The Edinburgh Law School
Law for Engineers
Session 2000/2001
Course Information and Handout
Lecturer: Mr S Miller
1
Course information
Aim
The aim of this series of seven introductory lectures to provide a basic understanding of the
legal concepts and issues relevant to those wishing to practise as Engineers.
Textbooks
No set text is prescribed. Students may, however, find useful basic textbooks such as Gloag
and Henderson, An Introduction to the Law of Scotland 10th edn (1995), or MacMillan and
MacFarlane, Scottish Business Law 3rd edn (1997). Other more specialised texts will be
mentioned in relation to particular topics. These books are available in the Law Library, Old
College.
Assessment
A one hour class test will take place at 12pm on Wednesday 16 May (Week 5) in a venue to
be announced. This will be a closed book test and will take the form of multiple choice
questions.
Lecture timetable
The 7 Lectures will be held in Engineering Sanderson on Wednesdays 12.00 - 2 .00 in Weeks
1-4 (12.00-1.00 in week 4). Handouts for the whole course will be provided at the first lecture.
1. 18 April
The Legal System: sources of the law and the court structure AND
2. 18 April
Contract: formation of a contract, its validity; contents; breach of
contract; termination and damages
3. 25 April
Sale of Goods
4. 25 April
Business Organisations: partnership and companies.
5. 2 May
Money and banking: the creation and extinction of debt
6. 2 May
Health and Safety at Work: statute and common law(delict).
7. 9 May
Contract and Agency: nature of the agency relationship; duties and
liabilities of an agent.
Course organiser
The course organiser is Mr S Miller. The other members of staff involved in the course are
Ms E Reid and Mr M Hogg
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Lecture 1
THE LEGAL SYSTEM: SOURCES OF LAW AND THE COURT STRUCTURE
Textbooks
Stair Memorial Encyclopaedia of the Laws of Scotland
D M Walker, The Scottish Legal System 8th edn (2001)
C M G Himsworth and C Munro, The Scotland Act 1998 2nd edn (2000)
Whether a rule is regarded as legally enforceable or not depends on where it comes from.
A.
SOURCES OF LAW
The law of Scotland consists partly of enacted law, and partly of common law.
1.
Enacted law
Acts of Parliament are of primary legislation, e.g. Scotland Act 1998, or the
Human Rights Act 1998, or the Road Traffic Reduction Act 1997, (texts all available
online at http://www.hmso.gov.uk/ and copy of the 1997 Act below).
Since 1999, statutes may derive either from the UK parliament or from the Scottish
parliament. The subject matter reserved to the legislative competence of the UK
Parliament includes:
 the Constitution
 Foreign affairs
 Defence
 the Civil Service
 Financial and economic matters
 National security
 Immigration and nationality
 Misuse of drugs
 Trade & industry (e.g. competition, consumer protection)
 Electricity; coal, oil & gas, nuclear energy
 Many aspects of transport (e.g. railways)
 Social security
 Employment
 Abortion, genetics, surrogacy, medicines
 Broadcasting
 Equal opportunities
The main subject areas devolved to the competence of the Scottish Parliament under
the Scotland Act 1998 are:
 Health
 Education
 Training policy & lifelong learning
 Local Government
 Social Work
 Housing
 Planning
 Economic Development
 Financial Assistance to Industry
 Tourism
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Some aspects of transport e.g. The Scottish road network; bus policy; ports
and harbours
Most aspects of the criminal and civil law
Criminal justice and prosecution system
Courts
Police and Fire Services
Environment
Natural heritage
Built heritage
Agriculture
Food Standards
Forestry
Fisheries
Sport
The Arts
Statistics, public registers and records
Under the Human Rights Act 1998 and the Scotland Act 1998 the laws passed by bother
parliaments must also comply with rights enshrined in the European Convention on Human
Rights.
For full information on the working of the Scottish Parliament see
http://www.scottish.parliament.uk/ See Her Majesty’s Stationery Office’s website for the full text
of all Acts of the UK and Scottish Parliaments passed since 1996 http://www.hmso.gov.uk/
(This links with the general UK Government Information Service website,
http://www.open.gov.uk)
Proposed
legislation
is
known
as
a
Bill
(explained
at
http://www.scottish.parliament.uk/parl_bus/bills-guide/bg-1.htm) and remains so until it progresses
through parliament and finally receives the royal assent. The progress of Scottish Bills,
together with explanatory notes, can be tracked through the Scottish Parliament website. Text
of Westminster Bills is available at HMSO site.
UK and Scottish statutes follow the same basic style of drafting (although there has been a
marked tendency to use more straightforward phraseology in the statutes produced by the
Scottish Parliament): short title and long title; sections and subsections; Schedules giving
detail are divided into paragraphs and appear at the end.
Cite a provision as Road Traffic Reduction Act 1997, s. 2(5)(a)
Details of when the Act comes into force are found in the commencement section.
How can you tell whether an Act of the UK parliament applies to all or part of the UK?
(If you wish to use the Law Faculty website as gateway to a range of legal sources in the UK
and abroad, go to http://www.law.ed.ac.uk/ and look at our “Links” section.)
4
Road Traffic Reduction Act 1997
1997 Chapter 54
An Act to require local authorities to prepare reports relating to the levels of road traffic in
their areas; and for related purposes.
[21st March 1997]
BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament
assembled, and by the authority of the same, as follows:Interpretation
In this Act the following terms shall have the following meanings, that is to say "local road traffic" means traffic consisting of mechanically propelled vehicles
on roads for which the Secretary of State is not the traffic authority;
 "principal council" means any council which is a local traffic authority;
 "traffic authority" and "local traffic authority" have the meaning given by
section 121A of the Road Traffic Regulation Act 1984.
Duty of principal councils to make reports
It shall be the duty of every principal council to prepare, at such time or times as the Secretary
of State may direct, a report containing an assessment of the levels of local road traffic in their area, and
 a forecast of the growth in those levels.
Subject to subsection (5), the report must also specify targets for a reduction in the levels of local road traffic in the area, or
 a reduction in the rate of growth in the levels of such traffic.
The report must also contain any other information or proposals which relate to levels of local road traffic in the area, and
 are required by guidance under subsection (6).
The report

may specify different targets for different parts of the principal council's area
or for different classes of local road traffic, and
may specify targets under subsection (2)(a) in relation to certain classes of
local road traffic, or in relation to part of the area and under subsection (2)(b)
in relation to other classes of local road traffic or in relation to another part of
the area.
A principal council are not obliged to specify targets under subsection (2)(a) or (b) in relation
to their area, or in relation to any part of their area, if they consider it inappropriate to do so,
but in that case the report must state that they consider it inappropriate to do so, and
 their reasons for so considering.
The Secretary of State may issue guidance to principal councils in relation to the preparation and content of reports under this section, and
 consultation in connection with the preparation of such reports;
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and a principal council shall have regard to any guidance when preparing a
report.
Where a principal council have prepared a report under this section they shall send the report to the Secretary of State, and
 publish a copy of the report in such manner as they consider appropriate.
The Secretary of State shall lay a copy of every report received by him under subsection (7)(a)
before each House of Parliament.
Expenses
There shall be paid out of monies provided by Parliament any expenses incurred by the Secretary of State under or by virtue of this Act,
and
 any increase attributable to this Act in the sums payable out of moneys so
provided under any other Act.
Citation, extent and commencement
 This Act may be cited as the Road Traffic Reduction Act 1997.
 This Act does not extend to Northern Ireland.
 This Act shall come into force on such day as may be appointed by order
made by statutory instrument by the Secretary of State; and different days may
be appointed for different purposes or different areas.
 Before making an order under subsection (3), the Secretary of State shall
consult such associations of local authorities as appear to him to be
concerned.
Secondary legislation
Secondary legislation most often takes the form of statutory instruments enacted by UK or
Scottish government Ministers, or departments to whom the power to legislate has been
delegated. E.g. Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) Partial
Revocation Order 1998 enacted by the then Secretary of State for Scotland under powers
granted by the Food and Environment Protection Act 1985.
Other public bodies such as local authorities may also have power to make by-laws etc.
European Community law
The UK is bound by the provisions of the Treaties to which the UK has been a signatory.
Distinguish EC Regulations and Directives. Regulations are directly applicable in the
member states. Directives are binding on the member states as to the result to be
achieved, e.g. Directive on Product Liability in 1985 implemented by the Consumer
Protection Act 1987.
6
2
Common Law
Case law.
Principles taken from decisions of judges constitute binding legal rules, e.g. Donoghue
v Stevenson 1932 SC (HL) 31, (i.e. “Session Cases”); 1932 SLT 317, (i.e. “Scots Law
Times”); 1932 AC 562 (i.e. “Appeal Cases”); [1932] All ER 1 (i.e. “All England
Reports”).
Mrs Donoghue was served ginger beer in a café. She found the corpse of a snail in the
bottom of the bottle. Was the manufacturer, Stevenson, liable to pay her damages,
even though there was no direct contractual relationship between him and Mrs
Donoghue? Yes, because of the rule formulated by one of the judges as follows:
Lord Atkin: “You must take reasonable care to avoid acts or omissions which you can reasonably
foresee would be likely to injure your neighbour. Who then in law is my neighbour? The answer seems
to be - persons who are so closely and directly affected by my act that I ought reasonably to have them
in contemplation as being so affected when I am directing my mind to the acts or omissions which are
called in question.”
Doctrine of precedent means that a judge is obliged to follow the previous decisions
of courts above him in the court hierarchy, provided that the facts and legal issues are
the same. Judges may decline to do so if they can distinguish the previous case on its
facts.
Juristic writings
Works of the institutional writers, e.g. Stair, Bankton, Erskine, and Bell. Growing importance
of modern writing, e.g. Stair Memorial Encyclopaedia of the law of Scotland.
7
B
THE COURT SYSTEM
Distinguish criminal and civil cases.
SCOTTISH CRIMINAL COURTS
High Court of Justiciary (Court of Criminal Appeal - ie no appeal to House of Lords)
High Court of Justiciary (trials)
Sheriff Court (solemn - with jury)
Sheriff Court (summary - no jury)
District Court
SCOTTISH CIVIL COURTS
House of Lords
Court of Session Inner House (2 Divisions)
Tribunals
Court of Session Outer House
Sheriff Principal
Sheriff Court
ENGLISH AND WELSH CIVIL COURTS
House of Lords
Court of Appeal (Civil Division)
Magistrate’s Court
County Court
High Court
(Queen’s Bench Division
Chancery Division
Family Division)
Arbitration
As an alternative to resolving disputes in the normal courts, parties who are in dispute can
agree that this will instead be referred to arbitration. This may be provided for in original
contract between parties.
Note distinction between the roles of solicitors and advocates.
8
Lecture 2
BASIC PRINCIPLES OF CONTRACT LAW
Textbook
HL MacQueen and JM Thomson, Contract Law in Scotland (2000)
Where does contract come from?
 The importance of common law sources
 The harmonisation of contract law
What is a contract?
A contract is an agreement which gives rise to obligations which are legally enforceable, e.g.
contracts of sale, employment contracts, building contracts.
Which agreements are legally enforceable contracts and which are not?
Agreement about social or domestic arrangements are not normally regarded as contracts.
The rule is that the parties must intend that their agreement should be legally binding.
In addition, the law refuses to enforce some contracts contrary to public policy.
Scots law does not require consideration in order for there to be a valid contract.
Are unilateral obligations binding?
Scots law recognises promises to be binding, provided that they have been made in writing.
Promises made in the course of business do not need to be in writing, however.
How does a contract come into existence?
Contracts may be in writing, expressed orally, or inferred form actings.
Note that certain contracts require to be in formal writing to be legally enforceable, notably
those relating to land, and also promises as above, (Requirements of Writing (Scotland) Act
1995 s.1(2)).
When does a contract come into existence?
A contract comes into existence being when the contracting parties reach consensus on its
essentials, when a valid offer from A meets with an unqualified acceptance communicated
to A by B. If the acceptance in turn imposes new conditions on the contract, this is a new
offer.
In the commercial context, commercial organisations commonly use standard form
contracts. This can lead to a battle of the forms where two commercial organisations are
involved.
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Unreasonable terms in consumer contracts are struck at by the Unfair Contract Terms Act
1977, and also the Unfair Terms in Consumer Contracts Regulations 1994, SI 1994 No 3159,
which implements for the UK the EC Directive on Unfair Terms in Consumer Contracts.
Express and implied terms.
Not all terms are expressed in the contract. Terms may be implied:
 as an incident of contracts of a particular class
 by custom of trade
 by reference to a previous course of dealing
 as necessary in the circumstances to give the contract business efficacy.
How are contracts varied?
The rule is the variation must be agreed between the parties and should take the same form as
the original contract.
Can you assign contractual rights?
If a contract has been executed, it is readily assignable.
If performance of the contract has yet to take place, contractual rights may be assigned with
the consent of the other party, or if there is no element of delectus personae in the contract.
BREACH OF CONTRACT
Breach of contract can arise in various ways.
 E.g. A has contracted with B that B will provide the air conditioning system
for new office premises.
 B phones up ten days before work is due to start and says that he’s going on
holiday and can’t do the job. That is anticipatory breach of contract.
 B simply fails to turn up on the appointed date. This is failure to perform.
 B does the job but the system permanently blows out hot air. This is defective
performance.
 B arrives on site on time, but takes six months finally to complete the work.
This is failure to perform timeously.
The remedies open to A depend on the materiality of the breach.
Self-help remedies
Rescission
The innocent party, A, declares the contract to be at an end and withdraws from it
altogether. A may claim damages in addition. This option is available to A only if B
has committed a material breach of contract.
Retention and lien
Retention: A can withhold performance of his/her part of the contract.
Lien: A can retain B’s property in his possession until payment is made under the
contract, e.g. repairer’s lien.
10
Judicial remedies
Caveat: the expense of litigation.
Action for payment
Specific implement
A applies for a court order compelling B to perform his/her obligations under the
contract.
Interdict
If A is attempting to enforce a negative obligation, A applies for interdict forbidding
B from taking action in breach of contract.
Damages
The award of damages should be sufficient to put A in the same position s/he would
have been in had B performed the contract. A must prove
 that s/he has suffered loss
 that the breach of contract was a direct cause of the loss suffered
 that the loss was reasonably foreseeable as a result of the breach.
Mitigation of loss
A is obliged to take whatever reasonable steps are necessary to mitigate his/her loss.
Penalty and liquidate damages
Liquidate damages are specified in the contract itself as an advance estimate of the
loss suffered in the event of breach. Liquidate damages are generally enforceable. In
contrast, penalty damages, specified in the original contract in order to penalise a
party in breach, are in principle not enforceable.
Frustration
If, after A and B have made their contract, circumstances outwith their control make
performance impossible, or radically different from what was originally anticipated,
the contract may be deemed to be frustrated. A and B are thus released from their
contractual obligations.
The contract will only be deemed to be frustrated if
 the event which caused frustration could not have been foreseen, and
 neither party was at fault.
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Lecture 3
SALE OF GOODS
Regulated by the Sale of Goods Act 1979 (SOGA) as amended by the Sale and Supply of Sale
and Supply of Goods Act 1994
1.
DEFINITION
s 2(1) SOGA:
A contract of sale of goods is a contract by which the seller transfers or agrees to
transfer the property in goods to the buyer for a money consideration, called the
price.
Goods are defined as ‘all corporeal movables except money’ [s61(1)]
 includes: e.g. machinery, animals, bags of flour and ships
 doesn’t include: e.g. land, houses, shares or debts
Sale is the transfer or agreement to transfer goods in return for money
Distinguish contracts of sale from:
 hire, deposit
 hire-purchase
 credit-sales
 gift
 supply services
2.
PASSING OF PROPERTY/TRANSFER OF OWNERSHIP
We need to distinguish between two situations here:
 where the seller is the owner of the goods
 where the seller is not the owner of the goods
Where the seller is the owner of the goods
General rule is that ownership in the goods passes from the seller to the buyer when
the parties intend it to pass [s17(1)]
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express stipulation
inferred from the circumstances
otherwise there are rules in the act which aid in the determination of
the parties’ intention [s18]
Determining when the ownership passes is important for the following reasons:


the seller or the buyer goes bankrupt
risk of damage/destruction (because the passing of risk generally
follows the passing of ownership)
Where the seller is not the owner of the goods
General rule: nemo dat quod non habet (no-one gives what he does not have) -[s21]
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But there are 4 exceptions:
 owner precluded by his conduct from denying the seller’s authority to sell
[s21]
 sales under voidable title [s23]
 resale by the seller in possession to third party in good faith and for value
[s24]
 resale by the buyer in possession to third party in good faith and for value
[s25(1)]
3.
PROTECTION OF THE BUYER: IMPLIED TERMS
The following terms are implied (automatically by law) in to the contract for the sale
of goods:
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
that the seller has the right to sell the goods - [s12(1)]
where the sale is by description that the goods correspond to the
description - [s13(1)]
where the seller sells the goods in the course of business that the
goods supplied are of satisfactory quality [s14(2)]
‘Goods are of satisfactory if they meet the standard that a reasonable that a reasonable
person would regard as satisfactory, taking account of the description of the goods,
the price (if relevant) and all other relevant circumstances’
The quality of goods includes their state and condition and the following (among
others) are in appropriate cases aspects of the quality of goods
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fitness for all the purposes for which goods of the kind in question are
commonly supplied
appearance and finish,
freedom from minor defects
safety, and
durability.
4.
PROTECTION OF THE BUYER: CONTRACTING OUT
In a consumer contract (one in which the seller is selling in the course of business and
the buyer is not) the Unfair Contract Terms Act 1977 prevents the seller contracting
out of the implied terms relating to description and satisfactory quality.
5.
THE BUYER’S REMEDIES
Buyers remedies in the case of breach of contract are: rejection and/or damages
Rejection: get money back and return goods
 only for material breaches
 in consumer contracts: any breach of the implied terms is deemed to
be material
 rejection is excluded where the goods have been accepted by the buyer
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(a) where B intimates acceptance of the goods or acts in a way inconsistent with
S’s ownership (but not before B has had an opportunity to examine the
goods); or
(b) where B retains the goods after the lapse of a reasonable time without
intimation of rejection; a reasonable time includes reasonable opportunity of
examination.
Damages
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damages can be claimed irrespective of whether the goods are rejected
or not
damages are calculated as the estimated loss flowing directly and
naturally in the ordinary course of events from the seller’s breach
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Lecture 4
BUSINESS ORGANISATIONS
We will look at the three main ways business organisations are structured: sole traders,
partnerships and companies
1.
SOLE TRADERS
 business has no separate identity from you
 all business property belongs to you
 advantages
 disadvantages
2.
PARTNERSHIPS
There are 3 types of Partnerships:
 Limited Liability Partnership [Limited Liability Partnership Act 2000]
 General Partnership [Partnership Act 1890]
 Limited Partnerships [Limited Partnership Act 1907]
General Partnerships
Regulated by the Partnership Act 1890
2.1
Definition - s 1(1) Partnership Act 1890
a relationship which subsists between persons carrying on a business in
common with a view to profit
2.2
Legal Nature of Partnerships
partnership a legal entity separate from the partners - S4(2)
2.3
Formation
 no formalities required as long as the intention of the parties clearly
revealed
 there are statutory rules exist for determining existence of partnership.
 generally, maximum of 20, but no limit if approved under the
Partnership (Unrestricted Size) Regulations 1968-70 e.g. patent rights,
surveyors, consulting engineers, building designers. [Secondary
legislation]
business carried on in the firm name
2.4
Carrying on business
authority of each partner to bind the firm is found in s5 Partnership Act 1890
“every partner is an agent of the firm and his other partners for the
purpose of the business of the partnership; and the acts of every partner
who does any act for carrying on in the usual way the business of the kind
carried on by the firm of which he is a member, bind the firm and his
partners, unless the partner so acting has in fact no authority to act for the
firm in the particular matter, and the person with whom he is dealing
either knows that he has no authority, or does not know or believe him to
be a partner.” (s5).
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each partner is jointly and severally liable for partnership debts - (s9)
 but see Limited Partnership Act 1907
the rights of the parties as between themselves are regulated either
expressly by the partnership contract or by the rules in ss 19-31 (e.g. right
of partner to participate in management
2.5
3.
Dissolution
 Partner’s death or bankruptcy
 partner giving notice
 application to court
COMPANIES
regulated by Companies Acts of 1985 and 1989
3.1
The nature of companies
 separate legal personality: Saloman v Saloman & Co. Ltd [1897] A.C. 22
 limited liability
3.2
Classification of companies
Limited Company
 public or private
 limited by shares
3.3
Formation of companies
 Minimum number of members (shareholders)
 Memorandum - governs external dealings of company
 Articles of Association - governs internal conduct of the company
 Registration - creates the company
3.4
Features of a public company
 generally limited by shares (or limited by guarantee)
 public company is one which expressly states in its memorandum that
it is to be a public company
 the name of a public company must end with the words “public
limited company” (PLC)
 has a share capital - minimum issued capital of £50,000
3.5
Carrying on business
the Act provides detailed rules particularly in connection with:
 the raising and maintenance of capital
 the appointment, removal and duties of directors
 meetings - AGM’s
 accounts and auditors;
 liquidation (i.e. winding up of company).
3.6
Directors
 the business of a company is carried on by its directors (who are the
company’s agents) pursuant to the articles
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 directors duties
e.g. are not allowed to have a conflict of interest or make a secret profit
4.
PARTNERSHIPS and COMPANIES COMPARED
Advantages of Partnership as compared with Company
 less formality and legal control
 public disclosure not required
 more flexible arrangements between partners - can vary powers of
partners by agreement capital freely alterable by agreement
Advantages of Company as compared with Partnership:
 separate legal personality
 limited liability of members to contribute to companies debts
 transferability of shares
 easier to raise finance
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Lecture 5
MONEY AND BANKING
1.
THE LEGAL AND ECONOMIC NATURE OF MONEY
1.1
What is money legally speaking?
 physical money in the legal sense is legal tender
 legal tender - that which a creditor can demand from a debtor, and
that which a debtor can insist that a creditor accept
"No creditor is bound to receive payment of a debt due to him by cheque or
otherwise than in the current coin of the realm. A creditor may even refuse to accept
Scottish banknotes." (Lord Young in Glasgow Pavilion v Motherwell (1903) 6 F 116.


England: coins and banknotes
Scotland: coins only
QUESTION: If Scottish notes are not legal tender, what are they?
1.2
Why physical money is not that important?
 economically, most money in today’s world is actually debt
 claims, in specie, to physical money (stolen bank notes) are
uncommon
 we are more concerned with claims to intangible money
2.
THE LEGAL NATURE OF DEBT
 a person who is owed a debt (the creditor) has the right to demand
payment of money at a stipulated time from another (the debtor) who
is under a correlative obligation to make payment
 from a creditors standpoint, a debt is incorporeal movable property
3.
THE CREATION AND EXTINCTION OF DEBT
3.1
The creation of debt
The principal sources of the obligation to pay money are:
 contracts
 promises
 delict
 succession
3.2
The extinction of debt
`
Payment
Methods of Payment that serve to discharge the debt/monetary obligation
 Legal Tender
 Scottish banknotes
 Cheques
 Bank Giro Credits
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


Credit Cards
s 83(1) and s 84(1) of the Consumer Credit Act 1974
s 75 of the Consumer Credit Act 1974
a)
the purchase price of the goods is greater than £100 and less
than £30, 000 and
b)
the credit card agreement is used to finance a particular
transaction between a debtor (card holder) and a supplier
(merchant) and
c)
the credit card purchase is made under pre-existing
arrangements, or in contemplation of future arrangements,
between the card issuer and the merchant.
 Charge Cards


4.
The EFTPOS system: debit cards e.g. Switch Cards
4.12 and 4.14 The Banking Code, (1998 revised edition)
Smart Cards e.g. Mondex
LOANS
4.1.
Term Loans
 repayable at a stated date
 generally no right to repay the capital amount at an earlier date unless
 agreement so provides
 the loan is subject to the Consumer Credit Act 1974
 loan may specify that capital is to be repaid in instalments or in a lump
sum at the end of the loan period (a balloon payment
 interest usually to be paid periodically and not ‘rolled up’
 frequently provides for acceleration of repayment on default of
contractual obligation
 loan usually given in lump sum but in big commercial loans common
for the loan to be ‘drawn down’ in ‘tranches’
4.2
5.
Re Charge Card Services Ltd [1988] 3 All ER 702
On-Demand Loans
 repayable when the creditor demands repayment e.g. an overdraft
 loans presumed to be on-demand unless contract provides otherwise
THE BANK/CUSTOMER RELATIONSHIP
 generally a contractual relationship
 as mentioned above deposits placed with the banker have the effect of
making the bank a debtor to its customers (creditors)
 the reverse is true when the bank extends overdraft/makes a loan to
its customers
 the customer has the right to repayment of money deposited with the
banker as follows
(a) current account - on demand
(b) deposit account - when time period of deposit expired
 there is no general duty on the bank to advise its customers on the
prudence of a transaction but if it does, it must might be liable for
negligence for wrongful advice
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
the bank is under a duty of confidentiality
-implied term in the contract between bank and customer that the
bank will not disclose details of customer's account or any details
relating to the customers transactions
4 exceptions: see Tournier v National Provincial and Union Bank of England
[1924] 1 KB 461 per Bankes L.J.




Where disclosure under compulsion of law
Public duty to disclose
Interests of bank require disclosure
Where disclosure made with the express or implied consent of the
customer.
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Lecture 6
HEALTH AND SAFETY AT WORK
1.
2.
INTRODUCTION: TWO REGIMES
We are concerned here with the liability of employers generally to their employees but
also in respect of the relevant safety authorities
1.1
Common law - delict
1.2
Statute - criminal liability under statute
There are also some statutes which if contravened allow the injured party a
delictual action for breach of a statutory duty: e.g. Factories Act 1961 and
other EC Directives
COMMON LAW: DELICT (Tort in English law)
Delict is the area of law which makes certain legally disapproved of conduct by a
defender actionable by a pursuer (who has generally suffered a loss/injury as a result
of the defenders act or omission)
If the defender commits a delict he/she will be obliged
compensation/damages (known as reparation in Scots law) to the pursuer
to
pay
More specifically we are concerned here with a damages claim made by an employee
against an employer for the latter’s negligence.
‘Negligence’ does not mean ‘carelessness’
Negligence exits when a person (the employer) allows harm to occur in circumstances
in which he ought to have taken precautions to prevent its occurrence
The requirements for a successful ‘negligence’ claim are as follows:
 act or omission
 defender owed the pursuer a duty of care
 breach of duty - the defender fell below the required standard of care
 causation
 the pursuer suffered damage (loss)
 that was not too remote
2.1
Duty of Care
Must show:
 injury was reasonably foreseeable;
 sufficient proximity between parties (ie close and direct relationship);

2.2
and
fair, just and reasonable, in all the circumstances to impose liability.
Breach of Duty (Standard of Care)
Once it is established that the defender owed the pursuer a duty then it must
be shown that the duty has been breached
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The test can be formulated as follows:
 what would or would not the reasonable man have done had he been
in the defender’s position to eliminate the risk which in the exercise of
his reasonable foreseeability he had identified
 if the defender failed to take such steps then he/she is in breach of his
duty
Calculus of risk approach - taking various factors into account




3.
degree of probability
magnitude of the harm
the value of the activity
knowledge of, availability of, or expense involved in taking
precautions
2.3
Causation
 the breach of duty must have been the real predominant or effective
cause of the occurrence which resulted in the pursuer’s loss, injury or
damage
 the factual (but for test) and the legal cause (value judgement)
 novus actus interveniens
2.4
Damage
Loss suffered by the pursuer
 patrimonial (financial) loss
 personal injury - solatuim
2.5
Remoteness of Damage
Two tests are used :
 direct and natural consequences
 reasonable foreseeability
STATUTE: HEALTH AND SAFETY AT WORK ACT 1974
3.1
Aims of the Act
 to secure the health, safety and welfare of persons at work;
 to protect persons, other than persons at work, against risks to health
or safety connected with the activities of persons at work;



3.2
control the keeping and use of explosives or highly flammable or
dangerous substances; and
control the emission of noxious or offensive substances from places
of work
allows for regulations to be made under it e.g. Manufacturing of
Health and Safety at Work Regulations 1992
Liability
 administrative and criminal sanctions for contravention
 no civil (delictual) liability under the Act
22


need to bring a separate delictual action to recover for your
injuries
but the existence of the statute or EC directive will often be strong
evidence of negligence
 shows that while the common law aims to compensate for
loss/injury the act aims to prevent the injuries from occurring
3.3
Scope of the Act
The Act is primarily concerned with the work situation
“work” means work as an employee or as a self employed person
 an employee is at work throughout the time when he is in the course
of his employment, but not otherwise;
 a self-employed person is at work throughout such time as he devotes
to work as a self-employed person
3.4.
General Duties of Employers and other Persons
General Duties of Employers to their Employees

every employer is under a duty to ensure, the health, safety and welfare
at work of all his employees.
This includes:
 the provision and maintenance of plant and systems of work that are
safe and without risk to health;
 arrangements for ensuring the safety and absence of risks to health;
 in connection with the use, handling, storage and transport of articles
and substances
 the provision of such information, instruction, training and
supervision as is necessary to ensure, the health and safety at work of
his employees.
 the provision and maintenance of a working environment for his
employees that is, so far as is reasonably practicable, safe, without risks
to health, and adequate as regards facilities and arrangements for their
welfare at work.
General Duties of Employers and Self-Employed to Persons other than their
Employees.

every employer has a duty to conduct his undertaking in such a way as
to ensure that persons not in his employment, who may be affected by
it, are not exposed to risks to their health and safety.
General Duties of Persons Concerned with Premises to Persons other than
their Employees

there is a duty on persons having control to any extent of premises,
etc in connection with the carrying on of a trade, business or other
undertaking (whether for profit or not) to take such measures as it is
reasonable to ensure that the premises, any means of access to or from
them and any plant or substance in the premises are safe and without
risks to health (ie domestic owners excluded).
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General Duties of Manufacturers etc as regards articles and substances for use
at work (i.e. duties imposed on persons not as employers or self employed
persons)
Any persons who designs, manufacturers, imports or supplies any article for
use at work is under a duty
 to ensure that the article is so designed and constructed as to be safe
and without risks to health when properly used;
 to carry out such testing and examination as may be necessary for the
performance of the duty imposed on him;
 to ensure that there is adequate information about the use of an article
and about any conditions necessary to ensure that, when put to that
use, it will be safe and without risk to health.
Any person who undertakes the design or manufacture of an article for use at
work is under a duty to carry out any necessary research to discover, and,
eliminate or minimise any risks to health or safety to which the design or
article may give rise.
All of the above four duties are subject to the qualification of “so far as is reasonably
practicable”.
But some areas governed by statutory regulation have strict liability on the employer (strict
liability is liability without fault) while others say ‘suitable and sufficient’ level which implies a
higher standard than merely reasonably practicable
General Duties of Employees at Work
Every employee whilst at work is under the following duties: to take reasonable care for the health and safety of himself and of
other persons who may be affected by his acts or omissions at work;
and
 to co-operate with his employer or any other person under a statutory
duty so far as is necessary, to enable that duty to be performed or
complied with.
3.5
Enforcement of the Act
Health and Safety Commission is the governing body and they provide
Inspectors
3.6.
Administrative Sanctions
 Improvement Notices: require remedy within set period
 Prohibition Notices - where an inspector is of the opinion that,
activities carried on, or about to be carried on in a place of work
involve, or will involve, a risk or serious personal injury, the inspector
may serve a prohibition notice prohibiting the activities.
 can also seize or render things harmless
 appeals against improvement or prohibition notices within 21 days.
3.6
Offences
It is an offence for a person to, amongst other things:
 fail to discharge the duties, referred to above, which he is subject to;
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


contravene any health and safety regulations or any requirements or
prohibition imposed under any such regulations;
to contravene any requirement or prohibition imposed by an
improvement notice or a prohibition notice (including any such notice
as modified on appeal).
unlimited fine and/or two years in prison
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Lecture 7
AGENCY
“Agency is the relationship that exists between two persons when one, called the agent, is
considered in law to represent the other, called the principal, in such a way as to be able to
affect the principal’s legal position in respect of strangers to the relationship by the making of
contracts or the disposition of property.”
Fridman, Law of Agency (6th edn) p 9
principal
(1)
agent
(2)
(3)
third party
Contract of agency (1) whereby agent may form contracts between principal and third party
(2). In some cases agent may incur responsibilities to third party (3) see V (c) below.
Different kinds of agent
General agent
Authority to act for principal in all matters, or in all matters falling within the scope of her
profession - e.g. solicitors, auctioneers, mercantile agent.
Special agent
Authority limited to one particular transaction, or to one particular act.
Are employees agents? Some dispute about this. One respected academic’s view: employees
are not strictly a category of agent (see Fridman, op.cit., pp 27-32), However, because
employees often have power to bind their employers to contracts with third parties, can
consider them agents in that respect.
Authority of agent
Actual authority


Expressly conferred
Implied authority
- anything usual in trade or profession
- customary authority
Apparent or ostensible authority
Authority implied by the actings of the principal: principal “holding out” agent as having
authority.
Duties of agent/Rights of principal
 Agent must follow instructions given;
 Agent must not delegate;
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




Agent must act with the skill and care reasonably expected of a
competent member of her profession;
Agent must keep accounts and make good any deficiency;
Principal is entitled to relief from agent if agent exceeds her authority;
Fiduciary duties: agent must act in best interests of principal; agent
must not let her interests and those of her principal conflict; agent
must not make a secret profit for herself;
Agent must treat information received from her principal as
confidential.
Duties of principal/Rights of agent
 Agent has right to receive remuneration;
 Agent is entitled to damages if the principal fails to complete the
contract;
 Agent has right to be reimbursed for properly incurred expenses.
Relationship of third party to agent and principal
 Where agent acts expressly on behalf of named principal.
Generally, principal can sue and be sued by third party; agent is not a
party to the contract.
 Where agent acts expressly as an agent, but does not identify his
principal. As above.
 Where agent acts on behalf of undisclosed principal.
Generally, both the agent and the “hidden” principal are liable on the
contract and are entitled to sue upon it. But alternative liability - third
party has right of election and election is final.
Termination of agency
 By completion of the transaction
 By mutual agreement of agent and principal
 By notice of revocation by other party
 Death/bankruptcy of the agent or principal
 Material breach by either party
 Principal ceasing business
Consequences of termination:
 Compensation or indemnity (under Regulations - see below)
 Principal must give notice or ostensible agency may continue.
The Regulations
The Commercial Agents (Council Directive) Regulations 1993 SI 1993, No. 3053
Scope
Effects: (i) right of the agent to remuneration; (ii) rights of the agent on termination.
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