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| {{a|tort|{{subtable|{{image|Clapham Omnibus|png|While out punting, Mrs. Potts meets the man on the Clapham Omnibus. {{vsr|1956}}}} | | {{essay|contract|gross negligence|{{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 a tortious concept, but on closer inspection, is not. You are liable, in tort, for ''normal'' negligence. The ''grossness'' of ones negligence never comes into it: the hurdle has long since been vaulted. This is a definitional thing: ''whatever you are liable for is, QED, 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. It wasn’t judge-made. One day a commercial lawyer 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 there is no room for evaluating how carelessly one acted when breaching a contract. It is binary: you either breach or you do 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''.
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| Interposing a behavioural standard into a 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 is “''normal'' negligence” in the contract — that is, what counts as a simple breach. No-one of them undermines the binary nature of liability for breach.
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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. As to how: read on.
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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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The basic principles of contract
The Jolly Contrarian holds forth™
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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.”
- —Federal Republic of Nigeria v 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.
What is gross negligence?
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?
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.
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 resulting risk.
- 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, and the one who causes it, by negligence, being allowed to walk away.
New York law
This outcome might be different in the American courts. 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.
The ladder of liability
In some strands of legal endeavour (notably in the criminal law and the tortious world of civil wrong-doing, one’s mental state is important in assessing one’s responsiblity; in others (principally the cool and dispassionate law of contract) it is — for the most part — not.
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.[1]
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
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| 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.
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| 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.
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| — |
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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.
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| — |
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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).
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| — |
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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.
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| Recklessness |
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Our hero did foresee the incipient calamity and, while not wanting it, boxed on regardless.
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| Intention |
— |
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Not only foresaw the calamity but acted fully intending it to come about.
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- Why interposing any behavioural standard into the threshold for breach of contract makes a category error.
- Why tortious standards make no sense at all for contractual relationships
- The single exception where a negligence standard makes sense in a contract: an indemnity
- The grossness of gross negligence and why it is American nonsense that should stay on that side of the ditch.
See also
References
[[category:Template:Contract Essay]]
- ↑ This use of the word “calculation” might upset some tort lawyers, for in legal terms to be “calculated” means expected to happen as a matter of probability, rather than mendacious design. Odd, really.
