BAMG2107 Business Law Assignment: Contractual Terms and Tort

This business law assignment addresses several key legal concepts within the realm of business. The first question distinguishes between contractual terms and representations, outlining the remedies available for each and referencing the case of Hadley v. Baxendale. It also explores how courts determine whether a statement is a term or a representation. The second question examines a scenario involving a hotel's liability to a guest, considering contract law principles, innkeeper's duty, and premises liability. The third question focuses on negligent misstatement, defining it and outlining the requirements for claiming damages, referencing the Hedley Byrne v. Heller and Caparo v. Dickman cases. The final question analyzes a case involving government liability for the actions of a prisoner, considering duty of care, fiduciary relationships, and relevant case law such as Home Office v Dorset Yacht Co Ltd.

Running Head: BUSINESS LAW ASSIGNMENT
BUSINESS LAW ASSIGNMENT
Name of the Student
Name of the University
Author Note

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LAW
Q1:
A contractual term is said to be a provision that is forming the fundamental structure
of a contract. On the other hand, representation can be true or false which is said to be a
statement of fact made by the make without being sure about it being true. A representation
that is said to be false though does not give rise to a tortuous obligation but amounts to a
tortuous action of misrepresentation.
It can be said that both term and representation give the right to remedy to the
aggrieved party but in case of terms of a contract the right of remedy automatically arises by
virtue of the codified obligation associated with the term. However, in case of representation,
the burden of proof lies on the aggrieved to prove that the breach causing party made the
statement fraudulently, negligently and without having adequate knowledge about the
trueness of the statement and such statement induces the aggrieved to act over the same. In
both, cases of term representation, the purpose of awarding damage are to put the aggrieved
in the same position where he or she would have been in the terms of the contract have been
properly executed by both of the parties. In the case of Hadley v. Baxendale, the court held
that, while recovering damages for breach of contractual terms an aggrieved party is liable to
recover damages which is reasonably foreseeable to both parties during the making of the
contract along with this the aggrieved party can claim consequential damages which may
have to arise due to any special scenario related to the contract as long as the existence of
those scenarios are within the knowledge of both the parties1. In case of representation, the
aggrieved party can claim damages beyond the foreseeability test and ask for all direct losses
happen to the claimant2.
1 Hadley v Baxendale (1854) 9 Ex 341
2 Star Polaris LLC v HHIC-PHIL INC [2016] EWHC 2941 (Comm)

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LAW In case of determining the obligation of a breach causing party, the court needs to
determine whether such an obligation arises out of any term or representation. The first
thumb rule for determining the same is to look for whether there exists any express written
provision regarding the breach in issue in the contract if so, then such written statement will
be considered as the term and any other oral statement will be the representation as stated
under the rule of 'Parol Evidence’. In the case of written provision, it will regard as the erm of
the contract. The next thing that needs to be determined is that the party making the statement
poses any requisite or extra skill regarding the concerned issue in that statement, then it is
going to be referred as a term3. On the other hand, if the representator has more knowledge
than the aggrieved, then it can be regarded as representation. The third thing that usually
determined by the court is the proximate relationship between the statement and the contract,
that is the depended on the statement made by statement maker which induces the aggrieved
to enter into the contract and without that statement, the contract would not exist4. In addition
to this, the significance of the advice of the representator must be communicated to him or
her either expressed or implied conduct. The fourth important factor is the time-lapse, that is,
after making the statement the contract has been immediately made, and then it would
amount to representation5.
Terms can further be classified under implied terms as envisaged in Section 16 of the
Sale of Goods Ordinance, conditions and warranties which depends upon the intention of the
parties at the time of making the contract6, and ‘innominate terms’ which is an intermediate
term between conditions and warranties which come into existence depending upon the
impact of the breach in such cases where conditions elaborated in the contract are
ambiguous7. However, the duty of the aggrieved party if check the trueness of the statement if
3 Oscar Chess v Williams [1957] 1 WLR 370
4 Bannerman v White (1861) 10 CBNS 844.
5 Heilbut, Symons and Co. v Buckleton [1913] AC 30.
6 Poussard v Spiers (1875) LR 1 QBD 410
7 Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7

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LAW it is within his or her capability by as a prudent person and complying with the principle of
due diligence.
Q2:
Issue:
The issue, in this case, is whether Ken can claim damages from the Grand hotel for
causing loss and injury to him during his stay to the hotel or not.
Rule:
In this case, the contract rule of the presence of knowledge, fiduciary liability,
negligence, the duty of care has been discussed. Furthermore, common law duties such as
innkeepers duty and premises liability have also been discussed to determine Ken's liability to
get damages.
Analysis:
Ken is liable to get damages from the hotel room on the basis of various ground.
Firstly, the Grand hotel management did not inform Ken about the disclaimer of no liability
for lost goods and injury on the hotel's party for their guest. Therefore, Ken does not have any
actual and constructive knowledge regarding the existence of such terms of stay, nor he did
sign any declaration confirming his no objection to comply with the provision8. Furthermore,
the hotel authority did not communicate with him about such a clause associated with staying
in the hotel, which as a service provider it is their liability to disclose each material facts or at
least give Ken an opportunity to have knowledge about such facts9. Therefore, they have
failed to act in good faith and comply with the reasonable standards of fair dealing as
envisaged under the law of contract.
8 Callahan, D.J., Kramer, L.B., Hanback, L.T. and Bacon, S.L., 2017. 2017 Government Contract Law
Decisions of the Federal Circuit. Am. UL Rev., 67, p.1273.
9 Anns v Merton London Borough Council [1977] UKHL 4, [1978] AC 728

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LAW Furthermore, the hotel authority can be held liable for the failure of common law
"innkeeper's duty" which envisaged that the innkeepers can be held responsible for the
injuries and theft for their guests10. Furthermore, the rule mandates that every innkeeper must
warn the guests about latent dangers which can be foreseen and further it is their duty to
inspect the property in order to ensure the safety of the guest on their premises. Further, the
doctrine of premises liability also imposes a duty of care upon the premises owner for each
and every person's safety in the premises. According to this rule, a hotel can be held liable for
the damages, theft or injury to their customer, as they are the invitee to the hotel under this
rule, a hotel owner can be held liable for their employee's act which has caused damage or
injury to the invitee under the principle of fiduciary duty. Therefore, in the present case, Ken
can claim damages from the Grand Hotel for the theft of his diamond watch and money from
his hotel room11. Further, he can hold the attendant liable along with it the hotel for their
negligent breach of duty of care towards ken as an invitee12. Furthermore, he can claim
damages from the hotel for not intimating him about such oil on the floor which caused in
bodily injury and which is their professional duty to ensure the safety of their client’s during
their stay at the hotel13.
Conclusion:
Therefore, it can be concluded that hotel owners owe a duty under the contract law as
well as under the law of tort to their customer or invitee during their whole stay in hotel
premises by virtue of which breach, Ken can claim damages.
10 Steenson, M., 2018. Duty, Foreseeability, and Montemayor v. Sebright Products, Inc. Mitchell Hamline LJ
Pub. Pol'y & Prac., 39, p.31.
11 Bourhill v Young [1943] AC 92
12 Phillips v Whitely [1938] 1 All ER 566.
13 Murphy v Brentwood District Council [1991] UKHL 2

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Q3:
A negligent misstatement is said to be a piece of false advice that has been given by
the representor to the representee and the representee acted upon such advice. However, in
order to claim damages that might occur from wrong advice to a person, the representee has
to prove that there was a special relationship between both the parties rather than mere
foreseeability on the representator’s part on the effect of the advice upon the representee. In
the case of Hedley Byrne v. Heller, a special relationship is said to exist where the
representators words have induced the representee to work on the advice by believing it to be
true and the representator had prior knowledge about such influence of his or her word over
representee14.
A special relationship is said to have existed when there is a contract between a representator
and representee. However, even in the absence of a contract, there might exist a special
relationship where the representator has any special knowledge or skill or is a professional. In
the case of Caparo v. Dickman15, the House of Lord held that the requirement to prove
negligent misstatement is;
 Advice must have to be given to the represenatatee by the representator regarding a
specific purpose known to the represenator and
 the representator knows that the representee will act upon the advice without inquiring
about the statement, which he or she eventually does.
In addition to this, there must be a presumption existed on the side of the reprentator that he
is required to give correct or true advice to the representee under the special relationship or
professional liability which he or she failed to comply with and eventually end up in giving a
false statement. It also needs to be proved that while giving such a false statement the,
14 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
15 Caparo Industries PLC v Dickman [1990] UKHL 2

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LAW representee was negligent and breached his duty of professional care which e or she owes due
to the represenattor due to the special relationship or contract.
Q4:
Issue:
The issue, in this case, was whether Amy's mother can claim damages from the
government of HKSAR for the death of Amy due to the reckless driving of a prisoner who
ran away from one of the correctional home of Tai Wo Ping, Kowloon or not.
Rule:
In this case, the rule relating to the duty of care, a fiduciary relationship of the government
with different governmental bodies and the government's duty of care upon the citizens have
been discussed.
Analysis:
In the present case, it has been held that due to the careless act of the guard of the
Hong Kong Correctional Services of the Government of HKSAR, the offender who was
serving the sentence for possessing dangerous drug has run away by stealing some controlled
drugs from a chemist's shop in Sham Shui Po and also stole a car. He further killed a 6 years
old child Amy in the streets with his car.
It can be held that various persons can be held liable to Amy's mother. Firstly, the
prisoner itself can be held liable for murdering her child. Secondly, the jailor and jail
authority can be held liable for their callous and negligent act by not giving proper attention
to the prisoner which helped him to run away from the jail. In the case of, Giraldo v. CDCR16,
the court held that prisoner and jailor is in a special relationship, by virtue of which jailor owe
16 Giraldo v. CDCR - 168 Cal. App. 4th 231.

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LAW the duty of care towards the prisoner and breach of which may amount to negligent on the
part of the jailor. Furthermore, it can be said that the jailor being the supervisors of the jail
guards owes a fiduciary duty over the act of the jail guards. Therefore, the jailor can be held
liable for the failure to comply with the professional duty of care in the nature of supervising
the acts of the guards as well as a negligent breach for unable to monitor the activities of the
prisoner which was the duty of the jailor and the jail authority. Furthermore, the Government
of HKSAR is said to be the head monitoring authority of all the correctional homes under the
Jurisdiction of the Government. In the case of, Home Office v Dorset Yacht Co Ltd17, a group
of juvenile offenders who were kept in prison on an island under the supervision of three
prison officers escaped from the prison and caused damaged to the plaintiff's yacht. The
plaintiff brings an action for damages against the Home Office stating negligence on the part
of the defendant. The court held that the Home Office owed a duty of care towards the
plaintiff and it is also foreseeable that the juvenile offenders if ran away would have caused
this damages, therefore, the office was supposed to take more reasonable care in looking after
the juvenile offenders in order to prevent risk. Therefore, in the present case, it can be said
that HKSAR government owes a duty to each and every citizen of the state and it is their duty
to look after the safety of the citizens by keeping the prisoner of heinous crime behind the
bars and take reasonable step to ensure the same. In this case, the Government failed to do so.
Hence they are liable for damages to the mother of Amy.
Conclusion:
It can be concluded from the fat of the case that the Government owes a fiduciary
duty regarding all its public bodies as well as owes a duty of care towards every citizen in
order to ensure their peaceful living in the country or state.
17 Home Office v Dorset Yacht Co Ltd [1970] UKHL 2, [1970] AC 1004

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LAW
Q5:
Issue:
The issue, in this case, is whether Adrian can terminate the contract and recover the
deposit money from the Grand hotel or not.
Rule:
The rule relating to the doctrine of frustration and discharge of the contract has been
discussed in this case.
Analysis:
Adrian booked the ballroom of the Grand Hotel for his marriage ceremony in January
2020 and gave 20% of the total cost advance for the same. However, the ballroom got
destructed by a fire accident in March 2020. Grand hotel told Adrian that he can perform the
ceremony in another 3-star hotel owned by the same holding company of the Grand Hotel.
However, Adrian rejected the offer and asked to return his money as the ballroom of the hotel
was smaller and could only hold 200 guests and the service is not up to the mark. The Grand
Hotel management was, however, denying giving back the advance to Adrian.
In the present scenario, it can be seen that, though there is a valid contract between the
two parties but the performance of the obligation of both the parties regarding the contract is
said to have been discharger by the rule of frustration as envisaged under the law of contract.
According to the rule, a contract is said to be frustrated during the happening of an event
between the formation and performance of the contract by which time both the parties must
have made some contribution regarding the performance of the contract, such accident
happened without the fault of either party and the occurrence of which was beyond the scope
of the foreseeability of both the parties. In the present case, frustration is said to have

9BUSINESS LAW ASSIGNMENT
LAW occurred due to the destruction of the property. In the case of Taylor v Caldwell,18 the court
held that the destruction of a subject matter which is the fundamental concern of the contract
can be referred to as an incident to discharged the contractual obligation of both the parties.
In another case of Krell v Henry19, if the terms of the contract do not cover anything about the
discharge of performance by the destruction of subject matter, the doctrine of frustration is
still going to be applied. Therefore, in the present case, Adrian cannot ask for performance of
the previous contract as a whole but he can ask for the return of the deposit based on his part-
performance of the contract which can be assumed by the act of depositing 20% of the total
cost of the said ceremony. In the case of Christy v. Row, it has been held that part
performance defines implying intention to pay and perform the obligation of the contract20.
Therefore, irrespective of the Grand hotel’s offer to give a new venue to Adrian, he is liable
to get back the deposit money under the doctrine of part-performance and also because such
new offer by the hotel cannot be continued under the same contract, the purpose of which has
been frustrated.
Conclusion:
Therefore, it can be concluded that the frustration of contract is a way to discharge the
parties from their future obligation but the part-performance can be taken into consideration
in determining liability.
18 Taylor v Caldwell [1863] EWHC QB J1
19 Krell v Henry 2 K.B. 740 (1903)
20 Christy v Row (1808) 1 Taunt 300

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Reference:
Anns v Merton London Borough Council [1977] UKHL 4, [1978] AC 728
Bannerman v White (1861) 10 CBNS 844.
Bourhill v Young [1943] AC 92
Callahan, D.J., Kramer, L.B., Hanback, L.T. and Bacon, S.L., 2017. 2017 Government
Contract Law Decisions of the Federal Circuit. Am. UL Rev., 67, p.1273.
Caparo Industries PLC v Dickman [1990] UKHL 2
Christy v Row (1808) 1 Taunt 300
Giraldo v. CDCR - 168 Cal. App. 4th 231.
Hadley v Baxendale (1854) 9 Ex 341
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Heilbut, Symons and Co. v Buckleton [1913] AC 30.
Home Office v Dorset Yacht Co Ltd [1970] UKHL 2, [1970] AC 1004
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7
Krell v Henry 2 K.B. 740 (1903)
Murphy v Brentwood District Council [1991] UKHL 2
Oscar Chess v Williams [1957] 1 WLR 370
Phillips v Whitely [1938] 1 All ER 566.
Poussard v Spiers (1875) LR 1 QBD 410
Star Polaris LLC v HHIC-PHIL INC [2016] EWHC 2941 (Comm)

11BUSINESS LAW ASSIGNMENT
LAW Steenson, M., 2018. Duty, Foreseeability, and Montemayor v. Sebright Products,
Inc. Mitchell Hamline LJ Pub. Pol'y & Prac., 39, p.31.
Taylor v Caldwell [1863] EWHC QB J1