Company and Commercial Law Report - Semester 2, 2018: Legal Analysis

This report analyzes a case involving a contract dispute between James and Lloyd Right Pty Ltd concerning the design and council permits for a restaurant. The report examines the legal implications of the contract breach, specifically the failure to provide the agreed-upon seating capacity and secure outside seating permits. It explores the application of the Australian Contract Act 2010 and the Fair Trading Act 1987 (SA), assessing Lloyd's liability for financial compensation to James due to lost revenue and the failure to provide agreed services. The report also considers the application of the Tort of Negligent Misrepresentation, the potential legal risks Lloyd might face, and provides suggestions for mitigating financial and reputational risks. It references relevant case law and legislation to support its conclusions, offering a comprehensive legal analysis of the scenario.

COMPANY AND COMMERCIAL LAW 1
LST5CCL
Company and Commercial Law Semester 2, 2018
Memo for Mid-semester Assessment
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Word count: 1200

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Table of Contents
INTRODUCTION......................................................................................................................3
ASSISTANCE/ FINANCIAL COMPENSATION OFFERED TO JAMES IF LLOYD IS
TAKING RESPONSIBILITIES UNDER CONTRACT INTO ACCOUNT............................3
ASSISTANCE/ FINANCIAL COMPENSATION LLOYD WOULD OFFER JAMES IF
TAKING RESPONSIBILITIES UNDER THE TORT OF NEGLIGENT
MISREPRESENTATION INTO ACCOUNT...........................................................................4
Example..................................................................................................................................5
POSSIBLE OTHER LEGAL RISKS THAT LLOYD MIGHT FACE.....................................5
Suggestion for reducing financial risk...................................................................................6
Suggestion for reducing reputation risk.................................................................................6
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7

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INTRODUCTION
The report is related to the resolving of the case under the study. The case is related to
the contract between James and Llyod regarding to make a provision of architectural
designing of the restaurant established by James and taking permission from Council
regarding the outside seating arrangement. The report covers the various legal compliances
and recommendation that must be taken into consideration upon non-fulfilment of
responsibilities as mentioned in the contract.
ASSISTANCE/ FINANCIAL COMPENSATION OFFERED TO JAMES
IF LLOYD IS TAKING RESPONSIBILITIES UNDER CONTRACT
INTO ACCOUNT
A contract was established between James and Lloyd Right Pty Ltd regarding by
which Lloyd was responsible for the interior and exterior design of the restaurant, ensuring
the seating capacity and obtaining permits from the local council. For this James had paid
$1500 for the services which Lloyd will be rendering to acquire permission from the Council.
When the restaurant became operational, it was found that the seating capacity is only 80
instead of 120 as proposed. Due to which James was suffering a business loss of 40
customers per day. Additionally, the Council had denied permission to James to make seating
arrangements outside. In this case, the Australian Contract Act 20101 will be applicable
because the contract was established between both the parties in a written format. The
contract did not mention about a number of seating arrangements but taking permission from
the Council was mentioned. Australian Contract Act 2010 and Fair Trading Act 1987 (SA) of
Section 1562 will be applicable for not fulfilling the committed responsibilities by the parties.
Lloyd had breached the contract and was responsible to pay James for the loss incurred by
him due to less number of seating capacity. Due to reduced number of customers, James has
been suffered 40 customers per day and he also found the estimated loss per customer is 30
dollar in a day. Hence, Lloyd will be responsible to pay $1200 to James for the loss of
customers that he is suffering each day. Secondly, Lloyd had accepted payment on behalf of
the provision of services related to taking permission from the Council. However, Lloyd was
not able to do so and James was not allowed to serve customers outside the restaurant area.
1 Australian Competition and Consumer Commission v Keshow [2005] FCA 558
2 Australian Competition and Consumer Commission v UNJ Millenium Pty Ltd [2012] FCA 1123.

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Hence as per the Australian Contract Act 2010 and Fair Trading Act 1987 (SA) Section158, it
is mentioned that3 wrongly accepting payment Lloyd is found to guilty and breaching the
contract. Lloyd is liable to pay back the service amount of $ 15,000 had received from James
on account of providing services that are related to the provision of permission from the
council. Hence it could be concluded that as per the Contract Law Lloyd can be held
responsible to pay for the compensation for the loss of customers that James is experiencing
each day in his restaurant. Lloyd is also accountable to pay for the service amount that had
received from James on providing services from the Council. Hence, the total amount that
Lloyd is accountable to pay James is $16200 (adding $15,000 and $12000) on non-fulfilment
of the tasks allotted to it.
ASSISTANCE/ FINANCIAL COMPENSATION LLOYD WOULD
OFFER JAMES IF TAKING RESPONSIBILITIES UNDER THE TORT
OF NEGLIGENT MISREPRESENTATION INTO ACCOUNT
As per the contract that was established between James and Lloyd Right Pvt. Ltd.
mentioned that Lloyd will be responsible for the taking the permission from the Council for
making seating arrangements outside of the restaurant in order to carrying out activities
related to interior and exterior designing.4 The contract did not mention the number of
consumer seats to be arranged in the restaurant inside or outside in a written manner. As per
Tort of Negligent and Misrepresentation Act 1967 which include section 2(2), Lloyd is
responsible to pay for the misconduct or non- fulfilment of responsibility related to taking
permission from the Council. As per the Tort Misrepresentation Act under Company and
commercial law, Lloyd could not be held responsible for the loss of business or not fulfilled
seating arrangement provision as it was not mentioned in the contract in a written manner.
Hence, Lloyd will only be accountable to pay back the amount that is $15,000 which had
received from James for providing services towards the attainment of permission from the
Council. Lloyd will not be summoned under Tort Misrepresentation Act nor responsible to
pay for the loss of revenues that James could earn from 40 customers not included in the
seating arrangement.5 Hence it could be concluded as per the Tort Negligent
Misrepresentation Law that Lloyd is responsible to pay for the compensation charges that are
3 Australian Competition and Consumer Commission v KingIsland Meatworks and Cellars Pty Ltd
[2012] FCA 859.
4 Anti-competitive agreements, misuse of market power (penalty judgment 2016), (ACCC v v Cement
Australia Pty Ltd [2017] FCAFC 159)

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mentioned in the contract established between Lloyd and James. Lloyd is not accountable to
pay for any charges or compensation that is not mentioned in the written contract.
Example
In Goodman v. Wenco Foods, 333 N.C. 1, 19-20, 423 S.E.2d 444 (1992)6 Goodman
was a supplier to Winco Foods and responsible for the supply of hamburger patty to Wenco
Foods as mentioned in contract established between them. When Wenco Foods sued
Goodman on the quality of hamburger patty which was supplying. Goodman denied the
charges that it was not responsible for validating the quality of the products and was
accountable for supplying as it received from the third party. As per the Tort, Negligent
Misrepresentation Act Goodman under section 2c Goodman was found to be guilty on
account of lack of negligence in regards to inspecting and supplying the products prior to
delivery.7 Further, Goodman was responsible to pay Wenco Foods for the compensation
amount which it has to render upon causing damage to the goodwill and consumer baseline of
Wenco Foods.
POSSIBLE OTHER LEGAL RISKS THAT LLOYD MIGHT FACE
Lloyd might face the financial risk and reputation risk charges from James. The
financial risk may arise due to the payment of compensation that Lloyd had to make James on
account of not fulfilling the requirements of the written contract. Lloyd may also be charged
for reputation loss as the restaurant established by James may suffer losses due to eluding the
seating arrangements from outside the restaurant. James considered outside seating features
to the main point of attraction for the customers and establishing goodwill for the restaurant.
On non-allowance of this facility, James might suffer from loss of goodwill and reduction in
customers.
5 Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75
FCR 238.
6 Trade Practices Act 1974 (Cth) s 45, 45A, 76, 80, Australian Competition & Consumer Commission v
ABB Power Transmission Pty Ltd [2004] FCA 819
7 Full Federal Court - price fixing and agency, ACCC v ANZ Ltd [2013] FCA 1206 (18 November 2013)

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Suggestion for reducing financial risk
The financial risk could be reduced by making necessary changes in the designing of
the restaurant such that the needs and requirements that were mentioned by James get
covered and resolved to a maximum extent.8
Suggestion for reducing reputation risk
For reducing reputation risk Lloyd could promote James restaurant in a positive
manner so that the loss which James was suffering due to losing customers, reduced
customers and restricting of outside service to customers might get reduced.
CONCLUSION
The report discussed the different features of the case and found that Lloyd Right Pvt.
Ltd was responsible for not conducting its responsibilities in a proper manner. Hence, if
Lloyd is penalized and charged for compensation it would be rightly done and Lloyd is ought
to pay for the negligent behaviour conducted by its side. The concerned parties Lloyd Right
Pvt. Ltd and James are bided to follow the rules that are mentioned in the Australian Contract
Act as the restaurant is located in Melbourne and the law related to Australian governing
bodies will be followed.
8 Robert RUDLOFF, Plaintiff, v. WENDY'S RESTAURANT OF ROCHESTER, INC., Moyer Packing
Company, Inc., Defendants [June 08, 2006]

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REFERENCES
Robert RUDLOFF, Plaintiff, v. WENDY'S RESTAURANT OF ROCHESTER, INC., Moyer
Packing Company, Inc., Defendants [June 08, 2006]
Full Federal Court - price fixing and agency, ACCC v ANZ Ltd [2013] FCA 1206 (18
November 2013)
Trade Practices Act 1974 (Cth) s 45, 45A, 76, 80, Australian Competition & Consumer
Commission v ABB Power Transmission Pty Ltd [2004] FCA 819
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd
(1997) 75 FCR 238
Anti-competitive agreements, misuse of market power (penalty judgment 2016), (ACCC v v
Cement Australia Pty Ltd [2017] FCAFC 159)
Australian Competition and Consumer Commission v KingIsland Meatworks and Cellars Pty
Ltd [2012] FCA 859.
Australian Competition and Consumer Commission v UNJ Millenium Pty Ltd [2012] FCA
1123.
Australian Competition and Consumer Commission v Keshow [2005] FCA 558.