Introduction to Business Law Assignment 2

This assignment covers topics such as duty of care, vicarious liability, contract law, and legal consequences of unfulfilled contracts.

Introduction to Business Law 1
INTRODUCTION TO BUSINESS LAW ASSIGNMENT 2
By (Name)
LAW105: Introduction to Business Law
(Tutor)
Charles Darwin University
(City and State)
(Date)

Introduction to Business Law 2
a) Rupali’s Duty of Care
Issue
Has Rupali breached any legal duty of care?
Rule
According to Latimer (2012), the legal duty of care is characterised by certain salient
features. These include, “reasonable foreseeability, reliance, compassion, knowledge, the
vulnerability of the victim, control over the injury and a lack of policy reasons to deny a duty
of care” (Latimer, 2012, pp. 230-231). These characteristics are were espoused in Donoghue
v Stevenson [1932] AC 562 where the court held that one should adopt reasonable care to
ensure their reasonably deducible acts and omissions do not injure those who are likely to be
affected by them; directly or indirectly (Bermingham, 2011).
In Governors of Peabody Donation Fund v Sir Lindsey Parkinson and Co Ltd [1985] AC
210, the court held that in addition to foreseeability, it is paramount to determine whether the
tortfeasor owed a duty within just and reasonable grounds and whether it is in breach of this
duty that the injured party suffered loss. This holding was a departure from the original two-
stage test used to determine duty of care as set in Anns v Merton LBC [1978] AC 728.
Application
Based on the rules highlighted above, a person owes a duty of care if they are in a position to
discern whether their acts or omissions would be detrimental to another and that the plaintiff
is vulnerable to suffer harm or loss at the defendant’s actions. In this particular case, there is
reasonable foreseeability in the relationship between Rupali and the guests. He is in a
position of knowledge as to the risks his actions as a chef would be detrimental to any clients
of the establishment. Additionally, in his preparation of food, he has control over the
possibility of harm suffered by guests due to ill-prepared food. By opting to prepare a durian
pie, Rupali should have taken necessary precautions to ensure that it was prepared in a

Introduction to Business Law 3
manner fit for consumption. His failure to peel the durian fruit before preparing the pie led to
foreseeable injury on the guests who ate it.
Conclusion
In conclusion, Rupali was in a position to owe a duty of care which he breached by failing to
peel the durian fruit and causing injury to guests.

Introduction to Business Law 4
b) Impact of inexperience to Duty of Care
Issue
The issue at hand is whether Rupali’s inexperience translates to a lower duty of care.
Rule
Under tort law, one of the defences against negligence claims is the principle of Volenti non
fit injuria. This is a presumption that where the victim or plaintiff is made well aware of the
risk involved with the action or inaction to be taken and they consent to it then the defendant
will not be held liable (Bermingham, 2011). In Nettleship v Weston [1971] 3 WLR 370, the
court held that a learner driver should be held to the same standard of care as a reasonably
qualified driver as an inexperienced doctor would be held to the same standard as a seasoned
professional. The defendant could therefore not rely on Volenti as a defence to lower her duty
of care. It is important to note that mere knowledge of possible risk does not amount to
consent to absolve the duty of care owed.
Application
In the case study provided, prior to presenting the meal, Johnny made an effort to explain to
the invited guests that Rupali would be preparing the meal alone without supervision. Rupali,
although training as a chef, has less experience than Johnny. Based on the holding in
Nettleship v Weston [1971] 3 WLR 370, Rupali as a training chef should be held to the same
standard of care as an experienced chef. His inexperience does not accord him a lower
standard. However, he could opt to rely on the Volenti principle as a defence to show that the
guests were made aware of any possible risk and agreed to proceed with the exercise
regardless.
Conclusion
Rupali does not owe a lower duty of care due to inexperience.

Introduction to Business Law 5
c) Johnny’s Vicarious Liability
Issue
The issue in question is whether Johnny can be held liable for the actions of Rupali as his
employer.
Rule
The principle of vicarious liability in the context of employment is three-fold. Firstly, an
employment relationship must exist; that is a contract of service vis a vis a contract for
service. Secondly, the employee should have committed an actionable wrong and thirdly the
action in question should have been committed in the course of employment (Bermingham,
2011). As held in Century Insurance Co Ltd v Northern Ireland Road Transport Board
[1942] AC 509, an action is considered to be within the course of employment if the
employee was basically fulfilling their required obligations at the time. In Lister v Romford
Ice and Cold Storage Co Ltd [1957] AC 555, the court held that an employer found to be
vicariously liable can claim indemnity from their employee where the actions resulting to
breach of duty amount to wilful misconduct as per the employment contract.
Application
In the case study provided, Rupali is being trained as a new chef in Johnny’s restaurant which
illustrates the existence of an employment relationship. Secondly, failure to peel the durian
fruit translated to an injury on the guests which presents a breach of duty of care. Thirdly,
despite the fact that the guests were invited outside closing hours, Rupali was undertaking the
duty expected of him as a chef in training under Johnny’s instructions and as such acted in
the course of his employment. These elements, therefore, satisfy the tri-fold test for vicarious
liability outlined above.
Conclusion
In conclusion, Johnny can be held vicariously liable for Rupali’s breach of duty.

Introduction to Business Law 6
d) The existence of a contract
Issue
The issue in question is whether a contract to provide services exists between the Lame Duck
Restaurant and Li.
Rule
The basic principles of law dictate that an offer and acceptance are pertinent to the existence
of a contract. It must be evident that an offer was made by an offeror to an offeree both of
whom have the legal capacity to contract and intent to be legally bound by the terms of the
contract (Latimer, 2012). In essence, the agreement must illustrate a meeting of minds
between the contracting parties which can be adduced expressly or implied by conduct. In
Smith v Hughes [1871] LR 6 QB 597, the court was convinced as to the existence of a
contract between the two parties based in the conduct of the parties despite the fact that the
dependent had purchased new oats where he initially believed the plaintiff was selling old
oats.
Application
In the case study provided, prior to the discovery of the error, Li’s request to book the
restaurant was accepted by Summer and invoice generated which led to the payment of an
invoice. These actions demonstrate an offer and acceptance which translates to an agreement
cemented by the deposit which served as part consideration. At the time, there was a
consensus ad idem between the parties involved which, based on the basic principles of
contract law, serve to establish a valid contract.
Conclusion
In conclusion, a contract exists as the basic elements have been satisfied.

Introduction to Business Law 7
e) Existence of Mistake
Issue
The issue in question is whether the error in quotation amount to a mistake under contract
law.
Rule
As a general rule, an error or misconstruction of any aspect of a contract does not amount to
an automatic dissolution of contractual obligations (Latimer, 2012). Under contract law,
mistake is considered under various categories each bearing varying consequences to the
contract. Where both parties are mistaken on the same fact, for example, the non-existence of
the subject matter, a common mistake is said to have occurred. In such a scenario the
equitable remedies such as rescission or rectification can be adopted, although in most cases
the contract would be void (Latimer, 2012). A contract can also suffer a mutual mistake
where the contracting parties are unintentionally mistaken on contrary aspects of the contract;
in this case, the contract is also void. A mistake may also be unilateral where only one of the
contracting parties is mistaken on the existing terms of the contract; this translates to a
voidable contract which can either be rectified or rescinded (Latimer, 2012). In Taylor v
Johnson [1983] HCA 5, the court allowed for rescission of a contract where only the plaintiff
had been mistaken as to the contractual terms.
Application
In the case study provided, Li made a booking based on menus which did not include the
revised prices. Summer accepted the booking mistakenly and process the transaction on the
mistaken prices. In this case, Li was mistaken as to the price of the service which is a
significant element of the contract. Summer mistakenly assumed that Li made the booking on
the revised prices. Johnny is however aware that the booking was processed in error. This

Introduction to Business Law 8
scenario presents a unilateral mistake as Li made the booking based on old prices and as such
the contract is voidable.
Conclusion
In conclusion, a unilateral mistake exists as only one party, Li, is mistaken on the terms of the
contract.

Introduction to Business Law 9
f) Legal consequences where the contract is unfulfilled
Issue
The issue in question is an identification of the legal consequences arising assuming that
Lame Duck Restaurant is legally obligated to fulfil the contract and fails to do so.
Rule
Under the basic principles of contract law, performance is required in order to discharge an
existing contract; the terms of the contract must be met to their entirety in order to illustrate
performance and failure to perform would amount to breach of the contract (Ewan & Qiao,
2015). The legal consequences for a breach of contract include damages, specific
performance, estoppel and rescission. The defaulting party may be required to compensate
the other, to perform their expected obligations, to desist from breaking their contractual
obligation or face an order to terminate the contract with restitution. In Luna Park (NSW) Ltd
v Tramways Advertising Pty Ltd [1938] HCA 66, the court held that compensation in
damages sufficed for a breach of contract by failure to display advertisements for eight hours
a day, which was a failure in performance.
Application
In the case study provided, assuming that the restaurant was legally bound to provide the
premises for Li’s event, failure to comply would amount to non-performance. As
aforementioned, non-performance of a contract amounts to breach of contract, of which
various remedies are available in law. The restaurant could be required to compensate Li in
damages or ordered to perform the contract.
Conclusion
In conclusion, as consequence to the refusal to provide the premises, the Lame Duck
Restaurant could face an action for damages or specific performance or both.

Introduction to Business Law 10
References
Anns v Merton LBC [1978] AC 728.
Bermingham, V., 2011. Nutcases: Tort. London: Sweet & Maxwell.
Century Insurance Co Ltd v Northern Ireland Road Transport Board [1942] AC 509,
Donoghue v Stevenson [1932] AC 562.
Ewan, M. & Qiao, L., 2015. Contract Law: Australian Edition. s.l.: Palgrave Macmillan.
Governors of Peabody Donation Fund v Sir Lindsey Parkinson and Co Ltd [1985] AC 210
Latimer, P., 2012. Australian Business Law. Sydney: CCH Australia Ltd.
Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555.
Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66.
Nettleship v Weston [1971] 3 WLR 370.
Smith v Hughes [1871] LR 6 QB 597.
Taylor v Johnson [1983] HCA 5.