University Law Case Study: Contract, Misrepresentation, and Negligence

This case study analyzes a legal scenario involving contract law, misrepresentation, restraint of trade, Australian Consumer Law, and negligence. Part A examines whether a contract was formed between Sally and Ethan, misrepresentation by Sally, and the reasonableness of a restraint of trade clause. Part B assesses Sally's potential legal actions against Good Health Help Pty. Ltd under Australian Consumer Law regarding the quality of services. Part C evaluates Sally's ability to sue David for negligence related to an accident. The analysis considers legal principles, relevant case laws, and statutory provisions to determine the rights and liabilities of the parties involved.

Running Head: Case Study
CASE STUDY
Name of the Student
Name of the University
Author’s Note

1CASE STUDY
PART A:
1:
Issue:
The issue in the case whether the legal intention to enter into contract was established
between Sally and Ethan.
Rules:
The doctrine to create legal intentions is a rule in the contract and forms one of the
essential elements for the determination of offer and acceptance between the parties. The
landmark case law for the determination of the intention of the parties to create the legal
intentions and abide by the terms of the contract in the course of such relationship1. The rule has
further been applied in modern cases to enhance the application of such precedent2.
There are two tests to establish the intention of the parties to create such legal intention:
 The objective test: unlike the name suggests, the test is more of a subjective one and has
been one of the determining factors in the decision of cases3. It was held that the
contractual relationship is determined by the explicit acceptance or the discharge of
contractual duty. In cases where the unilateral agreement exists, the performance or
omission of the act as stated in the terms of the contract shall constitute the determination
of the intention.
1 Simpkins vs. Pays [1955] 1 WLR 975
2 Welch vs Jess [1976] NZ 185
3 Carlill vs. Carbolic Smoke Ball Company [1893] 1 QB 256

2CASE STUDY
 The rebuttable presumption: this rule establishes the determination based on the burden
of proof. As a general rule, the burden of proof is determined as the balance of
probabilities in case of civil of wring and beyond reasonable doubt in the case of criminal
wrongs. However, based on different assumptions, the rule establishes four types of
agreements which are family agreements having no contract4, social agreements where
the cases are decided on basis of objective test which depends upon the merits of the
case5, Commercial Agreements where a valid contract is presumed6 and lastly, Collective
agreements where it is presumed that no contract has been made7.
Application:
In the given scenario, the terms and conditions of the contract were discussed and the sale
was proceeded. Although they were family but with the applicability of the two tests, the
contract was firstly accepted and the family relationship is subject to legal consequences only if
the situation demands.
Conclusion:
Relying upon the case analysis8, it can be concluded that Sally and Ethan had the legal
intention to enter into contract.
4 Balfour v Balfour [1919] 2 KB 571
5 Coward v M.I.B. [1962] 1 All ER 531 CA
6 Rose & Frank v Crompton [1925] AC 445
7 Ford v A.U.E.F. [1969] 2 QB 303
8 Erington vs Wood [1951] EWCA Civ 2

3CASE STUDY
2:
Issue:
The issue in the case is whether Ethan would be rewarded against representations made
by Sally.
Rules:
The misrepresentation is the making of an untrue or misleading based on which the
plaintiff makes his or her decision. The main element of misrepresentation is that the misleading
statement made by the defendant should have induced the plaintiff to enter into the contract9.
However, there is a difference between the statement of opinion and the statement of
misrepresentations10. Thus, it is important that the statement and its nature being untrue should
originate from the defendant. And the misled party’s decision should entirely or majorly depend
upon the untrue statements as made by the defendant11.
As laid down in the case law12, the concept of fraudulent misrepresentation was
recognized and the three elements were established for its determination which includes:
 Falsehood of the statement
 Statement is not to be believed
 The statement made is rash and nowhere even close to the truth
9 Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805
10 Fitzpatrick v Michel [1928] NSWStRp 19, Supreme Court (NSW, Australia)
11 Edgington vs. Fitzmaurice (1885) 29 Ch D 459
12 Derry vs Peek [1889] UKHL 1

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The party who has been misled can claim for the recession of the contract13 and recovery of
damages14 for all the losses which has been directly consequential to such misrepresented
contract.
Application:
In the given scenario, Salle had misrepresented the facts of the previous data of the
company revenues which showed profits. Such data formed the undermining factor for Ethan to
enter in to the contract with Sally and hence shall be entitled for the rescission of the contract or
claim for damages for the further irrecoverable losses of the company on the ground that he
purchased the company only because Sally had showed that the company was making profits in
its revenue and hence, Sally shall be liable for misrepresentation.
Conclusion:
It can be concluded that Ethan was entitled to be rewarded against representations made
by Sally.
3:
Issue:
The issue in the case is whether the restraint of trade term as imposed by Ethan is
reasonable.
Rules:
The restraints of trade is a common law doctrine which means that the parties to the
contract shall be bound by the contractual restrictions upon the freedom to trade. The foundation
13 Shogun Finance Ltd v Hudson [2004] 1 AC 919
14 Royscott Trust v Rogerson [1991] 3 All ER 294 CA

5CASE STUDY
of the competition law is based on this doctrine. The leading case in this regard is the Mitchel vs.
Reynolds15. It has been explained that the contractual of restriction of such kind shall be an
imposition of restriction upon the privilege to trade which shall be treated as void in nature and
hence, such contract shall not be enforceable by law. However, the exception to such rule is that
if the restriction clause is imposed to protect the reasonable interest of the person imposing it
which is generally the purchaser, then under the light of healthy competition among the
businesses, such clause shall be valid in nature16.
Remedies for the breach of restraint clause:
 Account of profits meaning that the breached party shall have entitlement to the profits
earned by the party who has breached the clause.
 Suit can be filed for injunction against the breaching person.
 Claim for financial damages as compensation for the damages incurred due to such
breach of clause.
Application:
In the given scenario, the contract between Sally and Ethan had a restraining clause upon
Sally to not conduct similar business within the radius of 100 kilometer radius and Sally on the
contrary after agreeing to the contract, purchased a store for the similar business within 20
kilometers from Ethan’s newly purchased Sally amounting to the breach of the clause.
Since the clause was meant to protect the interest of Ethan in the locality to maintain his
business and hence, to ensure healthy competition between the entities, the clause of restriction
shall be treated as valid and hence, Ethan would be granted the remedies in this regard.
15 (1711) 1 P Wms 181
16 Nordenfelt v Maxim, Nordenfelt Guns and Ammunition Co [1894] AC 535

6CASE STUDY
Conclusion:
It can be concluded that the restraint of trade term as imposed by Ethan is reasonable.
PART B:
Issue:
The issue in the case is whether Sally could take any action against Good Health Help
Pty. Ltd under the Australian Consumer Law Legislation.
Rules:
The Schedule 2 of the Competition and Consumer Act 2010 forms the basis for the
recognition and application of the Australian Consumer Law and its Subdivision B relates to the
Guarantees relating to the supply of services.
 Section 60 explains the Guarantee with respect to the due care and skill. It lays down that
if a person supplies goods or services to another person as a part of their business or
trade, then it is the duty of the supplier to ensure that such services shall be delivered with
due diligence and care17. It means that products should not deceptive or misleading in
nature18.
 Section 62 explains the Guarantee of the goods and services to be fit for the particular for
which the same has been ordered. In other words it has been established that if a supplier
supplies the goods and the services of trade and commerce, and if by express or impliedly
or by the way of negotiations, the consumer lets the supplier know the particular reason
for the purchase of such product or services, then it is the duty of the supplier to ensure
17 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60, (2004) 218 CLR 592.
18 Houghton v Arms [2006] HCA 59, (2006) 225 CLR 553

7CASE STUDY
that such goods and services are to be supplied in a fit matter to correspond to the
requirements of such consumer19.
 Section 63 explains the services to which the Guarantee does not apply. Such services
include contracts for transportation, storage of goods for the purposes of business and the
contracts of insurance.
The remedy as stated in section 267 of the Act lays down that:
 The consumer may claim for the recovery of all the reasonable costs arising from such
breach of guarantee of the services supplied.
 The consumer may also resolve to the termination of the contract for the supply of the
services.
Application:
In the given scenario, the services provided by the hospital ought to have guaranteed the
care and due diligence in the skill of the professionals performing the back surgery. In addition,
such service of the hospital was availed for the specific purpose of the injury that Sally suffered
due to slipping in the store.
Thus, the scenario can be analyzed in two applications of the rules. in the first
application, the back injury should have been performed with care and due diligence and hence,
it was breached due to their negligence and she suffered further illness. In the second application,
it can be explained that it was the duty of the hospital to guarantee that the treatment given was
for the specific purpose that she had come for and the same was breached due to the incorrect
information and the x-rays amounting to further injuries.
19 Australia Rong Hua Fu Pty Ltd v Ateco Automotive Pty Ltd (Civil Claims) [2015] VCAT 756

8CASE STUDY
Owing to the breaches, Sally was a consumer to the services provided by the hospital and
hence, she was entitled to the termination of contract and/or claim for the damages as
compensation.
Conclusion:
It can be concluded that Sally could take remedial action against Good Health Help Pty.
Ltd under the Australian Consumer Law Legislation.
PART C:
Issue:
The issue in the case is whether Sally could take legal action in negligence against David
for the accident on July 4 based on common law and state legislation legal principles.
Rules:
Under the common law, the tort of negligence has been established as the failure to
exercise reasonable duty of care resulting in the damages or injury to the other person. In such
scenario, it is the duty of the defendant to exercise duty of care as any reasonable man would
have in that circumstance and failing which the plaintiff suffered losses20. This has given rise to
the doctrine of occupier’s liability meaning that the persons who occupy the real property has a
duty of care owed towards the people who visit or trespass such property failing which they may
suffer huge losses21.
The same doctrine has been laid down in the codified form of Occupier’s Liability Act
1985(Western Australia). The leading case law that led to the codification of the law is
20 Donoghue vs. Stevenson [1932] UKHL 100
21 Wyong Shire Council v Shirt [1980 HCA 12]

9CASE STUDY
Australian Safeway Stores Pty Ltd. vs. Zaluzna22. This law binds the occupiers with the
minimum standard of reasonable care to be observed so that the visitors or the trespassers shall
not be put to dangerous conditions which may amount to damages (Section 5 of the Act). The
determination of duty of care being performed by the occupier depends on probability of the
quantum of injury caused, nature of premises, circumstances of entering the premises,
knowledge of the occupier that he may have visitors on the premises, age and ability of the
visitor and so on23.
The occupier’s liability rule is codified in the Civil Liability Act 2002 in NSW. It
establishes the similar duty of care imposed upon the occupier to protect the visitors and
trespassers from harm24.
Application:
The tort of negligence has been established as the failure to exercise reasonable duty of
care resulting in the damages or injury to the other person. In such scenario, it is the duty of the
defendant to exercise duty of care as any reasonable man would have in that circumstance and
failing which the plaintiff suffered losses
In the given scenario, David owed the duty of care towards Sally and the same was
breached when the wet and the slippery polished floor was neglected and the same was not
informed to Sally for her protection to be careful. Hence, considering the facts and circumstances
of the case, David shall be liable for the breach of Occupier’s Liability under the common law as
well as the state legislations which are Occupiers Liability Act (Western Australia) and Civil
Liability Act (NSW).
22 [1987] 162 CLR 479
23 Doyle (WA) Pty Limited v ING Real Estate Joondalup BV [2014] WASCA 215
24 Anton Nixon v Robert Lines [2017] VSC 723

10CASE STUDY
Conclusion:
It can be concluded that Sally could take legal action in negligence against David for the
accident on July 4 based on common law and state legislation legal principles.

11CASE STUDY
BIBLIOGRAPHY:
Case Laws:
Anton Nixon v Robert Lines [2017] VSC 723
Australia Rong Hua Fu Pty Ltd v Ateco Automotive Pty Ltd (Civil Claims) [2015] VCAT 756
Australian Safeway Stores Pty Ltd. vs. Zaluzna [1987] 162 CLR 479.
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60, (2004) 218 CLR 592
Carlill vs. Carbolic Smoke Ball Company [1893] 1 QB 256
Coward v M.I.B. [1962] 1 All ER 531 CA
Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805
Derry vs Peek [1889] UKHL 1
Donoghue vs. Stevenson [1932] UKHL 100
Doyle (WA) Pty Limited v ING Real Estate Joondalup BV [2014] WASCA 215
Edgington vs. Fitzmaurice (1885) 29 Ch D 459
Erington vs Wood [1951] EWCA Civ 2
Fitzpatrick v Michel [1928] NSWStRp 19, Supreme Court (NSW, Australia)
Ford v A.U.E.F. [1969] 2 QB 303
Houghton v Arms [2006] HCA 59, (2006) 225 CLR 553