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| {{a|tort|{{subtable|{{image|Clapham Omnibus|png|''Mrs. Potts Meets the Man on the Clapham Omnibus''. {{vsr|1956}}}} | | {{essay|contract|gross negligence|{{subtable|{{image|Clapham Omnibus|png|''Mrs. Potts Meets the Man on the Clapham Omnibus''. {{vsr|1956}}}} |
| {{liability ladder}}}}}}{{quote|
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| “Even a serious lapse is not likely to be enough to engage the concept of [[gross negligence]]. One is moving beyond bad mistakes to mistakes which have a very serious and often a shocking or startling (cf. “jawdropping”) quality to them.”
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| :—{{casenote|Federal Republic of Nigeria|JP Morgan Chase Bank}}}}''For a long essay on the related question “why would one ''use'' negligence in a [[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'''.''
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| ===A fish out of water===
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| In broad terms, [[common law]] liability arises between two parties when one breaches its express or implied duties to the other.
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| Express duties are what it promised to do (whether [[Wilful default|wilful]], [[Inadvertence|inadvertent]] or something in between) doesn’t matter. ''Did you do what you agreed to do, or didn’t you?''
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| There is a world of nuance in ''framing'' those duties — see below — but once framed, the question is binary.
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| Where the parties have not agreed their relationship in advance — where they are ships in the night — the courts must imply the duties they owe each other. This they do through the law of [[tort]], extruding them from abstract ideas like the “[[duty of care]]”, the “[[neighbour]]” principle, and the mythical man<ref>The easily triggered: should ''not'' Google “''[[Fardell v Potts]]''”. Those of a robust constitution might enjoy it, however.</ref> on the [[Man on the Clapham Omnibus|Clapham Omnibus]].
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| Again, much nuance required to frame the scope and extent of these duties, but once they are framed, it becomes a binary question. ''Did you do your duty, or not''?
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| The rationale for the bar on [[concurrent liability]] in [[contract]] and [[tort]] is thus clear: the two liabilities are mutually exclusive: contract applies where the parties ''have'' agreed duties, tort where they have ''not''. A duty inferred from abstract basic principles of fairness to mediate the interactions of strangers should never override a deliberate pre-allocation of risks that acquaintances have agreed before dealing with each other.
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| So, what does a covenant “not to be negligent” mean, within a contract? If it means anything, it is “do not fall short of your duty to your counterparty”. Since that duty is defined by the contract, it just means “''do not breach the contract''”. [[Negligence]], in a [[Contractual negligence|contract]], therefore, adds nothing that was not already there.<ref>There is one gloss on this, relating to the allocation of the risks of unwanted externalities that do not arise through breach of contract. These are covered by [[Indemnity|indemnities]], not the principles of [[Breach of contract|breach]], [[causation]] and [[remoteness of damage]].</ref>
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| Now, what of ''gross'' negligence? It ''sounds'' like something from the law of tort, but on closer inspection, it is not. You are liable, in tort, for ''normal'' negligence. That hurdle vaulted, the ''grossness'' of one’s negligence never comes into it. This is a definitional thing: ''whatever you are liable for is, [[Q.E.D.]], negligence''. There is no inner circle of hell wherein more terrible tortious penalties accrue.
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| So gross negligence is — must be — a creature of ''contract''. But it wasn’t judge-made, but commercial lawyer-made: One day, a legal eagle managed to get “gross negligence” into a contract and the rest is history. US courts and, more recently, English ones have been wrestling with it ever since.
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| But, per the above: there is no room for evaluating ''how'' ''carelessly'' one acted when breaching a contract. It is binary: you either breached it or you did not. You can have acted with unimpeachable faith, in the most prudent and dovish way, but if you didn’t do what you promised, ''you are in breach''. Similarly, you could have carried on like a total arse from start to finish but, if you delivered everything required of you in full conformity with the [[service level agreement]], you are untouchable.
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| Interposing any behavioural standard into the threshold for breach of contract, therefore, makes a category error.
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| Now, when framing contractual duties themselves, we impose performance standards short of “must, at all costs...” all the time: “[[best reasonable efforts]]”, “[[Practicable|all practicable steps]]”, “may, but is not obliged to”— that kind of thing.
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| But these performance standards necessarily define what you must do to perform the contract. None of them undermines the binary nature of your liability for breach. Your negligence, or otherwise, doesn’t come into it.
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| It is true: the world — the [[US attorney|new world]] especially — is awash with contracts riddled with gross negligence. This is a burden for our learned friends in [[Litigation|litigation department]] ({{casenote|Central Bank of Nigeria|JP Morgan Chase Bank}} refers).
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| But for we commercial attorneys, creating these instruments for courts to unpick: ''come on''. We can do better.
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| === Negligence in the context of indemnity ===
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| There is always an exception, isn’t there.{{Liability carveouts for indemnities}}
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| ===A spiritually bankrupt concept===
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| When negotiating to save the adjective “gross” from the oblivion it richly deserves, your best tack — and it’s not great — 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”.
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| This is not an edifying position for a lawyer to take, implying as it does that therefore you may as well not have a legal document at all. And it begs the question: if you don’t really mean it, why are you bothering to insist on “gross” negligence in the first place?<ref>The real answer is “because [[negotiation]] is [[performative]].”</ref>
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| After all, if you’re [[Negligence|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.
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| A good way of looking at this is to put it in the language of the laity. Like many other commonplaces of the ''[[Rechtsadler|Rechtsadlerkanon]]'', legal drafting can dress outright daftitude in sombre vestments. Take the time-worn [[indemnity]] for costs, framed in usual legal ''kapusta'':
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| {{quote|“''Customer hereby agrees to [[indemnify]] and keep indemnified Company on demand for all costs, beyond its ordinary costs of performance, that Company shall incur in the absence of aforesaid Company’s [[negligence, fraud or wilful misconduct]].''”}}
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| Adding the adjective “gross” here seems to add no more than a prudent pinch of pepper to this cabbage:
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| {{quote|“''Customer hereby agrees to [[indemnify]] and keep indemnified Company on demand for all costs, beyond its ordinary costs of performance, that Company shall incur in the absence of aforesaid Company’s '''gross''' [[negligence, fraud or wilful misconduct]].''”}}
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| But now render this same idea in the earthy metre of those who ride the [[Man on the Clapham Omnibus|Clapham omnibus]].
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| {{quote|“''You must [[reimburse]] us for any extraordinary costs we could not [[reasonably]] avoid when providing you our services.''”}}
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| Now it is a bit harder to “hide the weasel” if you’ll indulge the expression: not because the grammar is challenging, but because it sounds so preposterous when you do:
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| {{quote|“''You must [[reimburse]] us for any extraordinary costs we could not, '''without being [[reckless]],''' avoid when providing you our services.''”}}
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| ''Not [[reckless]]?'' Could you not be a bit more committal than ''that''?
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| ===English law===
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| ====“Gross” versus “casual” negligence====
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| Is there anything to be gained, under an English law contract from restricting your liability to losses occasioned by '''''gross''''', as opposed to ''ordinary'', casual, everyday, run-of-the-mill [[negligence]]?
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| It is hard to sustain in the face of stout objection. On one hand, these days, {{tag|gross negligence}} ''does'' seem to mean ''something'' at English law — ''[[obiter dicta|obiter]]'' — it’s just that it is not entirely clear what:
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| :''“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.”'' <small>([http://www.linklaters.com/Publications/Publication1403Newsletter/TMT_Newsletter_March_2011/Pages/08_UK_When_Does_Negligence_Become_Gross_Negligence.aspx Linklaters publication])</small>
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| ====What ''is'' gross negligence?====
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| 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.
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| The important factors in distinguishing between plain negligence and gross negligence appear to be:
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| *The seriousness of the error
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| *The seriousness of the resulting risk.
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| *Something more fundamental than a simply failure to exercise proper skill or care: a “serious indifference” to an obvious risk.
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| *Failing to comply with a [[duty of care]] by a significant margin.
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| Note in particular ''the seriousness of the risk or loss which eventuates''.
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| 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, and the one who causes it, by negligence, being allowed to walk away.
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| This outcome might be different in the [[US attorney|American]] courts (see below).
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| ===New York law===
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| Gross negligence ''is'' a thing across the ditch, and it is apparently sheeted directly the ''wantonness of the error'', rather than (as seems to be the case in English law) the ''outcome'' of the carelessness. It requires something more like ''recklessness'' than simple carelessness.
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| {{sa}}
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| *[[Degrees of liability]]
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| {{ref}}
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