Company and Commercial Law: Financial Compensation, Negligent Misrepresentation, and Legal Risks

This article discusses financial compensation under contract, financial assistance under tort of negligent misrepresentation, and legal risks arising out of non-performance of duty in company and commercial law. It provides rules and applications of each topic and suggests ways to avoid legal risks. The article cites relevant cases and laws.

Running head: COMPANY AND COMMERCIAL LAW
Company and Commercial Law
Name of the Student
Name of the University
Author Note

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Table of Contents
Part 1................................................................................................................................................2
Financial compensation under Contract......................................................................................2
Issue.........................................................................................................................................2
Rule..........................................................................................................................................2
Application..............................................................................................................................2
Conclusion...............................................................................................................................3
Part 2................................................................................................................................................3
Financial assistance under tort of negligent misrepresentation...................................................3
Issue.........................................................................................................................................3
Rule..........................................................................................................................................3
Application..............................................................................................................................4
Conclusion...............................................................................................................................4
Part 3................................................................................................................................................5
Legal risks arising out of the non-performance of duty..............................................................5

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Part 1
Financial compensation under Contract
Issue
To provide financial compensation or assistance to the aggrieved party for breach of
contract by Lloyd Right Pty Ltd, the contracting party.
Rule
When a party to the contract fails to perform as the terms of the contract, it amounts to
breach of such contract and in such situation, the aggrieved party may claim for damages or pray
to the court to quash the contract. In a contractual agreement, the terms are either express or
implied. The parties to a contract are bound by the express terms of the contract. In Pym v.
Campbell, it was held that the parties to the contract must know the importance of the expressed
terms of the agreement. In Hopkins v Tanqueray, it was observed that the parties the contract
must verify the terms of the agreement before entering into the contract and once such contract is
signed, it becomes enforceable on non-performance. In Oscar Chess v Williams, it has been
discuss that the express terms must expressly lay down the special skills of the parties that adds
up to the value of the contract. In Breen v Williams, it was held that special contractual
relationships would comprise of special duties on the party of the party responsibility to carry out
duties under reasonable care. The professionals have the implied warranty to carry out their duty
of care in such a way that it benefits the contracting party. However, in case of non-performance,
the party suffering the loss is eligible to claim damages under the common law of contract. such
damages would be payable depending on the amount or intensity of loss incurred by the
contracting party. Nevertheless, the defendant would still have several defenses to prove
innocence.
Application
In the given case study, James had told the manager of Lloyd Right Pty Ltd to arrange for
100 seating options in the restaurant along with the responsibility to get the permit of the place

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from the Local Council. The manager ordered for furniture bigger in size than the usual ones
which would only accommodate 80 seating option. Moreover, James wanted to include some
seating option outside, on the sidewalk of the restaurant to add an aesthetic value to the
restaurant. However, failure on the part of the manager to verify the fact whether such
arrangement would be feasible, amounted a severe loss to James when he was intimated by the
council that the table installed on the sideway need to be removed. In such situation, the manager
is liable to pay damages to James who would be losing $30 for every customer.
Conclusion
The manager would have to compensate James for the non-performance of the contract,
which required the manager to arranger for 100 seating even though it was not expressed in the
contract, but orally agreed upon by the parties. Moreover, by the manager’s failure to comply
with the rules of the council, James would incur heavy loss in the business. Therefore, for such
omission of duty, the manager would again be liable to pay damages to James on such terms.
Part 2
Financial assistance under tort of negligent misrepresentation
Issue
Negligent misrepresentation giving rise the issue, which speaks for financial
compensation or assistance to the plaintiff.
Rule
Negligent representation refers to the opinion or advice given by a professional in the
course of an agreement and the other party relied upon such opinion, which turns out to be false
and misleading. It is a tort, which is committed by a person who has professional liability to
another to show a duty of care. In Rogers v Whitaker, it was held that it is the duty of the
professionals to discuss the probable risks that can be encountered in the course of the
performance of the agreement. While discussing the professional and dutiful capacity of the tort-
feasor, it is to be understood that there are various other capacities of a person to commit

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negligent misrepresentation. Section 59 of Wrongs Act 1958 states that the skill of the person
hired must be appropriate as per the requirement. Any suppression of fact would amount to
misrepresentation.
In Perre v Apand, foreseeability of the risk of the non-performance of the contract was
discussed. If the defendant fails to foresee such probable risk, it might lead to severe
consequence, which would affect the plaintiff. Failure to foresee the risks would amount to
negligence of the party relied on, under the Law of Tort. The professional is expected to foresee
such risks, which has the capacity to cause injury to the client. The professional would be
directed to pay compensation to the aggrieved part by the court on enforcement of the contract.
Nonetheless, it has been observed that when a risk is too remote to be foreseen, the defendant
would not be held liable for the damage incurred by the plaintiff (The Wagon Mound No. 2).
Section 18 of the Australian Consumer Law (ACL) lays down that it is unlawful to
deceive someone by way of entering into a contract to which such innocent person might have
hold a trust and reliance. Thus, to claim damages, it is necessary for the plaintiff to establish the
fact that the defendant has deceived him and such an act has caused him injury.
Application
In the given case study, the aggrieved party had relied upon the manager to accommodate
100 seating in the restaurant and to get the permit of the place from the local council. The
manager showed negligence on his part on both the tasks, which have caused an injury to James,
the aggrieved party to the contract. Such negligent representation would make the manager liable
to compensate James.
Conclusion
James would receive compensation for the negligent representation and non-performance
of standard duty of care on the manager’s part, which has caused him severe financial injury.

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Part 3
Legal risks arising out of the non-performance of duty
James has quite a few legal risks ahead of him to tackle. The first and foremost would be
the large sized furniture that needs to be fitted in the restaurant, which would occupy more space
and would leave room for lesser number of seating. Lesser number of seating would amount to
the accommodation of lesser number of customers, which means the business would not make
the amount of profit that it had estimated to earn. In addition to, failure to remove of the installed
tables on the sidewalk would attract legal risk and eventual penalty from the local council. Later,
James might incur heavy losses due to the scanty accommodation of customers due to the ill-
fitted furniture as well.
A suggestive opinion to avoid the risk of scanty seating arrangement would lie on the
owner of the premise. The owner of the premise must choose and order the preferred furniture
that would fit in the restaurant without losing on the number of seating. Additionally, the parties
must incorporate expressed term on such significant matters without fail.

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Reference list:
Breen v Williams (1996) 186 CLR 71
Hopkins v Tanqueray (1854)
Oscar Chess v Williams (1957)
Perre v Apand (1999) 198 CLR 180
Pym v Campbell (1856)
Rogers v Whitaker (1992) 175 CLR 479
The Wagon Mound No. 2 [1967] 2 All ER 709