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Oris Ltd and Techno Ltd’s Case
James is concerned that he may have entered into a contract with Techno Ltd or Oris Ltd (or both), and he is uncertain about the terms and any possible further actions open to him. First of all, James should be advised that he has not concluded a contract with Oris Ltd: it is explicitly stated in the case description that the accountant withdrew the order when it became evident that the actual cost would exceed 5,000 GBP, while the company’s initial claim had been that the cost would not exceed 3,500 GBP.
Oris Ltd appear to lack honesty in the advertising materials they distribute; however, this company’s ethics is not the particular issue of interest here. What is important is that the withdrawal of the order indicates that no contract was concluded with Oris Ltd.
The situation with regards Techno Ltd is more complicated. James received a quote from Julia, the Sales Director, and was notified of the period during which the quote would be relevant. Within this period, James decided to accept the terms and left a message for Julia indicating as such. However, later (but still within the offer period) he changed his mind and asked a secretary to cancel the order (in a telephone conversation).
Can he, indeed, cancel the order in this way, or was the contract concluded at the moment he left the message for Julia? To answer this question, it is necessary to address relevant laws. According to UK legislation (Sale of goods act 1979), the process of concluding legally binding contracts follows two rules: offer and acceptance (Crystal 2017). Both should be explicit: it is universally recognized that one cannot buy something that is not for sale, and nothing can be sold to a person who is unwilling to buy it. In Gibson v. Manchester City Council (1979), along with numerous other cases, the importance of offer and acceptance for concluding a contract has been confirmed.
In the presented case, however, offer and acceptance can be confused because it is not particularly clear who is offering and who is accepting offers during the different stages of this negotiation process. First, Julia makes an offer: the needed software for 4,000 GBP. Then, James accepts the offer, but it is crucial to note that his acceptance is not delivered to Julia immediately, and, indeed, it will only be delivered along with the note stating that James later called and asked to cancel the order or, to be more precise, not to place the order: the order is not placed until Julia receives acceptance.
At the same time, it can be speculated that it is James who made an offer (the offer to buy the software for the indicated price), and it is Julia who should accept it, which she had not done before James’ request of cancellation. From either perspective, the parties have not entered into a contract. Once Julia reviews her messages (along with the latest note from James), she will know that no order for James should be placed.
Prang Ltd’s Case
Prang Ltd denies any liability for damaging Lucas’ car or causing his injury based on its exclusion clause. The first thing Lucas should consider before taking any action against the company is the validity of the exclusion clause. In the presented case, the clause is the sign that reads verbatim, ‘These premises are not staffed by our employees and may be dangerous.
Clients use these premises strictly at their own risk and Prang Ltd accepts no liability whatsoever for any damage or injury sustained by those using this facility or their vehicles or property no matter how caused.’ The sign itself had been specifically designed to be large and clear so that anyone entering the car park can see it. However, this exclusion clause could be classed as a void in court (Exclusion clauses and unfair contract terms n.d.) if it is found that the content of the sign contradicts UK legislation.
There are three aspects of validity for exclusion causes: incorporation, construction, and fairness (Exclusion causes n.d.). Incorporation means that the clause is properly incorporated into the contract; this requirement is met since the fact that Lucas entered the car park indicated that he agreed with the terms. Construction means that the clause is formulated properly, and it can be argued that this requirement was not, in fact, met. The British Parking Association (2011, p. 4) recognizes that ‘[e]very owner/ operator has a duty of care to maintain the building in a safe condition for those persons in or about it whether lawfully or otherwise’.
This recognition complies with the current legislation (Occupiers liability act 1984) and has been confirmed in National Car Parks Ltd v. Baird (Valuation Officer) & Anor (2004). Therefore, Prang Ltd cannot state that they accept no liability for any damage ‘no matter how caused’ because the company is responsible for the damage caused by their employees, and the individual who hit Lucas’ car twice is the company’s employee. This liability is reasonable, which is why Prang Ltd cannot exclude it (Unfair contract terms act 1977); the exclusion, therefore, can be deemed unfair.
Car park operators use exclusion statements to avoid liability under the circumstances they cannot control; for example, if there is an accident between two visiting cars in a car park, the operating company is not liable. It can be more complicated if car owners claim that it was, in fact, the car park’s fault, e.g. due to inappropriately placed barriers or inadequate markings (Car park public accident & barrier injury claims n.d.). Lucas’ case is much less complicated: the damage was caused by the operating company’s employee, and Prang Ltd cannot deny this liability (Christie 2014). What Lucas can do is claim the company’s negligence and institute legal action against Prang Ltd. The company’s liability will likely be acknowledged in court.
Williamson Baker & Co.’s Case
Williamson Baker & Co. signed off the audit of the accounts of a company—Hot Resorts Group—that later collapsed; before it collapsed, High Street Bank had decided to continue a loan to the company, and the decision was based, among other things, on the audit report. Now, the Bank accuses the accountancy firm of negligence, but Williamson Baker & Co. deny any liability because they initially provided a disclaimer in their report that stated that ‘it [the report] was solely for Hot Resorts Group and they [Williamson Baker & Co.] held no responsibility to anyone else for their audit work.’ As it was established above, disclaimers do not necessarily exempt companies from liabilities; it is necessary to address relevant legislation and previous cases to establish whether High Street Bank is likely to be successful in their lawsuit.
First of all, despite the content of the disclaimer, auditors can be liable not only to clients but also to third parties (Companies act 2006). Several court cases have confirmed this statement; for example, in Caparo Industries Plc v. Dickman (1990), it was established that an auditor can be liable to a third party in the case where the loss suffered by the third party is the consequence of the auditor’s actions, in the case the auditor and the third party are closely connected, and in cases where the court deems it fair and reasonable to impose a certain liability on the auditor. In a different case, Royal Bank of Scotland Plc v. Bannerman Johnstone Maclay (2005), the pursuer claimed to have lost more than 13 million GBP due to the auditor’s negligence in terms of failing to uncover fraud and misstatement in the accounts of a certain firm.
It should be noted that, in the second case, the auditor had not initially provided any disclaimers about its liabilities to third parties, and the judge concluded that it was an important factor that allowed imposing the liability on Bannerman Johnstone Maclay (Griffiths 2002).
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However, the fact that Williamson Baker & Co. did provide a disclaimer does not mean that the firm is not liable. The weakness of the High Street Bank’s position is that they claim that their decision to continue with the loan was based on the audit report, while the report clearly stated that it was to be used only by the company for which it was composed (Hot Resorts Group). Based on this, the court may decide that the Bank’s claim is unfair and unreasonable. However, the Bank should continue their lawsuit because delivering ‘matter that is misleading, false or deceptive’ (Auditor liability 2017, para. 9) constitutes auditing negligence and can cause liability to third parties.
Auditor liability 2017. Web.
British Parking Association 2011, Liability for car park maintenance. Web.
Caparo Industries Plc v. Dickman (1990) UKHL 2.
Car park public accident & barrier injury claims n.d. Web
Christie, S 2014, ‘’My car was scratched while being washed in a car park – who pays?‘’, The Telegraph. Web.
Companies act 2006. Web.
Crystal, G 2017, Legally binding contracts. Web.
Exclusion clauses and unfair contract terms n.d. Web.
Exclusion clauses n.d. Web.
Gibson v. Manchester City Council (1979) 1 WLR 294.
Griffiths, I 2002, ‘PwC’s audit disclaimer causes alarm’, The Guardian. Web.
National Car Parks Ltd v. Baird (Valuation Officer) & Anor (2004) EWCA Civ 967.
Occupiers liability act 1984. Web.
Royal Bank of Scotland Plc v. Bannerman Johnstone Maclay (2005) ScotCS CSIH_39.
Sale of goods act 1979. Web.
Unfair contract terms act 1977. Web.