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Requirement
Question 1
Explain the business efficacy test, using case law in support, and discuss how the test is used in relation to the terms of a contract.
Answer:
The business efficacy test was created in the Moorcock (1889), as it is a case of contract law that created business efficacy test for the law of implied tenure. The business efficacy test offers that the terms would be implied at the law only at one condition i.e. the terms should be necessary and obvious and should not be implied if the terms are reasonable and desirable (Miller, R. L. (2016). Further, the court will imply the tenure which the parties should have intended to involve because the contract would not be able to work without it and the one party’s consideration would fail.
Facts:
The ship's owner who was called the Moorcock, contracted for space at the jetty of the owner to unload the cargo. During the time of docked the tent went through and the ship's hull smashed the ridge, and the ship was damaged. There was an argument that the wharfingers were the ones who were mainly responsible for the safety of the vessel. The owners of the wharf claimed that no such provision was given in the contract to make sure the safety of vessels and they have to foresee the damage of the vessel. In the court, the main issue was whether there would be implied warranty in such situations or not. And as a result, the trial court identified that there was an existence of implied warranty.
Judgment:
The court held for the owner of the ship; the wharfingers should have taken the steps in order to discover the riverbed's stated adjoining to the jetty. Further, this would help them in identifying the ridge and have warned the owners of the ship about the hazard (Nembhard et al., 2012). It has been stated that the implied warranty should be relied on the presumed intended of the parties. And this should be read for the business efficacy. In the transaction of the business like this, the law wishes to impact by the implication is to provide business efficacy to the deal and must have been betrothed at such events by both the parties and not to pressurize on one side of all perils and to unbind the single side from the various chances of failure. But to create each party promise according to the law at various events that they will be responsible for the perils.
Further, the requirement of business efficacy includes the value judgment. A tenure can be only implied if, in absence of the term, the contract might lack practical or commercial coherence. According to the law, the litigants and court can easily argue for the implied tenure on the complete basis of business efficacy test even without investigating an entreaty about the right formulation for unfolding an implied tenure or term (Smith et al., 2012).
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Question 2
Straits Builders Pte Ltd (“SB”), secured a contract to construct five blocks of residential units (“the site”). Cranes & Co (“CC”) operated the business of renting and leasing out, amongst others, tower cranes. CC had been accredited by the Ministry of Manpower as an Approved Crane Contractor under the Workplace Safety and Health (Operation of Cranes) Regulations. SB entered into a Rental Agreement with CC for the hire of 3 tower cranes for use at the site.
Pursuant to the Rental Agreement entered into between SB and CC, CC was responsible for the delivery, erection, as well as the dismantling and removal of the tower cranes from the site. CC subcontracted out the dismantling of one of the cranes to Tower Cranes Pte Ltd (“TC”), another Approved Crane Contractor. Subsequently, while TC’s workers were dismantling the crane, the crane suddenly collapsed midway and injured three workers. It was not disputed that the improper dismantling of the crane by TC’s workers was the cause of the collapse and the consequent injuries of the 3 workers. Evidence also showed that TC’s workers had not been properly trained. However, TC was wound up soon after the accident and therefore not considered as a party to the legal action by SB.
There were no express terms in the Rental Agreement stating that (i) CC would provide properly skilled and qualified labor and trained personnel to dismantle the tower cranes and that (ii) CC would ensure that the dismantling and removal of the Tower Cranes would be done in a skilful and proper manner in accordance with any operating instructions issued for them.
Clause 6 of the Rental Agreement, however, stated that “CC shall not be liable or responsible for any direct or consequential loss suffered by SB in consequence of any stoppage of work, compliance with any order or directive from any judicial or governmental authority or by reason of any loss injury or damage suffered by any person from the presence of the tower cranes or the delivery possession use operation removal dismantling or return of them or from any defects in the tower cranes.”
SB would like your advice as to whether CC could be held liable to SB under contract law for the injuries of the 3 workers even though there were no express terms setting out CC’s liability. Further, advise SB on the validity and effect of Clause 6.
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Discuss the LEGAL PRINCIPLES in relation to the above case study, APPLY the legal principles and CONCLUDE on whether SB could have a good cause of action against CC.
Answer:
Being an individual, in my opinion, the CC could be held liable to SB under the law’s contract for the three worker’s injury. As the CC further subcontracted TC for the dismantling of the crane and the evidence showed that the workers of the TC were not trained enough in order to perform the activity and as a result, the crane was collapsed, and the three workers were injured badly. As there were no express terms in order to set out the liability of CC but according to the law, the employer is responsible for the misshaping with the employees.
According to the work act 2005, which replaced the work act 1989 in order to provide new provisions for the health, safety, and welfare of the employees at work. This act enhances and clarifies the responsibility of the employers and various other related parties in accordance to health and safety at work. The act also specifies the penalties which might be applied for the breach of occupational health and safety (Bailey, J. 2014). The clause 6 of the rental agreement is valid, but it was assumed that the CC would have used the skilled and experienced labor in order to dismantle the cranes. Moreover, the CC subcontracted TC, so it is their responsibility to provide training to the labor for the safety of the workers at the construction site. Therefore, SB can file a case against CC as the clause 6 is not valid because the workers were injured due to unskilled and untrained labor.
According to the safety and health protection Act 2004, the employees are given greatest level of safety and health protection which is practicable. The employers who are managing the activities are the ones who are mainly responsible for the safety and health of the employees (Burr, A. Ed. 2016).Under this act, the workers are given protection from the employers, sub-contractors, contractors, etc.
There are some legal principles which are applied to the given case in order to have a good cause of action (Law, A. 2015):
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No rights are absolute: A legal principle in the law of the case is that no legal right is absolutely certain, but it is limited by freedom and rights of others. Therefore, SB has the right to give their opinion, and no right is absolute as they can fight for the right.
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No hierarchy of rights: The supreme court of Singapore is completely clear that there should be no hierarchy of rights as the rights are deserving equally and further the approach which puts the rights over one and other should be avoided. Inherently, the right is not superior to the other. Therefore, SB should fight for the right of the workers as it was the responsibility of CC in order to dismantle the cranes with the help of trained and skilled labor.
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Rights may not extend as far as claimed:
While struggling, in order to compete for the right scenario, the companies should assess the extent of the rights as far as the claim of the parties. Further, the validation has the two key components i.e. does the claim intrigue the genuine right which is legal? And when the evidence is checked, can a person along with the claim bring himself/herself to the affirmative right. Therefore, SB should claim for the right. -
Considering contexts and facts:
Once the issues are unfolded and demonstrated, the rights should be defined in accordance to each other by looking at the facts and contexts on which the conflict rises. The court of Singapore has announced that the human and charter rights doesn’t exist in a vacuum and should be checked on the basis of facts and context in order to resolve the conflicts. Therefore, SB has proof that crane was collapsed during the time of dismantling and injured three workers because of the unskilled and untrained labor and this reason was identified during the investigation.
Therefore, SB has a good cause of action against CC and its subcontractor TC as the SB has evidence against CC and on that basis the company can claim CC and can get compensation for the injured employees from CC. According to the health and safety act, the clause 6 cannot be validated, and CC can be liable to SB under the contract of the law. SB can easily claim against CC on the basis of evidence and can fight for the right of employees. The court of Singapore believes in context and facts in order to resolve the issue; the SB has the context and fact against CC and the subcontractor TC in order to make them liable.
References
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Bailey, J. (2014). Construction Law. Crc Press.
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Burr, A. (Ed.). (2016). Delay and disruption in construction contracts. CRC Press.
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Law, A. (2015). SINGAPORE INDEX TO LAW JOURNAL ARTICLES-2013. Space, 50, 275.
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Miller, R. L. (2016). Business Law Today, Comprehensive. Cengage learning.
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Nembhard, I. M., & Edmondson, A. C. (2012). Psychological safety.
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Smith, D., Lawson, R. D., & Painter, A. A. (2012). Business law. Routledge.
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