Oxbridge Notes | Laws301 Lecture Notes Economic Torts

Mila is a hairdresser in Dunedin. Due to the Covid-19-related national lockdown, she has been unable to work for the past few weeks. The Government has now announced that, following a shift to Alert Level 2, hairdressers will be allowed to work again provided they are wearing appropriate PPE (personal protective equipment). Mila had seen this coming and had acted quickly: a few weeks ago already she had placed an order for PPE with Protective Clothing and Equipment Ltd (PCE) via TradeMe. Mila is glad she acted so quickly: the price for PPE has climbed massively since then, and in fact, stocks all over the country appear to be depleted. Unfortunately, her order has not yet been delivered and she is getting increasingly nervous. She contacts PCE, who tells her, with surprising honesty, that they had sold her PPE to Beauty First Ltd, a luxury beauty salon in Queenstown, because they had offered ten times the amount that Mila had paid. PCE said that they had told Beauty First Ltd that their last remaining set of PPE was earmarked to be delivered to a customer in Dunedin but Beauty First had explained to them that they would be stupid not to breach that contract and accept their offer instead. PCE offered to refund Mila’s payment.

Mila is distraught. Without the PPE she will not be able to return to work and will probably go out of business. A friend tells her that she would be able to sue PCE for breach of contract and claim damages for the economic loss she has suffered. But when Mila gets in touch again with PCE nobody answers the phone – the business seems to have disappeared. She is now wondering whether she can have recourse against Beauty First instead.

The partner you work for asks you to write an opinion on whether Beauty First could be held liable (addressed to the partner, not the client). Assume that PCE did, in fact, breach their contract with Mila by failing to deliver the PPE.

Assume that there is no precedent. How would you argue as a matter of first principles that Beauty First Ltd did/did not commit a wrong? In other words, what are the reasons of policy or principle for/against liability?

Court should develop a new tort holding Beauty First Ltd to account for the loss Mila has suffered as a result of Beauty First’s conduct.
E.g. climate change tort. Court must look at relevant principles and policy supporting the creation of such a tort.

Privity of contract – Beauty First was not a party to the contract, so it should not be held liable for PCE’s breach.

A claim for breach of contract against PCE already provides Mila with damages as a remedy.

Sanctity of contract – we should be protecting and upholding contracts. If we create liability on behalf of Beauty First, we are offering double protection of a contract.

In practice, this is a good idea because the party which actually breached the contract (PCE) might not have any money or may have disappeared.
This renders Mila’s right to claim damages as meaningless.

To what extent can we say that Beauty First’s conduct is blameworthy?

They arguably convinced or encouraged PCE to breach their contract with Mila
Wrongful – Beauty First participated in PCE’s breach of contract, they should be partly responsible for the loss that has occurred.
E.g – criminal law on parties to offences.
Beauty First’s conduct is morally wrong and tortuously wrong because it participated in PCE’s breach of contract.

The contract is like property – law offers protection against interferences with property.

Performance of contract is analogous to a property right
Beauty First’s conduct amounts to taking away a form of property right from Mila.
The law should also offer protection against interfering with right to contractual performance?

Would the Court interfering amount to improper interference with the free market?

The price of goods is determined by market forces such as supply and demand
If Mila had wanted to retain her right to the PPE, she should have paid more money
It is unhealthy for competition for a Court to say that Beauty First should not have offered what it did for the PPE.
However, what about fair play and a fair market?

Should the matter be left to Parliament?

This is a matter of competition and what is fair in terms of commercial practices
This is something Parliament should regulate, Courts are not well placed to make such policy decisions.

Assume that, after lots of digging, you find some very old cases that held that “a person who knowingly procures a servant to leave his master’s service committed a wrong”. These cases responded to a labour shortage following the Black Death in the 14^th century.

There are 4 arguments to make:

Direct application of the rule to the facts
Application of the rule by analogy to the facts
Distinguishing the rule by reference to the facts
Overruling/declining to follow the non-binding precedent.
When making these arguments, the argument should be guided by the scope of the rule by reference to it’s underlying principles, rationale, policies values, and by reference to the consequences of its application.

Applying the rule because of factual similarities

There is no material difference between a contract for the supply of goods and a contract for services between a master and servant.

Distinguishing the rule by reference to the facts

A contract for the supply of goods is not the same as a contract between master and servant.

Determining the scope of the rule by reference to its underlying principles

Precedent stands for a broad principle of secondary liability which applies in this instance
E.g. If someone helps or convinces someone to commit a wrong, they are liable.
Here, Beauty First Ltd arguably convinced PCE to breach their contract, so they should be liable.

Determining the scope of the rule by reference to the consequences of its application

Precedent should be narrowly construed so as to avoid improperly interfering with the market
Rule should be interpreted narrowly and be confined to very limited circumstances.

Overruling/declining to follow the precedent

The precedent assumes that servants are the property of their masters which is problematic as it is contrary to modern laws and values.
The precedent was a response to historical conditions that are no longer relevant and should be confined to such circumstances.

Lecture 22: (14/05/20)

Summarised in OBG v Allan at [169]. Plaintiff had employed a famous opera singer called Wagner to perform exclusively at their theatre.

Defendant ‘enticed and procured’ singer to breach her contract to work for him instead.
Plaintiff brought a claim against his competitor.
The majority held that defendant to be liable.

“It was established law that a person who knowingly procured a servant to leave his master’s service committed an actionable wrong.” – OBG v Allan at [170]

The minority held that the ‘black death’ cases should be confined to master and servant relationships and have no application outside those circumstances.

Crompton J saw no reason to confine the principle to the facts, held that it could apply to all contracts for services of any particular description.

Opera singer had breached a contract of service.

Erle J reasoned more widely – the principle underlying the master and servant cases is that procurement of the violation of a right is a cause of action.

“It is clear that the procurement of the violation of a right is a cause of action in all instances where the violation is an actionable wrong, as in violations of a right to property, whether real or personal, or to personal security. He who procures the wrong is a joint wrongdoer, and may be sued either alone or jointly with the agent…”

Principle of liability for procurement of a wrong applies to a breach of contract, as well as any actionable wrong.

“It is undoubtedly prima facie an unlawful act on the part of Miss Wagner to break her contract, and therefore a tortious act of the defendant knowingly to procure her to do so.” – Wightman J

Accessory liability – if someone participates in someone else’s wrong, they will be liable as a joint wrongdoer.
If the primary wrongdoer has committed a breach of contract, any person participating in that breach of contract will be liable in tort for inducing breach of contract.

This was a consolidated appeal, including...

Laws301 Lecture Notes Economic Torts - Tort Law

About Oxbridge

More Tort Law Samples