CONM40008＿Law for construction＿QS_FT_N1164091_Lin, Yi-Fang (Iris)_21/11/2023

Task1 (1166 words):

To the management team of CC Ltd:
I would like to confirm that all the team members have access to the latest clear version of
our documentation, including our perspective and analyses of the use of letters of intent to
handle construction business. I have done some research on these issues and the following
information was provided for your reference. Additionally, I would like to reiterate the use of
letters of intent might cause an impact on the undependable results. If there are any
suggestions or improvements to our documentation, please feel free to share them with us.
Thank you for your attention to this review. John described (2016, p.57) that the letter of
intent (LOI) is to express an intention to enter into a contract at a future date. They
typically arise as feedback prompted by prolonged negotiations, consequently affecting the
scheduled completion date due to the possible delay in the commencement date. Before
that date is reached, all parties such as the contractor, the subcontractor, the construction
professionals, and the suppliers will have submitted an offer in some shape or form. The
document that the parties may make the preliminary commitment to agree on something in
a future deal, and it sets forth the current intention of a party which is not legally binding
for each party involved. The letter of intent is commonly used in large scale construction
programs, business transactions, and even company mergers and acquisitions. Here are the
pros and cons of using the letter of intent as the form below:

Advantages
1.It accelerates the speed of forming the
arrangement at the initial stage.
2. It defines the principal terms of the
potential deals of arrangements.
3. It clarifies terms in an LOI such as parties,
stipulation, requirements, and timetables.
4.LOI can include non-disclosure
agreements which can build trust for each
party before signing a formal contract.
5.It is convenient to use LOI as an interim
measure when parties still need to make
arrangements with third parties, or the
finance has not been finalized.
Disadvantages
1.Uncertainty: When the letter of intent fails
to prudently draft, even it stated that LOI was
non-legally binding in the begging, it may
become legally binding contract in the end.
2.Confusion: Sometimes, the parties do not
reach agreements in the past negotiations,
causing on the LOI was ambiguous.
3.Intricacy: There is no clear definition of LOI,
because it is non-legally binding.
4.Risks: One party in transaction may use LOI
as a tool to compare if other party have
interest in this deal –It is risky to clients.

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If we look at the previous case, the most debatable one on the letter of intern is British
Steel Corp V Cleveland Bridge & Engineering (1984). The defendant took part in completing
the building of a bank project in Saudi Arabia and negotiated with the claimant as well as
successfully tendered the fabrication of the supply of steel nodes for them. The defendant
sent a letter of intent to the claimant who contains: the defendant’s intention to enter into
the contract, the form of sub-contract will be the defendant’s standard form, and the
defendant requested the plaintiff to commence work immediately pending the preparation
and issuing to you of the official form of sub-contract. (John 2016, p.58) Even though there
are further discussions about the changes in specifications, no parties signed the contract
because neither party can reach an agreement on the sequence of the delivery of the nodes.
The claimant continued to manufacture the nodes and delivered products. When most of the
nodes were delivered, the remaining components were suspended due to an industrial
dispute. The defendant refused to make interim or final payment, instead, they claimed for
late delivery, also the delivery of the nodes out of sequence. The claimant sued for the value
of the steel production on a quantum meruit, contending that no binding contract had been
entered into. A formal or executory contract has never been entered into since all the
parties are still negotiating, and it was impossible to determine the extent of the liability
(Royal Institution of Chartered Surveyors 2023). In some cases, the letter of intent could
have been an enforceable contract. However, it was not like that in this case because
neither of the parties had entered into the contract. The judge had their best solution, which
was to allow the restitution to be recovered according to the jobs they had done. This case
explained why the use of a letter of intent might cause disputes in the industry.
Another case set an example that we should allow for the use of letter of intent was
dangerous or risky for construction works. In a review case of Ampleforth Abbey Trust v
Turner & Townsend Project Management Ltd (2012), the work was accomplished by using
a sequence of letters of intent until the project’s completion. (John2016, p.61) The judge
found that the defendant's jobs are comprised of professional negligence, which was
accountable for the loss of the plaintiff which had been caused by the consultant was failed
to finalise the building contract with the contractors before the completion of the work. The
defendant was assigned by the claimant to undertake the three separate building projects
for the accommodation of at Ampleforth College. The dispute arose between them due to
the final project; the third work was completed in the prolongation timeline so that the Trust
company sued for the liquidated damage on the amount of ￡750,000 for the delayed work.

The impact caused the claimant to be unable to charge the compensation loss from the
delayed works. The importance of the case lies in the misconceptions the parties had over

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the legal basis of the letters of intent. The consultant thought the letter of intent drafted
tightly enough to protect their employer from the costs of delay via the liquidated clause.
(John 2016, p.61) The judge decided that as the project manager, the defendant should not
let the works had performed under letters of intent caused their claimant were excluded
from receiving the liquidated damage. The judge described a project manager,
for their main duty, is the representative who speaks of employer for the intention to
negotiate all different aspects of a project, whose obligation was to propose a proper
measure to the employers for professional advice in this matter. The defendant therefore
was sued for professional negligence. To summarize, most letter of intents include language
that cause them non-legally binding, but it doesn’t mean both parties have not agreed to
specific obligations in signing a LOI. In most situations, the LOI contains both non-legally
binding and certainly biding provisions such as: confidentiality and non-disclosure terms,
the termination of the LOI, separate cost for each party for the duration of negotiation in
the LOI, and a breakup fee or termination fee if the transaction is not finished. According to
these situations mentioned, I strongly recommend CC Ltd to consider more and require
experienced legal counselor advice before the final decision.

Task 2 (2265words):
The definition of negligence in the following narratives: A breach of a legal duty to take
reasonable care that results in damage to the claimant. (Paula 2023) Therefore, we need to
examine if this injury caused any negligence by the case law tests. The elements of
negligence could be described as duty of care + breach of duty + causation + damage =
negligence. As for an injury case here, we must examine if GD Ltd and CC Ltd are liable for
negligence. A few things need to be proven for both companies to be liable: GD Ltd and CC
Ltd owed the duty of care to Mr. A and Miss H; they breached this duty; and the duty
caused them damage. According to the first flood gate, we must examine if one party owes
the duty of care of the other party. Before defining the duty of care, we must examine the
following should be satisfied before a court should be willing to impose the duty of care:

1. The damage is reasonably foreseeable:

This is the foundation of duty of care, also known as neighbor principle. To perceive this,
we may review the case of Donoghue v Stevenson (1932), this case has established the
“neighbor test”, from Lord Atkin's famous statement: “We must take reasonable care to
avoid acts or omissions which you can reasonably foresee would be likely to injure your

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neighbour.” This principle extends the scope and reach of duty of care not only limited to the
contractual relationship.

2. There are sufficient close relationship between the defendant and the claimant, also
known as proximity:

The term of proximity means the sufficient close to the relationship between the duty of
both parties be acknowledged in the case. At the later cases of Ann v Merton London
Borough Council (1977) and Caparo Industries plc v Dickman (1990), they have established
the restrict definition of “proximity” and “fairness”. In the previous example, even the
claimant has claimed the damage but there is some criticism that the doctrine is so wide,
the council did owe a duty of care due to its sufficient close, but it was unreasonably
foreseeable damage, so it has been overruled by the Caparo Test. In the case of Caparo
Industries plc v Dickman (1990), Caparo Industries bought some shares in Fidelity Plc, they
thought it might be a good investment based on the financial data prepared by Mr. Dickman.
Caparo never making any assessment on their own and fully trusted in Mr. Dickman’s
reports even though they never met each other. After losing some money from this
investment, Caparo decided to sue the accountant Mr. Dickman (instead of suing Fidelity
since they owned parts of its shares) based on wrong financial reports. The House of Lords
held that no duty of care from Mr. Dickman had been owed to Caparo due to the insufficient
proximity between them.

3. It must be fair, just, and reasonable for the court to impose a duty of care in the light of
policy considerations with which the court is concerned:

Due to more and more claims to negligence in the late 1980s, the judges required to
reconsider the application for duty of care. Based on the case of Swinney v Chief Constable
of Northumbria Police, the informant had received threats from a violent suspect after her
contact details were stolen from an unattended police car. The judges finally held that the
police had a liability for the informant’s safety; means the police owed a duty of care for the
claimant’s details and security. If the court ultimately decides the imposition of a duty would
not be fair, just and reasonable there will be no duty owed. They would proceed with the
imposition cautiously and avoid wrongful claims.

Therefore, in this case studying, is there a reasonably foreseeable injury for the renovation
in the shop complex? The answer might be yes. Since one member of staff of CC Ltd has
placed a sign which states they will not be responsible for any damage or injury, they do
know that there might be an incident if not prevent the public from entering this area during

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their work. Therefore, reasonable foresight in this case is perceptive. Besides, we will check
if there is any sufficient proximity between them. We may look back to the case of home
Office v Dorset Yacht Company (1970), the young offenders who were unsupervised by the
borstal officers stole the yacht and damaged it. The House of Lords held that the Home
Office owed a duty of care for these borstal officers, who were negligent in recapturing
these escaped trainees for stolen and damaged yacht. There is a sufficient proximate for its
nearby region, besides, there is a special relationship of one of the parties if under a duty
control for preventing damage. (LawTeacher 2023) The incident happened at the entrance
of the shop complex, where the public walk back and forth daily. Additionally, the working
scope of the renovation project is for the entrance so that there is a physical proximity
between both parties. In the case of Robinson v Chief Constable West Yorkshire Police
(2018), the Judge ruled that public authorities are subject to the same liability in tort law as
well as private individuals. They are under the duty not to cause the public harm via their
actions. Since CC Ltd was employed by GD Ltd to undertake work for public use, they do
have the duty of care for the safety of the public. Once it has been established that the
defendant owes the claimant the duty of care, it must next be established that the
defendant has breached the duty. (Paula 2023, p196) Then moved on to the second flood
gate to examine the breach of duty via this case Blyth v Birmingham Waterworks (1856),
Judge Baron Alderson had defined the stand of code of negligence: “Negligence is the
omission to do something which a reasonable man guided upon those considerations which
ordinarily regulate the conduct of human affairs, would do or something which a prudent
and reasonable man would not do.” There are also a few factors that need to be considered
to affect the breach of duty:

1. Particular characteristics of defendant: Children, learners, or experts.

In the case of Bolam v Friern Hospital (1957), the Judge set out a peer review of a
professional’s actions. If the defendant’s conduct is regarded as proper by one responsible
body of professional opinions, the defendant is not negligent. The following case Bolitho v
City & Hackney Health Authority (1997) has helped to clarify what was meant by one
“responsible body”, defining it as one whose opinion had a “logical basis.” (Legal-lore 2023)
If the judge recalls a group of professionals in the renovation team, even an employee
forgot to erect barricades or cordon off the entrance, however, there are supposed to be
fixed actions made by on-site supervisors. GD and CC Ltd in this case may be considered
liable for negligence for its omission of cordons.

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2. Risk factors: Low or high risk, the magnitude of harm, the practicality of precautions.

To define a breach of duty, we need to consider if risk factors are relevant to the breach of
duty. In the case Haley v London Electricity Board (1965), the defendant did not take
adequate precautions (such as by putting a fence in the way) to prevent harm whilst digging
a hole in the pavement. The defendant was liable for their breach of care. In our case, if an
employee forgot to cordon off the entrance while fixing a new entrance sign, it may cause
the company to be liable for negligence.

The third flood gate is to examine if there is causation and correlation. Causation can be
defined by the previous case of Wilsher v Essex Area Health Authority (1988), this case
considered an issue of causation, there is sufficient proof that the negligence of a doctor
caused a child’s blindness after a child had been negligently given an excess of oxygen. We
may also look the case of Barnett v Chelsea Kensington Hospital (1969), the Court held that
the hospital was not liable for the death of Mr. Barnett since he would not survive, even he
had received the emergency care. This case set forth the but for test, establishing the
application to determine the actual causation is commonly used in criminal law and tort law.
This is one of the tests that many courts use to determine whether a defendant caused
damage or injury. The but-for test means “If the X is not happening, would Y have
occurred?” In the application of law case: “If the defendant had not done something, would
the damage have caused?” For this same reason, we may relate the test to our case:
“If the employee of CC Ltd had not forgotten to block the entrance area, would this accident
have happened?” However, the staff might feel innocent that he had put a sign in advance,
so it was not his fault. In this situation, we may use the substantial factor to prove what is
the main reason caused the claimant’s injury. The dropped new sign board which was above
the entrance was the substantial factor for causing injury, so it would not have occurred
if they were away the entrance. It is obvious that the causation of the breach of duty of care
based on the but for test.
The final flood gate is to examine the damage in this case, and what kind of damage it is. In
practical, we apply the rule called the remoteness of damage by viewing the case of
Overseas Tankship Ltd v Morts Dock and Engineering (1961), also known as the Wagon
Mound (No. 1), which imposes a remoteness rule for causation in tortious damage. The case
fact was molten metal fell into the oil causing it to catch fire, causing considerable damage
to the wharf and the equipment. The defendant was only liable for the damage that was
reasonably foreseeable that the wharf would be damaged by the fouling oil rather than the
unforeseeable spreading and the remote fire. (tutor2u 2020) To give further thought in
damage, we can consider more about “the Eggshell Rule”, also known as “Thin Skull Rule”,

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is the law principle that the defendant will be accountable for the consequences of assumed
liabilities under the condition of the plaintiff’s unforeseeable reactions and unusual damages
resulted from the defendant’s negligent or intentional tort. If we further check our case, the
breach of duty of care caused the claimant to have the injuries of Miss H and Mr. A resulting
from the falling new signage board. Based on the facts from the above analyses, CC Ltd
might be in negligence of tort law. From the perspective of GD Ltd, they might be sued as
vicarious liability. The definition of vicarious liability is that one party held liable for another
party’s tortious action, even though they did commit the action itself. It is a type of strict
liability means that even the defendant is held liable even is not at fault (has not done
something wrong). The most common example is while the employer is held liable due to an
employee’s tort during a specified course of employment. There are three steps to establish
that the employer is vicariously liable:

1. A person has committed a negligent tort

2. A person was an employee while committing a negligent tort

3. A negligent tort was acting in the course of employment by the employee

The negligence tort was acted by GD Ltd while the employee is under an employment
relationship with GD Ltd, and they may be liable against the vicarious liability for this
accident.

The objective of compensation in tort law is guided by the principle known as restitutio
integram, meaning "restitution to the original position". The compensation in tort law should
take the form of: “the sum of the money which will put the party who has injured, or who
has suffered, in the same position as he would have been in if he had not sustained the
wrong for which he is now getting his compensation or reparation.” (Paula 2023, p10) “Tort
law has also recognized that liability must be subject to certain rules that limit the
availability of compensation. The floodgates of litigation and disproportionate liability have
demonstrated that tort law must set limits to the type of loss it will compensate.” (Paula
2023, p10) Hence, in practicable cases, compensation for mental distress is rarely rewarded
due to its difficulty in précised mathematical calculation. For Miss H, the possible
compensation may include her salary in three months along with all medical expenses out of
this accidence.

As for Mr. A, the compensation is unquantifiable since he would no longer do the same job
as before. As previously mentioned, we may apply the Egg Skull Shell Rule to request the

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historical medical records of Mr. For further review. To provide the Court with additional
information whether there was a pre-existing condition made him more vulnerable to
serious injury than usual condition. For reference, the compensation can only be decided on
how much money can support his rest of life in his condition. For an advisor perspective, it
requires us to prepare well if case would be lost, follow up on precedent cases of
compensation, a range might be from ￡96,160 to ￡300,000 and includes the amputation

of either both arms or a single arm, which is amputated partially or completely. (Accident
Claims Advice 2023)

_________________________________________________________________________
Reference:
1. John, A., 2016. Construction Contract Law the essentials. 4th ed.
London: Macmillan Education.
2. RICS, 1984. Cases - British Steel Corp v Cleveland Bridge & Engineering [online].
Available at:
https://www.isurv.com/directory_record/3882/british_steel_corp_v_cleveland_bridge_and_
engineering [Accessed 29 October 2023].
3. Paula, G., 2023. Tort. 8th ed. London: London: Sweet & Maxwell.
4. Law Teacher, 2021. Cases - Home Office v Dorset Yacht Co Ltd [online].
Available at: https://www.lawteacher.net/cases/home-office-v-dorset-yacht.php

[Accessed 16 November 2023]

5.Varma,T.,2023.Bolam and Bolitho Test.[online].Available at:
https://www.legallore.info/post/bolam-and-bolitho-test

[Accessed 30 October 2023]

6. tutor2u, 2020.Key Case | The Wagon Mound (1961) | Negligence-Damage-Remoteness
[online]. Available at: https://www.tutor2u.net/law/reference/key-case-the-wagon-mound-
1961-negligence-damage-remoteness [Accessed 17 November 2023]
7. Accident Claims Advice, 2023. How Much Personal Injury Compensation Can I Claim
[online]. Available at: https://www.accidentclaimsadvice.org.uk/calculating-a-personal-
injury-claim/[Accessed 1 November 2023]