Business Law Questionnaire

Textbook:

https://drive.google.com/file/d/12SO9zrU15Woh2vNhp…

Additional case from the brief
Breach in duty of
care
Woods v Multisport holdings
pty Ltd.
Likelihood of risk
Woods got hit in the eye
while playing a game of
indoor cricket at Multi Sport
and ended up suffering a
serious injury.
Multi sport was the one
that arranged the game,
but failed to supply helmets
or any warning signs of the
danger.
Had Multi-Sports
been negligent
either in (1)
failing to provide
helmets, or (2)
failing to warn of
the possible
dangers?
Woods sued for
negligence, and court held
that Multi did owe a duty
but has not breached it.
Woods appealed.
NO, was not negligent
1. Risk itself was
low
Helmets aren’t normal
equipment in the game
of cricket because the
game itself is usually
safe.
2. Risk should
have been
obvious
There was no need to
give warning signs
because risk of injury is
obvious in sports.
Woods made his choice
to play.
Special
relationship test
Tepko Pty Ltd
V Water Board
Tepko is planning on
borrowing money from
the bank to make a
subdivision and connect
it to a water supply.
Tepko asked the
Waterboard to estimate
the cost, and the Water
board reluctantly agreed
since the bank pressured
them to.
The water board advised
it would be approx.
$2.5million
As a result of the high
estimation, the bank
withdrew finance
It turned out it would
only have cost $800,000
They sued for economic
loss
Whether the
Water Board
owed a duty
o£ care to Tepko
in providing the
estimate?
Owed NO duty of care
Split 4-3
Majority said no
Because two main
reasons
1. The board did
not know that
the estimate
would be relied
on the bank for
an important
estimate
2. It was no
reasonable for
tepko to rely on
the estimate
since they were
reluctant to give
it in the first
place and the
estimate was
supposed to be
a ROUGH
estimate
On the other hand
1. Board knew that
tepko would rely
on the
information to
some extent
2. Tepko’s reliance
was reasonable
Indirect negligent
misrepresentation
R Lowe
Lippman Figdor
& Franck v
AGC Ltd
AGC was a finance
company and main lender
of Lyvetta.
Lippman=auditor
Did Lowe
Lippman owe a
duty of care to
AGC in providing
the audited
accounts?
In favor of auditor
How did the
option affect
Quinn’s attempt
to withdrawthe
offer?
CANNOT REVOKE
Gracuaob signed an
agreement that says “sales
and agreement” without
reading and the machine
she bought was actually
defective.
Was Mrs
LTstrange bound
by the exemption
clause in the
sales agreement
even though she
had not read the
clause?
YES
Because she signed the
agreement, she is
bound by it.
Since the exemption
clause excluded implied
terms, Mrs lestrange
could not rely on it.
Alphapharm signed
“Conditions of contract,”
despite not reading it, and
was actually never
pressured to sign it as well.
The High Court
had to decide
whether
YES bound by it
He signed the
agreement, so he is
bound by it.
AGC called Lippman for
the auditor report for
“review purposes.”
AGC also asked Lippman
whether the profit figure
was actually 100,000, and
they replied that it would be
less but decline to tell the
actual figure.
Option
Goldsborough
Mort & Co Ltd v
Quinn
Goldsborouough provided
Quinn with an option of 5
shillings.
Before time expired, Quinn
wanted to revoke offer.
1. Only
representation
was the signed
accounts
2. No evidence
that the auditor
intended or
wanted to
induce AGC to
act on it
3. Auditor would
not have known
that AGC was
going to rely on
the
representation
The 5 shillings is a
binding promise to keep
the offer open, and
therefore cannot be
withdrawn.
Goldsbourough still
accepted it, and sued
Quinn .
Exemption
clause- signature
rule
L’Estrange v F
Gracoub Ltd
(see below for
more detailed
info, page 28)
Signed
Toll v
Alphapharm
The exemption clause
stated that there is no way
that F would be liable for
any of the damages.
(a) Alphapharm
was bound by the
exemption clause
because it had
signed the
Application for
Credit; or
(b) Alphapharm
was not bound by
the exemption
clause because F
had not taken all
reasonable steps
to bring the
clause to the
attention of
Alphapharm.
Reasonable
notice, unusual
terms
Interfoto Public
Library v
Stilleto
Interfoto delivered 47
photographic
transparencies to Stiletto in
a jiffy bag.
Stiletto was planning to use
them for a presentation,
but ended up not using it.
Stiletto never opened the
transparency bag or read
Interfoto’s standard terms
and conditions, which were
inside the bag.
Condition 2 said there was
a holding fee of £5 per
transparency for each day
over fourteen days. After
around a month, Interfoto
sent a bill for £3,783.50.
Exemption clause
cover
Insights
Vacation V
Young
When was the
contract made —
during the
telephone call or
later?
If the contract
was made when
the
transparencies
were delivered
together with the
delivery note had
Interfoto given
Stiletto
reasonable
notice of the
existence of the
over-holding fee
contained in the
delivery note?
The clause had not
been successfully
incorporated into the
contract.
Where a clause is
particularly onerous, as
in this case, and the
fees are exorbitant at
ten times the level of
other photographic
libraries, the party
seeking to rely on the
clause must show they
have taken reasonable
steps to bring the clause
to the other party’s
attention.
IPL had failed to do this
and they could,
therefore, only recover
fees assessed on a
quantum meruit basis.
There was a clause that
states Insight is excluded
from injury if a passenger
is injured while seated and
wearing a seatbelt, but the
passenger was standing
up.
Should be interpreted in
its natural meaning.
Facts
Decision and Legal Reasons
Because mrs Young
was not sitting in her
seat when she fell,
exemption clause did
not apply.
WEEK 1
Area of Law
Case
Issue
Name
Negligence Law
Duty of Care for
manufacturers
Donoghue
v
Steventso
n
Customer drinks
ginger ale from bottle
with a decomposed
snail inside
Can you be liable for
negligence if there is no
contract between the
parties?
Yes.
Neighbour Principle: means you
have a legal obligation (duty of
care) if (1) the risk of injury is
reasonably foreseeable, and (2)
there is a close relationship
(proximity) between the parties.
In this case, manufacturers owe a
duty of care to customers because
(1) it is reasonably foreseeable
their customers can be harmed if
their products are not manufactured
safely and (2) there is a proximate
relationship being manufacturer
and customer.
Negligence Law
Duty of Care for
manufacturers
Negligence Law
Duty of care for
Property
Owners and
Occupiers
Grant v
Australian
Knitting
Mills Ltd
Modbury
Triangle v
Anzil
Plaintiff (Dr. Grant)
bought underwears
that were
manufactured by the
defendant (Australian
Knitting Mills/AKM)
and suffered
dermatitis after
wearing the
underwears.
The dermatitis was
caused by excess
sulfites that were
present in the
underwear, due to not
properly rinsing the
clothing.
Did the manufacturer
owe a duty of care to its
customer even without
a contract?
Modbury shopping
center has an outdoor
parking space.
Does Modbury, a
property owner, owe a
duty of care to
occupiers (Anzil) who
are injured at the
property, if the injury
was done intentionally
by a third person?
This outdoor parking
space turns its lights
off after 10 pm
Yes,
Neighbour Principle: means you
have a legal obligation if (1) the risk
of injury is reasonably foreseeable
and (2) the person is closely
connected to you in some way
(proximity).
In this case, Dr. Grant and the
company have a customer manufacturer relationship. It is also
foreseeable that if the excess
sulfite was not washed out during
the manufacturing process, it can
cause injury to customers.
NO. Modbury was not liable for
damages to anzil.
The property owner does not have
the duty to control a third party from
harming others if the harm was
from a criminal act.
One sunday night,
Anzil closed his video
shop at 10:30, in
which he ran into
three unknown men
who then injured him
The rule may be reconsidered if
there is a high degree of certainty
of future foreseeable harm, and the
lack of action to prevent it.
Anzil sued modbury
for damages from
negligence and was
successful. Then
modbury appealed to
the high courts
But in this case, no.
No high degree of certainty
Application of test practice:
Relationship of property owners
and occupiers
Risk was not reasonably
foreseeable because it was done
by a third party
Short version:
An employee named
Anzil was attacked by
three unknown men.
He believes its due to
the shopping center’s
negligence
Negligence Law
Club Italia
v Ritchie
Duty of care for
Property
Owners and
Occupiers
Club Italia was
hosting a ball which
quickly escalated into
a huge fight involving
at least 30 people.
The club then called
the police, and they
were not informed of
the situation.
Ritchie, one of the
policemen, was
attacked and
seriously injured.
Then ritchie sued the
club for not doing their
duty to take steps to
prevent him from
harm
Short version:
A police officer
(Ritchie) was called to
a club to resolve a
huge fight, but was
injured in the process
because he was not
properly warned.
Group 3:
Negligence Law
Duty of care:
Mental Harm
Tame v
NSW
Should Club Italia be
liable for the actions of
a third party, if
governed by the same
rules as the Modbury
case?
Yes.
Or were the
circumstances different
enough to lead to a
different ruling, where
Club Italia should’ve
taken preventive
measures to protect the
police on their
property?
Holton was, in fact, under the
control of the club. The club
allowed for Holton to continue to
misbehave, and inflict harm on
others.
Does club italia owe a
duty of care to ritchie.
The appeal mentioned that Club
italia had no control over the
actions of Holton.
BUT
Application of test practice:
Neighbor:
Close neighbor relationship of
property owners occupiers
Risk was reasonably foreseeable,
because Club Italia had control
over Holton’s behavior
Did the police officer owe No. Police officer did not owe a duty
Mrs Tame was involved a duty of care to Tame
to Mrs tame.
in a car accident which for reporting the blood
was not her fault to
alcohol test?
A police officer’s duty is to make
begin with
reports, not to protect people from
emotional harm.
Her alcohol test
The harm inflicted was not
showed that she was
reasonably foreseeable.
sober, but the officer
accidentally wrote 0,14,
which is a high alcohol
reading, but was later
Application of test practice:
corrected.
S 73 wrongs act
1. P was at the scene
Mrs. tame was
concerned that people
would have a negative
image, and developed
depression.
2. Loss was not reasonably
foreseeable
She sued the police
and the state of NSW
Short version:
Mrs Tame sued a NSW
and the police officer
for recording her
alcohol test wrong,
which made her
depressed.
Group 4:
Negligence Law
Annetts v
Australian
Safeway
Stations
Duty of care:
Mental Harm
James annet went to
Did Australian stations
work as a jackaroo at a owe a duty of care to
cattle station in western Annets not to cause
australia
mental pain and injury
James was sent there
alone at a remote
property and soon went
missing. When he was
found, he was dead
from exhaustion,
hypothermia, and
dehydration after his
car ran down.
Yes. they did owe a duty of care
Shock or mental injury does not have
to be sudden or have to have a close
physical connection between two
incidents
This gave rise to psychiatric injury
and suffering of injury
Application of test practice:
S 73 wrongs act
1. P was a close relative of D
2. Loss was reasonably
foreseeable
Mr and mrs annetts
suffered mental harm
Short version:
James annet died of
exhaustion,
hypothermia, and
dehydration during his
work which caused
mental harm to annetts
family. Annets sued
Australian safeways for
negligence
Group 5:
Negligence Law
Breach of Duty
of Care:
Rasbora v
JCL
Marine
JCL, a boat building
company, was
contracted to build
one for Atkinsons
(rasbora)
Had JCL breached its
duty of care for
Atkinson?
Yes they did breach the duty of
care
Jcl was aware of the fact that
Atkinsons was going to take it to
the sea
Standard of
Care
Group 6:
Negligence Law
JCL was aware that
atkinsons plans on
taking the boat to sea
The boat turned out
defective, which
caused injury to
Atkinsons
Atkinsons sued JCL
for negligence
Short version:
JCL made a defective
boat for Rasbora,
which they knew he
was going to take out
to sea. Rasbora
suffered injuries and
sued.
O’Dwyer v
Leo
Buring
Breach of Duty
of Care:
Standard of
Care
Leo burning produces
wine with a unique
cap, a screw on metal
cap with a plastic
stopper.
O’dwyer did not know
of this, and was
injured in the eye.
The bottle did not
have caution signs
but the bottle was in
use for a long time
without accidents
Owdeyer sued leo
JCL embraced the defective
designs knowing that it’ll likely
result in harm
Therefore: JCL owed a duty of care
to atkinson to take reasonable care
when designing or installing the
parts
Application of test practice:
Expected standard of care
1. A reasonable person, in the
position of D, would have
either notified, or made
better designs of the boat to
minimize the risk.
Weighting test
1. High possibility of risk
occurring
2. High likely seriousness
3. Cost and difficulty is
reasonable
4. Risk outweighs social
benefit
Did Leo Burning breach
their duty of care to
O’dwyer?
Negligence Law
Road users
Damages:
Causation
March v
Stramare
One of Stramare’s
employees parked the
truck in the middle of
the road for the
purpose of easily
unloading or loading
March, who was fairly
drunk, ran into the
back of the truck
A reasonable person would regard
this act as negligent.
The design itself was negligent,
and the risk was reasonably
foreseeable since first time users
would not be aware of the plastic
stopper or the force of it.
Application of test practice:
A reasonable person, in the
position of D would have put
disclaimers, or instructions, to
warn people of the risk in order
to minimize the potential risk
that could have occured.
1.high chance
2.medium likely seriousness
3.not costly to reduce risk
4.risk outweighs social benefit
Short version:
Odweyer was injured
by Leo burning’s
bottle design, and
owyer sued.
Group 7:
Yes they did breach
Was Stramare
responsible for the
damages to March, and
how much responsibility
should they bear?
Yes, stramare was partly
responsible (30%), and March was
(70%) also responsible
Stramare was wrong for parking the
truck in the middle of road, which
could impose foreseeable harm on
others
(This law was enforced to protect
motorists )
At the trial, stramare
was deemed 30%
responsible and
March, 70% because
one of the reasons
that contributed was
his drunkenness.
In this circumstance, negligence
was one of the causes that resulted
in stramares harm.
Because of stramares negligence,
March was able to be harmed as
well.
This case was
appealed
(the causation was not a result of a
new act, rather, it was a chain)
Short version:
March, who was
drunk at the time, got
injured by a truck
parked in the middle
of the road. March
sued.
The result was also foreseeable
Application of test practice:
(but for test): if the defendant
was not careless, would the
plaintiff suffer injuries?
No, both were held responsible.
Remoteness: The losses were
reasonably foreseeable
WEEK 2
Negligence Law
Duty of care:
Mental Harm
Jaensch v
Coffey
Mr Coffey was seriously injured
in a road accident caused by
Jaensch. He was taken to
hospital.
Mrs Coffey did not witness the
accident but she suffered
psychiatric trauma as a result,
in part from seeing her husband
in hospital and in part because
of what she was told about his
injuries and prognosis.
She sued Jaensch for
negligence
Short version:
Mrs Coffey suffered mental
harm by watching Mr Coffey get
hurt.
Did Jaensch owe
duty of care to Mrs
Coffey to avoid
causing
psychological harm?
YES
Legislation now provides that a
person claiming damages for
mental harm arising from shock
may only do so if:
● The person was
present at the time of
the accident
OR
● The person was a
close relative of the
person injured in the
accident.
Application of test practice:
S 73 wrongs act
1. Even though mrs
coffey wasn’t there at
the time, she was a
close relative
2. The mental injuries
were foreseeable
Negligence Law
Perre v
Appand
Perre is a potato farmer located Did Apand owe a
Yes
in SA and sells the potatoes to duty of care to Perre Apand did owe a duty
WA
for the pure economic Salient features test:
loss?
1. The damages were
Sparnon has a potato farm near
foreseeable
spanon, and he uses the seed
a. Apand knew
provided by Apand
that the
damages could
Apand grew their seeds in a
be inflicted on
risk diseased location, and
those around
knew that the seeds would be
Sparnon
used on sparnons property (he
2. Perre was vulnerable
knew of the danger he could
a. Perre was not
inflict)
aware of
Apand’s
Sparnon’s potatoes were then
activities
infected.
3. Perre belonged in a
determinate class
WA prohibits import of potatoes
Reasonable foreseeability
with any bacterial wilt, so perre
satisfied:
could no longer sell it to WA,
Apand knew selling the infected
and suffered purely financial
seeds could affect farmers
losses
(such as Perre) who were close
to Sparnon’s farm.
Sparnon and perre sued
Vulnerability exists:
append for negligence,, and
Perre was neither aware of
court deemed apand liable to
Apand’s activities nor, in any
sparnon and not perre.
event, able to protect his own
Perre appealed
interests and farm from the
Short version:
damage
Perre sued Appand for giving
Determinacy of class:
harmful seed to Sparnon (his
Apand was aware the group or
neighboring farm) which made
class of people who could be
him unable to export his
affected by selling the infected
potatoes. Sued for economic
seeds near Spanon’s property
losses..
were farmers (such as Perre)
The Defendant owed the
Plaintiff a duty of care to
prevent causing even pure
economic loss
Caltex Oil v
The Dredge
Willemstad
Operator of a dredge damaged
the piplies of Caltex oil
Caltex oil sued for negligence
of economic loss because they
could no longer extract the oil
Note: The operator was aware
that caltex oil used this pipeline
Duty of care:
Pure Economic
Loss
Negligence Law
Duty of care:
Pure Economic
Loss
Did the operator owe Yes
a duty of care to
Damages awarded to caltex
Caltex when the
are the costs of using
damages were purely alternative source of transport
economical?
for the oil
Salient features test
1. Relationship
established
2. Loss was reasonably
foreseeable
3. Determinate class
4. Caltex oil was
vulnerable because it
would have costed
them a lot to find
another supplier
Negligence Law
Duty of care:
Pure Economic
Loss
Johnson
Tiles v Esso
Facts:
Did esso owe a duty
Esso is the sole supplier of gas of care to respective
in victoria
plaintiffs
Gascor is one of the distributors
of gas
Both parties
They both have a contract in
which Esso is not help
responsible for failure to supply
gass
And retailers were protected
from any inability to supply gas
1998, there was a huge
explosion causing there to be
no gas supply, and it was due
to esso’s carelessness
Gas customers were divided
into two
1. Those who suffered
property damage and
further losses
2. Those who suffered
economic losses
(private customers,
employees, etc)
Short version:
Because of a gas explosion,
Esso failed to supply to
businesses, and also affected
employees as well.
Note:
They had a contract beforehand
that Esso will not be held
accountable if they fail to
supply.
P was divided into 3 categories
1. Those who suffered
physical damages
2. Gas users (private and
business)
3. Employees
Duty of care owed
Those who suffered physical
damage:
– YES, owe a duty to not
cause property
damage
Applying the salient features
test
Private users and business
users:
– Harm was reasonably
foreseeable, and a
relationship exists
– From a determinate
class (esso knew who
were their customers)
– Extra: Could not
defend itself on the
grounds that its actions
were legitimate
business activity
BUT
Vulnerability:
– Was not vulnerable
since they were not
fully reliant on Esso
and could have had
backup equipments or
businesses could have
had other suppliers
– Was not vulnerable
since gas supply was
never fully guaranteed
(gas explosions are not
fully unexpected)
Contract terms:
– supplier was not
responsible for losses
– Statue: inappropriate to
impose a duty
THEREFORE: no duty of care
was owed
Employees
1. Relationship exists
2. Risk was reasonably
foreseeable
BUT
-was not from an indeterminate
class (Esso could not have
known about how many
employees were at risk, or the
potential number of people they
are supporting)
THEREFORE: no duty of care
exists
Reasonable foreseeability
and Relationship satisfied
Esso supplied gas for the
purpose of purchase and use
by the gas customers
amounted to a sufficiently
proximate relationship
The relationship between Esso
and the stood-down workers
was also proximate
Determinate class
Esso had knowledge of the
number and type of gas users
and customers prior to the
interruption. Therefore
determinate class.
Esso had no knowledge of the
number of people who could be
affected by the employees
being fired – potential unlimited
plaintiffs. Therefore
indeterminate class. No duty
of care
owed for these plaintiffs.
Vulnerability did not exist for
the gas users
All gas customers had chosen
to use gas, were aware that the
supply was neither completely
certain nor guaranteed, and
could have purchased back-up
equipment or
insurance to reduce their
exposure to the risk of
interruption.
Did not take responsibility of
the risk
The chain of contracts showed
that Esso had NOT assumed
the risk for pure economic loss.
Indeed, if liability was found,
the scope of liability would be
limited by the terms of
the contract
Negligence Law
Breach of duty
of care:
Weighting Test
Romeo v
CCNT
CCNT was in charge of
Dripstone Park, which had tall
cliffs. On top of the clifffes,
there were car parks with low
fences and signs
No fencing around the cliff
itself, but was clearly visible
Romeo was drunk one night
and injured herself when she
fell off
Romeo then sued CCNT and
was unsuccessful, even after
appeal
Short version:
Romeo sued CCNT for not
taking enough steps to prevent
her from falling off the cliff.
Was a duty of care
NO
breached to Romeo? Possibility of falling off the risk
was foreseeable IF no care
was given
BUT
Applying the weighting test
A. Likelihood of risk was
very low, and it was
very obvious to the
point that Romeo
should have taken
reasonable care of her
own safety
B. Magnitude of harm:
High seriousness of
harm (there is serious
risk)
C. Reasonable protection
was given because
there was no need to
spend more than
CCNT have
a. CCNT did
provide
sufficient
protection
against the risk
b. the extension
of the fencing
around the cliff
was
unnecessary
Negligence Law
Breach of duty
of care:
Weighting Test
Negligence Law
Case that
established the
but for test
Damages:
Causation
Harris v
Bulldogs
Rugby
League Club
At the Bulldog Rugby Leage
club, there have been cases of
the crowd releasing fireworks,
although no one wa injured
One day, Harris was injujred on
the left eye by the firework, and
sued the club for negligence
It was established
NO
that the club did owe
1. The club already took
a duty of care
enough preventative
measures through bag
Did the Club breach
searches
its duty of care to
2. It wasn’t reasonable to
Harris?
ask the club to do
anything more
Short version:
Extended: Did the
(like individual body searches,
Harris sued the club for not
Club breach its duty dogs, etc)
doing enough to keep him from of care to Harris by
3. Not reasonable to ask
getting hurt from the fireworks. not preventing
the club to stop the
injuries caused by
game
unauthorized or
illegal use of
Extra:
fireworks by the
Context of the weighting test
crowd?
1. Low possibility of injury
happening
2. There was potential to
suffer a serious injury
3. The club already took
enough preventative
measures through bag
searches
a. It wasn’t
reasonable to
ask the club to
do anything
more
b. Not reasonable
to ask the club
to stop the
game
Chappel v
Hart
Dr.Chapel=ear nose and throat Did Dr Chappel’s
specialist
failure to warn
contributed to the
Mrs hart, who had a
cause of the
degenerative condition, was
damages?
advised by Dr Chapel to
operate because it would have
required an operation sooner or
later
Mrs hart made it clear that she
YES
He did contribute
Applying the BUT for test:
If Dr. Chappel was not careless
(by not warning Hart), Hart
would NOT have suffered the
did not want a damaged voice
and dr hart did not warn her
properly
There was an infection during
the operation which left her with
a damaged voice. Hart sued
chappal for not warning her
properly (since the operation
was negligence-ness)
Hart was awarded damages, dr
chappel appealed
Short version:
Hart sued Dr for not warning
her properly of the damages
she could have taken from the
surgery.
injury or loss.
WEEK 3
Negligence Law
Defences:
Disclaimers
Hedley
Byrne v
Heller
Hedley Byrne were
advertising agents placing
contracts on behalf of a
client on credit terms.
Hedley Byrne would be
personally liable should the
client default.
Can a negligent
misstatement give
rise to an action for
damages for
economic loss?
NO.
Did Esso owe a duty
of care to Mardon in
making pre
contractual
representations?
YES
To protect themselves,
Hedley Byrne asked their
bankers to obtain a credit
reference from Heller &
Partners (‘H&P’), the client’s
bankers.
The court found that although
a duty of care would normally
exist in this case, H&P’s
disclaimer was sufficient to
protect them from liability and
Hedley Byrne’s claim failed.
This is because the disclaimer
removed the owing of duty of
care by the defendant’s and
the plaintiff agreed on this
when signing the document.
The reference (given both
orally and then in writing)
was given, but also
contained an exclusion
clause to the effect that the
information was given
‘without responsibility on the
part of this Bank or its
officials’.
Hedley Byrne relied upon
this reference and
subsequently suffered
financial loss when the client
went into liquidation.
Negligence Law
Duty of care:
Negligent
Misrepresentatio
n
Esso
Petroleum v
Mardon
(Done by
CB)
Mardon took a lease of
Esso’s new Petrol station.
Esso’s experts had
estimated that the petrol
station would sell
200,000 gallons of petrol
in three years. This
estimation was based on
a plan which was already
altered, but Esso never
changed the facts for
Mardon.
So, the garage never
sold more than 70,000
gallons and suffered
huge financial losses.
Mardon sued Esso.
Esso can sue for breach of
contract
1. A special relationship
exists between esso
and mardon
2. Therefore esso owed
a duty of care to
mardon when
advising future petrol
sales
Application of special
relationship test:
1. The statement in
relation was a serious
or business matter
because it has to deal
with an investment
and future income
2. The advice giver
should have realized
that they are being
trusted and relied
upon, since they know
that the words of the
contract should be
true
3. It is reasonable to rely
on the advice given,
yes since they trust
the information given
by experts relating to
the contract terms
Negligence Law
Duty of care:
Negligent
Misrepresentatio
n
L Shaddock
& Assoc v
PCC (Done
by VT)
Shaddock was a land
developer interested in
buying land in parramatta.
Before shaddock bought the
land, they asked PCC
whether there will be any
road widening construction
going on, in which PCC said
NO.
Did PCC owe a duty
to take reasonable
care in responding to
shaddock’s
question?
Yes
Did PMH owe a duty
of care to Esanda
Finance?
NO
After Shaddock bought the
land, PCC decided to widen
the road.
Shaddock couldn’t sue for
breach of contract, so sued
for tort of negligent
misstatement.
Negligence Law
Duty of care:
Negligent
Misrepresentatio
n
Essanda
Finance
Corp v PMH
(Done by
RRH)
Excel hired PMH (defendant)
to audit and give reports for
them to determine their
financial situation.
Excel then gave the report to
Esanda finance, who used to
report to assess Excel’s
situation. Esanda finance
chose to invest in Excel.
The audit report turned out
to be wrong, and Esanda
finance went bankrupt.
Esanda finance sued PMH
for negligent misstatement
since the audit was incorrect.
Applying the special
relationship test
1. The statement in
relation was a serious
or business matter
because its buying
land, which deals with
a lot of money
2. The advice giver
should have realized
that they are being
trusted and relied
upon. PCC should
have known that they
are asking, so that
they can decide to
seriously invest,
therefore is looking for
accurate information
to rely on.
3. It is reasonable to rely
on the advice given,
since PCC holds the
authority of the road
expansion
Applying the esanda finance
test
1. PMH knew that
Esanda finance would
rely on the auditing
report
BUT
1. PMH did not intend
for Esanda to act on
the information
a. The audit
report was
given so that
Excel could
use it, not
Esanda
Short version:
Esanda finance sued PMH
for giving them the wrong
audit report which caused
them to invest in the wrong
business
Negligence Law
Duty of care:
Negligent
Misrepresentatio
n
Hill v Van
Erp
As a solicitor, Hill, wrote up a
will that was to be witnessed
by the husband of the
beneficiary.
But in Queensland, this is
invalid, so the beneficiary
could not receive anything.
Beneficiary sued Hill for
negligence.
WEEK 4
finance
The defendant was aware the
information would be relied
upon by the plaintiff
BUT
– The defendant did not
take any responsibility
for Esanda’s loss or
reliance on the audit
– The defendant did not
intend for the plaintiff
to act on the
information. The audit
was written for Excel,
and was never
intended to be relied
upon by lenders such
as Esanda to act on it
(such as lending
money)
– It was not reasonable
for Esanda to rely
upon the information
because the
defendant did not
prepare the audit for
Esanda or other
lenders to lend money
to companies
associated with Excel.
Did Hill owe a duty of
care to the
beneficiary even
though the
beneficiary suffered
no physical injury or
loss?
YES
Special relationship test
1. Yes it was a serious
matter. It has to deal
with a lot of money.
2. Yes, the solicitor
should have known
that the beneficiary
would have relied on
whom they think are
experts to give them
advice, and to do the
correct procedure.
3. Yes, as part of the
solicitor’s job, Hill
should have known to
do the right thing. So,
Van Erp was correct
in trusting her.
Contract
Formation Law:
Invitation to treat
Pharmaceut
ical Society
of Great
Britain v
Boots Cash
Chemist Ltd
Background:
S 18 of the Pharmacy and
Poisons Act states that
people aren’t allowed to sell
certain drugs without the
supervision of a registered
pharmacist
When was the
contract made?
– When a
customer
selects items
or at the
counter?
Defendant (boot) opens up a
pharmacy in which
customers pick their own
medicine, and then takes it
to the counter to be
supervised by a pharmacist.
Who made the
contract?
– Retailer in
displaying
the items or
customer
when
presenting
goods at
checkout
point?
Was it an offer?
Boot’s job was to prevent
removal of drugs and was
sued as a breach of s 18.
Main issue involved the
contractual principles
No
Offer was made by customers
when presenting items at the
checkout point
Displaying the goods was an
act of invitation to treat.
Short version:
Boot got sued for breaching
s18 of the pharmacy act.
Contract
Formation Law:
Harvey v
Facey
Offer
Bumper hall pen-property
owned by Facey in which
Harvey wanted to buy
Was facey reply to
an offer to sell
bumper hall pen to
Harvey for 900?
Harvey sent a Telegram
asking if Facey wanted to
sell Bumper hall, and asked
for the lowest price.
NO
Facey was just answering the
enquiry made by Harvey, and
did not agree to sell.
The only offer made was by
Harvey.
Fancy replied that the lowest
price is 900 pounds.
Harvey responded that he
agreed to buy for the sum of
900, and please send us the
title deed and asked for early
possession.
Facey refused the sale, and
Harvey sued for breach of
contract.
Short version:
Facey refused the sale of
Bumper hall pen to Harvey
after answering that the
lowest price they can offer is
900.
Contract
Formation Law:
Carlill v
Carbolic
Smoke Ball
Company advertised a
smoke ball as a medicine
and promises in an
Was there a binding
contract between the
parties?
Yes
The advertisement was an
Offer
advertisement to pay 100
pounds to any person who
contracts the flu after using
smoke ball
offer made to the ‘whole word’
Was an offer made?
Carbolic smoke ball made and
express promise to pay 100
pounds to anyone who
contracts flu after using the
ball
Carlill (plaintiff) uses the ball
but contracts a flu since he
relied on the ad
An offer can be made to the
whole world-and will become
a contract with anybody who
comes forward and performs
the condition
Just by performing the act,
completes the agreement
Carbolic smoke ball refuses
to pay carlill the 100 lb
because the words of the ad
did not amount to an offer as
it was too vague and
unreasonable (no time limit
and no means to check
whether consumer used the
ball)
-depositing 1000 in the bank
shows that they are serious
and intended so
Short version:
Company put out that if you
get the flu after using the
smoke ball, they’ll pay you
100 pounds
The advertisement was an
offer made to the ‘whole
world’ – Carbolic Smoke Ball
made an express promise to
pay 100 pounds to anyone
who contracts flu after using
the ball
An offer can be made to the
whole world – and will
become a contract with
anybody who
comes forward and performs
the condition
Contract
Formation Law:
Hyde v
Wrench
Counter-Offer
Wrench offered to sell his
property to Hyde for 1,000
pounds.
What happened to
the transaction after
the counter offer of
950?
Hyde made a counter offer
of 950 pounds.
Wrench disagreed so Hyde
replied that he agreed to pay
1,000.
Counter-Offer
Turner,
Kempson &
Co v Camm
TK made an offer saying that
they were willing to supply
15 tons of raspberry pulp for
45 pounds per ton, to be
delivered and paid in cash in
7 days.
Wrench did not have any
obligation to sell because his
offer was first rejected by
hyde.
After the counter offer,
Wrench rejected the offer.
What Hyde mentioned at the
end was another offer, which
Wrench ignored.
Wrench never replied and
later refused the offer and
did not transfer the land.
Contract
Formation Law:
No agreement was made
Was Camm’s
acceptance a new
counter offer?
YES
Because there was a change
in terms of TK’s offer, or an
addition to the terms.
Therefore, it is a new counter
offer
Camm accepted but added
that
– Free delivery of 3
lots of 5 tons each,
10 days in between
– If there are any
faulty packaging or
so on, they are able
to be claimed no
later than 14 days
TK refused to deliver
Contract
Formation Law:
Routledge v
Grant
Revocation
Grant offered to buy R house
and mentioned that the offer
was open for 6 weeks.
Grant later wrote a letter to
withdraw the offer, within the
six weeks, and before it was
accepted.
Was Grant entitled to
withdraw his offer
even though he had
promised to keep it
open for six weeks?
YES
He can revoke the offer as
long as it is before it is
accepted
Reject R
R suffered from this because
he bought another house
thinking that this house
would be sold to him.
R sued G
Contract
Formation Law:
Masters v
Cameron
Acceptance
Masters wanted to buy
Cameron’s farm and made
an agreement which
contains these terms
-” this agreement is made
SUBJECT to the preparation
of a formal contract…”
Did a contract exist
between masters v
Cameron, and did
Masters accept it?
The memorandum covered
everything including the
sales price of 17,500 which
was paid by Masters.
Later, Masters suffered a
financial problem, so he
refused to proceed.
There are three possibilities
1. There is a contract
which is immediately
binding, and one of
the terms is that
formal documentation
will be prepared
2. There is a contract
but nothing can
happen until a formal
document is prepared
(condition precedent)
3. There is no contract
Because in the agreement,
there was a phrase which said
“subject to contract”, this
means that it was not final
and unqualified. Therefore,
there was no contract.
WEEK 5
Contract
Formation Law:
Todd v Nicol
Mrs Nicole offered for her
niece and sister in law to
move from Scotland in order
to live with her.
Did the family
arrangement amount
to a contract ?
Yes
–
There was a high cost
that Todd already
Intention
(domestic relationship)
Was it an intention?
She promised that she will
continue to provide for her
accommodation until her
niece gets married, and after
she dies, she will give away
the house to them.
Do they have the
intention to be legally
bonded?
One day, they both had an
argument and Nicol kicked
Todd out of the house, but
Todd argued that they had
already made a contract.
sacrificed. She quit
her job and sold her
furniture.
– There was no
evidence of a
“condition
– Therefore, there is an
intention to go into a
contract despite the
domestic relationship
since it has a strong
commercial flavor
To address the seriousness
and sacrifice (lecture slide)
1. Nicole offered rent
free accommodation
and to give their
house to Todd when
Nicol dies
2. Todd sold the house,
quit her job and
travelled to Australia.
High cost of the
journey
3. Todd will potentially
become homeless if
Nicol was allowed to
break the agreement
4. Nicole included Todd
her her will, while the
Todd’s moved from
Scortland to South
Australia. There was
no condition in her
agreement
Contract
Formation Law:
Intention
Rose and
Frank v JR
Crompton
Crompton, a company,
agreed to make Rose and
Frank an exclusive
distributor of Crompton’s
tissue products.
It is a commercial
relationship.
The content of the
agreement includes things
saying that it was not a
formal contract, and will not
be subject to legal
jurisdiction, etc.
Basically (content of
contract):
This isn’t a contract. The
three parties agree that it
Was there a
contract?
Do they have the
intention to be legally
bound?
No
It can be rebutted for this
commercial relationship
Because there is strong
contrary evidence
Their intention was clear
because the agreement
mentioned that they did not
want to enter into a legal
relationship with each other.
All three parties signed an
agreement that mentioned
they did not intend for the
agreement to be a contract.
It is the exception to the
assumption that there will
always be an intention if it is a
cannot be enforceable by
law. And if there is an issue,
we will deal with it ourselves.
commercial agreement.
Rose and frank sued for
breach of contract
Contract
Formation Law:
Stilk v
Myrick
Consideration
Stilk is a seaman for the sea
trip from London to the Baltic
and back.
Was it a valid
consideration?
No
Not supported by
consideration
-stilk already has a previous
duty as a seaman to do his
job, including the extra
emergency services
– bad consideration due to
past obligations
Soon after, more and more
crew left the job and the
captain promised to give pay
raises equivalent to two
seamen.
After the voyage, the captain
refused to pay and Stilk sued
for breach of contract.
Contract
Formation Law:
Consideration
William v
Roffrey
Bros and
Nichols
William made a contract with
Roffrey to provide carpentry
services for him, the agreed
pay was 20,000.
William then suffered from
difficulties, and asked for
extra pay of 75 pounds per
flat.
After William finishes his
work, Roffey refused to pay
arguing that there was no
consideration to make the
promise binding.
Did Williams provide
consideration for
Roffey’s promise to
pay the extra
amount?
RB, building contractors,
contracted with W for him to
undertake carpentry work on
some flats RB were
renovating for a local
Council.
W fell behind the work
schedule, and RB promised
W extra money to complete
the work
on time.
When more work was
finished, RB later refused to
pay the extra money, relying
on the
principle of Stilk v Myrick.
Contract
Formation Law:
Pinnel’s
case
Someone owed Pinnel 8
pounds 5 s which was due
on november 11th.
Yes
It was decided that a promise
to perform an existing
contractual duty could be
subject to consideration if the
promisor has extra benefits.
(or by not doing so, there will
be a case of failure to
perform)
There was a practical benefit
for roffery because
1. Williams kept on
working which saved
roffery from looking
for another carpenter
2. The contractual
losses that would
have been incurred if
roffrey did not
complete the
renovation on time
Here, RB did gain a practical
benefit:
if W had not finished on time
RB would have had to
find another carpenter, would
have had to sue W and, most
important, would have
breached its contract with the
owner (the local Council).
Did the debtor
provide consideration
for Pinnel’s promise
Yes
By paying Pinnel early, he is
receiving extra benefits.
Consideration
The debtor paid 5punds 2s
and 6d one month before the
debt was due and Pinnel
accepted that this part
payment would cancel all the
previous debts.
to accept the lesser
amount in full and
final satisfaction of
the entire debt?
The first exception to
“negotiating debts”
By paying before the due
date, he is earning extra
benefits.
Pinnel sued the debtor for
the remaining balance.
Contract
Formation Law:
Foakes v
Beer
Consideration
Mrs beer had previously
sued Foakes which caused
Foakes to owe her 2090
pounds and 19 s.
Because Foakes could not
pay immediately, they made
a contract to pay 500 now,
and the amount left over of
1690 and 19 s would be paid
in installments of 300 each.
Did Foakes provide
any consideration for
Beer’s promise to
accept the judgment
debt in interest-free
instalments?
In favor of Mrs. beer.
– Payment of a debt
without something
extra does not
discharge the debtor’s
obligation to pay the
full debt.
Mrs beer did not claim any
interest in the agreement.
Foakes continued to pay but
soon, Mrs beer asked to
claim the interest.
Foakes says that it was not
in the agreement, however
mrs beer said that the
agreement was not
enforceable.
Promissory
Estoppel
Walton
Stores v
Maher
Maher is the owner of a
property with buildings on it
Walton stores is interested in
the agrea but wanted to
demolish a building and
rebuild another one.
Maher took action and
demolished the building and
began building a new one,
but no contracts were signed
because of a failed
negotiation
Walton made its lawyers
slow the deal but continued
letting maher demolish the
building
Walton then backed out
even though Maher was in
the middle of building a new
Was Maher entitled
to rely on Waltons
Stores’
representations in
order to enforce an
agreement between
the parties, even
though no written
contract had been
completed?
Yes
Maher was permitted to
believe that any formal
contracts were formalities
This meant that Maher could
rely on “promissory estoppel”
the elements of equitable
estoppel (including
promissory estoppel) are:
– A promisor makes a
promise;
– Promisor creates or
allows an assumption
that the promise will
be kept or a contract
will be created based
on this promise;
– The promisee relies
on this to their
detriment; and
– It is unconscionable
building
Exception to past
consideration
Re Casey’s
patents
Maintiendrai
v Quaglia
S&C arranged for Casey to
undertake marketing
activities to promote an
invention but did not discuss
payment for services.
After Casey performed his
duties, S&C agreed that
Casey will get 1/3 share of
the invention
S&C refused to give him the
1/3 due to past
consideration.
for the promisor to
ignore the promise.
Casey provided good
consideration because there
was an implied expectation
that his services will be paid
for – in this case the agreed
1/3 share of
ownership
1. Promissor makes a
promise
2. Assumed that legal
relationship existed
3. The tenants continued
to occupy the rented
shop because they
were promised to
lower rent
4. The landlord wanted
to keep the shop
occupied
5. The detriment was
having to pay back
owing rent all at once
rather than being able
to pay it monthly as
permitted by the
written lease
WEEK 6
Express Terms
Express Terms
DJ Hill v
Wright
Oscar
Chess v
Williams
Wright agreed to carry
valuable machinery for DJ
but ended up causing
damage to the machinery
through negligence.
Was the exemption
clause a term of the
contract?
Secondly, the form that
contains the exemption clause
did not appear to look like a
contract, therefore there was
no reason for the employees
or Hill to think of it as anything
else.
Hill and Wright already had
10 similar dealings in the last
8 month before this incident,
and everytime, an employee
would sign the form without
reading them.
So, the signature rule does
not apply!
William sold a car to Morris
for 290 pounds. According
to the registration book, the
car was a 1948 model.
Therefore, the exemption
clause was NOT a term.
Was the oral
representation that
the car was a 1948
model a warranty
(term of the contract)
or a mere
representation?
Age of the car was very
important and can have a
huge impact on the price
because the 1948 model had
a higher trade in value.
Blakney entered into a
contract with Savage to build
him a fancy boat that was
estimated to be able to go 15
miles per hour.
The boat could only go up to
12mph so Blankney sued for
breach of contract.
A mere representation
The court knew that Williams
was unaware, since he got
the information from a
registration book that was
tampered with by someone
else. (So it was an innocent
misrepresentation)
The representation was
definite and unqualified.
Don’t understand how it
relates to reasonable
bystander test
The difference between the
two values was 115 pounds,
so Oscar sued for breach of
contract.
JJ Savage v
Blakney
First, whatever that was
written on the form was done
POST contract.
The contract was agreed by
telephone, and at the point
of delivery, an employee
signed a form.
This form contains a clause
in which excluded liability for
the damage caused.
Turns out, it was actually a
1939 model, but Williams
was unaware of this.
Express Terms
Oral
representation,
must be
promissory
NO
Was the
representation
(estimated speed of
15mph) a collateral
contract?
In favour of Savage (the boat
builder)
– a statement or
representation is not a
collateral contract
merely because it is
one of the factors that
caused Blakney to
enter into the contract
– The statement was
NOT promissory
Express Terms
Four corners rule
or deviation rules
Sydney
Corporation
v West
SC is the owner of a carpark.
West parked at this place
and got handed a ticket but
did not get the chance to
read it.
Note that he is a frequent
user of the car park.
Did the exemption
clause protect SC,
even though it was
part of SC’s
contractual duties to
not be careless?
No
Even though the exclusion
cause was a term on the
contract, the exemption
clause itself did not cover the
SC’s actions.
In the contract, SC and West
agreed that Sc would not be
liable for damages “however
such loss..” which is
interpreted to be the loss
arising from the storage of the
car.
The ticket actually had an
exclusion cause, but there
was no alerting of this for the
car park users.
The exclusion clause
basically states how they
arent going to take any
responsibility for the loss and
damage of any vehicles.
Therefore, the clause did not
cover the losses outside of
the four corners, which is the
case of West.
Afterwards, there was a thief
who tricked the attendant
and was able to damage
West’s car.
Express Terms
Van Den
Eschert v
Chappell
VDE agrees to sell a house
to Chapppell.
Before signing the contract,
Chappell asked if there were
any ants in the house in
which VDE said no.
Was Van Den
Esschert’s oral
assurance about the
white ants a term of
the contract?
Later on, Chappell found
ants in the house, and it cost
her 60 pounds to get rid of
them.
Also, the oral statement was
made right before the signing
of the contract.
Chappell sued for damages
Lastly, the assurance of not
having the ants in the house
was an important statement
that played a part in
Chappell’s purchasing
decision.
and breach of contract (for
the warranty regarding the
ant→ basically the oral
version)
Olley v
Marlboroug
h Court
Olleys booked a room in the
MC hotel.
On the door, they notice a
sign which says that they will
not be held responsible for
any loss or stolen things.
The oral representation is a
promise.
Firstly, the statement sounded
like a promise because it was
an affirmative answer.
(if there were any, i would
have gotten rid of them
anyway)
Note that the contract did not
mention anything about ants.
Express Terms
Yes
Was the sign on the
door a term of
contract?
No
The contract was made at the
reception desk. Therefore, the
sign on the door is AFTER the
contract is made.
Mrs olleys furs were stolen
due to the carelessness of
the hotel, and mrs olley sued
for damages..
So, the sign on the door is not
a term, and the exemption
clause is invalid.
The hotel claimed that
because of the sign, they are
not liable.
Calculating
Damages
Hadley v
Baxendale
Because of a broken
crankshaft, Hadley could not
continue his/her work at the
flour mill.
Bax was hired to take the
shaft and get a new one
manufactured.
Were the losses
resulting from the
mill’s closure losses
that flowed in the
ordinary course of
things?
The court held that it was not
in the usual course of things
that the mill would stop
altogether because of a
broken shaft.
It was reasonably possible
that the mill would have a
spare shaft, or that it could
acquire one.
Bax had no knowledge of
what goes on in the mill or
the importance of the shaft.
So because of his
carelessness, the shaft was
unable to be manufactured
for a long time which caused
the mill to be inoperative for
many days..
Hadley sued for losses.
Extra from Lecture slides
Exemption clause
Photo
Productions
v securicor
A security guard burned
down the factory that he was
supposed to be protecting.
Did the clause cover
the fundamental
breach?
The contract provided:
‘Under no circumstances
shall Securicor be
responsible for any acts by
their employee
unless such act or default
could have been foreseen
and avoided by the exercise
of due diligence by the
employee and the company’.
Oceanic sun
line v Fay
A document was provided in
Australia to prospective
Australian passengers on
a sea cruise.
The cruise ticket was not
available in Australia. This
document referred to
Yes,
The fundamental breach here
is the burning down of the
building, which caused the
contractual agreement to be
destroyed.
The clause protected
Securicor because the act of
setting fire to the factory by
the employee could not have
been foreseen (not expected)
and avoided with due
diligence.
Is there any unsigned
writing incorporated
into the contract?
No,
The High Court found that the
terms contained on the ticket
prior to embarkation in
Greece were not terms of the
contract.
conditions and terms
contained in the shipping
contract.
This was because of the
failure to give the passenger
ACTUAL notice of the terms
that had been added.
Prior to departing on the
cruise in Greece, the
passenger was given a ticket
containing terms of which
they had not been previously
notified in Australia.
L’Estrange, bought a
cigarette slot machine for
cigarettes from Graucob,
and the agreement included
an express clause stating
L’estrange v
Graucob
Whether the clause
excluding all terms
not stated in the
contract should be
deemed effective and
binding.
YES
Binding, because she signed
it which communicates her
intentions to be bound by it.
Did the parties intend
to contract on the
basis that the oral
representation was a
warranty not subject
to the disclaimers in
the catalogue?
In favor of Couchman.
“This agreement contains all
the terms and conditions
under which I agree to
purchase the machine
specified above and any
express or implied condition,
statement, or warranty,
statutory or otherwise not
stated herein is hereby
excluded”
The fact that she had not read
it yet does not matter.
The machine proved to be
faulty and the Lestrange
sued for breach of Sale of
Goods Act.
Couchman
V Hill
Heifer means a pregnant
cow
Unserved means haven’t
mated with a male
Couchman bought a heifer at
an auction that was
described in the catalogue to
be “unserved.”
Before purchasing the heifer,
he asked if the animal was
really unserved, and the
owners said yes.
Later on, it was found that
the heifer was in calf and
died.
However, the catalogue also
Intention of parties to contract
was based on the oral
representation and
assurance, and not on the
conditions of the catalogue.
Therefore, oral representation
prevailed over written terms
contained the following:
“All lots must be taken
subject to all faults or errors
of description (if any), and no
compensation will be paid for
the same.”
WEEK 7
ACL Consumer
Guarantees
Atkinson v
Hastings
Atkinsons purchased second
hand tractor from Hastings
Tractor wasn’t working well
and overheated often
Atkinson claimed that the
tractor was not fit for the
purpose of scrub pulling
which had been made
known to Hastings deering at
the time of sale.
ACL Consumer
Guarantees
Grant v
Australian
Knitting
Mills
Plaintiff (Dr. Grant) bought
underwears that were
manufactured by the
defendant (Australian
Knitting Mills/AKM) and
suffered dermatitis after
wearing the underwears.
Were the goods
supplied reasonably
fit for the buyers
specified purpose
YES it was reasonably fit
Was the contract a
consumer contract
Because it was a second
hand, it is reasonable that it
would sometimes break down
and tear apart
Sales of Goods act 1989
applied
Lecture:
The tractor is not considered
a good because it is NOT an
ordinarily acquired good used
for personal, domestic, or
household use, NOR was it a
commercial road vehicle.
Were the goods of
merchantable
quality?
NO
The product was not safe!
Based on ACL s54(2),
acceptable quality means that
goods must be safe.
The dermatitis was caused
by excess sulfites that were
present in the underwear,
due to not properly rinsing
the clothing.
ACL Consumer
Guarantees
Carpett Call
v Chan
Chan accepted a quote from
Carpel Call of 68,839 dollars.
During negotiations, Chan
told Carpet of his
requirements
1. Good quality
2. Grey
3. Capable of
withstanding heavy
human weight
4. Suitable for
nightclub catering
Were the goods of a
type ordinarily
acquired for
personal, domestic or
household use?
Had the buyer
relevantly relied on
the seller’s skill?
Chan HAD TO pay
The goods were a type
ordinarily purchased for
personal, domestic, or
household use, EVEN
THOUGH it was used for
commercial purposes.
HOWEVER
There wasn’t enough
evidence to say that Chan
relied on Carpett’s skills,
therefore Chan had to pay
When the carpet did not
meet requirements, Chan
refused to pay the full
amount.
Carpet sued for unpaid
purchase price.
ACL Consumer
Guarantees
Beale v
Taylor
Taylor (seller) advertised a
car as the model called
Was the sale a sale
by description? What
Beale (buyer) wins!
“herald convertible white,
1961”
Beale bought it, took it to the
garage, and was told that the
car was two models molded
into one.
The back was 1961, but the
front was an earlier version.
was the description
by which the car was
sold? Had the seller
breached the
obligation to ensure
the good sold
matched the
description
According to s56(1), it must
be guaranteed that the goods
correspond with the
description.
In this case, the car DID NOT
match the description
Since the car was molded
into one, it could not be
used.
Beale sued taylor.
ACL Consumer
Guarantees
Read v
Neerey
Read took his BMW to get
the transmission fixed at
Neerey TWICE.
One specific feature of the
car was that the car could
only be started when it was
at neutral, and the switch to
turn the car neutral was
missing.
Was Nerey under an
obligation to exercise
reasonable care and
skill in repairing
Read’s car?
Had Nerey breached
that obligation? If so,
had the breach
caused the damage
to Read’s garage?
YES neerey was under the
obligation
Did the ACL apply to
this repair contract?
If so, was there a
breach of the ACL?
In favor of ZHANG
Nerey had the duty to
exercise reasonable care and
skill, which they failed to do.
And yes, Nerey did cause the
damage because Read was
previously warned about the
issue.
The switch actually went
missing because neerey
wired it incorrectly.
One day, Read started the
car and forgot to check
whether the car was on
neutral, which ended up
damaging his own garage.
ACL Consumer
Guarantees
Zhang v
United
Auctions
Zhang took his motorcycle to
get it repaired for a ticking or
tapping noise from the
engine
They repaired the
motorcycle a lot, but did not
fix the issue.
According to s 61, if the buyer
makes known to the service
provider of a particular
problem, the service must be
reasonably fit for that
purpose .
Therefore, the statue was
breached and was entitled to
a refund.
From lecture
Crago V
Multicorp
Ostrich incubator maybe
ordinarily acquired by ostrich
farmers, but not the general
public
Not ordinarily acquired for
domestic or personal use,
not normally used
domestically or purchased
[with the intention] for
personal use.
WEEK 8
Vitiating Factors
Yorke v
Ross Lucas
Misleading or
Deceptive
Conduct
Vitiating Factors
Misleading or
Deceptive
Conduct
Yorke bought the business
because of the figures that
Treasureway Stores
provided.
Turns out, the figures were
actually wrong, so Yorke
sued Ross Lucas (the agent
that provided treasureway
with the figures) for
misleading deceptive
conduct.
Collins
Marickville v
Henjo
Investments
CM bought a restaurant
from Henjo Investment
thinking that the restaurant
had the right seating
capacity after inspection
upon the many visits he did.
Had the agent
engaged in
misleading conduct
when it innocently
passed on to the
buyer the vendor’s
incorrect turnover
figures?
YES
Was the seller’s
conduct misleading
or deceptive within
the meaning of the
statute?
YES
Misleading or
Deceptive
Conduct
RAIA
Insurance v
FAI General
Insurance
FAI=insurance company
RAI= insurance broker for
the Royal Australian Institute
When RAIA was asked to
conduct an appraisal of FAI’s
policy, they concluded that
most of it was illusory.
This is the case of SILENCE
in misleading or deceptive
conduct.
The court held that the seller
should have said something
about the seating capacity
since it’s important
information.
BUT, the restaurant actually
exceeded the seating
capacity set by liquor license
and council permit.
Vitiating Factors
Even though Ross Lucas
wasn’t aware, the information
was inaccurate, therefore DID
conduct in a manner that is
misleading and deceptive.
Was RAIA’s report
(that the FAI policy
was illusory)
misleading or
deceptive? Was
RAIA correct in
arguing that it was
merely an opinion?
FAI was upset, so they sued.
YES
This is the case of a
misleading or deceptive
OPINION.
Even though it was an
opinion, RAIA is an expert,
and their words will carry
more weight.
By saying that it was illusory,
they are implying that it was
based on reasonable
grounds, but it was actually
NOT.
Vitiating Factors
Misleading or
Deceptive
Conduct
Bateman v
Slatyer
Bateman was considering
the purchase of a franchise
and the Slatyer convinced
him by saying things that can
be misleading
– Profits were
unrealistically high
– Suitable location
– Likelihood of
mortgage being
repaid
Slatyer was saying all these
misleading things because
Did the disclaimer in
the contract negate
the misleading nature
of the comments
made by franchisor in
negotiating the
franchise?
NO
His behaviour can be
considered as misleading and
Disclaimers are not effective
against misleading or
deceptive conduct
he depended on an
exemption clause/disclaimer.
The franchise ended up
losing a lot of money, so
Bateman sued.
Vitiating Factors
Unconscionable
Conduct
ACCC v
Coles
Supermarke
t
Coles=large supermarket
chain
Coles gets its products from
many different kinds of
suppliers.
Did the conduct of
Coles amount to
unconscionable
conduct?
Unconscionable
Conduct
Commercial
Bank v
Amadio
Mr and Mrs Amadio were
elderly who came from Italy,
which meant that they did
not understand much
english.
They gave a mortgage to the
bank for her son’s overdraft.
They signed the document
thinking that their son’s
business was successful, but
this was untrue and the bank
manager knew this.
The Amadios also thought
that their liability under the
guarantee was limited to
$50,000 and that it would
last only six months. But this
was also untrue, since it was
actually unlimited.
Soon after, the son’s
business failed, and the
bank sought to enforce the
guarantee and mortgage.
The Amadios sued for
unconscionability.
Coles pleaded guilty
Coles pleaded guilty to
unconscionable conduct and
was fined.
Basically, Coles developed a
rebate scheme that would
take advantage of their small
suppliers, who had no choice
but to suffer. They did this by
threatening the small
suppliers, either accepting or
not advertising etc.
Coles also penalized late or
short delivery that was not in
the contract.
Vitiating Factors
YES
Should the contract
be set aside on the
basis that the
transaction was
unconscionable?
YES
Under common law
The defendant had a
disability: little knowledge of
english, did not understand
the contract, and did not have
formal education. This put
them at an unfair advantage.
The defendant (the bank)
knew this and did not take the
time to explain to them.
Exploited the opportunity, and
forced the plaintiffs to sign an
unfair contract.
Extra from slides
Silence
(misleading and
deceptive
conduct)
Optus v
ACCC
Optus offered ‘unlimited’
download plans for users
who signed up to their
services. However, the
plans were subject to
major limitations including
speed reductions when a
certain amount of data was
downloaded.
The court found that the
use of the term ‘unlimited’
in relation to plans that
were subject to major
limitations that were not
disclosed was misleading and
deceptive. This is because the
word “unlimited” means
without restriction.
–
Misleading and
deceptive conduct
Common law
(unconscionable
conduct step 3)
Collins
Marrickville
v Henjo
Collins purchased a
restaurant partly as a result
of a belief the restaurant
had a certain seating
capacity after visiting the
restaurant and noting the
number of tables and
chairs. In fact, the
restaurant had exceeded
the seating capacity set by
the council, therefore it was
deceptive.
Bateman v
Slatyer
This was confirmed in the
case of Bateman v Slatyer
where a term that
said the purchasers were:
‘not induced by any
representations other than
those in the contract’ was
not found to be effective.
Slatyer was liable for
Misleading or Deceptive
conduct arising from
misrepresentations about the
business being sold.
Astvilla Pty
Ltd v Director
of Consumer
Affairs
Victoria
FAILURE TO
DISCLOSE
The plaintiff was a single
mother who had very little
knowledge and experience of
buying property
The defendant knew this and
Mislead and tricked the
plaintiff into buying the
property by claiming it was in
high demand (it
was actually in the market for
many years) and it was very
cheap (it was more expensive
than it was originally valued)
and that she had to buy it
immediately!!!
Common law
(unconscionable
conduct step 3)
In Kakavas v
Crown
Melbourne
Limited
FAILED
The plaintiff was an obsessive
gambler
The defendant may have
known this and
The defendant allowed the
plaintiff to continue gambling
and eventually lose $20
million
WEEK 9
Agency Law
Apparent
Authority
Freeman
and
Lockyear v
Buckhurst
Park
In Buckhurst Park
Properties, the board of
directors appointed the
agent as a managing
director but did not follow the
procedure as set out in the
company’s articles of
association yet.
They nevertheless allowed
the managing director to talk
to enter a contract with
Freeman and Lockyear to
come up with a plan for the
development of the land and
do the necessary
procedures.
Freeman and Lockyear later
sued Buckhurst because
they weren’t paid.
Buckhurst denied the
accusation saying that the
agent was never formally
appointed.
Did the agent have
authority to bind the
company by a
contract with the
architects?
YES
Although the agent was never
formally appointed and had
actual authority, he has
apparent authority because
1. The agent was
represented as a
managing director.
This means the agent
(as a managing
director) would have
apparent authority to
hire the architects for
redevelopments.
He appeared to be the
managing director to the third
party and managing directors
normally can employ
contractors on behalf of the
company.
2. The directors,
principal, were the
one who described
the agent, and they
have actual authority
to manage the
business (the
authority to enforce
the matter of the
contract)
3. A third party,
Freeman and
Lockyear relied upon
the contract because
of the “agent’s”
persuasion/induceme
nt
Third party relied
SO BASICALLY:
1. He was agent and
had apparent
authority
2. The directors who had
actual authority
appointed him
3. A third party relied on
the contract
Partnership Law
Ferguson v
FCT
Business
Ferguson is planning to
leave the Australian navy
and go into primary
production (