Legal Analysis: Contract Formation, Torts, and Liability Issues

This assignment analyzes a legal scenario involving contract formation, mistakes, breach of contract, and tort of negligence. It explores the essential elements of a valid contract, including offer, acceptance, and consideration, and examines potential mistakes such as unilateral mistakes. The assignment further assesses liability for breach of contract and the remedies available to the aggrieved party. It delves into the tort of negligence, emphasizing duty of care, breach of duty, and causation, and applies the concept of vicarious liability. Finally, it discusses the types of damages that can be claimed in negligence cases, distinguishing between special and general damages. The analysis incorporates relevant case laws and legal principles to provide comprehensive solutions and advice for the involved parties.

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Cover Sheet
Name of the Student
Student ID
Word Count

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Contents
Solution 1........................................................................................................................................................................3
Issue A........................................................................................................................................................................ 3
Law.........................................................................................................................................................................3
Application and conclusion.....................................................................................................................................3
Issue B......................................................................................................................................................................... 4
Law.........................................................................................................................................................................4
Application and conclusion.....................................................................................................................................4
Issue C......................................................................................................................................................................... 4
Law.........................................................................................................................................................................5
Application and conclusion.....................................................................................................................................5
Issue D........................................................................................................................................................................ 5
Law.........................................................................................................................................................................5
Application and conclusion.....................................................................................................................................6
Issue E......................................................................................................................................................................... 6
Law.........................................................................................................................................................................6
Application and conclusion.....................................................................................................................................6
Issue F......................................................................................................................................................................... 7
Law.........................................................................................................................................................................7
Application and conclusion.....................................................................................................................................7
Bibliography...................................................................................................................................................................8

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Solution 1
Issue A
a) Whether there is a valid contract amid Jonny and Marie?
Law
To make a valid contract, it is necessary that all the contract essentials must be present. A valid contract
comprises of five basic essentials.
An offer is the initial element in any contract formation and is made by an offeror to an offeree. An offer
when transfers his intention to an offeree and lay down term which he wishes to be carried on by the offeree,
then, it is an offer in law1. The offeree when gave his consent to the offer term, results in an acceptance of
the offer2. An acceptance should be the mirror image of an offer to make it binding in nature3. When an offer
is combined with an acceptance then there is agreement. However, no quotation or a request for information
can be considered as an offer or acceptance in law4. Thus, any acceptance of a quote is invalid in law5.
An agreement must be established by the parties with legal intention. Legal intonation submits that the
parties are intending to be bound by the agreement in the court of law6. The agreement must also be
supported by consideration to make it enforceable7 and the parties must be capable8.
All these elements results in contract formation.
Application and conclusion
Steven is the sales manager of Lame Duck Restaurant (owned by Johnny). Two price lists are developed by
them, for children (Quotation A) and for customers (Quotation B).
Now, a quote is sent by Steven to Marie who is intending to conduct a party to customers. As per Stevenson v.
McLean, no quote is considered to be an offer or acceptance in law. Thus, by providing Quotation A to Marie
there is no offer that is made by Steven which is accepted by Marie. Thus, the acceptance by Marie is
against an offer which was never made by Steven or Johnny as held in Hyde v. Wrench.
Thus, there cannot be a valid contract amid the parties as the acceptance that is made by Marie is not in
correspondence with any offer.
1 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
2 Crown v Clarke (1927) 40 CLR 227.
3 Hyde v. Wrench (1840) 3 Beav 334.
4 Stevenson v. McLean (1880) 5 QBD 346.
5 Julie Clarke, ‘Australian Contract law-Agreement’, 2012, <https://www.australiancontractlaw.com/law/formation-agreement.html
6 Balfour v Balfour [1919] 2 KB 571.
7 Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460.
8 Nash v Inman [1908] 2 KB 1.

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So, there is no contract formation amid the parties.
Issue B
Was there a mistake? If yes, than what kind of mistake?
Law
Normally, mistake signifies an error. However, the concept of mistake is very significant in law and no
contract is considered to be rescinded by the party even if the mistake is fundamental. There are four kinds
of mistake that normally exists:
i. When both the parties are mistaken on a single thing, then, there is a common mistake on the part
of the parties and equity remedies can be availed, that is, rectification of contract or rescission of
contracts;
ii. When both the parties are in error but on different things then there is mutual mistake. Normally
this kind of mistake is incurred when the contract is uncertain or vague.
iii. When one party is at mistake and the other party is at no fault then a unilateral mistake is said to
incur and equity remedies can be availed, that is, rectification of contract or rescission of
contracts9;10
iv. When the parties are in error on the nature of contract they have entered into, then, the mistake is
Non est factum. The parties are not able to understanding the significance or the manning of the
contract.
Application and conclusion
Now, Jonny and Steven has sent Quotation A to Marie for a corporate party which she is intended to host.
The quotation that is sent by Steve was a quote for children parties. Both entered into a contract on the basis
of quotation A. It is submitted that when Marie signed the contract she understands the nature of contract
and is signing the contract with intention to abide by the same. However, when the quotation is presented by
Steven then he is of the view that he is giving quotation B where as in reality quotation A is provided. Thus,
a unilateral mistake is undertaken by Steven.
Thus, there is no such remedy in common law, however, in equity Steven has right to either rectify the
contract or rescind the contract.
Issue C
What will happen if the Lame Duck Restaurant is obliged to provide the premises for the banquet, but
refuses to do so?
9 Taylor v. Johnson (1983) 57 A.L.J.R. 197.
10 CASE COMMENTARY TAYLOR V. JOHNSON: UNILATERAL MISTAKE IN AUSTRALIAN CONTRACT LAW, Monash University
Law Review [VOL. 1 1, JUNE '851.

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Law
When any contract is made then the parties must abide by its terms and conditions. If any party is at fault
and does not abide by the term of the contract then, the aggrieved party must sue the party at fault.
The aggrieved party can11:
i. Sue for damages;
ii. Rescind the contract;
iii. Claim compensation.
Application and conclusion
It is assumed that there is a valid contract amid Johnny & Steve and Marie.
If the Lame Duck Restaurant is under contractual obligation to provide the premises for the banquet, but
refuses to do so, then, it is an act of breach of contract.
Thus, Marie can sue Lame Duck Restaurant for rescission of contract and can claim damages for the loss
that is suffered by her because of the cancellation of her party.
Issue D
Advise Johnny on whether there was a tort of negligence.
Law
In order to establish a tort of negligence it is required that the defendant owns a duty of care which is
violated by him and which resulted in loss to the plaintiff12.
A duty of care signifies that the defendant must carry out his acts and omission in such manner so that no
loss or injury is caused to the plaintiff because of his acts or omission13. The duty of care is only imposed
upon the defendant when the plaintiff is his neighbor, that is, there exists proximity or closeness amid the
parties14. Also, the plaintiff must also be reasonable foreseeable by the defendant15.
Once the duty is imposed upon the defendant, then, if the defendant does not able to act as per the desire
level of care that is expected in any given situation, then, the duty is considered to breach16.
Lastly, because of the breach of the duty of care it is necessary that there must be some kind of damage that
is sustained by the plaintiff17.
Compliance of all the elements results in establishing negligence on the part of the defendant.
11 Julie Clarke, Australian Contract law- Remedies’ 2012, < https://www.australiancontractlaw.com/law/remedies.html>.
12 MacPherson v. Buick Motor Co. (1916).
13 Donoghue v Stevenson (1932).
14 Caparo Industries plc v Dickman [1990] UKHL 2.
15 Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40
16 Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem [2009] .
17 Jay Feinman, Law 101, 2010, New York: Oxford University Press

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The defendant can protect himself if he can prove that he takes reasonable actions to bring the danger within
the notice of the plaintiff, but, the risk assumed by the plaintiff is taken voluntary.
Application and conclusion
The Gardner is carrying out work at the rooftop garden of an apartment building. A general notice is pasted
on the mailbox that the resident must avoid rooftop in the morning because of the work.
It is submitted that the Gardner is accruing work and thus it is duty to act in such a manner so that no injury
is caused to the resident of the building. The duties are imposed because the resident is in close connectivity
with the Gardner and thus are his neighbors.
However, this duty is violated by the Gardner when the palm leaf had just been cut off one of the garden
trees by the gardener. Thus, the duty of care that is expected from him is violated.
Because of the violation, one of the residents slips over on a palm leaf and breaks his wrist. The damage is
because of the act of the Gardner and is foreseeable.
Thus, it is advice to Steve that there is duty of acre upon Gardner which is breached causing harm to the
resident.
Thus, there is action of tort.
But, the Gardner can reduce his liability as warning notice is pasted and the act of the resident was
voluntary.
Issue E
AdviseJohnny on whether he is liable for actions of his gardener?
Law
In law, one concept is called vicarious liability.
In vicarious liability the master is considered to be liable for all the actions of his servant provided the acts
are carried out within the employment course. Thus to prove negligence18:
i. There must be relationship of master-servant;
ii. That the servant is acting as per the directions and control of the master19;
iii. That the acts of the servant are not criminal in nature.
iv. The servant is not an independent contractor.
Compliance of all the elements will make the master liable for the actions of the servant.
Application and conclusion
The Lame Duck Restaurant has employed a Gardner. They sub contracted him for other work. he was
assigned an work for Marie to work at the rooftop garden of an apartment building.
18 NetLawman, ‘Vicarious Liability’ 2017, https://www.netlawman.com.au/ia/vicarious-liability-australia.
19 Prince Alfred College Incorporated v ADC [2016] HCA 37.

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Now, the Lame Duck Restaurant and the Gardner are in the relationship of an employer and employee. Also,
the actions of the gardener are within the control of Steve as they only appointed him to work for Marie. He
is appointed as a sub contractor to work for Marie.
Thus, he is acting as an contractor and is thus an employee of Lame Duck Restaurant.
So, there can be application of vicarious liability in order to hold Steve liable for the actions of the Gardner.
Issue F
Advise what damages have to be paid for: medical expenses, money lost by cancelling holiday or both?
Law
In negligence when any party is found to be negligent in his actions, then the aggrieved party can claim
damages from the defaulting party. The damages that can be availed are20:
i. Special damages – the out pocket expenses, such as, medical expenses, loss of earnings can be
claimed
ii. General damages – these damages include pain and suffering, loss of earning capacity in the
future, loss of enjoyment of life and disfigurement.
Application and conclusion
Because of the negligent action of the garner the resident suffered and claimed compensation for his injury,
including medical expenses and money lost by cancelling an overseas ski.
However, he is liable to claim only compensation for his injury, including medical expenses as they are his
general damages.
Money lost by cancelling an overseas ski cannot be claimed as they does not fall in general or special
damages.
20 The Law Hand Book, ‘Negligence, liability and damages’ 2016,
http://www.lawhandbook.org.au/10_01_01_negligence_liability_and_damages/.

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Bibliography
Books/Articles/Journals
CASE COMMENTARY TAYLOR V. JOHNSON: UNILATERAL MISTAKE IN AUSTRALIAN
CONTRACT LAW, Monash University Law Review [VOL. 1 1, JUNE '851.
Jay Feinman, Law 101, 2010, New York: Oxford University Press
Case laws
Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem [2009] .
Balfour v Balfour [1919] 2 KB 571.
Caparo Industries plc v Dickman [1990] UKHL 2.
Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460.
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
Crown v Clarke (1927) 40 CLR 227.
Donoghue v Stevenson (1932).
Hyde v. Wrench (1840) 3 Beav 334.
MacPherson v. Buick Motor Co. (1916).
Nash v Inman [1908] 2 KB 1.
Prince Alfred College Incorporated v ADC [2016] HCA 37.
Stevenson v. McLean (1880) 5 QBD 346.
Taylor v. Johnson (1983) 57 A.L.J.R. 197.
Wyong Shire Council v Shirt [1980] HCA 12.
Online Material
Julie Clarke, ‘Australian Contract law-Agreement’, 2012,
<https://www.australiancontractlaw.com/law/formation-agreement.html
Julie Clarke, Australian Contract law- Remedies’ 2012, <
https://www.australiancontractlaw.com/law/remedies.html>.
NetLawman, ‘Vicarious Liability’ 2017, https://www.netlawman.com.au/ia/vicarious-liability-australia.
The Law Hand Book, ‘Negligence, liability and damages’ 2016,
http://www.lawhandbook.org.au/10_01_01_negligence_liability_and_damages/.