Negligent Advice and Untrue Information: Legal Analysis

This document provides a legal analysis of two issues: whether Magnolia can sue Laura for providing negligent advice, and whether Jake can sue the Council for providing untrue information. It also discusses the elements of negligence and the duty of care in these situations. The document further analyzes two contract law issues: whether there is a binding contract between Donald and Margarita, and whether Jeff is obligated to provide services to Donald. Finally, it examines the concept of promissory estoppel in the context of a lease agreement between Donald and Nacho, and discusses the issue of unconscionable conduct in a loan agreement between Com Bank and Donald's parents.

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Title Page
Name of the student
Student ID

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Contents
Question 1...................................................................................................................................................3
Issue A.........................................................................................................................................................3
Relevant Law...........................................................................................................................................3
Application of Law..................................................................................................................................4
Conclusion...............................................................................................................................................4
Issue B.........................................................................................................................................................4
Relevant Law...........................................................................................................................................5
Application of Law..................................................................................................................................5
Conclusion...............................................................................................................................................6
Question 2...................................................................................................................................................6
Issue A.........................................................................................................................................................6
Relevant Law...........................................................................................................................................6
Application of Law..................................................................................................................................6
Conclusion...............................................................................................................................................7
Issue B.........................................................................................................................................................7
Relevant Law...........................................................................................................................................7
Application of Law..................................................................................................................................7
Conclusion...............................................................................................................................................7
Issue c..........................................................................................................................................................7
Relevant law............................................................................................................................................7
Application..............................................................................................................................................8
Conclusion...............................................................................................................................................8
Issue D.........................................................................................................................................................8
Law..........................................................................................................................................................8
Application..............................................................................................................................................8
Conclusion...............................................................................................................................................9
Reference List...........................................................................................................................................10

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Question 1
Issue A
Whether Magnolia can sue Laura for providing negligent advice?
Relevant Law
In Donoghue v. Stevenson [1932], every defendant is duty bound to provide protection to the
plaintiff from his actions and omissions. This law of negligence has evolved with the passage of
time and now includes statements and advices from experts. (Gibson, 2018)
The law of negligent statements simply establishes that any person who is making any
professional statement or furnishing advice with the familiarity that the claimant is relying on his
statements, then, the defendant is obligated to ensure that no harm must be caused to the claimant
because of his advice provided there is proximity amid the advisor and the relying party. The
duty not to give negligent advices is found in Hedley Byrne & Co Ltd v Heller & Partners Ltd
(1964). Thus, to impose the legal duty on the adviser (defendant), the main elements:
i. Duty of care – The advisor when giving advice is under the duty to ensure that the
plaintiff who is relying and acting on the advice should not suffer with any harm
(Candler v Crane, Christmas & Co [1951]. There are few elements which must be
present before the duty of care is imposed:
a. In Mutual Life and Citizens Assurance Co Ltd v Evatt (1968), the duty only exist
when the advisor is duly aware that the claimant would rely on the advice before
undertaking any further actions or omissions.
b. That there should be some sort of connection amid the parties which implies that
the advice will impact the plaintiff directly (San Sebastian Pty Ltd V Minister
Adminstering The Enviromental Planning And Assessment Act (1986).
c. That it is necessary that the advisor can reasonably foresee the presence of the
plaintiff (Caparo Industries PLC v Dickman [1990]
d. That the advisor is controlling the acts of the plaintiff by furnishing the advice
(Hill v Van Erp - [1997])
ii. Violation – In Karrawirra Wines v State Bank of South Australia [1994] when the
advisor does not cater the advice as per the level of heed that is desired in the
situation, then, there is violation.

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iii. Damages – When the claimant suffers with injuries because of the advice then
damages are caused provide the loss is reasonable anticipated.
Application of Law
Magnolia started her cooking business (‘Thermo-delicious’) and wants to expand her business.
She met Laura Smartypants, an accountant/financial adviser. Laura agreed that she will prepare a
business/ expansion plan for her.
Now, Laura owns a duty of care towards Magnolia as Luara is aware that Magnolia is relying on
her advice before undertaking expansion plan. Laura is in the dominant position and is sharing
the relationship of proximity.
Laura suggested that her position is very sound that she can scrounge money. However, Laura
admitted that the report prepared by her was no correct as the already existing liabilities are not
taken into account and the costs of the establishment was also not considered.. She also admitted
that relied on her tarot cards.
So, the level of care that is expected from Laura fall short considering the fact that Laura is
aware Magnolia is relying on her advice before seeking expansion plan.
Magnolia acted on the advice of Laura. She borrowed $69000 from Usurer’s Credit in July 2018.
She signed a 5 year lease, purchased thermomixers and hired a designer fir her webpage..
Because of the wrong advice the business of Magnolia failed and she suffer losses. The losses
are the direct result of the wrong advice.
So, Laura is negligent.
Conclusion
It is thus concluded that Laura has furnished negligent statements and face the consequences of
the losses that are faced by Magnolia.
Issue B
Whether Jake can sue the Council for providing untrue information?
Relevant Law
The law of negligence owns a duty of heed on every defendant towards the claimant who is the
neighbor of the defendant. The duty of care is also to be furnished by the government authorities
and the local councils (Capital & Counties plc v Hampshire County Council [1997].
The elements which required to be prove includes:

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i. That the local councils are under the duty to furnish correct information to the relying
parties when the councils are aware that the relying party are making their future
decision based on the information provided by them. Thus, the plaintiff are
considered be reasonable foreseeable and are in proximate relationship (Shaddock &
Associates Pty Ltd v Parramatta City Council (No 1) [1981];
ii. In Welton v North Cornwall District Council [1997], the local councils must provide
the information adequately and if the information so provided does not meet the
standard of care then the duty is violated. When the certificates are provided without
mentioning the risk involved then it is breach (Reeman v Department of Transport
[1997];
iii. The relying party must have faced damages. In Caltex Oil (Australia) Pty. Ltd. v. The
Dredge "Willemstad" [1976], damages are awarded for the failure to provide correct
information in the certificates.
Application of Law
Jake is the boyfriend of Magnolia and is a property developer in NSW. Jake contacted The Blue
Mountains City Council on 15th April 2018 and sought several details regarding the property he
intends to purchase especially on any prospective road widening proposal.
The council is under the legal duty of care to provide correct information as the council is aware
that the decision of Jake to purchase the property or not depends upon the certificate that is
issued to Jake.
The council sends a letter on 10th July with a planning certificate specifying that no widening
attempt is desired. Based on the statement, Jake purchased the land but after 2 months after
purchase he was advised that a road widening proposal had been approved on 26 July 2018.
Now, the council has violated its duty of care as it fails to mention in the certificate the risk
involve in the property that Jake intends to purchase. The degree of care was not met.
The proposal related in the acquisition of more than one half of Jake's property. Jake suffered a
financial loss of $1,600,000 and thus he suffers from serious mental disorder.
So, Jake has suffered damages. Council is liable to make good the economic loss that is suffered
to Jake because of the negligent certificates provided.

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Conclusion
The council must pay the financial loss and the loss for mental disorder that is suffered because
of the wrongful advice of the council
Question 2
Issue A
Is there a binding contract amid Donald and Margarita?
Relevant Law
A contract is made when an offeror is made to an offeree. An offer is the proposal which is sent
to the offeree by the offeror with the hope of confirmation (Carlill v Carbolic Smoke Ball
Company [1892]. The offeree when confirms the offer then it results in an acceptance. (Latimer,
2012)
As per R v Clarke [1927] when the offer is kept open for some time without any consideration
from the offeree then it is called an option and the offeror has the right to enter into contractual
relationship with any other person. There is no foundation that the contract must be made with
the offeree only.
Application of Law
In NSW, there are several restaurants that are owned by Donald Frump.
Margarita is the owner of ‘The Milky Cow'’. Donald meets Margarita on 20th September.
Margarita offers to sell Donald 200 kgs of Wagyu beef for $3500. She kept the offer open for the
next 24 hours.
Since the offer which is given by Margarita is not supported by any consideration from Donald
thus, Margarita has the power to sell the goods to someone else.
So,, Carlos, after 2 hours called Margarita and offered $3700 for the meat. Margarita accepts the
offer of carols and thus the acceptance is valid as per Carlill v carbolic.
After three hours, Donald calls and accepts the offer of Margarita. But, such an acceptance has
no value as the contract is lardy established with Carlos.
Conclusion
Margarita has is no concluding contract with Donald as the goods are sold to Carlos before the
same are accepted by Donald.
Issue B
Whether Jeff is obligated t provides services to Donald?

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Relevant Law
Every contract is established when an offer is made which is duly accepted. But, every contract
can be enforced in law provided there is a supporting consideration.
A consideration is something beneficial or of value which must be exchanged amid the parties to
support the promises. If there is no supporting consideration, then, the promises cannot be
enforced and is held in Currie v. Misa (1875).
Application of Law
Donald wishes to purchase a new motor vehicle for deliverance He enquired about few trucks
from Mario's Trucks and Motors Pty Ltd. He decided to buy a Pantech 2018 for $60,000. Post
contract, Donald enquired whether Jeff (sales manager) will give the primary service free to
which Jeff agrees. After 2 months Donald requires services.
Jeff denies the same. It is submitted that the oral negotiation to provide services is not part of the
written contract not the new term is supported by any consideration. Thus, the term is not
binding in nature.
Conclusion
Jeff is not obligated to provide services as the promise is not supported with any consideration.
Issue c
Is there a binding contract amid Donald and Nacho?
Relevant law
One of the rules that are generally prevalent is the rule of promissory estoppel. Promissory
estoppel exists when there is the presence of some kind of legal relationship that exists amid the
parties. One of the parties must have made some kind of representation to another party and such
another party must have acted based on the said representation and have worsened off his
position. In such situation, the party who has made the promise is obligated to comply with the
said promise and is estopped from denying his part of the promise (Walton Stores (Interstate) Ltd
v Maher and Another. (1988).
Application
Donald intent to take a premise on lease. He wanted to flatten a wall and build an oven to which
Nacho (landlord) shook Donald's hand. On the basis of Nacho promise, Donald took a bank loan.
After 4 weeks, Donald received a letter that Nacho did not intend to proceed with the lease.

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It is submitted that it is on the promise made by Nacho that Donald had spent $150 000 on the
remodeling. Even though the lease is not signed but the acts of Donald are governed on the
promise made by Nacho and thus by applying promissory estoppel Noacho is obligated to fulfill
his part of the promise.
Conclusion
Nacho is obligated to fulfill his part of the obligation under promissory estoppel.
Issue D
Whether Com Bank looks sue the parents for the loan amount?
Law
A contract when is legally enforceable at times can be terminated on account of the contractual
party who is suffered from unconsiousable conduct.
An unconsiousable conduct is an act wherein one party is at so much dominant position that he
takes advantages of the weaker party. the party is weaker as he is not in the position to
understand the transaction and take sound decagons because of literally, old age, lack over
the ;language command. Etc. The contract which suffers from unconsiousable conduct is
voidable and is held in Kakavas v Crown Melbourne Ltd [2013]
Application
Parents of Donald and Ricardo migrated from Australia to Australia from Romania in 1963 and
are dependent upon them for advice and support. They have poor language skills and limited
education and survive on their pension. They have a house @ $750,000. In 2018, Ricardo needs
$265,000. He requires his parents to become guarantor to The Con Bank and thus misleads them.
After examining their monetary position the manager meets the couple and goes over the
assurance bond. Ricardo uses the money but become insolvent.
It is submitted that Bank cannot sue the parents for the loan amount as the contract that is
established amid Ricardo and the bank is suffered from unconsiousable conduct. The bank is
aware that his parents do not understood the nature of the transaction as questions ere ought from
the parents which were not answered properly and he thus used his dominant position to
misguide his parents in order to seek to himself.

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Conclusion
Thus the bank cannot sue the parents as the transaction suffers from unconsiousable conduct.

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Reference List
Books/Articles/journals
Gibson, A (2018). Business Law (Pearson Australia, Custom Edition, 2018).
Latimer, P (2012). Australian Business Law 2012. (CCH Australia Limited, 2012).
Case laws
Candler v Crane, Christmas & Co [1951] 2 KB 164.
Currie v. Misa (1875) LR 10 Ex 153
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Caltex Oil (Australia) Pty. Ltd. v. The Dredge "Willemstad" [1976] HCA 65
Capital & Counties plc v Hampshire County Council [1997] 3 WLR 331.
Caparo Industries PLC v Dickman [1990] UKHL 2
Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) AC 465.
Hill v Van Erp - [1997] 188 CLR 159.
Karrawirra Wines v State Bank of South Australia [1994] 62 SASR 1.
Kakavas v Crown Melbourne Ltd [2013] HCA 25 (5 June 2013)
Mutual Life and Citizens Assurance Co Ltd v Evatt (1968) 122 CLR 556.
Reeman v Department of Transport [1997] 2 Lloyd's Rep. 648.
R v Clarke [1927] HCA 47
San Sebastian Pty Ltd V Minister Adminstering The Enviromental Planning And Assessment Act
(1986) 162 CLR 340 .
Shaddock& Associates Pty Ltd V Parramatta City Council [1981] ALR 385.

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Walton Stores (Interstate) Ltd v Maher and Another. (1988) 76 ALR 513
Welton v North Cornwall District Council [1997] 1 WLR 570