Business Law Assignment - Misrepresentation and Negligence

This Business Law Assignment discusses the concepts of misrepresentation and negligence with relevant case laws and their application in different scenarios. The first answer discusses misrepresentation with the help of the case of Jessica and Angela. The second answer discusses negligence with the help of the case of Sandra Smith and her husband. The subject is Business Law and the university or college is not mentioned.

Running head: BUSINESS LAW ASSIGNMENT
Business Law Assignment
Name of the Student
Name of the University
Author note

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Answer 1:
Issue: The issue in the case of Jessica and Angela is where there was a misrepresentation of
facts by Jessica to Angela and whether Angela can sue Jessica for misrepresentation.
Rule: Misrepresentation of facts can be defined as a false or misleading statement given by
one party to the other to induce him to enter into a contract. Many common law countries
have adopted the concept of misrepresentation where the person who relies on the facts need
to enter into the contract by giving them untrue information. Under contract law
misrepresentation can be defined as a voidable contract where the party who has this means
to find out the truth can deem the contract voidable at his own instance. In the case of
Kalabakas v Chubb Insurance Company of Australia Ltd [2015] VSC 705 the courts
defined the meaning of a misleading statement to include that it can be defined as a false
statement to convince the other party to be bound by the terms of the contract.. Another
important fact to consider while concluding that there was misrepresentation it is important to
establish that the party gives out a strong statement of fact inducing the other one to believe
in the terms of the contract was held in Bisset v Wilkinson [1927] AC 17. In cases of
expression of opinions the other party cannot claim that there was misrepresentation because
it does not exist in cases of opinions. One more criteria to be fulfilled to make sure that there
is representation of facts is to prove that the statements made are completely false and they
were known to be untrue by the person presenting the facts. Horsfall v Thomas [1862] 1
H&C 90 held that the person making the statement has to have the power to induce other one
into entering into the contract. In cases when the other person had the means to find out about
the truth of the statement but did not do so it is difficult to establish that there was any
misrepresentation. In such cases it has to be shown that the person had enough opportunity
but he did not exercise his power to check the truthfulness of the facts presented to him.
Smith v Land & House Property Corp (1884) 28 Ch D 7dealt with a similar situation where

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the person to whom the information was conveyed hand an opportunity to check the
truthfulness of the statement and the party did not do that. The court held that in this case
there was no expression of facts and only expression of opinions expressed by one party to
ensure the other party enters into the contract. The law governing misrepresentation in
Australia is called the Misrepresentation Act, 1972 which talked about the definition and
what constituted miss representation. The party to prove that he was misrepresented it is
important for them to prove that they have checked all the documents carefully and they
could not find out the truth and therefore the placed reliance on the person making the
statement of facts. The party has to prove the party had an intention to defraud and therefore
to further that goal they made statements knowing very well that they were not true.
Application: Jessica and. Angela entered into a contract to negotiate the deals of the
restaurant which Jessica was intending to buy from Angela. Angela made statements about
the profits her company makes before selling it to Angela. Jessica made false statements
about the profit the company incurs claiming that she earns a profit of $10,000 and had also
asked Angela to check the records for herself. Angeles check the record still 2007 she saw
that the company was making profits of $10,000 in 2007 and after that the company did not
make enough profits but only an amount of $2000 from 2008 onwards. Even though Angela
was given an opportunity to check the profits for herself she only checked for the year 2007
and when later it came to her knowledge that the company was not making enough profit she
realised that all the facts were not made known to her.
Therefore the other party can make a claim that all the documents where available with her
and she had the chance to check the facts of the case there shall be no case of
misrepresentation. The reliance test was held in this case where the court held those parties
have a reliance over the others and believing them they enter into a contract the wrong doing
party shall be held liable for misrepresentation. Therefore if the party places some reliance on

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other party and thereafter enters into a contract believing him it shall account to
misrepresentation and shall have to pay damages according to Derry v Peek (1889) 5 T.L.R.
625
Conclusion: Lastly, it can be concluded stating that Jessica will be liable for
misrepresentation.
Answer 2:
Issue: The issue of this case is whether Cola manufacturer had committed negligence and
claimed compensation for the recovery of the losses which were acquired by Sandra Smith
and her husband.
Rule: Negligence can be made only when one party can owe a duty of care to the other party
who had been hurt. Therefore, the term negligence refers to a tort that results in the breach of
a legal duty for taking care of the parties involved. Negligence refers to that situation, when
an individual gets injured due to the activities of another person. Negligence is therefore a
tort where the person who is injured does not play any kind of role in it. Duty of care is
referred to as the basic constituent for determining negligence. The other existing constituents
include breach of duty of care, causation and remoteness. If all these essential elements are
not constituted then the plaintiff cannot state there was a negligence on the part of the
plaintiff and the defendant. The case of Donoghue v Stevenson [1932] AC 562 states the rule
of and concept of duty of care that recognizes when the parties associated in this case are
treated to be as neighbors of each other. When an individual can foresee that the activities of
an individual can hurt another individual that will be the outcome as a duty of care. The duty
of care should be present in such a scenario. In this case, it was observed that an individual
had suffered an injury for drinking beer at a café. He had suffered and losses because a snail

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was present in the bottle of beer and the individual got ill. The injured individual asked for a
claim from the manufacturer. Thereafter, he had claimed that no contract was formed, hence
no remedy can be made present in such a situation. It was determined by the Court that duty
of care existed which provides a right to a party for making a claim in case of negligence.
The Court had therefore held the decision in favor of the plaintiff. This scenario was
illustrated in the case of Smoldon v Whitworth & Nolan [1997] PIQR P133
Negligence is therefore regarded as the tort that is generally initiated to compensate
the parties that had suffered and faced an injury due to the activities of another individual. If
no contractual relationship exists, then it negligence cannot be formed. A test for recognizing
the duty has been provided by the case of Haynes v Harwood [1935] 1 KB 146. Thereafter, it
was produced by the Court the test stated that the party had a probability to have a duty of
care in the existing relationship. It was observed in the case of New South Wales v
Commonwealth (1990) 169 CLR 482. This kind of test was implied in the particular case of
Heller v Partners, Ltd. ([1963] 2 All E.R. 575) where the injury caused was foreseen
reasonably by a party to another party for a duty of care that must be present.
The concept of negligence includes the duty of care but it requires the element of
‘breach of duty of care’. The provisions related to this have been mentioned and discussed in
the provisions of common law and civil liability 2002. The purpose of test was t recognize
the duty of car ef provisions. The basic step of the step is to analyze the situation that can
also be breached. Further, this scenario was observed in the case of Dutton v Bognor Regis
UDC [1972] 1 QB 373. However, the standard of care should be taken as precautions for
ignoring the probability of the harm that is engaged with the injury caused.
Therefore, the negligence can be claimed only when there is a scene of breach of duty
that will result in a loss. When a duty of breach occurs, the constituent of causation is

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required. The test of ‘but for’ should be applied in such situations. Damages for the breach of
duty cannot be foreseen and stated to be too remote.
Application
It can be observed from the facts of the case that a carton of cola was purchased by
Sandra from a local store. Her husband had drank the cola and fell ill eventually. Sandra and
her family had to suffer a huge amount of medical expenditures because of the illness. On the
other hand, the local store that had provided the cola ran out of business due to bankruptcy.
The suitable or appropriate rule that can be applied in this scenario is the case of Donoghue v
Stevenson. This is because the same incidents had occurred in this particular case. This case
had similar facts associating with the concept of breach of duty of care. Therefore, no
contract existed for which one can ask for compensation for the negligence caused. There
was a breach of duty of care on the part of the manufacturer. If the manufacturer was not
negligent while serving the drinks then it would not have constituted negligence. The claim
caused can only be successful only when the elements of negligence are proved. There must
be involvement of breach of duty of care, duty of care and the causation of injury. However,
the neighbor principle can also be applied in this scenario. As per the rule and the case, the
damages can be recovered only if it is not very remote. If the damages that are too remote and
they are not noticed and cannot be irrecoverable in negligence then it cannot be considered to
be foreseen. Therefore, only because of a reasonable individual had witnessed the cockroach
in the drink and the medical expenses if shown then it might result in a loss of employment
for the manufacturer. The manufacturer of the local store will also have a few responsibilities
and duties that he had owed to Sandra’s husband. Thus, the case mentioned above will be
applicable in this scenario again.

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This is because even in this case the manufacturer had produced a defective drink that
was injurious for the person who had consumed it. Similarly, even in this case, there was a
breach of duty to care on the part of the manufacturer. The noticeable injury that was caused
in this scenario was that the individual consuming the drink had found a cockroach in it.
Therefore, it can be stated Acne had breached the duty of care. However, if the cockroach
had not been present in the drink then Sandra’s husband would not have suffered the loss or
injury. If the manufacturer was careful during the time of serving the drink to Sandra’s
husband then it would not have resulted in negligence. This clearly shows that there was a
breach of duty in this scenario. The manufacturer will be held liable for committing
negligence. Hence, negligence can be determined in this situation and Sandra can make a
claim against Acne for the damages that were suffered by her husband.
Conclusion: Lastly, it can be concluded stating that the Acne Cola can be charged for the
damages by Sandra for the loss and injury suffered by her husband.

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References:
Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428
Bisset v Wilkinson [1927] AC 177
Derry v Peek (1889) 5 T.L.R. 625
Donoghue v Stevenson [1932] AC 562
Dutton v Bognor Regis UDC [1972] 1 QB 373
Edgington v Fitzmaurice (1885) 29 Ch D 459
Haynes v Harwood [1935] 1 KB 146
Heller v Partners, Ltd. ([1963] 2 All E.R. 575)
Horsfall v Thomas [1862] 1 H&C 90
Kalabakas v Chubb Insurance Company of Australia Ltd [2015] VSC 705
Misrepresentation Act 1972 (SA)
New South Wales v Commonwealth (1990) 169 CLR 482
Smoldon v Whitworth & Nolan [1997] PIQR P133