The English Legal System facilitates law and punishment within the UK. All laws are passed through this system, and all courts within the UK work to withhold these laws. It is separated by two main categories; Criminal Law and Civil Law.
Criminal and Civil Law are different in the ways that guilt is determined, as well as having different court systems that rule over each type (see Appendix 2).
Criminal Law requires proof beyond reasonable doubt, and is aimed at criminal offences such as burglary, assault and murder. Custodial sentences are often given to the defendant if found guilty.
Civil Law, however, looks to protect the rights of individuals. It focuses on negligence, duty of care and contract disputes. Less proof is required than Criminal Law, as only a high probability of guilt needs to be proven. Sentences are often in the form of damages or injunctions being issued.Damages are often in the form of monetary compensation or restitution.
Within any legal dispute, there are many specialist terms that are used such as tort (an infringement of a right leading to legal liability through civil courts), precedence (establishment of judgment for future similar cases), case law (the law which has been established by the outcome of former cases), liability (legal responsibility for something/someone) and litigation (the process of taking legal action). These terms are often referred to when looking at the English Legal System, and will be mentioned when looking at the Bashem Ltd case.
The Bashem Ltd case can be looked at from the perspective of many laws and obligations within the legislative framework. For example the Health and Safety at Work Act 1974, Joint Contracts Tribunal (JCT), Occupiers Liability, Duty of Care and the Employment Protection (Consolidation) Act 1978. However, due to the breadth of each law and its implications, not all of them will be discussed within the essay.
Bashem Ltd has potential liability and litigation issues after winning a JCT contract with Hopeless Council. This is due to their subcontractor having to depart from their original estimate, which may cause Bashem Ltd to breach the terms of their contract with Hopeless Council.
Furthermore, two people have been injured on site which Bashem Ltd may be liable for. This essay will look at any legal liabilities regarding these issues, and providing Bashem Ltd with advice on how to avoid any future litigation.
Due to this legal framework, Bashem Ltd would have certain duties and obligations with regards to both contract disputes and health and safety. Each of these aspects will be looked at in depth, to see where Bashem Ltd may be liable for litigation, and where this may be avoided.
Bashem Ltd currently has contractual issues with Hopeless Council. They are in a JCT contract with arbitration clauses, and may be liable to pay for liquidated damages if they cannot complete the project on time.A JCT contract is comprised of 9 parts:
• Carrying out the works
• Control of the works
• Injury, damage and insurance
• Assignment, third party rights and collateral warranties
• Settlement of disputes
Within the dispute settlements aspect, the contract would clearly state any liquidated damages that would be payable upon departure from the contract. In this case, £15,000 per day would be the damages in question.
If Bashem Ltd departs from the original terms of the contract, they would be liable for the partial liquidated damages, but may also be subject to repudiation from the client. This would mean cancellation of contract, with Hopeless Council looking to replace the contractor. These terms are covered under the Unfair Contract Terms Act 1977(Parliament, 1977), in which it is stated a breach of contract would allow Hopeless Council to recover compensatory damages if it can be proven that delay has caused foreseeable losses. This compensation would be classified as liquidated damages as it is an estimate of loss of earnings suffered by the client. These types of damages may also be referred to as a penalty clause within the contract.As the liquidated damages would be written in to the JCT contract, the ‘foreseeable losses’ would be the £15,000 fees. This meansBashem Ltd would have to pay them under the terms of the current contract. The act also clarifies a breach of contract as non performance or poor performance. If deadlines are not met, then the work would fall under this definition:
“(1)For the purposes of this Part of this Act, “negligence” means the breach—
(a)of any obligation, arising from the express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the contract”. (Parliament, 1977)
However, the sum of £15,000.00 per day may be ruled as excessive. If a court rules this as a punishment, as opposed to a true reflection of liquidated damages, then it would be unenforceable. This precedence was set by Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd (1914), in which a re-sale penalty of £5 per tyre was deemed a penalty, and thus Dunlop could only claim for nominal damages. “A penalty clause is not enforceable. It matters not whether the sum is referred to as a penalty or as liquidated damages. It is the real nature of the sum which counts. A penalty is a punishment.” (Chappell, 1987, p. 94). This shows that the LADs within the contract would not be enforceable in full, as they are an inflated figure and not representative of the true damages.