Gross negligence

The Jolly Contrarian’s Glossary The snippy guide to financial services lingo.™ →Go uptown The ladder of liability In some strands of legal endeavour (notably in the criminal law and the tortious world of civil wrong-doing), your mental state is important in assessing your responsibility for what you done; in others (principally the cool and dispassionate law of contract) it is, for the most part, not. Contracts are contracts, your signed up voluntarily; why you didn’t do what you said you would is beside the point. This is less so for the criminal law and relations between unacquainted neighbours, where we impute certain standards of care. Where the inadvertent is blameless, neither knowing the risk she runs, nor being reasonably expected to be able to anticipate it; and the negligent has some civil, civic responsibility for what befalls his neighbour on the premise that, since that odious hypothetical fellow plucked from the pews of the sacred Clapham omnibus would have seen it, so should he, even though in point of fact he did not; the grossly negligent is a poor, confused, careless American; the reckless sees the risk all right, and decides to plough on and take it, notwithstanding that she might have no particular wish or expectation that a calumny should befall anyone, least of all the plaintiff. The intender, in contrast to all those above, does what he does as a matter of cold-blooded, contemptuous calculation. Now the standards as between crimes and torts diverge. We know at one end are the innocent, faultless lambs, at the other wanton brigands; but how the varying stages between fit together is by no means clear. We have had a half-hearted go, but be warned, it was a Friday afternoon, and we got approached knock-off time we swiftly lost interest. This is probably a good example of negligence. Right, where’s that beer? Criminal Tort Contract Description Inadvertence Inadvertence Inadvertence Neither intended, wanted, foresaw, nor can reasonably have been expected to foresee the calamity that in fact came about. Had no bearing on any duties, implied or explicit, arising between us. Negligence Negligence — A reasonable person in that position would have foreseen the incipient calamity which would come about by following this course of action, but our hero, in actual fact, did not. Ergo, an unreasonable person. — — Default You have agreed to do something, received consideration for it and, whether by accident or design, you didn’t do it. This is the contractual equivalent of negligence: you had a duty, and you fell short of it. — — Wilful default You have agreed to do something, received consideration for it and, on purpose, you didn’t do it. (This is the same as default, by the way. No-one cares why you didn’t do it). — — Gross negligence Even a faintly moronic person in that position would have foreseen the incipient calamity which would come about by following this course of action but our hero in actual fact did not. Ergo, a stridently moronic person. Unclear how there is room for this in a contract given normal default and the already redundant wilful default. Recklessness — — Our hero did foresee the incipient calamity and, while not wanting it, boxed on regardless. Intention — — Not only foresaw the calamity but acted fully intending it to come about. Index — Click the ᐅ to expand: Glossary Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

For an essay on the related question “why would one use negligence in a legal contract at all?” see the article about “contractual negligence”. For a short answer to that question try this: Unless one has an indemnity, one shouldn’t.

A spiritually bankrupt concept

When negotiating to save the adjective “gross”, the best available tack — and it’s not that good, really — is to say “look, if we muck up we’re hardly going to stand on ceremony, are we? So don’t worry about the legal docs”.

This is not an edifying position for a lawyer to take, implying as it does that you may as well not have a legal document at all. And it begs the question: why bother to insist on “gross” negligence in the first place?

After all, if you’re negligent, you’re negligent. It is hard to maintain your dignity against the complaint of an innocent, irate and out-of-pocket client by saying you’ve only been a bit negligent.

English law

Gross versus ordinary negligence

Is there anything to be gained, under an English law contract from restricting your liability to losses occasioned by your gross negligence — as opposed to your ordinary negligence?

It is hard to sustain in the face of stout objection. On one hand, these days, gross negligence does seem to mean something at English law — obiter — it’s just that it is not entirely clear what:

“Certainly the last time this issue came before the Court of Appeal they decided that the debate about its meaning was a “somewhat sterile and semantic one.” (Linklaters publication)

What is gross negligence?

What case law there is suggests that, since both terms do get used in English law contracts, there must be some distinction. From the declarers of the common law, this is quite a piece of tail wagging dog work.

The important factors in distinguishing between plain negligence and gross negligence appear to be:

• The seriousness of the error
• The seriousness of the risk which results from the negligence.
• Something more fundamental than a simply failure to exercise proper skill or care.
• A serious indifference to an obvious risk.
• Failing to comply with a duty of care by a significant margin.

Note in particular the seriousness of the risk or loss which eventuates. Put it this way, if your negligence results in a £10,000,000 loss, it is going to be a curious court indeed which concludes this was a mere trifling matter, and the right outcome is for the innocent party to bear the loss. This outcome might be different in the American courts (see below), but that only compounds one’s suspicions about the silliness of U.S. legal system to which a significant part of this blog is devoted.

Wouldn’t you say?

New York law

Gross negligence is a thing across the ditch. No argument about that. And it is apparently sheeted directly the wantonness of the error, rather than (as seems to be the case in English law) the upshot of the carelessness. It requires something more like recklessness than carelessness.

That this is a thing — and even that it is market standard — is no grounds for yielding to a US attorney who insists on foisting it on you.

See also

• Degrees of liability