D.

Concurrent Liability in Tort and Contract

Three-party situations. We now return to the point that 1–008
contractual and tortious duties may co-exist on the same facts. The
proposition that D may incur liability in tort to C from a matter or
transaction in respect of which D had a contract with B was clearly
established in Donoghue v Stevenson,25 which is the basis of the
manufacturer’s common law liability in tort to the ultimate
consumer.26 It is noteworthy that the action in negligence rests
upon the existence of a duty of care owed by the defendant to the
claimant and in the last resort this is determined by the court’s
perception of what is fair, just and reasonable, and on that issue the
contractual context in which the events take place will often be
relevant. For example, it has been held that a building subcontractor
was not liable in negligence for damage to the works
when the main contract provided that they were to be at the risk of
and insurable by the building owner,27 and an agent answering
inquiries on behalf of his principal is not personally liable in
negligence in respect of their accuracy unless he has assumed some
direct responsibility.28 Similarly, too great a readiness to hold that a
director owes a personal duty of care to persons with whom his
company has dealings risks setting at naught the protection of
limited liability.29
Two-party situations. Where it is alleged that the defendant owes 1–009
concurrent duties in contract and tort to the same person, some
legal systems have a doctrine (known in French law as non cumul
des obligations) that this is not possible.30 Though there were signs
of this in England in earlier days,31 the weight of the modern case
law was the other way and the “concurrence” approach was
decisively affirmed by the House of Lords in Henderson v Merrett
Syndicates Ltd,32 where it was held that Names at Lloyd’s might
sue members’ agents (with whom they had a contract) for
negligence as well as for breach of contract in the management of
underwriting business so as to gain the advantage of the longer time
limit under the Latent Damage Act 1986.33 As Lord Goff put it:34
“the result may be untidy; but, given that the tortious duty is imposed by
the general law, and the contractual duty is attributable to the will of the
parties, I do not find it objectionable that the claimant may be entitled to
take advantage of the remedy which is most advantageous to him.” 35
Thus, for example, concurrent liability arises between carrier and
passenger, doctor and (private) patient, solicitor and client, and
employer and employee.
Effect of allocation of responsibility by contract. Usually, 1–010
concurrent liability will not affect the substantive duty that the
defendant owes: the duty will be the same in tort and contract. For
example, a doctor’s duty in tort is to exercise proper professional
care and skill and the implied terms in his contract are the same: 36
he does not impliedly warrant that he will effect a cure, though
theoretically he may do so by an express promise to that effect.37
However, there have been several cases in which attempts have
been made to use the duty in tort to override the allocation of
responsibility between the parties by contract. If the contract were
to provide expressly that the defendant was not liable for “risk X”
then (subject to the effect of the Unfair Contract Terms Act 1977
upon that term) it would be absurd to allow a tort duty to intrude
and contradict that allocation.38 The same must be true where there
is an implied term in the contract that the defendant is not to be
liable for “X” (or, as it would be more likely to be expressed, there
is no implied term that he should be liable for that risk).39
Instances where the courts regard the situation as the province 1–011
of the law of contract. Even where the parties are not in a
contractual relationship restraint may have to be exercised because
sound policy may suggest that the matter should be left entirely to
contract law. Thus building contracts are commonly made by a
tendering process and contract law has reasonably clear rules about
this. The basic principle is that the person who invites tenders has
complete discretion as to which bidder shall get the contract. This
may be modified in some cases by a finding that there was a
promise (a collateral contract) to accept the “best” bid; or at least a
promise to give honest consideration to all conforming bids; and
where public works are involved there may be statutory
requirements which displace the general law. There would be a
serious risk of disruption of these principles if we allowed
contentions that the invitor owed a “duty of care” to bidders, still
more if we allowed such arguments to be advanced by subcontractors
associated with unsuccessful bidders.40
E. Tort and Unjust Enrichment
The law of unjust enrichment is concerned with situations where 1–012
one person has been unjustly enriched at the expense of another.
The paradigm example of liability arising in this branch of the law
is that to repay money which has been paid under a mistake of fact.
Suppose that C mistakenly deposits £100 in D’s bank account
thinking that he was depositing the money in X’s account. D is
under a duty to return the money to C. The liability is distinct from
liability in tort because the liability does not depend on any breach
of duty. D does not owe C any duty not to accept money from C.41
F. Tort and Equitable Wrongs
Wrongs that are redressable in equity include breach of trust and 1–013
breach of fiduciary duty. A breach of trust occurs, for example,
where a trustee misapplies trust property. A breach of fiduciary
duty is committed, for instance, where a solicitor who is acting for
a client in respect of a commercial opportunity seizes that
opportunity for himself. Liability for equitable wrongs can arise
concurrently with liability in tort. Equitable wrongs are distinct, at
least historically, from torts. In earlier times, equitable wrongs were
actionable only in the chancery courts whereas proceedings in tort
were commenced in the common law courts. However, the fact that
equitable wrongs depend upon a breach of duty owed to the
claimant has led some authors to argue that they should be regarded
as torts.42 This view is now arguably dominant among theorists,
although it certainly does not command universal support. It has
been argued, for example, that torts and equitable wrongs are
distinct on the ground that the former are concerned with the
correction of losses whereas the latter are aimed at the diversion of
wrongful gains.43
Perhaps the time is approaching to assimilate equitable
wrongdoing with the law of tort but the force of history is powerful
in English law and for the moment it is probably safer to say that
the streams run in different channels even though the patterns they
produce may have similarities. Even now, although law and equity
have long been fused and questions relating to equitable wrongs
may incidentally arise in tort cases, actions arising from equitable
wrongs are allocated to the Chancery Division of the High Court.
The distinctiveness of equity (at least at a theoretical level) has
been affirmed in situations which might have been absorbed into
the tort of negligence. Thus a mortgagee of property exercising a
power of sale may have to take care to obtain a proper price and a
receiver who carries on a debtor’s business for the creditor may
have to run it properly, but these duties are owed in equity and not
in negligence on the basis of “neighbourhood”.44
G. Tort and Bailment
A bailment involves one person taking custody of another person’s 1–014
goods. The person who delivers the goods is called a “bailor”. The
person to whom they are delivered is the “bailee”. Common
examples of bailment are hire of goods (such as hiring a car from a
garage); gratuitous loan of goods (such as lending this book to a
friend); and pawn or pledge. In very many cases, the delivery is on
a condition, express or implied, that the goods shall be restored to
the bailor as soon as the purpose for which they are bailed is
completed, but it seems that this is not a necessary condition. For
example, a standard hire-purchase agreement involves a bailment
followed by an option to purchase and if the hire charges and
option fee are paid the purpose of the exercise is that the bailee
should become the owner. If the bailee misuses or damages the
goods he is, of course, liable in a civil action to the bailor. Is this
liability to be distinguished from liability in tort? Many bailments
arise out of a contract, but it is undoubtedly possible for bailment to
exist without a contract and where this is the case, as in the
gratuitous loan of something for the use of the borrower, what is
the nature of the liability? Winfield’s opinion was that the bailee’s
liability is not tortious because, he said, the duty arises from a
relation, that of bailor and bailee, which is created by the parties.
No one need be a bailee if he does not wish to be one and no one
can have liability for the safe custody of goods thrust upon him
against his will.45 It is certainly true that a person cannot be
subjected to the duties of a bailee without his consent but as we
have already seen, there are duties which are undoubtedly tortious
and which can only exist if there has been some prior agreement
between the parties, so it may be argued that there is no good
reason for distinguishing the common law duties of a bailee from
duties of this kind. Assumption of responsibility has been an
important idea in the expansion of the modern law of negligence46
but a little before this occurred it was said on high authority that the
obligation of the bailee “arises because the taking of possession in
the circumstances involves an assumption of responsibility for the
safe keeping of the goods”.47 Furthermore, while it is a requirement
of a bailment that the bailee voluntarily takes custody of the goods,
it seems that it is not necessary that the bailor should consent to
their custody.48 If the bailor’s claim is necessarily founded upon
some specific provision in a contract, then, no doubt, the bailee’s
liability is not tortious but contractual; but if the bailor’s claim rests
upon a breach by the bailee of one of the bailee’s common law
duties, then might one not contend that his liability is as much
attributable to the law of tort as is the claim of a visitor against the
occupier of premises under the Occupiers’ Liability Act 1957?49
However, the Court of Appeal has held that a gratuitous bailment
may create a legal obligation independent of that in tort, though on
the facts there was also a parallel liability under that head. 50
Sometimes the legislature lays down rules by reference to the
contract/tort distinction and no other. For example, the legislation
on limitation of actions contains elaborate provisions on contract
and tort but says nothing about bailment. The courts have
nevertheless managed to accommodate bailment cases within this
structure.51 All this is typical of the common law’s willingness to
be pragmatic about “classification” and to admit parallel causes of
action.