82,891
edits
Gross negligence: Difference between revisions
Jump to navigation
Jump to search
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 18: | Line 18: | ||
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> | 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> | ||
Now, what of gross negligence? It sounds like | 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. | ||
So gross negligence is — must be — a creature of contract. | 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. | ||
But there is no room for evaluating how carelessly one acted when breaching a contract. It is binary: you either | 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. | ||
Interposing | Interposing any behavioural standard into the threshold for breach of contract, therefore, makes a category error. | ||
Now, when framing contractual duties themselves, we impose performance standards | 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. | ||
But these performance standards necessarily define what | 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. | ||
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). | 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). | ||
But for we commercial attorneys, creating these instruments for courts to unpick: ''come on''. We can do better. | But for we commercial attorneys, creating these instruments for courts to unpick: ''come on''. We can do better. | ||
=== Negligence in the context of indemnity === | |||
There is always an exception, isn’t there.{{Liability carveouts for indemnities}} | |||
===A spiritually bankrupt concept=== | ===A spiritually bankrupt concept=== | ||
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”. | 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”. | ||