Archives for posts with tag: Contracts

Premises Liability

Of prime importance to property owners and occupiers (tenants) is liability for damages to persons or property which occur on the owner’s or occupier’s property. Ownership or control of the premises upon which the damages occurred by itself will not create liability for the owner or occupier.  There also must exist a duty from the owner or occupier to the damaged person or property.  Also, control may be established through a showing of actual control or a right to control the area in which the damage occurred.  The control must relate to the activity that caused the injury complained of before a duty will exist.  Areas beyond the limits of an owner’s or occupier’s control will not establish such a duty.

Chapter 95 of the Texas Civil Practices & Remedies Code governs damage claims accruing on or after September 1, 1996, arising from negligent construction activities. A thorough discussion of that Chapter is well beyond the scope of this article.

In addition to control, an owner’s or occupier’s duty to a party will be determined by the legal status of that party. A party may be considered a trespasser, licensee or invitee.  A “trespasser” is someone who has no legal right to be on the property.  A “licensee” is a person who is present on the property with the permission of the owner or occupier, but for whom the owner or occupier has no business relationship.  A licensee is present on the property for his or her benefit only, and not that of the owner or occupier.  On the other hand, an “invitee” has a present business relationship with the owner or occupier and is present on the property for the mutual benefit of both parties.  A licensee or invitee may become a trespasser if his or her occupancy exceeds the scope of the rights granted to them.

Typically, owners and occupiers owe trespassers no duties other than to not injure them willfully, wantonly or through gross negligence. This has been the common law rule in Texas for many years, and has been codified in Section 75.007(b) of the Texas Civil Practices & Remedies Code.  For licensees, owners and occupiers owe the same duties that are owed to trespassers, and the additional duty to use ordinary care to make reasonably safe and adequately warn of dangerous conditions of which the owner or occupier is aware, but the licensee is not.  Actual instead of constructive knowledge of the dangerous condition by the owner or occupier is required.  Owners and occupiers are additionally responsible to invitees for their active negligence.  With respect to agricultural or recreational activities, Chapter 75 of the Texas Civil Practices & Remedies Code provides special protections to land owners engaged in such activities.

Texas courts have divided invitees into 2 categories: “public invitees” and “business visitors”. Public invitees are people who enter premises which are generally open to the public, such as governmental facilities and parks.  A business or merchant impliedly is “inviting” the public into its place of business.  Contractors, employees, and public servants are distinct categories of invitees.  By way of the invitation to the public, all entrants into those premises expect to be in a safe environment.  As such, owners and occupiers owe invitees the duty to exercise ordinary care to keep the premises reasonably safe, including the duty to inspect and discover latent defects, make safe any defects, or warn the invitees of the same.  For invitees, an owner or occupier is charged with any actual or constructive knowledge of the condition of the premises (i.e., conditions that the owner or occupier should have known of regardless of actual knowledge), and has a duty to make sure their invitees are reasonably safe from any such dangerous conditions or adequately warn the invitee of such conditions.

Even where a duty exists on an owner or occupier to provide a safe premises, liability will only occur where the breach of such duty proximately causes damages to the third party. Proximate cause is made up of two separate elements.  The first being “cause in fact”, which means that the negligent act or omission was a substantial reason that the injury occurred and without which, the injury would not have occurred.  The second element is “foreseeability”, which means that an ordinary and reasonably prudent person (which my first year contract law professor described as “Ward Cleaver”—Baby Boomers and Gen-Xers will understand) should have anticipated that such act or omission would result in such damage or injury.  These rules are general in nature, and several special situations have modified versions of these rules.  For example, premises liability relating to children, disabled persons, elevators and escalators, sporting events, and animals, each have modified rules relating to liability to the premises owner or occupier.

Under certain circumstances, an owner or occupier may be responsible for acts of third parties. The same rules as above apply for a third party act as for the owner’s or occupier’s direct negligence.  There must be a duty, a breach of that duty, and such breach proximately caused the injured party’s damages.  Most premises liability situations involving third parties are determined by proximate cause.  However, a third party’s act or omission may be a superseding act, breaking the chain of causation between the premises owner’s or occupier’s conduct.  A “superseding act” is an outside force that intervenes in a chain of events to cause an outcome that otherwise would not have occurred.  A superseding act can relieve an owner or occupier from liability relating to that act.

The criminal act of a third party is a common type of superseding act which may prevent the owner or occupier from becoming liable for an injury occurring on the premises. However, there are situations where an owner or occupier has been held responsible even where the criminal acts of a third party were involved.  In situations where such conduct is foreseeable and unreasonable, courts have imposed liability on the premises owner or occupier.

Employers have a duty to provide a safe workplace for its employees. Owners and occupiers have a duty to follow laws and ordinances which relate to safety of the premises, and the failure to follow such laws and ordinances may be considered to be per-se negligence.  Where an area or place has had so much criminal activity that has resulted in damage or injury to persons in and around such area, a premises owner or occupier may have a duty to protect its invitees against such dangers.  Note, however, that employers typically do not have a duty to warn an employee of conditions that are commonly known or already appreciated by the employee.  Of course, such duties will necessarily be affected by whether Worker’s Compensation insurance exists or not.

The principles underlying premises liability are in most instances purely fact driven. The analysis can be complicated, particularly when there may be more than one cause of the damage or injury or a superseding act.  Owners and occupiers of real property should always take advantage of liability insurance which will cover any negligence found against such owner or occupier, as well as provide the owner or occupier with a defense (attorney) against the prosecution of such claims.

Scott Alagood is board certified in Commercial and Residential Real Estate Law by the Texas Board of Legal Specialization and can be reached at alagood@dentonlaw.com or http://www.dentonlaw.com.

 

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Have I Formed a Contract?

What must happen to form a contract? Like the NFL’s catch rule, it’s not always clear. Most of us enter into contracts on a regular basis. We buy and sell goods and services; we make promises in exchange for things we want. This article addresses some of the fundamentals associated with forming a binding contract.

Generally, to create a contract one party must make an offer to another party, the other party must accept that offer, and something of value or perceived value must be exchanged. That something is called consideration.

The offer may be for a good, service, promise, etc. The offer must be reasonably certain. For example, John offers to sell Larry his horse, Hurricane, for $70,000. Unless John owns multiple horses named Hurricane, that statement is probably a sufficient offer. If John had not named a price, his offer would not be certain. Offers may be revoked before they are accepted. An offer will lapse if it is not accepted in the stated time or a reasonable time. A reasonable amount of time to accept an offer is dictated by the surrounding circumstances. A reasonable time to accept an offer to buy a perishable item is likely shorter than an offer for non-perishables.

The next step to forming a contract is accepting the offer. Acceptance must be communicated to the person who made the offer (or his agent), and acceptance must be clear and definite. So, if Larry tells Bob (who is not John’s agent) that he accepts John’s offer, has Larry actually accepted? No. Larry’s statement was not made to John. If Larry says to John, “I think I’d like to buy your horse”, Larry has expressed a desire to buy Hurricane but not a clear and definite acceptance of John’s offer. Communicating acceptance, however, does not necessarily require a person to sign a contract or say “I accept.” If upon hearing John’s offer, Larry handed John $70,000, that act would constitute acceptance and performance of Larry’s contractual obligation. If, instead, Larry says to John “I’ll pay you $60,000 for Hurricane”, Larry has rejected John’s offer and made his own offer (a counteroffer) to purchase Hurricane, which John can either accept or reject.

Usually, consideration must be exchanged or promised to create a contract. The consideration for John and Larry is money and a horse. Consideration consists of either a benefit to the promisor or a loss or detriment to the promisee. Consideration may be provided by or to someone who is not a party to the contract. Also, consideration is generally regarded as adequate, except when its inadequacy would “shock the conscience” or is inadequate as the result of fraud. In other words, bad deals are usually enforceable.

Under certain circumstances where consideration is not specified, but one party relies to his detriment on a promise made to him by another party, the promise may still be enforced. For example, John assures and reassures Larry that he is going to give him the rest of the $10,000 he needs to build a new barn for Hurricane. “I love Hurricane and don’t want him setting hoof in your old barn. I’ll give you the money”, says John. Larry, in relying on that promise, demolishes his old barn and starts construction on the new barn. John then informs Larry that he has decided not to give him the money. Larry may be able to enforce John’s promise of $10,000. However, if Larry did not believe that John would give him the $10,000 but demolished his barn and started building a new one anyway, there would be no reliance and no enforcement of John’s promise.

To form a contact, the parties must also have a mutual understanding of the subject matter of the contract and the essential terms. Under a scenario where Hurricane had died two weeks before John offered to sell him to Larry, John knew of Hurricane’s demise, but Larry didn’t. John and Larry don’t have a mutual understanding. Additionally, there is likely inadequate consideration and possible fraud in this example. Larry thinks he’s getting a living horse for $70,000 and John knows otherwise but doesn’t tell Larry.

Contracts can be oral, but some must be in writing and signed by the person to be charged with the promises (e.g., contracts to loan money and contracts for the purchase and sale of real estate). Contracts can be formed through an email or text message exchange if such satisfies the elements of a contract.

Contracts range in complexity and terms. If you need help preparing, reviewing, understanding, enforcing, or defending a contract, consult with an experienced and qualified attorney.