1. What are the key areas of business law that are relevant in these facts?
2. Who can take legal action and what remedies could be given by a court?
It is of particular significance to note from the outset that Bill aged 15 has entered into a contract together with his sister who is aged 22. The issue that arises for determination here is the capacity of Bill to enter into contract. On the hand the seller of the café dishonestly made untrue assertions that the cafes weekly takings are $10,000. The issue that begs an interpretive determination here is whether the statements amounted to a fraudulent misrepresentation.
It is a general principle in law that for a contract to be enforceable and binding, the parties the must be of the requisite capacity. It has been held that contract that are entered to by minors are void unless they a contracts of necessity (Nash v Inman 1908). The Minors (Property and Contracts) act recognizes that minors are persons below the age of 18 and any contract with them is void (Minors (Property and Contracts) Act 1970 (NSW) s46 (1)).
A misrepresentation is an untrue statement that induces the other party to enter into contract which has the effects of vitiating the contract. It is thus submitted that for a misrepresentation to be actionable there are various elements that must be met for the action to be successful. Firstly, one of the parties must have made a false assertion of fact. It has been held that if a statement is substantially correct then it does not amount to an untrue statement (Avon Insurance plc. v. Swire Fraser Ltd, 2000). It is worth noting that the statement must be a clear untrue statement that does not bring about any ambiguity (Bisset v Wilkinson, 1927).
Secondly, the misrepresentation must be made by a party to the contract or an agent representing the party to the contract. Thirdly, the other party must rely on the untrue statement to the effect that the untrue statement will influence his or her judgment to enter into the contract. However, a misrepresentation will not be actionable if it did not affect the judgment of the other party expected to sign the contract (Smith v. Chadwick, 1884).
It is submitted that the contract with Dodgy Pty. Ltd. is void because Bill had not reached the age of majority as required by Law. In addition when the law of misrepresentation is applied in this case it becomes undeniably true that Dodgy Pty. Ltd. made untrue assertions that affected the judgment of the two siblings. Dodgy Pty. Ltd. was aware that the statements were actually false but still they fraudulently induced Bill and Jill into singing the contract. It thus advised to Bill and Jill that the contract is void and furthermore an action for misrepresentation will be successful and they will be entitled to the remedy of damages and rescission of the contract. Essentially, the two key business Law areas that affect this case are Capacity in contract law and Misrepresentation of facts in contract law too.
Hugh runs a Pizza business and has since decided to replace his recipe to what he refers to as the latest recipe. Unfortunately most of the customers who have bought and eaten the pizza fall sick. The issue of determination here circumnavigates within the product liability which invites an action for negligence in tort.
Product liability entails a claimant bringing a claim against a manufacturer or a maker of product for a defect in the product that has cause harm to the user. The overarching rule entrenched here is the law of negligence which is to the effect that one should reasonably foresee acts or omissions that are like to cause harm to a neighbor (Donoghue v. Stevenson, 1932). Ideally, Lording Artkin in the foregoing case defines a neighbor as persons who are likely to be affected by ones act or omissions and should therefore be put in their contemplation.
The person to bring an action must be one who can prove the legal positions that have been identified in part (i) above. It is of interest to note that for a negligence claim to succeed there are three essential elements that must be unassailably proved to the court by the claimant for the action to succeed (Grant v Australian Knitting Mills, 1936).
Firstly and most importantly the claimant must establish that the manufacturing company owed them a duty of care. The litmus for determining the duty of care has since been sufficiently settled in Caparo Industries v Dickman (1990) where the court firmly stated that for duty of care to exist a three stage test must be met. The harm or injury that visited the claimant as a result of the act or omissions of the defendant must be one that is on the face of it reasonably foreseeable (Kent v Griffiths, 2000). A relationship of proximity must exist between the claimant and the defendant for duty of care to be deemed to exist (Home Office v Dorset Yacht Club, 1970).
It is indispensible that the claimant proves that as a result of the breach the duty the defendant suffered harm. A Causal link must be established showing that the defendant actually caused harm to the claimant.1t is now a settled position that section 5c of the civil liability act 2002 borrows the idea inherent in it from the common law test, the ‘But for Test’ (Adeels Palace Pty Ltd v Mubarak & Bou Najem, 2009). The aforementioned test was correctly applied in Barnett v Chelsea & Kensington Hospital (1968) where the court stated that if the defendant shows that the harm would have occur but for the negligent omissions then a causal link will not be established between the harm and act of the defendant.
It is interesting to note that the locus standi in product liability claims has been extended to also include regulators who must have consent from the injured parties. Essentially, this implies that the regulators can also sue on behalf the users who have been harmed by the defective products.
Notably, the claimant in a negligence action has a breadth of options as remedies that will available upon a succefull claim. The claimant may seek damages which is a common law remedy that seeks to put the claimant in the position they were before the tort occurred. Damages in an action fro negligence are categorized into two. Special damages are awarded for any economic loss that the claimant has suffered. This may include the medical expenses that the claimant incurred because of the harm caused by consuming the defendants product and loss if earnings that is occasioned by the defendants incapacity to conduct his activities that fetch him an income. General damages are also common damages awarded to the claimant by the court. They are damages that awarded for the pain and suffering that has visited the claimant and the emotional distress he has had to endure because of the harm caused by the defendant.
It is thus submitted that Hugh ought to reasonably foresee that his acts omissions in the business could likely affect the consumers of his product. From the application of the principles of law stated above it can be rightfully said that the consumers of the pizza can rightfully bring a legal claim of negligence because Hugh owed them a duty of care and he breached that duty of care. The relationship of proximity here is raised because the people who have fallen sick because of consuming the pizza are his clients. In this sense, liability will attach to the omissions by Hugh because a causal link can be established and it undeniably proves that he caused the injury to his clients because they consumed pizzas that he prepares.
It should also be noted that apart from the direct consumers of the product, the people who have been harmed can make a joinder claim through regulators who seek to protect consumer but consent from the people who have ben harmed must first be sought.
The special damages in this case will be awarded where those people who were harmed by the pizzas have incurred medical expenses. To those who had to be admitted in hospital or stay at home until recovery, if they can prove that they have lost considerable amount of earnings because they were incapacitated to work , will also be awarded special damages. Because of the pain, suffering and emotional distress that they could have suffered they can also be awarded general damages.
References
Adeels Palace Pty Ltd v Moubarak& Bou Najem [2009] HCA 48
Avon Insurance v Swire Fraser Ltd [2000] 1 ALL ER Comm 573
Barnett v Chelsea & Kensington Hospital (1968)3 All ER 1068
Bisset v Wilkinson [1927] AC 177
Caparo Industries v Dickman (1990) 2 AC 605
Civil Liability Act 2002(NSW)
Donoghue v. Stevenson (1932) UKHL 100
Grant v Australian Knitting Mills (1936) A.C. 562
Home Office v Dorset Yacht Club (1970) AC 1004
Kent v Griffiths (2000)2 WLR 1158
Minors (Property and Contracts) Act 1970 (NSW)
Nash v. Inman [1908] 2 KB 1
Smith v Chadwick (1884) 9 App Cas 187
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