12. Law for Engineers

Exam: one question on law. Need to know definitions and key elements of negligence and/or contracts, purpose/aims of Fair Trading/Consumer Guarantees Act, and state if there is negligence or a contract and explain what elements are missing.

Making and Classification of Law

Two primary sources: parliament and the courts.

Parliament

Parliament is:

Parliament creates Acts of Parliament/statute.

However, legislation is a superset of statues, including regulations, rules and bylaws.

Regulations and rules: when parliament delegates law-making power to other government bodies.

Bylaws: laws delegated to local councils.

The Courts

Common law: decisions made by judges make the law. Judges refer to previous cases, making the law if there are no relevant cases.

Statutes becoming more significant over time with common law becoming a fallback.

Parliamentary sovereignty: Parliament can create statutes that override common law.

Parliamentary Process

NZ Courts

Basic hierarchy:

Classification of Law

International law: inter-state relations (Treaties, Conventions, etc.)

Public law: government/individual relations (e.g. crimes, traffic offences, tax, constitutional law, human rights, welfare)

Private law: individual/individual relations (e.g. contract law, negligence, land law)

Contracts

Contract: agreement/promises between two or more people that is intended to be enforceable at law.

Agreement is critical: they must be mutually understood and legally enforceable promises between parties.

Basically any commercial transaction is a contract, even if there is no paper being signed (e.g. buying a coffee).

Elements of a Contract

Parties must intend that their agreement will be enforceable at law:

II: Offer and Acceptance

Offer: “An expression of willingness to contract made with the intention that it will become binding on the person making it as soon as it is accepted by the person to whom it is addressed.”

Acceptance: “A final and unqualified expression of assent to the terms of the offer.”

A counter-offer (implicitly rejects and then) destroys the original offer and substitutes it with a new offer.

Silence is not acceptance (e.g. if I don’t hear from you by x, I assume you have accepted my offer).

Invitations to treat

‘Treating’ means to negotiate. Hence, this means an invitation to make an offer.

It is a preliminary step towards a contract; it is a signal of preparedness to negotiate entering a contract.

It is NOT a promise to be bound if accepted.

Advertisements, catalogues, goods displayed on shelves etc. are all examples of invitations to treat.

Some examples of invitations to treat:

III: Consideration

Each party gives the other something and each party gets something in return: ‘the price of the promise’.

It must be sufficient - real and valuable, but does not need to be adequate (this is up to the parties to decide).

Each party must give something that is legally recognizable as consideration, even if it is purely nominal (e.g. a dollar for a patent, lease of land for a peppercorn). Without consideration, it would be a gift and not a contract.

IV: Capacity

People, natural or artificial, may have the capacity to contract.

Minors:

Intoxication limits contractual capacity: if a person is so intoxicated that they do not know what they are doing and this is appreciated (realized) by the other party, the contract is voidable by the intoxicated person.

A party is the victim of unfair treatment if you can show their consent was given under either:

Or there is:

VI: Legality

Contracts may be void for reason of illegality:

In some cases, the courts have power to effect a fair outcome (e.g. if it is found to be illegal after a payment is sent but before the product is delivered, the court can order the money to be returned).

Negligence

Part of private law; not a part of public/criminal law.

It is a species of Tort (means wrong in French). Other torts include defamation, breach of privacy (fairly new) and nuisance (interference with enjoyment of land).

Negligence is an act done by a person where they, without just cause or excuse, cause harm to the plaintiff; it is liability for careless acts or omissions.

In New Zealand, personal injury goes through the ACC, preventing you from suing others for negligence.

Tort is NOT contract. The distinction is the relationship between parties:

Donoghue v Stevenson (1932) House of Lords

The highest court in the UK, the House of Lords, created the tort of negligence in this decision.

Donoghue’s friend bought bottle of ginger beer (hence she was not party to a contract), finding a snail in the bottle and developed health issues because of it. She filed a lawsuit against Stevenson, the manufacturer, with the court holding that:

… You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbor. Who, then, in law is my neighbor? 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.

Negligence is liability under civil law to recover for a loss and is separate from criminal law. For example, you could be charged under criminal for dangerous driving and separately sued for negligence.

Three Key Elements to Negligence

  1. Duty of care owed: the person is a ‘neighbor’
  2. There is a breach of duty: failing to reach the standard of care that a reasonable person (or person professing special skills) ought to have
  3. The breach causes loss/damage
    • ‘but for’ test: but for the failure in duty, the loss/damage would not have occurred
    • The chain of causation between the breach of duty and loss/damage is not too far/remote
      • e.g. crashing into a car, causing them to miss an important contract; liable for the damage to the car but not the damage from missing the contract

Negligent Advice

Duty: usually arises when an advisor is in the business of giving advice or hold themselves out as having skill and expertise (the defendant knew or ought to have known the advice would be relied upon).

Breach of duty: failing to meet a standard assessed by reference to the reasonable specialist advisor/expert - could be reflected in a code of ethics.

Loss: there must be proof of actual loss.

Consumer Protection

Fair Trading Act 1986: attempts to stop unfair competition by increasing consumer protection by requiring information about the product and services to be true.

Consumer Guarantees Act 1993: establishes minimum standards for goods and services which are purchased by consumers and gives remedies against those that fail to meet the guaranteed standards.

There is no contracting out of these acts for domestic consumers (adding a clause that these acts will not apply), although it may be possible if the consumer is in trade.

The acts are complementary:

Fair Trading Act, Section 9:

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive

Consumer Guarantees Act

The Consumer Guarantees Act applies when goods or services are supplied by a supplier or manufacturer to a consumer. It does not apply to someone supplying something privately.

Guarantees for Goods by suppliers include:

  1. Guarantee as to title
    • They have the right to sell the goods
  2. Guarantee as to acceptable quality, safe, durable
    • Standards depend on the circumstances
  3. Guarantee as to fitness for purpose
    • If you are told it can do X, it should be able to do X
  4. Guarantee as to price; reasonable price if no price if mentioned (more relevant for services)

Guarantees for Goods by manufacturers include:

  1. Guarantee of acceptable quality
  2. Guarantee as to repairs and spare parts
  3. Express guarantees
    • e.g. if manufacturer offers 10 year guarantee for the product, they must provide it

Guarantees for services include:

  1. Guarantee as to reasonable care and skill
  2. Guarantee as to fitness for particular purpose
  3. Guarantee as to time of completion
  4. Guarantee as to price

Example

Civil engineer gets contract to build bridge to cross a wide rural-water race which cuts across the driveway to the farmer’s home and garage. Stipulated that it must be able to carry domestic cars and motorbikes. No time for completion specified, but took a year to get engineering drawings.

Collapses the first time it is used, initial investigations indicating it lacked a central pillar that should have been required due to its length.

Questions: