Business Law Foundation (LAW101): Case Study and Remedies

This report analyzes a business law case involving a mechanic and a car owner, focusing on property rights, breach of contract, and duty of care under Australian law. The case involves a vintage Porsche Speedster requiring repair, followed by a theft at the owner's home, which led to financial constraints. The mechanic refuses to release the car without payment and offers a loan secured by the car. The report examines the legal principles of ownership, possession, and the implications of selling property without ownership. It applies these principles to the scenario where the car is sold by a third party (Mark) without the owner's permission. The analysis discusses the concept of wrongful possession and its legal consequences, referencing relevant cases like Yanner v Eaton and Smoldon v Whitworth & Nolan. The conclusion determines that Mark breached the duty of care, and the report suggests remedies for the owner, including compensation for damages. The report references several legal resources to support its claims.

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Foundation of Business Law

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Table of Contents
1. Reproducing the Problem.......................................................................................................3
2. Legal Principles......................................................................................................................3
3. Application of the Case to the Facts......................................................................................4
4. Discussion..............................................................................................................................5
5. Conclusion..............................................................................................................................5
6. Remedies................................................................................................................................5
References..................................................................................................................................6
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1. Reproducing the Problem
Peter had a vintage 1956 Porsche Speedster, which needed repairing of its gearbox. He went
a mechanic who said that the car will need two days to get repaired. The mechanic further
stated to Peter that he needs to pick up his car in the third day due to having rush in the shop.
However, the next day, Peter found that his house has been burgled in which his laptop and
carbon fibre racing bike were stolen. Herein, Peter buys a new laptop, as he needs it for study
purpose, which leaves him no money to pay the mechanic for getting his repaired car. Peter
goes to the mechanic two days later and he refuses to give the car without payment. Under
this circumstance, the mechanic offers Peter to give a loan. However, the mechanic wants
security against the loan. Based on the given case, the property law of Australia is referred to
as a system of rules, which focuses on regulating and prioritising the rights to property law,
responsibilities and interests of a person towards ‘things’. Contextually, these ‘things’ include
the right to ownership of an object that is tangible in nature (Australian Law Reform
Commission, 2015).
2. Legal Principles
An agreement has been formed between Peter and the mechanic, wherein Peter had to pay the
mechanic for fixing his car. Since Peter has not been able to pay for the car repairing, hence,
the mechanic can possess his car without having any ownership (Craddock Murray Neumann
Lawyers Pty Ltd, 2014). In this context, the duty of care is considered to be a legal
responsibility of not causing any harm, wherein it is reasonably predictable. There must exist
an adequate relationship between the two parties for duty of care to exist (Legal Services
Commission of South Australia, 2016). Hence, it can be stated that the mechanic has not
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breached any duty of care since he has no significant relationship with Peter. Moreover, the
mechanic has not harmed Peter in any way.
Nevertheless, on assuming that Peter lends his car to Mark for a test drive, he wishes to sell
the same to mark. Mark is highly interested in buying the car from Peter. He sells Peter’s car
to Robert in good faith and is unaware of original ownership. Thus, as per the general legal
rules persisting in the Australia, an individual has no right to sell properties that he or she
does not own (LegalVision Pty Ltd, 2015). Hence, Robert cannot be considered to be the
owner, as per the Australian law. This further signifies that Peter is still the real owner of the
car (Courtney, 2019).
As per the Australian law, a mortgagee, which remains in possession, intending to sell the
property, must be conducted under good faith. However, the attempt of Mark in selling
Peter’s car without permission can be considered to be a breach of contract (Courtney, 2019).
For example, one of the cases in relation to selling the property without permission of Yanner
v Eaton, Gummow J can be considered wherein it is mentioned that “common law, wrongful
possession of land might give rise to an estate in fee simple with the rightful owner having
but a right of re-entry” (Australian Law Reform Commission, 2015). As per this case,
possession can be referred to as a complex concept, which signifies the physical holding of
tangible objects. In addition, property rights further depend on the statutory framework of
laws and the property rights affect this particular property type (Australian Law Reform
Commission, 2015).
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3. Application of the Case to the Facts
The aforementioned case of Yanner v Eaton, Gummow J depicts wrongful possession of the
land. In the same way, the case of Peter and Mark also signifies wrongful possession of the
car. Justifiably, Mark sells the car, which owned by Peter to Robert, without his permission.
This signifies the fact that even though the car has been sold to Robert, he does not own it.
This is mainly due to the reason that Peter is the real owner of the car and not Mark, who sold
it to him.
4. Discussion
Another case of Smoldon v Whitworth & Nolan depicts that the plaintiff suffered from a
broken neck by the hooker during a rugby match. However, the claim made against the
defendant (Nolan) was based on breaching of duty of care in relation to “enforce the Laws of
the Game” (LawTeacher, 2018).
5. Conclusion
With respect to the case of Peter and the mechanic, there has been a breach of duty assuming
that the latter (Mark) sold Peter’s car without permission. Hence, he is liable to compensate
Peter for his act.
6. Remedies
In terms of remedy, certain amounts need to be paid to Peter by Mark for the damages being
caused by him to sell the car without taking prior permission from Peter (Australian Law
Reform Commission, 2010).
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References
Australian Law Reform Commission 2010, 8. Australian remedies: misappropriation and
other defaults, Home, viewed 8 September 2019, <https://www.alrc.gov.au/publication/legal-
risk-in-international-transactions-alrc-report-80/8-australian-remedies-misappropriation-and-
other-defaults/>.
Australian Law Reform Commission 2015, Definitions of property. Home, viewed 8
September 2019, <https://www.alrc.gov.au/publication/traditional-rights-and-freedoms-
encroachments-by-commonwealth-laws-alrc-interim-report-127/7-property-rights/definitions-
of-property-2/>.
Courtney, W 2019, Good faith and termination: The English and Australian experience,
Articles, viewed 8 September 2019,
<https://www.journalofcommonwealthlaw.org/article/7602-good-faith-and-termination-the-
english-and-australian-experience>.
Craddock Murray Neumann Lawyers Pty Ltd 2014. How do the Concepts of Possession,
Ownership and Title Impact Property Rights in Australia?, Home, viewed 8 September 2019,
<http://www.craddock.com.au/Document/How+do+the+concepts+of+possession-
2c+ownership+and+title+impact+property+rights+in+Australia-3f.aspx>.
LawTeacher 2018, Negligence duty of care cases | tort law cases | law teacher, Cases,
viewed 8 September 2019, <https://www.lawteacher.net/cases/negligence-duty-cases.php>.
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LegalVision Pty Ltd 2015. I bought a car from someone who wasn’t the owner, do I own,
Home, viewed 8 September 2019, <https://legalvision.com.au/i-bought-a-car-from-someone-
who-wasnt-the-owner-do-i-own-the-car/>.
Legal Services Commission of South Australia 2016. Negligence. Law Handbook Home,
viewed 8 September 2019, <https://lawhandbook.sa.gov.au/ch01s05.php>.
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