Law Case Study: Ellen vs. Council - Negligence and Breach of Contract

This case study analyzes a legal dispute involving Ellen and the Council. Ellen seeks damages due to negligent advice from a Council employee, leading to her business's failure and mental distress. The analysis explores potential claims of misrepresentation, negligence, and vicarious liability. The document examines the principles of negligence, breach of contract, and negligent misstatement, supported by relevant case law such as Donoghue v Stevenson and Baltic Shipping v Dillon. The analysis concludes that Ellen has grounds for a negligence claim against the Council and a breach of contract claim against herself for failing to pay rent, recommending that she pursue legal action for compensation and fulfill her contractual obligations. The case also addresses the negligent misstatement by the Council employee, recommending Ellen pursue remedies for her losses. The document provides references to legal texts and cases to support the analysis.

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Company Law
Tort Law and Contract Law
07-Oct-17
(Student Details: )

LAW 2 | P a g e
Issue 1
The key issue in this case revolves around a possible claim which can be made by Ellen
against the council for the advice.
Rule
Misrepresentation refers to a false statement of fact made to induce the other party
into getting forward with the contract by the first party. In misrepresentation, the false
statement has to be made of fact and not of opinion, as was held in Bisset v Wilkinson [1927]
AC 177. And Horsfall v Thomas [1862] 1 H&C 90 provides that reliance has to be placed by the
aggrieved party on the misrepresented fact, for a case of misrepresentation to stand
(McKendrick, 2014).
Negligence is considered as a breach of duty of care, as a result of which, the person to
whom such duty had been owed, gets harmed or has to bear a loss (Greene, 2013). For making
a case of negligence, the parties have to show that a duty was owed, that its breach resulted in
an injury, that the risk of harm was foreseeable in a reasonable manner and that the parties
had proximity between them (Statsky, 2011). Owing to the presence of these elements, in
Donoghue v Stevenson [1932] UKHL 100, the aggrieved party was compensated for her illness,
due to dead snail found in ginger bottle, which made the consumer sick (Latimer, 2012). Baltic
Shipping v Dillon (1993) 176 CLR 344 saw the aggrieved party being compensated for her
mental distress (Paterson, Paterson & Duke, 2012).

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Vicarious liability is a principle through which, the employer can be made liable for the
acts of their employee, and stems out from the agency law (Giliker, 2010).
Application
Based on vicarious liability, for the acts of Council Employee, the Council would be
liable.
The Council Employee, in order to induce Ellen into getting the studio in that locality,
made a false statement of fact, and on which Ellen relied and went ahead with the leasing
agreement. However, a case of misrepresentation would still not stand as no contract was
entered between Council and Ellen, or the Council Employee and Ellen, which could state that
Ellen was induced into a contract.
However, a case of negligence can be made in this case. This is because it was the duty
of the Council Employee to give the right information to her. As this duty was contravened, she
was injured in form of her nervous disorder, her business failing and her rent being
outstanding. So, based on the quoted cases, Ellen can apply for damages, in terms of economic
loss and mental distress caused.
Conclusion and Recommendations
Hence, the Council would have to pay damages to Ellen for the wrong advice, owing to
negligence of the Council Employee. So, Ellen should go ahead and initiate a case of negligence
against the Council and claim monetary compensation for her mental distress, her loss of
income and the pending rent.

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Issue 2
The key issue in this case revolves around a possible breach of contract as a result of the
rent not being paid by Ellen.
Rule
Once a contract has been formed, the terms covered under the contract have to be
properly fulfilled. In case one of the contracting parties fails to fulfil the contractual obligations,
it results in the contract being breached (Andrews, 2015). And as a result of this, the aggrieved
party can apply for damages, which are mostly in terms of monetary compensation; though, the
same can be applied for equitable remedies as well (Clarke & Clarke, 2016).
Application
In the given case study, a leasing contract had been drawn between the landlord and
Ellen, which required both the parties to fulfil the obligations covered under it. However, the
failure of Ellen in paying the rent due would be deemed as a breach of contract, irrespective of
the reasons for such breach. And this would allow the landlord to make a case of breach of
contract against Ellen and ask for payment of rent, along with a possible interest for the
outstanding amount as damages.

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Conclusion and Recommendations
Thus, by not paying the rent, the contract was breached by Ellen. And it is
recommended to Ellen to make the due payments, or she would have to bear additional costs
for her breach of contract.
Issue 3
The key issue of this case revolves around the negligent misstatement made by the
Council Employee.
Rule
Negligent misstatement is best defined as such an inaccurate or a false statement,
which one person makes to another, in an honest, but careless manner (Latimer, 2012). So,
when a person holding special knowledge gives advice to another, who does not have the skills
or knowledge of the first person, in a careless manner, a case of negligent misstatement can be
made against such first person. For making a case of negligent misstatement, the aggrieved
party has to show that there had been an element of fault, followed by an actual damage and
lastly, that by being awarded remedies, the victim would be aptly compensated; instead of
going forward with the punishment of the negligent party (Gibson & Fraser, 2014).
Application
In the given case study, the Council employee made a negligent misstatement to Ellen.
This is because there was a fault element in the sense that the Council Employee did not even

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check for what he had been asked and simply by looking at screen stated that Ellen had nothing
to worry about. It was his duty as a person sitting at enquiry desk, to make certain that the
information which he was giving was correct, but he failed to do so carelessly. Ellen had to bear
actual damage in form of mental distress, her loss of income and the pending rent. And instead
of punishing the Council Employee, it would be best to award remedies to Ellen so that she
could cope up with her losses.
Conclusion and Recommendations
To conclude, the Council Employee did make a negligent misstatement in this case. So, it
is recommended to Ellen to make a case of negligent misstatement and apply for remedies,
particularly to compensate her for her losses.

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References
Andrews, N. (2015). Contract Law (2nd ed.). UK: Cambridge University Press.
Clarke, P., & Clarke, J (2016). Contract Law: Commentaries, Cases and Perspectives (3rd ed.).
South Melbourne: Oxford University Press.
Gibson, A., & Fraser, D. (2014). Business Law 2014 (8th ed.). Melbourne: Pearson Education
Australia.
Giliker, P. (2010). Vicarious Liability in Tort: A Comparative Perspective. Cambridge: Cambridge
University Press.
Greene, B. (2013). Course Notes: Tort Law. Oxon: Routledge.
Latimer, P. (2012). Australian Business Law 2012 (31st ed.). Sydney, NSW: CCH Australia Limited.
McKendrick, E. (2014). Contract Law: Text, Cases, and Materials (6th ed.). Oxford: Oxford
University Press.
Paterson, J.M., Robertson, A., & Duke, A. (2012). Principles of Contract Law (4th ed.). Rozelle,
NSW: Thomson Reuters (Professional) Australia.
Statsky, W.P. (2011). Essentials of Torts (3rd ed.). New York: Cengage Learning.