Assignment on Business Law: Contract, Negligence and Authority Issues

This law assignment addresses four key legal issues. The first issue examines the tort of negligence, focusing on a local council's duty of care, breach of duty, and resulting damages to the plaintiff, Craig, due to incorrect information provided by a council agent. The second issue analyzes whether an enforceable contract exists between Craig's company and an architectural firm, considering the concept of apparent authority and the rule of indoor management in relation to Tom, who acted as managing director without formal appointment. The third issue concerns contract discharge through bilateral discharge, determining whether a debt between Craig and Steven was settled by a partial payment and waiver. The final issue evaluates whether a contract between Craig and Federation Square was breached or frustrated due to a fire, which rendered the event impossible. The assignment applies legal principles to these scenarios, providing conclusions on liability and enforceability.

LAW
STUDENT ID:
[Pick the date]

LAW
Question 1
Issue
The core issue is to determine if there has been negligence on the part of the council and if
Craig can recover the damages from the council. The various elements of the tort of
negligence need to be considered on the basis of conduct of council staff.
Rule
For establishing the tort of negligence, the following three elements need to be present.
 Duty to Care – The defendant must have a duty to care towards the plaintiff. This can
be tested through the neighbour test as outlined in the Donoghue v. Stevenson [1932]
AC 562 at 580 case. The neighbour is an entity which in the belief of the action doer
can be impacted by the choices exhibited in relation to the inaction or action
undertaken (Davenport & Parker, 2014). Also, the impact should be foreseeably seen
for the duty to care to arise.
 Breach of Duty – It is essential that the defendant must take adequate measures so as
to extend the necessary care to the neighbour or the potential plaintiff. The reasonable
care would be dependent on the underlying circumstances in relation to the likelihood
of damage and severity of the underlying damage. Failure to take reasonable measures
which would be expected from a person of average intellect would lead to breach of
duty (Lindgren, 2011).
 Damages – The plaintiff must suffer damages on account of breach of duty. These are
not limited to physical and monetary and may be as emotional or mental stress. It is
imperative that the damage must be related to breach of duty. This can be tested by
ascertaining whether the damage would have still occurred if breach of duty would
not have happened. If the occurrence of damage is independent of duty breach, then
the defendant cannot be held for negligence (Gibson and Fraser, 2014).
Application
It is apparent that in the given case, Craig is the plaintiff who went to the local council to
obtain information about the restriction on land block which he was interested in purchasing.
There is a duty to care on the part of the local council and the agents representing the same
since any wrong information could result in losses which are clearly foreseen. Also, there has
been a breach of duty in the given case since the agent could not provide the correct
information since he was constantly being disturbed by his mobile. It is reasonable to expect
that in public offices, the agent would not attend to personal calls while doing work. Further,
damage has been suffered by Craig which could have been avoided had the agent at the local
council given the correct information about land acquisition for road widening. Thus, all the
elements of tort of negligence are satisfied in the given case.
Conclusion

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Based on the above discussion, it is apparent that Craig has suffered damages (in terms of
financial loss) owing to negligence of local council agents. Hence, Craig can sue the local
council for damages.
Question 2
Issue
The core issue is to determine whether an enforceable contract exists between Craig’s
company and the architectural firm in light of the actual authority not existing with Tom to
enact the contract.
Rule
Authority granted to an agent can be actual or apparent. While actual authority comes from
the position that an individual is duly appointed to, the apparent authority arises from the
conduct of the underlying person. If a given individual tends to act in a certain manner which
gives a reasonable indication to the third party that the individual has the requisite authority,
then the contracts arising in this manner would be considered as enforceable. This is in line
with the verdict highlighted in the Freeman and Lockyer v Buckhurst Park
Properties (Mangal) Ltd [1964] 2 QB 480 case. In the given case also, a person concerned
inspite of not being appointed as the director was acting so and hence the contract enacted
with the third party was held enforceable (Paterson, Robertson and Duke, 2015). Also, with
regards to the concerned individual not having the requisite authority, the interest of the
innocent third parties is safeguard in accordance with rule of indoor management. This rule
was highlighted in the landmark Royal British Bank v Turquand (1856) 6 E&B 327 case
(Carter, 2012).
Application
In the given case, even though Tom is not formally appointed as the managing director but
his business card lists his designation as MD and also his conduct reflects the same. Thus it
would be appropriate to conclude that in reality Tom has apparent authority to act as
managing director. Further, since in the business card and his conduct, it is reflected that Tom
is the managing director, hence the architecture firm has reason to assume that Tom has the
requisite authority. Considering that the architecture firm has benign intention while entering
the contract, hence it would be considered as enforceable in line with doctrine of indoor
management.
Conclusion
Craig’s company would be bound by the contract entered into by Tom and the same cannot
be considered void on the grounds that Tom lacked the requisite authority.

LAW
Question 3
Issue
The core issue is to ascertain whether the contract between Craig and Steven has already been
discharged or not. Further, in light of the same, it needs to be opined if remaining loan and
interest amount can be recovered from Steven.
Rule
One of the mechanisms of contract discharge is bilateral discharge. Under this category, it is
possible for waiver to be granted when one of the parties is unable to completely perform the
contractual obligations. In this case, it is possible for the other party to discharge the contract
by voluntarily agreeing to the altered standard of performance. However, it is expected that
for this to happen there should be some consideration for both the parties involved which
should not be necessarily the same. A relevant case in this regards is Christy v Row (1808) 1
Taunt 300 (Carter, 2012).
Application
In accordance with the given case facts, it is apparent that Steven on account of failure to
secure the government contract was unable to make the requisite repayment of $ 1 million
along with interest. Hence, Steven offered to Craig that he can make a payment of $ 500,000
and the remaining debt would be waived off. Even though Craig was reluctant but his
agreement to the revised terms was voluntary and driven by the consideration to be able to
obtain a partial amount which may not be available later. The voluntary consent is also
apparent from the fact that Craig did not decide to pursue legal recourse till few weeks when
his own financial condition deteriorated and he needed money. Thus, it is apparent that the
debt has been completed discharged owing to $ 500,000 payment made by Steven. However,
the cade for interest payment may be made since the same was not covered in the settlement.
Conclusion
The contract between Craig and Steven has already been discharged and hence Steven does
not owe any debt. However, Craig may sue Steven for the outstanding interest payment since
it was not part of the settlement reached between contracting parties.
Question 4
Issue
The core issue is to determine whether there has a breach of contract or the contract was
frustrated. Based on this, it needs to be opined as to whether Craig can sue Federating Square
in relation to contract being breached.
Rule

LAW
A contract may be discharged through various means. One of these is frustration. The
frustration of contract typically takes place when after the enactment of contract, there is
change of circumstance which cannot be attributed due to fault of either party but makes the
contract obligation impossible to perform. It is noteworthy that frustration does not result
when either party is at fault or when it is more expensive or difficult to fulfil the contractual
obligations. In the event of the contract rendered frustrated, neither of the parties can sue the
other and also the future obligations for each of the parties arising from the contract are
considered discharged (Paterson, Robertson and Duke, 2015).
A leading case with regards to frustrated contracts is Taylor v Caldwell [1863] EWHC QB J1.
In this case, a music hall was rented for four concerts but one week before the date of concert,
the music hall caught fire. The honourable judge termed the contract as frustrated in this case
and hence ensured that no future obligations arise because of the original contract (Carter,
2012).
Application
It is apparent that the building caught the fire a night before the event and it was not
attributed to the fault of either party. Also, on account of the fire, the building was completely
destroyed which meant that the defendant could not arrange the event even at incremental
cost. Thus, it would be fair to term the contract as frustrated. Owing to the contract being
frustrated, the plaintiff (Craig) would not be able to sue Federating square in relation of
breach of contract.
Conclusion
Since the given contract is frustrated, hence neither party can sue the other citing breach of
contract. Hence, Craig would not be able to sue Federating square.

LAW
References
Carter, J. (2012) Contract Act in Australia. 3rd edn. Sydney: LexisNexis Publications.
Davenport, S. and Parker, D. (2014) Business and Law in Australia. 2nd edn.. Sydney:
LexisNexis Publications.
Gibson, A. and Fraser, D. (2014) Business Law. 8th edn. Sydney: Pearson Publications.
Lindgren, K.E. (2011) Vermeesch and Lindgren's Business Law of Australia. 12th edn.
Sydney: LexisNexis Publications.
Paterson, J. Robertson, A. and Duke, A. (2015) Principles of Contract Law. 5th edn. Sydney:
Thomson Reuters.