Insurance Law Assignment - M05 Module, University Name, Semester 1

This Insurance Law assignment analyzes a scenario involving a five-year lease, outbuildings, an explosion, and an injured employee, addressing key legal issues. The solution examines the validity of the lease agreement under common law, considering elements such as offer, acceptance, and consideration, and applies the principles of Hadley v Baxendale. It then assesses whether the company has rights to use outbuildings, determining the absence of consideration. Furthermore, the assignment explores the tort of negligence concerning the explosion and the employer's liability for the injured employee, referencing cases like Donoghue v Stevenson and Dring v Telstra Corporations Ltd. The analysis concludes that the lease is valid, the company lacks rights to the outbuildings, and the company committed torts of negligence and has employer's liability.

Running head: INSURANCE LAW
INSURANCE LAW
Name of Student
Name of University
Author Note

1INSURANCE LAW
Answer a
Issue
The 1st issue in this case is whether the five-year lease for additional premises can legally
be valid.
Rule
Although the acts like Sale of Goods Act1, Misrepresentation Act2 and Unfair Contract
Terms Act3 have provisions for contract laws, however in UK the Contract Law is mostly
governed by the English common law. As per common law, for a contract to be considered as
legally binding it is required to contain 5 elements, which are- offer, acceptance, consideration,
certainty, competence of the parties.
According to the English law of contracts for any breach of contract the party in the
breach can apply for the recovery of the damages suffered. However according to the principles
set in the case Hadley v Baxendale4 the innocent party is only be eligible for the recovery of
damages for the loss suffered by the breach, provided the loss is not too remote.
Application
Applying the provision of the common law in this case it can be seen that agreement
signed by SH Ltd for the lease of the additional premises is legally valid. The agreement can be
seen to be following all the elements of the contract.
1 Sale of Goods Act 1893
2 Misrepresentation Act 1967
3 Unfair Contract Terms Act 1977
4 Hadley v Baxendale [1854] 9 Exch. 341

2INSURANCE LAW
Applying the principles of the Hadley v Baxendale it can be said that for the breach of the
contract performed by SH Ltd by not insuring the additional premises, the lessor would be
eligible for claiming damages for the losses that are not too remote.
Conclusion
Thus from the above discussion it can be concluded that the five-year lease for the
additional premises would legally be valid.
Answer b
Issue
The second issue in the case is whether SH Ltd has a right of using the outbuildings.
Rule
Consideration under the English common law of contract is one of the most important
elements of the contract. Although a promise without consideration is not enforceable, however
it can be used as a defence towards any legal action as was seen in the case Waltons Stires
(Interstate) Ltd v Maher5.
Application
Applying the common law of contract it can be seen that there was no consideration
between the two parties and the permission for using the outbuildings is just a promise and
hence would not be legally enforceable as seen in Waltons Stires (Interstate) Ltd v Maher. Hence
SH Ltd does not have any right of using the outbuildings.
5 Waltons Stires (Interstate) Ltd v Maher [1988] HCA 7, (1988) 164 CLR 387

3INSURANCE LAW
Conclusion
Thus it can be concluded that SH Ltd does not have a right of using the outbuildings.
Answer c
Issue
The third issue is whether any tort was committed in relation to the explosion by SH Ltd.
Rule
According to the common law of tort negligence is described as the failure to perform
one’s duties and for which damage to a person or property arises . To prove negligence four
elements are needed to be proved- duty, breach of duty, damage and causation, these were
discussed in the case Donoghue v Stevenson6.
Employer’s liability under the common law can be defined as the liability of any
employer for any injury or any misconduct of an employee under the ‘course of employment’.
Application
Applying the decision of the case Donoghue v Stevenson it can be seen that SH Ltd had
committed ‘tort of negligence’ as the explosion can be seen to be a result of using wrong
ingredients in the chemical mixing process.
As the explosion occurred under the course of employment of SH Ltd, hence they would
be held for employers’ liability.
6 Donoghue v Stevenson [1932] UKHL 100

4INSURANCE LAW
Conclusion
Thus it can be concluded that two torts were committed in relation to the explosion by SH
Ltd.
Answer d
Issue
The final issue in this case is whether SH Ltd had any duty towards the injured employee.
Rule
Under the common law and Employers’ Liability (Compulsory Insurance) Act7 an
employer can be held liable for any injury arising to any employee during the course of
employment, this is known as employer’s liability. This was discussed in the case Dring v
Telstra Corporations Ltd (Compensation)8.
Application
Applying the decision of the case Dring v Telstra Corporations Ltd (Compensation) it
can be said that SH Ltd can be held for ‘employer’s liability’ for the injury of the employee as
the explosion occurred in the course of employment Employers’ Liability (Compulsory
Insurance) Act9.
7 Employers’ Liability (Compulsory Insurance) Act 1969
8 Dring v Telstra Corporations Ltd (Compensation)[2018] AATA 3149
9 Employers’ Liability (Compulsory Insurance) Act 1969

5INSURANCE LAW
Conclusion
Thus it can be held that SH Ltd had duty towards the injured employee under employers’
liability.

6INSURANCE LAW
Reference
Donoghue v Stevenson [1932] UKHL 100
Dring v Telstra Corporations Ltd (Compensation)[2018] AATA 3149
Employers’ Liability (Compulsory Insurance) Act 1969
Hadley v Baxendale [1854] 9 Exch. 341
Misrepresentation Act 1967
Sale of Goods Act 1893
Unfair Contract Terms Act 1977
Waltons Stires (Interstate) Ltd v Maher [1988] HCA 7, (1988) 164 CLR 387