Business Law: Common Law Principles and Negligence in Business Scenarios

This report explores the application of common law principles in business scenarios, focusing on misrepresentation and negligence. It analyzes two case studies: one involving a restaurant purchase negotiation and the other concerning a consumer who suffered illness after consuming a contaminated product. The report examines relevant legal issues, analyzes applicable legislation and case law, and provides conclusions regarding the legal liabilities of the parties involved.

Business Law
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Table of Contents
Introduction................................................................................................................................3
Question 1:.................................................................................................................................4
Question 2..................................................................................................................................7
Conclusion................................................................................................................................10
References................................................................................................................................11
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Introduction
In this report, there is a discussion about the concept of the common law which is applicable
in the business scenario. In this, there is shown a clear understanding regarding the principles
of the Australian business law. All the relevant facts and the legal issues are discussed herein
to develop the good understanding. The effective business law legislation and the cases are
provided in order to support the arguments. This report is fragmented into two parts the first
part provides the discussion regarding the negotiation and the common law rights of Angela.
In the second part of the report, there is a discussion about the Andry and Sandra. Herein the
provisions regarding the negligence are also provided in contact with various cases and the
statutes.
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Question 1:
Scenario:
In the given case Angela enters into the negotiation procedure with Jessica to purchase the
restaurant. Herein the when asked by the Jessica about the profits then she told that $10,000
is an annual profit to Angela. On the basis of trusts, Angela enters into the negotiation to
purchase the contract. But it is afterwards found that the accounts show the profits of $2,000
for the last five years.
Issue:
In the given case the issue is related to the misrepresentation of the facts by the Jessica.
Hence the common law rights and the provisions are provided to safeguard the rights of
Angela.
Rule:
In the given case there is an application of the provisions of the misrepresentation. As per the
principles of common law, it is provided that the misrepresentation is a false statement of the
facts which is made by the one party to the other party. Herein the acts of the
misrepresentation take the various forms such as fraudulent, negligent and the innocent
misrepresentation. The acts of the misrepresentation are treated as an offence in terms of the
Australian consumer laws
Analysis:
In the decided case law of ACCC v Cadbury Schweppes Pty Ltd [2004] FCA 516. There is
involved the case of misrepresentation in which there is a marketing of the cordial which
claim that fruits extracts but in real terms, it is not the true. As per the provisions of
MisrepresenationAct 1972(SA), such acts are treated as an offence which induces the parties
to enter into the contract then the individual or business is liable for the fines up to $100000
for the corporates while $20000 for the individuals (Wadlow, 2011).
The misrepresentation takes the various forms such as it may be innocent or fraudulent. In the
given case of Angelia when the negotiation was made with the Jessica to purchase the
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restaurant there is a misrepresentation of the facts by the Jessica. The annual profit was
shown to be $10000 but in real terms, the from current last five years the restaurant is having
the profits of a punt of $2000. It is analysed that there is a misrepresentation of the facts by
the one party to deceive the other party or to induced them to purchase the restaurant. Hence
such an act of Jessica is treated as a fraudulent misrepresentation as the statement made by
the Jessica is false or misleading. Herein in such case, the remedies available to the parties is
to rescind the contract or to sue Jessica to compensate the loss incurred.
Hence under the provisions of Misrepresentation act 1972, the court has the power to award
the damages suffered by another party due to misrepresentation. And the damages can be
claimed by the court if it is proved to the court that the statement is false and the party has
incurred the losses with the much statements. In the decided case law of Peek v Gurney, it is
provided that if the half-truth is also an act of the misrepresentation. Hence it is a part of the
complete situation of lieing.
However, in this case, the acts of negligence are also applicable as it is the duty of Angelia to
check the accounts properly. Herein the provisions of duty of care are also applicable on the
Angelia which shows that it is the duty of the care to check the accounts of the restaurant and
the profit statement. Hence as per the provisions of the Civil Liability Act 1936, it is provided
that where a defendant has acted in a reasonable manner or his actions are such which falls
below the standard then in such case these acts as a breach of the duty of care. In the decided
case law of Donoghue v Stevenson, it is provided by the court the decision regarding the
negligent misstatement (Lexis PSL, 2017).
Here, in this case, the situation is related to the act of contributory negligence. It is a
situation in which the person or individual suffered has themselves found to be contributed in
the reasons of the loss (Fulbrook, 2017). Hence if the situation is such in which the plaintiff is
failed in fulfilling the reasonable duty of the care for the safety of itself then the individual
has themselves contribute to the loss. The effect of such a situation is that the damages
claimed by the parties will be reduced according to the extent in which the individual has
contributed to the loss suffered by the parties. The case of Butterfield v Forrester (1809)
provides the facts and the justifications of the contributory negligence (Ramensky, 2018).
Conclusion:
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It is concluded from the above case that Jessica is liable for the acts of misrepresentation of
the facts with Angela. Hence in such a situation, Angela has the right to claim the damages or
rescind the contract. But when considered the situation then it is also analysed that it is the
duty of Angelia as well to check the accounts properly before purchasing the restaurant.
Hence Angelia has contributed to the misstatement caused. It is considered to be a part of the
contributory negligence which is held on the part of Angelia to check the statements.
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Question 2
Scenario:
In the given case Sandra Smith has purchased the cartoon of cola from the local corner store.
But when Andy her husband has drunk it then he falls ill and remained in the hospital for
three days. Herein on the inspection, it is found that the remains of the cockroach are found in
the drink. This is the reason with which the party has suffered from the large medical
expenses. Herein the store is bankrupt and the family wishes to sue the manufacturer.
Issue:
The issue in the present case is as follows:
 Whether the Australian manufacturer, Acme Cola Company Ltd, is liable for the acts
of the negligence?
 The Amount claimed by Smith on the grounds of the negligence.
Rule:
In this case, the act applicable to the parties is Law of negligence and limitation of liability
Act 2008. Negligence falls under the law of tort wherein there is a breach of the duty of care
by the party involved in the contract. However, the following conditions are required to be
fulfilled to prove the negligence:
 Defendant has owned the duty of the care
 The duty is breached by the defendant (Legal dictionary, 2017).
 The breach has caused the damages to the claimant.
In the landmark case of Donoghue v. Stevenson, there is an introduction to the neighbour
test. This test includes that the if the damages are such which is foreseeable by the defendant
then in such case the defendant owes the duty of the care to the neighbours. But herein the
breach should cause the damages to the claimant (QualitySolicitors, 2016).
Further the Consumer Protection Act 1987 is also applicable in the given case which poses a
strict liability towards the defective goods which causes harms to the consumers.
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Analysis:
It is observed from the given case law that the due to the remains of the cockroach found in
the can of cola the party has suffered from the illness. This acts as one of the reasons on the
basis of which the huge medical expenses are incurred by the party without their fault
(Okrent, 2014).
As per the law of torts in Australia, the negligence is considered to be one of the types of the
tort. The negligence means a careless act which is done by the doer which requires an
effective care in the performance. Herein the situation of the negligence has arrived when the
breach is made by the defendant in such manner which does not involve the care of the
plaintiff. In the decided case law of Donoghue v Stevenson, it is provided that the Donoghue
has not expected that the beer which is drunk contains the decomposed snail which becomes
a reason for the illness caused to the parties. Hence, in this case, the court made a decision
that valid claim can be made by the parties even when it is made by the friend or the other
person (Luntz, et. al., 2017).
Hence in the given case also it is found that the although the cans of the cola were sold by the
corner store the manufacturer Acme Cola Company Ltd is liable for the freshness of the cola.
Hence when it is accessed in the close observation that the cola contains the remains of the
cockroach on the basis of which Andy suffered from the illness and the huge medical
expenses are incurred by them is on the fault of the manufacturer as they have not taken care
of the interests of the customers while manufacturing f the colas. It is also found that the
corner store was bankrupt and closed and hence the parties suffered could bot claim the
losses from the store rather they can claim the loss from the manufacturer who is responsible
for the production of the cola.
In the similar case of Caparo Industries v Dickman, it is provided that the three stages of the
duty of care were applicable to the parties. But the duty to prove the law of the negligence is
proved by the plaintiff (Law firm, 2017).
As per the provisions of the Consumer Protection act, it is found that the strict liability
should be imposed on such cases wherein there is a production of the defective goods which
causes the harm to the consumer or their property. Hence as per this provision, the
manufacturer is liable for the defectiveness of the product.
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Conclusion
It is concluded from the above case that Sandra Smith can claim the amount of the damages
which is suffered to her from the illness of the husband Andy on the consumption of the cola
which contains the remains of the cockroach. Hence, in this case, the medical claim and the
expenses can be claimed by the Sandra.
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Conclusion
It is concluded from the above report that all the elements of the contract law and the tort
laws are developed in this report effectively. This report provides the clear understanding
regarding the concepts of the negligence which is responsible to prove the party at the fault.
The defences available and the injuries claimed by the parties is also effectively developed
from this report. Effective discussion of the acts of the misrepresentation is also cleared from
the report made. the cases are cited with the help of the decided case law which makes them
more significant and effective.
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References
 Fulbrook, J., 2017. Outdoor activities, negligence and the law. Routledge.
 Law firm, 2017. The Basis of Tort and Personal Injury Law. Available at:
http://www.lawfirms.com/resources/personal-injury/personal- injury-litigation/basis-
tort-law.htm. [Accessed on: 09.05.2018].
 Legal dictionary, 2017. Tort law. Available at: https://legaldictionary.net/tort-law/.
[Accessed on: 09.05.2018].
 Lexis PSL, 2017. Tort, negligence and nuisance claim—overview. Available at:
https://www.lexisnexis.com/uk/lexispsl/disputeresolution/document/
393747/59PMBBC1F18B-72Y2- 00000-00/Tort,%20negligence%20and%20nuisance
%20claims—overview. [Accessed on: 09.05.2018].
 Luntz, H., Hambly, D., Burns, K., Dietrich, J., Foster, N., Grant, G., & Harder, S.,
2017. Torts: cases and commentary. LexisNexis Butterworths.
 Okrent, C., 2014, “Torts and personal injury law”, Nelson Education.
 QualitySolicitors, 2016. Six clear steps to making a professional negligence claim,
Available at: http://www.qualitysolicitors.com/consumer-rights/professional-
negligence/legal-process. [Accessed on: 09.05.2018].
 Ramensky, G., 2018. Fraud and negligence. Findlaw Australia. Available at:
http://www.findlaw.com.au/articles/134/fraud-and-negligence.aspx [Accessed on:
09.05.2018].
 Wadlow, C., 2011. The law of passing-off: Unfair competition by misrepresentation.
Sweet & Maxwell.
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