PACC6009 Business Law : The tort of Negligence

As Olivia and Fitz ride along the freeway, Jake rings Olivia's phone and she answers it. In the meantime, a car driven by Huck comes around a bend in the freeway. Huck takes his eyes off the road for a moment as he rummages through his man-bag to locate his phone which is ringing. His car veers to the left, but Huck is unable to manoeuvre the vehicle which crashes into Olivia and Fitz's bikes, injuring Olivia. Olivia suffers from Osteogenesis Imperfecta (Brittle Bone syndrome) and as a result of her condition, and the collision, she broke three of her limbs. Because of the delay caused by the traffic accident, another driver, Quinn, is stuck in traffic. She is an electrician and because she cannot get to her next repair job of fixing the refrigerators in Mellie's restaurant, Mellie has to dispose of $7,500 worth of Wagyu beef which goes bad. 

Advise all parties on any/all liabilities arising from these facts, citing relevant statutory and case law authority, using the ILAC format. 

2.Cyrus runs an Agribusiness, called Modern Pastures Ltd, which specialises in retailing agrichemicals and farm machinery. He has solicited your advice as to whether he has any contractual liability arising out of these circumstances: 

On 20 September, Cyrus meets Rowan over lunch. Rowan owns a small dairy farm called The Big Moo'. Cyrus tells Rowan that he has just received a consignment of 30 Ride-on mowers and asks Rowan if he would be interested in buying any. Rowan says "Send me some details this afternoon". Cyrus sends a letter to Rowan in which he writes: "I offer to sell you four (4) John Deere 125 Ride on mowers at $ 3450 each, with delivery on 10 October". Rowan puts a reply in the mail on 25 September which says "I accept your offer. On 27 September, Cyrus telephones Rowan and says "Look, I've decided to sell the mowers to my cousin. You have had long enough to think about this contract, and since I haven't heard from you. I am revoking my offer." Rowan's letter reaches Cyrus on 29 September. 

Cyrus wishes to purchase a coffee shop in Mount Victoria, a small town in the Blue Mountains. He feels anxious to ensure that he would obtain a new lease for the premises where he is to run the business after the existing lease of the business premises expired. James, the landlord, indicated verbally that he would do this provided Cyrus complied with the existing lease. On 26 July, he sent a letter to Cyrus confirming this representation. Cyrus purchased the business and James refused to grant a new lease even though Cyrus had complied with the terms of the existing lease. 

Cyrus is feeling overwhelmed by the vicissitudes of this world and decides to enter a religious order called 'The brotherhood of the covetous lads' of which the brother superior is Mr Fallacious. In accordance with his vows of poverty, Cyrus is asked to give substantial sums of money, a total of $ 320.000 AUD) to Mr Fallacious for the purpose of the order. Six months after joining the order, Cyrus met Victor and fell madly in love with him. He decides to leave the order to marry his beloved and asks Mr Fallacious for his property to be returned to him. Mr Fallacious refuses. Cyrus id very upset as he needs the money to purchase a house for him and his partner. 

Assume that you are Cyrus' solicitor and that he has asked you for legal advice. Advise him as to what contractual liability, if any, he has in the above circumstances, citing relevant statute and case law authority, using the ILAC format. 

1.Issue

The central issue in the given case is to determine the potential liabilities for the concerned parties primarily arising on account of negligence.

Law

For determining the tort of negligence, it is pivotal that there should be adherence to three conditions. The first condition is that the defendant should have a duty to care directed towards the plaintiff. The second condition deals with the conduct of the defendant leading to the breach of the duty to care. The third or final condition is that the plaintiff must suffer some form of damage on account of the faulty conduct of the defendant which led to breach of duty to care..

Duty of Care

This is usually ascertained in line with the “neighbor test” which highlights if the defendant has a duty to care towards the plaintiff. In accordance with this test, neighbor is categorized as all those individuals that potentially can be adversely impacted through the decision of the action taker with regards to taking the action or refraining the action coupled with the manner in which the action is undertaken (Davenport & Parker, 2014). Further, it is imperative that adverse impact envisaged on the neighbor should be foreseeable as highlighted in the Donoghue v. Stevenson [1932] AC 562 at 580 case. Duty of care on the part of the defendant cannot be assumed to exist for damages that are unforeseeable as the defendant cannot take requisite measures to prevent the same (Dovuro Pty Limited v Wilkins [2003] HCA 51) (Harvey, 2009)

Breach of Duty

In the event that a duty of care is indeed bestowed on the defendant, it is essential that reasonable steps must be undertaken in order to ensure that the plaintiff is not harmed.  The care extended and the steps taken to prevent the damage would be driven by the nature of damage and the underlying risk or chances of happening. Thus, the defendant is expected to take reasonable steps which a reasonable person is expected to take given the circumstances (Gibson & Fraser, 2014). Breach of duty would occur when the reasonable measures that ought to be undertaken are not taken by the defendant (Latimer, 2016).

Damages

It is pivotal that the plaintiff should have suffered some damage arising from the breach of duty. The ambit of damages is quite vast and goes beyond physical and financial damage to include emotional and mental stress as well (Harvey, 2009). Additionally, in order to develop a causal link between damages suffered and breach of duty, it is pivotal to prove that the concerned damage would not have occurred provided the duty of care was not breached (Young v Charles Church Ltd [1997] The Times LR May 1, CA). If the damage would have occurred despite no breach in duty of care, then it is not possible to hold the defendant responsible for the damage that may have been incurred (Lindgren, 2011).

Further, it is pivotal that the plaintiff must also observe all reasonable precautions in order to prevent damage to self. It is possible that in situations where the conduct of the plaintiff is also negligent resulting in damages, then the plaintiff will also be accused with contributory negligence and would lead to lowering of the liability for the defendant (Astley v Austrust Limited (2000) 197 CLR 1; [1999] HCA 6) (Gibson & Fraser, 2014).

Application

Based on the relevant details of the situation, the liabilities need to be discussed for Cyrus, Huck & Quinn.

Cyrus – Since Cyrus has provided Olivia and Fitz with bikes, there is a duty to care arising on part of him whereby he must not extend faulty bikes to the parties which could potentially damage them. However, in the given case, the bikes provided lack front lights while the bike provided to Olivia also does not have a tail light. Further, Cyrus does not inform them about the lights but at the same time advised them to drive on the cycleway and not take the freeway. It is  imperative to note that driving on the cycleway would have ensured that there would no accident with a car or larger vehicle.

However, the two friends disregarded his advice and took the freeway despite warnings to not do the same which were present. As a result, both friends occurred a car accident and Olivia incurred severe injuries. It is apparent that there is contributory negligence on the part of the two friends since despite warnings from Cyrus and otherwise, they decided to take the freeway despite being drunk. Also, while driving Olivia also answers phone call. Cyrus would not be held responsible for the damages caused to any of the parties as the accident is the result of combined result of negligence by the two friends specially Olivia coupled with Huck as even if the lights were in working order, it is unlikely that the accident would have been averted.

Huck – As a person using the roads to drive, there is a duty to care for the co-drivers who are driving on the road and thereby all the relevant traffic rules must be obeyed. Further, responsible user must keep his eye and concentration ahead so as to avoid any mishaps. However, there was a breach of this duty by Huck since while turning the car, he took his eyes off from the road which is not what a reasonable person should do. Damage has been suffered by Olivia and possibly Fitz also. Thus, Huck would be held liable for the same. However, he would be able to use contributory negligence as a defense considering that they were drunk, took the freeway and did not have headlights.

Quinn – Quinn is an electrician who has the duty to care towards her customers and one of that requires that she reaches on time. She was not able to reach the customer on time due to which customer suffered financial damages worth $9,500. However, Quinn would not be held responsible as the damage in this manner was not foreseeable and hence she would not be held responsible for the same.

Conclusion

Liability on account of negligence would arise only for Huck and not anyone else. However on account of contributory negligence of Olivia an Ritz, the liabilities on Huck would be limited.

2.Case 1

Issue

The issue is to determine whether Cyrus and Rowan have enacted a contract or not and to advice Cyrus about his legal position in this case.

Law

In order to enact a contract between the two parties the presence of valid offer extended by offeror and valid acceptance sent on behalf of offeree is considered to be essential elements. It is imperative to note that any offer would become enforceable only when the offeree has received it. Further, the communication mode for the acceptance letter plays a critical role for deciding the enforceability of the acceptance (Andrews, 2011). If the offeree has used postal mode of communication then the acceptance become enforceable and valid on the offeror at the time when the acceptance mail (letter) is put into the mail box. Further, in case of postal media, the factor that acceptance letter would be enforceable only when the offeror has received the letter is not required. The Adams v. Lindsell (1818) 106 ER 25 case is the testimony of this (Carter, 2012).

Application

It is apparent from the case facts that offeror Cyrus has extended an offer to Rowan regarding the sale of mowers with a consideration amount of $3,450 each. Rowan has acceptance the over without any condition and sent the acceptance letter to Cyrus. It can be said that Cyrus has extended the offer which was valid when Rowan has received the letter. Moreover, the acceptance became valid and enforceable at the same moment on September 25 when Rowan dropped the acceptance letter in the mail box. Therefore, due to the presence of valid offer and acceptance, there would be a legally enforceable contract formed. Further, as per postal rule of communication, it is not imperative for the enactment of the contract that the acceptance letter should be received by Cyrus. Hence, Cyrus has the legal liability to perform the contractual obligation as per the contract or else there would be a breach of contract.

Conclusion

It can be concluded from the above discussion that a valid enforceable contract is formed between Cyrus and Rowan and Cyrus has the legal liabilities to complete the contractual duties or Rowan has the legal rights to sue Cyrus and claim for damages for breaching the contract.

Case 2

Issue

The issue in the present case is to comment on the legal position of Cyrus and to determine whether Cyrus and James have entered into a contract.

Law

The relevant law applicable in this case is “doctrine of promissory estoppel”. Under the provision of this rule, two parties would be classified as legally bound into a contractual relation even if one party does not want to create the contract with the other party. This rule is applied in scenarios when one party has promised the other party to perform certain task or activity. Also, the party has informed the other party about the same and the other party has started the respective work based on the promise made by the promisor party (Latimer, 2016). Moreover, if the party has made the promise and the innocent party does not know about the unilateral false of party then this rule protects the rights of innocent party. The innocent party has the rights either to demand to the other party to complete the contractual duties or to claim for the damages. The Walton’s Stores Ltd v Maher (1988) 164 CLR 387 case is the witness of this aspect of doctrine of promissory estoppel (Taylor & Taylor, 2015).

Application

In this case, Cyrus wants to purchase a coffee shop in Mount Victoria. He has decided to take a shop on lease to run the business. James the landlord orally has indicated the intention of providing the shop on lease to Cyrus, after the completion of the existing lease. On July 26, James has sent the letter regarding the confirmation for extending the shop on lease to Cyrus.  Cyrus, has acquired the various material and accessories required for the business based on the fact that James would provide the shop for lease. However, James has denied providing the lease to Cyrus even though he has complied with the requisite lease terms. It can be said that a valid promise was made on behalf of James to Cyrus and Cyrus performed several actions by relying on the promise. Hence, as per the doctrine of promissory estoppel rule, James cannot deny completing the promise or else Cyrus has the legal rights to sue James and claim for the damages because a contract was formed between the parties.

Conclusion

It can be said that Cyrus and James would be entered into contract and Cyrus has legal rights to claim for damages from James.

Case 3

Issue

The main issue is to determine if Cyrus can recover the money from Mr. Fallocious.

Law

The money donated under charities are governed by the contract law. For enforceable donations, it is imperative that there needs to be an offer which should be accepted without the presence of any undue influence, duress or misrepresentation (Andrews, 2011). Another pivotal element that has to be present for an enforceable contract is consideration which need not be sufficient and adequate. In this regard, it is essential that this need not be always tangible and can be anything which is perceived by the promisor (Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87) (Carter, 2012).

Application

In the given case, Cyrus joins a religious order and on the vows of poverty given by the head Mr. Fallocious, he is asked to contribute a sum of AUD $ 320,000 which he obliges with. However, after six months, he falls in love with Victor and wants to settle down and therefore demands the money. It is apparent that there was no duress or undue influence present from the time of giving money till the time of meeting Victot, Cyrus had no issues and also deemed that consideration was present which is why he never demanded the money back.

Conclusion

Thus, there was an enforceable contract between Cyrus and Mr. Fallacious and hence Cyrus would not get his money back.

References

Andrews, Neil, (2011). Contract Law (3^rd ed.). Cambridge: Cambridge University Press.

Carter, J. (2012). Contract Act in Australia (3^rd ed.). Sydney: LexisNexis Publications

Davenport, S. & Parker, D. (2014). Business and Law in Australia (2^nd ed.). Sydney:LexisNexis Publications.

Gibson, A. & Fraser, D. (2014). Business Law (8^th ed.).  Sydney: Pearson Publications.

Harvey, C. (2009). Foundations of Australian law (2^nd ed.).  Prahran, Vic.: Tilde University Press.

Latimer, P. (2016). Australian Business Law CC (1^st ed.). Sydney: LexisNexis Study Guide.

Lindgren, KE. (2011).Vermeesch and Lindgren's Business Law of Australia (12^th ed.). Sydney: LexisNexis Publications.

Taylor, R. & Taylor, D. (2015). Contract Law (5^th ed.). London: Oxford University Press.