, the prosecution must prove guilt beyond a reasonable doubt, whereas in tort cases, the plaintiff must demonstrate that the defendant's actions were more likely than not to cause harm..

[Audio] Negligence can be defined as a breach of legal duty to take care which results in damage to the claimant. This definition can be broken down into four component parts that a claimant must prove to establish negligence. The legal burden of proving each of these elements falls on the claimant..

[Audio] The relationship between the principal and agent will come to an end automatically with the death or insanity of either party, bankruptcy of the principal, or illegality..

[Audio] Mrs. Donoghue visited a café with a friend and the friend purchased ginger beer in an opaque bottle. Mrs. Donoghue drank from the bottle and poured the remaining contents into her glass, only to discover the decomposing remains of a dead snail. This shocking discovery led to Mrs. Donoghue suffering from severe gastro-enteritis and shock. Since her friend had bought the ginger beer, Mrs. Donoghue could not hold the café owner liable in contract. However, she was able to sue the manufacturer of the ginger beer. The House of Lords ruled that the manufacturer was indeed responsible for Mrs. Donoghue's suffering. This case has become a pivotal example of the Neighbourhood principle in English law, which places a duty of care on individuals to prevent harm to those in their immediate vicinity. It serves as a reminder to always be mindful of our actions and how they may affect those around us..

[Audio] The neighbour test or neighbour principle, formulated by Lord Atkin, holds that individuals must take reasonable care to avoid actions or omissions that could reasonably foreseeably harm their neighbours. A neighbour is defined as someone whose interests are directly and closely affected by one's actions, and who should be considered when making decisions. This principle has significant implications, extending beyond its initial application to manufacturers and consumers, and has become a foundation of the law of negligence. Courts continue to rely on the neighbour principle to determine whether a duty of care exists in new scenarios..

[Audio] The question of whether there was reasonable foresight of harm gets to the heart of whether the defendant should have anticipated the risk of injury occurring. Was the defendant aware that their actions could cause harm? If so, then they may have breached their duty of care..

[Audio] Tort is a civil wrong, a breach of a legal duty that causes harm or injury to another person. Tort law is a branch of the law of obligations, where redress can be sought through damages, injunctions, or other remedies. When there is a breach of normal conduct, liability is imposed on the party responsible. The remedy available is either to enforce an obligation, prevent a breach of duty, or prohibit conduct that is likely to cause a breach. This includes seeking damages to compensate for losses or injuries, or obtaining an injunction to stop harmful behavior..

[Audio] When considering vicarious liability, it is crucial to understand that it arises when one person is held responsible for the actions of another. This concept is often applied in situations where there is a recognized relationship between the parties involved. In this case, we are looking at vicarious liability by authorisation and ratification under Tort Law..

[Audio] One person is held responsible for the actions of another person, typically in cases involving employers and employees. This is an exception to the general rule, where the person committing the tort would normally be held personally liable. Instead, vicarious liability allows the claimant to seek compensation from someone else, such as the employer, who may be more likely to have the financial resources to pay damages..

[Audio] A third party can only be held liable for the torts committed by another if three essential components are met. There must be a recognized relationship that gives rise to vicarious liability, such as a master-servant relationship, a principal-agent relationship, or even a company-director relationship. The relevant party to this relationship must have committed a tort. Additionally, the tort must have been committed as part of the dealings of that relationship, meaning it arose from the normal course of business or activities within that relationship..

[Audio] The three essential criteria for establishing vicarious liability between an employer and an employee are clear. Firstly, the person who commits the tort must be an employee, as opposed to an independent contractor. This distinction is crucial, as it determines whether the employer has control over the actions of the individual committing the tort. Secondly, the employee must have actually committed a tort. This means that the employee's actions must have caused harm to someone else. Finally, the tort must have been committed in the course of the employment. This criterion ensures that the employer's responsibility extends only to the activities performed by the employee while working on behalf of the employer. By meeting these three conditions, an employer may be held liable for the torts committed by their employees..

[Audio] Many working relationships can be classified as either employer-employee or independent contractor. Employer-employee relationships include examples such as sales assistants, solicitors, and university lecturers. In contrast, individuals like landscape gardeners and electricians may be considered independent contractors since they work with various clients. The courts have developed several tests to distinguish between these two categories, including the control test, integration test, and economic reality test, also known as the multiple test..

[Audio] A defendant will not be vicariously liable unless two conditions are met. Firstly, there must be an employer-employee relationship or one akin to employment between the defendant and the tortfeasor. Secondly, the tortfeasor must have committed the tortious act while acting in the course of their employment..

[Audio] To establish vicarious liability, it is essential to demonstrate that the employer had control over the employee's actions during the course of employment. This can be achieved through various tests, including the employment status, course of employment, integration test, Salmond test, and multiple test. By examining these factors, we can determine whether the employer bears responsibility for the employee's actions..

The Law of Agency. [image] What Will James Bond Do Next.

[Audio] The law of agency refers to a relationship where one person, known as the agent, has the power to create or alter legal rights, duties, or relationships of another person, known as the principal. This relationship allows the agent to facilitate contracts between the principal and a third party. In return, the agent typically receives a commission. Importantly, the agent does not contract with customers in their own right, and therefore generally has no liability to them. This relationship is considered both consensual and fiduciary, meaning it requires mutual agreement and trust between the principal and the agent..

[Audio] Agents can be employees who make contracts on behalf of their employers. Directors are also agents of the company, acting on its behalf. Moreover, agents may be independent contractors hired for their specialized skills and expertise. For instance, stockbrokers, travel agents, auctioneers, and insurance brokers are examples of such agents..

[Audio] The agent is given authority by the principal for specified purposes. This means that the agent has permission to act on behalf of the principal, but only within certain limits. The agent does not have the authority to act outside of these boundaries. The scope of the agent's authority can be either general or specific. General authority might include tasks such as identifying potential customers and negotiating contracts, while specific authority would involve doing everything necessary to complete a single transaction..

[Audio] An agent can be categorized into four main types. General agents have the power to act on behalf of the principal in relation to specific kinds of transactions, such as an estate agent. Special agents, on the other hand, are limited to acting for the principal in respect of a single specific transaction. Mercantile agents or factors are entrusted with goods for the purpose of sale and are granted significant powers under the Factors Act 1989 to transfer ownership of goods belonging to their principal and collect payments from customers. Del credere agents guarantee that if the third-party they've introduced fails to pay for goods received, they'll compensate the agent..

[Audio] A fiduciary relationship exists when one party, the fiduciary, has a duty to act solely in the best interests of another party, the principal. This obligation of loyalty is the distinguishing characteristic of a fiduciary relationship. The principal is entitled to the single-minded loyalty of the fiduciary, who must act in good faith and avoid any situation where their duty and interest may conflict. The fiduciary must also refrain from making a profit out of their trust and ensure that they do not place themselves in a position where their duty and interest may conflict. Finally, the fiduciary may not act for their own benefit or the benefit of a third person without the informed consent of the principal..

[Audio] An agent owes duties of loyalty implied by law to their principal. This means they must act in the best interests of the principal and avoid any actions that might harm them. Furthermore, an agent cannot delegate their duties to someone else, except under specific circumstances. Moreover, they need to avoid situations where their personal interests conflict with their duty to the principal, unless the principal has given their explicit consent. Lastly, simply disclosing their interest is not enough; they must actively avoid taking advantage of it..

[Audio] Other relationships can also be characterized as fiduciary when one person acts for or on behalf of another in circumstances where a relationship of trust and confidence arises. This includes relationships such as those between a family member and an elderly relative, between a company director and the company's shareholders, and between co-venturers in a joint property venture. However, it's important to note that while directors owe a fiduciary duty to the company, this duty does not extend to shareholders unless there is a special factual relationship..

[Audio] When an agent acts on behalf of a principal, they must adhere to specific duties outlined in the agency agreement. They must carry out the wishes of the principal as specified in the agreement, exercising reasonable care and skill in the performance of their duties. Unless explicitly authorized to do so, the agent should conduct their duties personally, rather than delegating them to others. The agent has a responsibility to account for any money or property received on behalf of the principal, keeping accurate records of transactions. Agents must also avoid conflicts of interest, refraining from taking bribes or making secret profits. By fulfilling these duties, agents demonstrate their commitment to serving the best interests of their principals..

[Audio] The principal and the agent may choose to end their relationship through mutual agreement. Alternatively, the agency contract may specify circumstances under which one or both parties can terminate the agreement by providing written notice. In cases where no such provision exists, either party can still bring the contract to an end by giving reasonable notice..

[Audio] Termination by operation of the law occurs when the agency relationship comes to an end automatically due to certain circumstances. These circumstances include the death or insanity of either the agent or the principal, bankruptcy of the principal, or illegality. In these cases, the agency relationship terminates without any further action being taken by either party..

[Audio] Companies are artificial persons created by statute, with their own legal identity separate from their shareholders. They can sue and be sued, enter into contracts, and own property. In other words, companies are treated as if they were individuals, with their own rights and responsibilities. This concept is known as the "separate entity" doctrine..

[Audio] Businesses can take many different forms, but some of the most common include sole traders, simple partnerships, limited liability partnerships, private limited companies, and public limited companies. Each type has its own advantages and disadvantages, and the choice of which one to use will depend on the specific circumstances of the business..

[Audio] The trading organisations in the UK can take various forms. A sole trader is one such form, where the individual is personally responsible for the business. Partnerships, governed by the Partnership Act 1890, are another option, where all partners share joint and several liability. Limited liability partnerships, introduced by the Limited Liability Partnership Act 2000, offer limited liability to its members. Lastly, there are limited liability companies, regulated by the Companies Act 2006, which also provide limited liability to its shareholders..

[Audio] The Companies Act 2006 is the latest legislation regulating company law throughout the UK. This act consolidates previous legislation, making it the longest piece of legislation passed by Parliament since the 17th century. With over 1300 sections and 16 schedules, it replaces most of the previous legislation regarding companies..

[Audio] Companies are formed under the governance of section 7 of the Companies Act 2006. There are two types of companies: those limited by shares and those limited by guarantee. The Articles of Association serve as the constitutional document for the company, outlining its internal rules and governing aspects such as director authority and share transfers. According to section 18 of the Companies Act 2006, these Articles must be submitted to the registrar of companies upon registration..

[Audio] Companies have their own separate legal identity, which distinguishes them from their directors and other individuals involved with them. Consequently, members are not accountable for the company's financial obligations..

[Audio] The process of incorporating a company involves submitting an application for registration, which includes several essential documents. The first document required is a statement of subscribers, also known as the memorandum, which outlines the intentions of the founders to establish the company. This document should contain the company's name, registered office, purpose, and liability. The next document needed is the company's constitution, which is the Articles of Association. This document defines the internal rules of the company, outlining the powers of the directors, the transfer of shares, and other essential aspects of the company's governance. The Articles can be custom-drafted or adopt model articles. Furthermore, a statement of capital is required, detailing the shares issued and to whom they were allocated. Additionally, a statement of company officers, directors, and secretary is necessary, highlighting their roles and responsibilities within the organization. Private companies may have only one director, whereas public companies must have at least two directors, as per section 154 of the Companies Act. Finally, a statement of compliance is required, ensuring that all registration requirements have been met. This document allows the Registrar to verify that the company has fulfilled its obligations under the Companies Act..

[Audio] The Memorandum of Association is a document that outlines the intentions of the company's founders. It defines the company's name, registered office, purpose, and liability. This document serves as an agreement between the named parties, who agree to become members and take up at least one share in the company. Once the Memorandum of Association is filed at Companies House, a certificate of incorporation will be issued, confirming the company's existence..

[Audio] The company name is a crucial aspect of a company's identity. According to the Companies Act, a public company is identified by including 'Plc' as part of its title, while a private company is identified by including 'Ltd'. The act also specifies certain restrictions on the use of a company name, including that it cannot be the same as a company already registered, or suggest a connection with a government or local authority, or be misleading or suggest a connection with another company. If these restrictions are breached, a civil claim can be brought for 'passing off'..

[Audio] Using a name which is deceptively similar to that of another business can cause damage to its goodwill and reputation, resulting in the tort of passing off. This concept was established in the case of Hendriks v Montagu [1881] 17 Ch.D. 638, where the Universal Life Assurance Society successfully prevented Montagu from registering a company with a similar name. Furthermore, it's not necessary to prove intentional deception to establish passing off, as demonstrated by the case of British Diabetic Association v Diabetic Society Ltd [1996] EWCA Civ 839..

[Audio] A company cannot be formed under the Companies Act 2006 for an unlawful purpose. Companies House can refuse to register a company with such a purpose, and this decision can be challenged through judicial review. Furthermore, even if the company's activities are not illegal, they might still be considered immoral, as illustrated by cases involving prostitution..

[Audio] A properly formed registered company is a separate legal entity from its shareholders and has separate rights and liabilities as a separate legal person. This principle is known as the corporate veil or the Salomon principle. The company continues to exist regardless of changes to its membership. It owns its assets and is responsible for its own liabilities. As long as a company remains registered, its separate legal personality exists. However, this existence can be terminated through liquidation and subsequent removal from the register..

[Audio] The Companies Act 2006 outlines the duties of directors. These duties are set out in sections 171-177 of the Act. The main duty of a director is to act in good faith and in what they believe to be in the best interests of the company. They must also exercise their powers for proper purposes and avoid conflicts of interest. Additionally, directors have a duty to act with honesty and integrity..

The Duties Of Directors. 46. [image] Fiduciary Duty.

[Audio] The Companies Act 2006 created statutory provisions relating to the duties of directors. These provisions clarified the position of all directors and governed the special responsibility they held in relation to their company. A significant change introduced by the Act was the introduction of a statutory statement of directors' duties for the first time..

[Audio] Directors exercise specific tasks relating to the running of the company. The members of the company own it, but they do not have any automatic rights of management. Directors may be appointed according to the company's articles, typically through an ordinary resolution at a general meeting, although there are other circumstances under which they can be appointed. The common law duties of directors are expanded by virtue of the provisions of the Companies Act 2006. Directors are responsible to the company, not to individual shareholders..

[Audio] Directors have the absolute power, subject to the articles, to manage the day-to-day business of the company, including promoting its success and development. This power brings several advantages, but it also has a significant drawback: directors may prioritize their own interests over those of the company's stakeholders, who rely on them to act in good faith. The Companies Act aims to mitigate this risk by codifying the duties owed by directors to the company..

[Audio] The statutory duties of directors under the Companies Act 2006 include acting within their powers, promoting the success of the company, exercising independent judgment, exercising reasonable care, skill and diligence, avoiding conflicts of interest, not accessing benefits from third parties, and declaring interest in a proposed transaction or arrangement. These duties are outlined in sections 171 to 177 of the Companies Act..