200909 Enterprise Law

While in a rush, Bronwyn stores some of her household items in Purdy's storage facility. She is issued with a temporary storage receipt which she is required to read and understand the terms and conditions before signing. Nevertheless, she goes ahead and signs it without reading, thereby failing to notice one essential clause that absolves the storage facility management from any wrongdoing in case of any damages or losses. According to the store rules, the stored goods can only be released when someone produces the issued receipt, a term which both Bronwyn and Purdy communicated and agreed upon. Besides, there is a large sign at the facility entrance that points out that the storage receipt contains all the full terms and conditions of this contract, legally binding.

Issues start arising when there is flooding in the area, which causes damage to some of the stored goods. The lounges and books were "totally ruined" in the aftermath of the floods. Further, Bronwyn discovers that some of her items were missing; one of Purdy's employees had mistakenly released them days before the flood without documentation. In this regard, it is fair to say that there was a breach of contract on the part of the employee, and in effect, Purdy, since the employee is her agent. While Purdy rightly draws Bronwyn's attention to the terms, the part about releasing goods only with proper documentation had been discussed and agreed upon earlier. A contractual obligation tussle ensues between the two parties to the deal.

Legal assessment

For a contract to stand, there must be an intention to create legal relations, and in business communications, it is assumed that the parties involved intend to create binding agreements. The legality of a contract is anchored upon its terms and conditions. In this case, the terms and conditions included the orally communicated conditions, the displayed notice at the entrance, and the instructions in the storage receipt issued. As in the ruling in “ICS Ltd v West Bromwich [1998] 1 WLR 896", the express terms are usually final and binding. It is also generally agreed that the parties to the contract are legally bound by signing binding documents, regardless of whether read and understood or not. This concept was reinforced in the ruling in "Toll v Alphapharm [2004] 219 CLR 165”.

Concerning the employee's action to release some of the boxes without documentation, it revolves around vicarious liability. The loss of the client's property was caused by an employee's carelessness, which the principal (Purdy) was unaware of and had forbad. However, since the loss occurred in the line of work, the liability then falls on the principal; this is a decision that has been used in many landmark rulings, chiefly in the Lister v Hesley Hall Ltd [2001] UKHL 22”. In principle, the employee breached one of the terms of engagement in the contract, and the employer is held liable since the breach occurred in the line of duty (Sharkey, 2019). However, the big question is whether that clause that indemnifies the facility from any losses would be applicable in this case.

Damaged goods and furniture

Generally, a facility used to store people's goods should be in such a condition that it can guarantee their safety while at the facility. Safety includes protection from thieves, damages, and mishandling by the employees. At Bronwyn's facility, such safety is not guaranteed, and the owner, in one of the clauses, indicates that the facility will not be responsible for such losses. Bronwyn is bound by her signature; in hurriedly signing the binding document without reading and understanding the terms and conditions. She cannot make any claim concerning the furniture and books that were damaged by the floods in the store in Sydney.

Lost boxes

While the terms in the storage receipt absolve the storage facility from any loss claims, Bronwyn also expressly tells Purdy that the receipt issued will be required to reclaim her stored goods. This oral communication in a business setup is legally binding and can be used to make claims for the lost boxes. The employee mistakenly issued them out, despite knowing that a receipt is required to make such a transaction. That oral communication, in this regard, overrides the clause that indemnifies the storage facility from any losses that occurred. This action was a breach of the contract on the part of Purdy by her employee (Misenti, 2018). It would make no sense to indemnify her in this case if every client was to produce a receipt only to find their goods missing and get referred to that clause.

References

Investors Compensation Scheme Ltd v West Bromwich Building Society (1998).

Lister v Hesley Hall Ltd (2001).

Lovetinsky, V., 2017. Liability for Agents in Czech Tort Law: A Step in the Right Direction. Common L. Rev., 14(1), p. 33.

Misenti, N. C., 2018. Should an Agent Be Liable for Ordinary Negligence When Liability Is Transferred to the Principal?. Southern Journal of Business and Ethics, 10(1), pp. 131-153.

Sharkey, C. M., 2019. Institutional Liability for Employees' Intentional Torts: Vicarious Liability as a Quasi-Substitute for Punitive Damages. Valparaiso University Law Review, 53(1), pp. 18-35.

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004).

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