Legal Advice on Misrepresentation and Negligence Cases

This report provides legal advice on two cases of misrepresentation and negligence. In the first case, Angela can file a suit for misrepresentation against Jessica for false statements made during contract formation. In the second case, the Smith family can file a case of negligence against the cola manufacturer for failing to maintain safety standards, causing injury to Andy. The report analyses relevant laws and cases to provide advice.

Business Law Assignment

Executive Summary
In this report, two cases were discussed to provide legal advice in each case. The first case
deals with the issue of misrepresentation based on the information presented by the
parties. It was advised that Angela should file a suit for misrepresentation against Jessica.
The statements made by Jessica were false based on which a contract was formed between
the parties. Thus, Angela can end the contract and file for damages to compensate her
losses. In the second case, the issue of negligence was raised. It was advised that the Smith
family should file a case of negligence against the cola manufacturer because all elements of
negligence are present in the case. Andy suffers damages due to the failure of safety
standards of the manufacturer which owed a duty of care and it was breached. Thus, it is
advised that the Smith family can claim for damages based on a case of negligence.
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Table of Contents
Introduction...............................................................................................................................3
Answer 1.....................................................................................................................................3
Advice.....................................................................................................................................4
Answer 2.....................................................................................................................................5
Advice.....................................................................................................................................6
Conclusion..................................................................................................................................7
References List...........................................................................................................................8
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Introduction
In case parties of a contract made a false statement or implied a fact which is untrue in
order to induce another party to form a contract, it is considered as misrepresentation. The
contractual relationship which is formed based on misrepresentation cannot bind its parties
legally to enforce the terms of such contract. It becomes voidable, and the aggravated party
has the right to end the contract or bind the parties to its terms. On the other hand, if the
actions of people or organisations could cause serious injury to another party, then it is their
duty to ensure a standard of care which assists in avoiding harm to another party. In case
such care is not maintained by a person or an organisation, then a suit for negligence can be
filed by the parties. In such case, the aggrieved party can claim for damages which he/she
suffered due to the fault of another party. This report will examine two cases based on
these principles in order to provide advice to parties of each case. To clearly understand the
topic, various case laws and legislation will be analysed in the report.
Answer 1
In this case, a false statement is made by Jessica regarding the financial statements of her
business, and the issue is whether it can be considered as misrepresentation. In order to
advice Angela, it is necessary to understand relevant laws and cases. Firstly,
misrepresentation is defined as a false or untrue statement which is made by a party with
an objective to attract another party into signing a contract and form a contractual
obligation. A contract formed based on misrepresentation of fact is voidable. In such case,
the innocent party has the right to either terminate the contract to end the contractual
relationship or made the contract valid (Hillman, 2012). Generally, a misrepresentation is
made by a party during the stage of negotiation of a contract. The purpose of making a false
statement is to induce or attract another party by giving him specific information in order to
form a contractual relationship.
The law provides that the false statement made by a party must be related to a fact rather
than a personal opinion or a promise (Derry v Peek (1889) 14 App Cas 337 and McConnel v
Wright (1903) 1 Ch 546) (Eggers, 2013). For example, if a statement is made by the seller
that a property is worth $100,000, then it is considered as a personal opinion. On the other
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hand, if the seller made in the statement that had paid $100,000 for the property then it is
considered as a statement of the fact. Similarly, a promise made by a party cannot be
considered as a false representation because it is related to future and it cannot be
considered as either true or false at the time when it is made (Dimmock v Hallett (1866) 2 Ch
App 21). The statements which are made regarding future events or estimations are
considered as a false statement of fact (Esso Petroleum v Mardon (1976) QB 801 and AMEC
Mining v Scottish Coal Company (2003) ScotCS 223) (Sergeant and Wieliczko, 2014). It is
necessary that the party which is making a false statement must be in a position to know
the fact otherwise it cannot be considered as a misrepresentation.
It is also necessary that the party to whom a false statement is made must have an intention
to carry out the stated intent (Edgington v Fitzmaurice (1885) 29 Ch D 459 and Keays v
Guardian Newspapers Limited, Alton, Sarler QBD (2003) EWHC 1565 (QB)) (Freedland et al.,
2016). In Australian law, the court uses Parol Evidence Rule (PER) in order to determine
whether a statement is considered as a misrepresentation of fact or not. It was given by the
court in the judgement of Goss v Lord Nugent (1833) 5 B&AD 58 case (Epstein, Archer and
Davis, 2014). The discussions between parties are a contract judged based on PER model in
order to consider that whether are considered as a term of the contract or not. In case a
party check the validity of the statement which his made another party, then a suit for
misrepresentation cannot be filed (Attwood v Small (1838) UKHL J60) (Kodilinye and
Kodilinye, 2013). However, if the opportunity to check the fact is not used by the party, then
it is considered that the party relied on the false statement based on which a suit for
negligence can be filed (Redgrave v Hurd (1881) 20 Ch D 1).
Advice
The statement made by Jessica is considered as a false statement because she was in a
position to know the facts and Angela carried out the deal based on such statement
(Edgington v Fitzmaurice). Jessica could claim that Angela checked the validity of the facts
by checking the accounts based on which she did not rely on the statement (Attwood v
Small). However, Angela only checked the account of 2007, and she didn’t check the rest
based on her reliance on the statement of Jessica; therefore, a suit for misrepresentation
can be filed by her (Redgrave v Hurd). The contract between Angela and Jessica is voidable
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based on which Angela can terminate the contract and claim damages from Jessica for the
loss suffered by him. Thus, a claim for misrepresentation can be filed in this case, and Angela
can demand damages.
Answer 2
In the present scenario, the Smith family suffered significant losses because of the health
issues faced by Andy which was caused due to drinking remains of a cockroach from the
cola bottle. The issue is whether a suit can be filed against the cola manufacturer based on
the negligence due to which Andy suffered serious injury. Before giving advice, it is
necessary to understand the elements which are required to be fulfilled in order to
constitute a claim for negligence. While performing specific actions, a person or company
owes a duty of care to ensure that such action did not cause a serious injury to another
party (Bismark et al., 2012). This duty is imposed over the party by the law which is
mandatory to be fulfilled. In case such duty is not maintained or breached by the party and
due to such breach, another innocent party suffered losses than a claim for negligence can
be filed. Based on this claim, the innocent party has the right to claim damages from the
breaching party in order to compensate for the loss suffered. Donoghue v Stevenson (1932)
AC 562 is an important case in which the court lied down the principles of negligence. In this
case, the judgement of the court was given based on the ‘neighbour test’. Mr Donoghue
become violently ill due to drinking remains of a snail which was present in her drink due to
negligence of the café worker (Greiner, 2014).
The court accepted her claim by providing that she had fulfilled the elements of the
neighbour test. The elements of the test include closeness in the relationship of parties and
foreseeability of the harm (Dorset Yacht Co Ltd v Home Office (1970) AC 1004) (Petrin,
2013). While claiming damages, it is necessary to prove that a duty of care is owed by the
party. There are a number of cases in which it was held that a manufacturer owed a duty
towards customers. In Norton Australia Pty Ltd v Streets Ice Cream Pty Ltd (1968) HCA 61
case, it was held that a duty of care is owed during packing of goods by a manufacturer.
Presence of a duty of care is importance without which a claim for negligence cannot be
constructed (British Railways Board v Herrington (1972) AC 877). It is necessary that the
party which owed the duty must have breached it by not maintaining a level of care which
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any reasonable person would have in such particular situation (Vaughan v Menlove (1837) 3
Bing. NC 467). In case of consumers, companies are required to maintain a standard of care
issued under the Competition and Consumer Act 2010 (Cth) in order to avoid a suit for
negligence. Foreseeability of the harm is a key element of contract based on which a party is
required to maintain a duty of care to avoid a suit for negligence (Australian Safeway Stores
Pty Ltd v Zaluzna (1987) HCA 7) (Hayward, 2013).
However, foreseeability of a risk did not itself creating a legal duty of care (Agar v Hyde
(2001) 75 ALJ 504). Not all accidents are caused by negligence for example a doctor might
not able to save the life of a patient due to severe injury (Stuart v Kirkland-Veenstra (2009)
HCA 15) (Townsend and Luck, 2009). It is necessary that the losses suffered by the party are
caused as a direct consequence of the breach of duty by a party who is required to maintain
a duty of care. An innocent party cannot claim for damages which are suffered due to an
accident which did not occurred due to the breach of duty of a party. Furthermore, the
damages must not be too remote in order to claim damages for negligence. The remoteness
of damages is a key factor which is evaluated by the court while providing a judgement for a
case of negligence (Bismark et al., 2012). The damages which are too remote are not
required to be compensated by the party who breached the duty of care. In order to decide
remoteness, the court uses ‘but for’ test. In this case, the court evaluate that an accident
would not have occurred but for the breach of duty by the party an injury is suffered by the
innocent party (Yates v Jones (1990) Aust Torts Reports). Based on which a claim for
damages can be filed by the party.
Advice
The severe injury suffered by Andy was caused due to drinking the remains of a cockroach.
He did not know that the cola bottle had remains of a cockroach which was there due to the
failure of maintaining a standard of care by Acme Cola Company Limited. The manufacturer
had a duty of care to ensure that drinks are safe for people (Norton Australia Pty Ltd v
Streets Ice Cream Pty Ltd). A duty was there, and the manufacturer breached such duty due
to which Andy suffered an injury. The damages were not too remote, and they were caused
due to direct consequences of actions of the manufacturer. Thus, it is advised that the Smith
family should file a suit for negligence and demand damages for the injury suffered by Andy.
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Conclusion
In conclusion, in case any fact which is relevant to a contract is made by a party which is
false and based on such fact, another party signs a contract, then a suit can be filed for
misrepresentation. As discussed in the first case, the statement made by Jessica was false,
and Angela entered into a contract with her based on such statement. Jessica cannot rely on
the defence that Angela checks the book of accounts because she only checks the books of
2007. Thus, she relied on the false statement made by Jessica due to which the contract
becomes voidable. As discussed above, a claim for negligence can be filed in the second
case. The injuries suffered by Andy are caused due to the remains of cockroach which were
present in the cola bottle because of the negligence of the cola manufacturer. A duty of care
is owned by the manufacturer which was breached due to failure to maintain a standard of
care based on which the injury is suffered by Andy. Based on which, a suit for negligence can
be filed, and a claim for damages suffered by the Smith family can be recovered from the
cola manufacturer.
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References List
Agar v Hyde (2001) 75 ALJ 504
AMEC Mining v Scottish Coal Company (2003) ScotCS 223
Attwood v Small (1838) UKHL J60
Australian Safeway Stores Pty Ltd v Zaluzna (1987) HCA 7
Bismark, M.M., Gogos, A.J., McCombe, D., Clark, R.B., Gruen, R.L. and Studdert, D.M. (2012)
Legal disputes over informed consent for cosmetic procedures: a descriptive study of
negligence claims and complaints in Australia. Journal of Plastic, Reconstructive & Aesthetic
Surgery, 65(11), pp.1506-1512.
British Railways Board v Herrington (1972) AC 877
Competition and Consumer Act 2010 (Cth)
Derry v Peek (1889) 14 App Cas 337
Dimmock v Hallett (1866) 2 Ch App 21
Donoghue v Stevenson (1932) AC 562
Dorset Yacht Co Ltd v Home Office (1970) AC 1004
Edgington v Fitzmaurice (1885) 29 Ch D 459
Eggers, P.M. (2013) Deceit: The Lie of the Law. Florida: CRC Press.
Epstein, D.G., Archer, T. and Davis, S. (2014) Extrinsic Evidence, Parol Evidence, and the
Parol Evidence Rule: a Call for Courts to Use the Reasoning of the Restatements Rather than
the Rhetoric of Common Law. NML Rev., 44, p.49.
Esso Petroleum v Mardon (1976) QB 801
Freedland, M., Bogg, A., Cabrelli, D., Collins, H., Countouris, N., Davies, A.C.L., Deakin, S. and
Prassl, J. eds. (2016) The contract of employment. England: Oxford University Press.
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Goss v Lord Nugent (1833) 5 B&AD 58
Greiner, R. (2014) Environmental duty of care: from ethical principle towards a code of
practice for the grazing industry in Queensland (Australia). Journal of agricultural and
environmental ethics, 27(4), pp.527-547.
Hayward, B. (2013) Tort, cinema and violent crime: An Australian perspective. Alternative
Law Journal, 38(4), pp.255-259.
Hillman, R.A. (2012) The richness of contract law: An analysis and critique of contemporary
theories of contract law (Vol. 28). Berlin: Springer Science & Business Media.
Keays v Guardian Newspapers Limited, Alton, Sarler QBD (2003) EWHC 1565 (QB)
Kodilinye, G. and Kodilinye, M. (2013) Commonwealth Caribbean contract law. Abingdon-
on-Thames: Routledge.
McConnel v Wright (1903) 1 Ch 546
Norton Australia Pty Ltd v Streets Ice Cream Pty Ltd (1968) HCA 61
Petrin, M. (2013) Assumption of responsibility in corporate groups: Chandler v Cape plc. The
Modern Law Review, 76(3), pp.603-619.
Redgrave v Hurd (1881) 20 Ch D 1
Stuart v Kirkland-Veenstra (2009) HCA 15
Townsend, R. and Luck, M. (2009) Protective jurisdiction, patient autonomy and paramedics:
the challenges of applying the NSW Mental Health Act. Australasian Journal of
Paramedicine, 7(4).
Vaughan v Menlove (1837) 3 Bing. NC 467
Yates v Jones (1990) Aust Torts Reports
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