BUSINESS LAW QUESTIONS
Carlil v Carbolic Smoke Ball Company [1893] 1 QB 256; [1892] EWCA Civ 1
Carlil v Carbolic Smoke Ball Company is a leading case in Contract Law which discusses the salient elements of an offer, an invitation to treat and other relevant contractual concepts. The facts of this case are that Carbolic Smoke ball Company, while advertising the Carbolic Smoke Ball drug for influenza, advertised that; £100 would be rewarded to any person who contracted influenza having used the ball three times a day for two weeks. The Company added that £1000 was already deposited with Alliance Bank to demonstrate their sincerity in the matter. Ms. Carlil relied on this advertisement and used the Ball as prescribed. When she contracted influenza, the Company refused to pay. She thus sued.
In this case, the court decided that the advertisement made by the Company was an offer and not an invitation to treat simply because the statements in the advertisement consisted of precise terms that would on acceptance result in a valid contract. According to Lindley LJ, there was an unequivocal promise to pay £100 to anyone who contracted the cold. This was not a mere puff because the advertisement gave an assurance of £1000 having been deposited already for that purpose. Therefore, these statements consisted of conclusive terms which if acted upon on the other end this would be construed as acceptance. An invitation to treat is merely a statement or action made to welcome persons in negotiations or bargaining. There was no such intention because this statement had closed terms which could only be accepted or rejected by the persons to whom it was represented. The price was quoted and conditions given to the offeree.
Question (b)
Difference between Conditions and Warranties
Any contract must have a range of terms which define the obligations, duties and relationships between the contracting parties. In the case of Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos), [1970] 3 All ER 125, Lord Denning MR acknowledged the categorization made by Sir Fredrick Pollock in which he pronounced that there are two types of terms; Conditions and Warranties. A condition is a term which is so fundamental to the contract that failure to adhere to it may lead to the aggrieved party repudiating the contract. On the other hand, a warranty is a term antecedent to or collateral to the main contract such that if it is flouted, the innocent party can only be allowed to claim damages but not rescind the contract altogether (Frey & Frey, 2001, p.62). .
Fletcher Moulton LJ, in a celebrated dissenting judgment in the case of Wallis, Son & Wells v Pratt & Haynes [1910] 2 KB 1003 at 1012, intimated that the two apportionments of terms of contracts may not be exhaustive since there are many terms of contracts may not fall into either category. In such cases, courts should ask themselves if the breach in question was so fundamental to the root of the contract that it handicapped the initial agreement. If it was, then the aggrieved party could discharge himself from any form of performance. This position borrows from Lord Mansfield’s stance in Boone v Eyre (1777). The current practice has it that many conditions and warranties are now specifically contained in Statutes from a detailed perspective (Mckendrick, 2012, p.107). If the statute is mute about a certain aspect, the Courts proceed to look at the text of the agreement itself to discern whether the term is a condition, warranty or intermediate. It is always important for Courts to make this distinction because from here is when they can establish whether a party could be discharged from their obligations or they can only sue for damages.
Tort Law Research
Test for Vicarious Liability
A person can be found vicariously liable for the torts committed by another under two circumstances. The first one is if it can be proven that the tortfeaser was his employee at the time of committing the tort and that his actions happened within the scope of his duty. Secondly, even if the tortfeaser is an independent contractor, if the employer ordered him to perform the actions, then they can be held vicariously liable for his torts. The test of establishing vicarious liability entails making a number of considerations depending on the facts presented. Predominantly courts use the Salmond’s test to discern whether an employer is vicariously liable (Atiyah, 1967, p.46)
Traditionally, the control test was the best yardstick of discerning whether a person is an employee or an independent contractor. Under this test if a person is not only told what to do but also how to do it, then he is deemed to be an employee. However, at present, the test majorly factors in the question of whether either party has control over details of the work. Secondly, Courts consider whole tools of trade, equipment and premises are used for purposes of the work. Finally, if a person has the freedom to work for other employees who have the power to dismiss him, then he is an independent contractor. The level of skill that a person has also dictates whether they are employees or independent contractors.
Question (b)
Liability in respect of servants or employees can only accrue if the tort was committed in the course of employment and within the scope of employment. In a bid to establish whether an action falls under the scope of employment, the Salmond test is applied. Under this test, liability can only be apportioned to an employer if the following conditions have been fulfilled. First, the mode of doing work that a servant was employed to do is put to question. If a servant goes ahead to perform an action that he was not employed to do, the employer cannot be held vicariously liable for such actions. This was manifested in the case of Century Insurance Co. v Northern Ireland Road Transport Board [1942] AC 509. In this case, a Petrol lorry driver caused fire while lighting a Cigarette. He did so when emptying Petrol into an underground tank. His employer was held to be vicariously liable for the damage because the actions he was performing fell square within his scope of employment.
Similarly in Bailey v Manchester Railway Company (1873) LR 8 CP, the defendant forcefully ejected the plaintiff from the train erroneously thinking that he was in a wrong train. It was held that the Company was liable for the tort committed against the Plaintiff. Secondly, if the tort is committed within the authorized limits of time and place, then the employer is vicariously liable. In this case, conduct falls within the scope of employment if it is not unreasonable disconnected from the authorized period. In Ruddyman v Smith (1889) 60 LT 708, a clerk went to the washrooms past the working time and left the taps on. The ensuing floods damaged the adjoining premises. The employer was held vicariously liable because the actions were not unreasonably disconnected from the scope of period.
Employment Law Research
Secondly, there is the integration test. Under this test, Courts consider whether the person or his or her role forms part of the organization. If what the servant does forms the core business of the organization, then he or she is an employee. In Express & Echo Publications Ltd. v Tanton [1999] IRLR 367, it was pronounced that under a Contract of service, an employed person is part of the business and he carries out work which is an integral part of the business. On the other hand, in a contract for service, even though work is done for the business, it is not integral for the operation of the business. Considering the case at hand, the role of waiting on the tables at the restaurant is so fundamental to the business that daily operations cannot run without a waiter a as such, owing to this test; Ivor Tinman can be deemed to be an employee. This position was reaffirmed in Stevenson Jordan and Harrison v Mc Donald & Evans [1952] 1 TLR 101.
There is also the substitution test under which, if the servant is allowed by the employer to take leave or to abscond duty and his position can be substituted by another worker, then he cannot be deemed to be an employee. In the case at hand it appears that there was no substitute for Ivor Tinman and perhaps that is why he was fired for poor attendance, therefore, technically he was an employee. Finally, there is the business test. Also known as the economic reality test, the business test is concerned with whether or not the worker is in the business on their own account. In Ready Mixed Concrete v Ministry of Pensions and National Insurance [1968] 2QB497, the court considered a number of factors associated with a contract of service and concluded that the independence with which the plaintiff operated would not render him an employee. Looking at all these tests, it would be plausible to conclude that Ivor was an employee of the theatre.
Question (b)
In a bid to avert any ambiguity regarding the status of employees in future, the Company should adopt the following measures. To start with, all casual workers should draw full wages with no deductions on account of tax and National Insurance. This will send the message that the person is not treated in any way as an employee if the Company. Secondly, for Casual laborers, they should sign a contract of less than three months with terms detailing their status as casual workers and the specific dates at which their services should be terminated.
Also, it is imperative that all casual workers serving within the restaurant should be informed of the ability of having their services substituted by other persons and the flexibility of working in other places so that the Company does not seem to have absolute control over the workers (Collins, 2010, p.19). All these measures could significantly work to absolve the Company from future liability in actions of unfair termination or vicarious liability.
Reference List
Atiyah, P. S. (1967). Vicarious liability in the law of torts. London, Butterworths.
Collins, H. (2010). Employment law. Oxford, Oxford University Press.
Frey, M. A., & Frey, P. H. (2001). Essentials of contract law. Albany, NY, West/Thomson Learning.
Mcivor, C. (2011). Vicarious liability in tort. [Place of publication not identified], Hart Pub.
Mckendrick, E. (2012). Contract law: text, cases, and materials. Oxford, U.K., Oxford University Press.
Smith, I. T., Wood, J. C., & Baker, A. (2013). Smith & Wood's employment law. Oxford, UK: Oxford University Press.
