Questions:
1.Is Jo-Anne liable in negligence for Kate’s loss? Briefly discuss whether Herb Accounting Ltd is liable for Kate’s loss.
2.Is the Mortgage Contract between the bank and Stella enforceable? Is there a contract between Stella and Angelo for the supply of tomatoes?
Whether Jo-Anne is liable for Kate’s loss
Whether the Herb Accounting Ltd is liable for Kate’s loss
As per the given fact of the case, it can be found that Jo-Anne had knowledge about the resort’s actual profit for the year 2016 but has misrepresented the facts to make Kate purchase the Bay View Resort, which can be said as illegal. However, even if we consider that Jo-Anne was ignorant about the misrepresentation in the Auditor’s report then also Jo-Anne is liable for the act of negligence.
To prove that the negligence has been occurred on the part of the defendant, the plaintiff has to prove the following essentials of negligence.
Duty to take care: The defendant is the person who had the legal duty to take reasonable care. When the defendant omits to take such reasonable care towards the plaintiff, he is said to have negligence in taking the proper care[1]. In the given case, Jo Anne has the duty to take reasonable care in towards Kate to advice him in purchasing motels., the first essential of negligence is proved and Jo Anne can be made liable for the negligence acting as the real estate advisor of Kate.
Duty to Whom: In Donoghue v Stevenson, it has been stated that the duty is not limited only towards the plaintiff but also its neighbors. The neighbors are those who are directly or closely affected by the act of the defendant as stated by Lord Atkin[2]. In the given case, Jo Anne has the duty towards the Kate, but Jo Anne could not perform his duties as required. Therefore, Kate has proved that Jo Anne has the duty towards him which has not been performed by Jo Anne and that caused injury to Kate.
Breach of the Duty: The defendant has the duty to take reasonable care, which a normal person would have taken in the course of his business in performing the task for which he has been employed on contracted. When the defendant does not performs any act or omits to perform any act he is said to have breach his legal duty. The defendant who has breached its legal duty to do or not to do any act as per the contract and for omitting such act the plaintiff suffers injury or damage , the defendant shall be held liable for such breach. In the given case, Jo Anne has breached its duty to take reasonable care and shall be made liable. Thus, this essential has also been proved which proves that Jo Anne was responsible for the breach caused to Kate and shall be liable to pay damages.
Factual Causation: The plaintiff must prove that the defendant has made omissions, which has resulted in the injury or damage. However, the cause between the breach of duty and the damage caused is determined by the court[3]. The court observes that the damage or injury suffered in the direct result of the breach of duty by the defendant (Section 11, Civil Liability Act, 2003)[4]. The High Court of Australia has held that to determine the actual cause of the damage or whether the damage is the direct cause of the breach, the court has initiated a test which the court stated as ‘but for’ test, because it is very complicated when there are many causes for a single damage or injury. In the given case, the breach made by Jo Anne was direct cause of the accident or injury suffered by Kate. Therefore, Jo Anne was responsible for the damage or injury suffered by Kate making loss in his business.
Harm: The plaintiff can claim for damages only if there is a pecuniary damage, which is the cause of the breach of duty on the part of the defendant. A plaintiff is entitled to only legal remedy if the plaintiff sustains no pecuniary damage. In the given case, Jo Anne’s breach of duty has caused harm to Kate. The harm that Jo Anne has done to Kate is that for the act of negligent Jo Anne made loss in his business which he cannot recover and had to sell the resort at a rate which is lower than that which he has purchased. Therefore, Jo Anne has acted negligently and has done harm to Kate.
Damages: The plaintiff has to prove that there has been a substantial damages caused by the act of the defendant. The damages received by the plaintiff may be harm to the body, reputation, property or any economic loss[5]. In the given case Jo Anne was negligent in his act to and left Kate unknown about the actual reason behind such a good profit in the year 2016. Therefore, it is proven that Jo Anne has made the breach for which Kate is entitled to receive damages from Jo Anne.
In the given case, Jo Anne was responsible to provide detailed information regarding the resort which Kate had purchased for its business. Jo Anne had the duty towards Kate being the real estate advisor. Jo Anne should have disclosed all material information to Kate regarding the resorts financial status. Moreover, Jo Anne should have disclosed the information of fishing competition which was to be held in the resort. The Bay View Resort has made a profit of $1.2 Million in the year 2016 which was false and misleading. This all information was expected to be kept by the real estate agent Jo Anne which she has negligently missed. Jo Anne should be made liable for the negligent act which a prudent or ordinary man would have done in ts ordinary course of business. Therefore, Jo Anne shall be liable for the act of negligence. She shall also be charged under the Civil Liability Act, 2003 for the negligent act and shall pay damages to Kate for the loss suffered by him for the Act of Jo Anne.
Herb Accounting Ltd has not acted ethically and should be liable for the loss of Kate. As a professional accounting firm, it should have maintained the ethical relation with Kate. The accounting statement of Herb has misrepresented Kate in making purchase decision of the Bay View Resort. Therefore, Herb Accounting Ltd shall be liable for making misrepresentation and has undue influence on the decision of Kate by publishing a over stating accounting statement by showing a profit of $1.2 Million.
Whether mortgage contract between the bank and Stella enforceable
Whether there is a contract between Stella and Angelo for the supply of Tomatoes
The issue with respect to the give fact can be resolved by the Contract law o Australia. The case can only be solved if we find that essentials of the contract law must be fulfilled. Agreements, which form a contract, must fulfill the 7 important elements of a valid contract. The elements of contract are – offer and acceptance, consideration, intention to create legal relations, certainty, capacity, free consent and legality of the objects[6].
The first elements of a contract are offer and acceptance. When a person shows his willingness to engage in doing or stay away from doing any act and ask the other to provide his consent to perform the act, the proposal is made. When the person gives his consent to the proposal or accepts the proposal, it is said that the proposal is accepted. In creating, a contract the first step is that one party shall make an offer to do an act and the other party will give his consent. When the proposal is accepted, it becomes a promise[7]. In Carbill v Carbolic Smoke ball Co, it has been held that the defendant company made the offer to the public at large and by using the product of the defendant company; the plaintiff has accepted the offer.
The promise or agreement must be followed by consideration of the Act[8]. The consideration to an agreement may be in monetary value or is of any other kind. For instance[9], A promises to give his car to B and B agrees to that offer, after some days A change his mind to give his car to B. B cannot take action against A, as there was no consideration paid by B.
The agreement made between the parties must be certain[10].For instance, A agrees to sell B a cartoon of biscuit, here the nature of the agreement is certain and can be fulfilled.
The parties entering into contract shall have the intention to create a legal relationship. In Lim Keng Siong v Yeo Ah Tee, it has been held that the parties to the contract have intended to form a contract and mere absence of an written agreement does not mean that they does not form a legal relationship which cannot be enforceable by law[11].
The persons entering into contract must have the capacity to enter into contract of the Act, i.e., he must have attained the age of majority, must be of sound mind and is not barred by law to enter into contract[12].
Parties to the agreement shall give their consent freely i.e. the consent of the parties are free from coercion, undue influence, fraud and misrepresentation. In the given case, Joash consent to leave the job to work in his family business was free from any undue restriction or conditions[13].
As per the first issue, the mortgage contract between the Bank and Stella cannot be enforced because the consent of Stella in making the mortgage contract is through misrepresentation. As per the contract law, if any of the parties to the contract enters into contract without taking his consent or through misrepresentation then the contract so made is void and cannot be enforced in the eye of law. As we know that as per the definition of Contract, Contract is an agreement enforceable by law[14].
The second issue is that he contract between Stella and Angelo has been formed as we know contract can be written as well as oral. Angelo has made a contract with Stella orally. The contract with Stella fulfills all the essential elements of the contract and is thus there is a contract between Stella and Angelo.
Conclusion:
Therefore, it can be concluded that mortgage between bank and Stella cannot be enforced as it does not fulfills the essential elements of contact and the contract between Stella and Angelo is a contract for the supply of tomatoes as it fulfills all the essentials of a valid contract.
Blyth v Birmingham Water Works Co., (1856) LR 11 Exch.781
Bourhill v. Young, 1943 AC 92
Butterfield v Forrester, 1809 11 East 60
Cusimano, G.S. and Roberts, M.L., 2016. Contributory Negligence and Assumption of Risk. Alabama Tort Law, 1.
Donoghue v Stevenson, 1932 AC 562
Fried, C., 2015. Contract as promise: A theory of contractual obligation. OUP Us.
Goldberg, J.C., Sebok, A.J. and Zipursky, B.C., 2016. Tort Law: Responsibilities and Redress. Wolters Kluwer law & business.
Grant v. Australian Knitting Mils Ltd., 1935 AC 85
Lee, L.L., 2015. FRANCHISING CASES IN MALAYSIA. International Journal of Franchising Law, 13(1).
Lochgelly Iron & Coal Co. v Mc Mulan, 1934 AC 1
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Nicholas v. Marsland, 1875 LR 10 Ex.255
Srinivasan, V., 2015. Restraint of Trade: Emerging Trends.
Stone, R. and Devenney, J., 2014. Text, cases and materials on contract law. Routledge.
Winfield and Jolowicz on Tort, Ninth Edition, 1971, p.45.
Wong, T.C. and You, O.H., 2014. Malaysia: A Preliminary Study. Accounting Education for the 21st Century: The Global Challenges, p.386.
Blyth v Birmingham Water Works Co., (1856) LR 11 Exch.781
Donoghue v Stevenson, 1932 AC 562
Bourhill v. Young, 1943 AC 9
Cusimano, G.S. and Roberts, M.L., 2016. Contributory Negligence and Assumption of Risk. Alabama Tort Law, 1.
Butterfield v Forrester, 1809 11 East 6
Goldberg, J.C., Sebok, A.J. and Zipursky, B.C., 2016. Tort Law: Responsibilities and Redress. Wolters Kluwer law & business.
Fried, C., 2015. Contract as promise: A theory of contractual obligation. OUP Us
Srinivasan, V., 2015. Restraint of Trade: Emerging Trends.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK)
Lochgelly Iron & Coal Co. v Mc Mulan, 1934 AC 1
Nicholas v. Marsland, 1875 LR 10 Ex.255
Lee, L.L., 2015. FRANCHISING CASES IN MALAYSIA. International Journal of Franchising Law, 13(1).
Wong, T.C. and You, O.H., 2014. Malaysia: A Preliminary Study. Accounting Education for the 21st Century: The Global Challenges, p.386
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