Christina IRAC sample negligence and contract PDF

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GRADUATE SCHOOL OF BUSINESS AND LAW MID-SEMESTER SAMPLE TEST WITH MODEL ANSWERS COURSE:

LAW2442 COMMERCIAL LAW

DATE:

Week 7 Tutorial

TIME ALLOWED:

50 minutes

TOTAL OF PAGES:

Nine (9)

INSTRUCTIONS TO CANDIDATES:

1.

The candidate’s name and student number must be entered on the test paper.

2.

This test has two questions. Candidates are required to answer both questions. Both questions carry equal marks.

3.

Answers must be written on the provided test paper.

4.

Students are not permitted to leave the tutorial room with the test paper.

5.

Grammar and expression will be taken into account when assessing answers.

6.

Only those enrolled in LAW2442 Commercial Law may sit for this test.

7.

This test is open book.

8.

Electronic materials are not allowed.

9.

This paper carries 30% of the marks allocated in this course.

NAME :……………………………………………………………………………. STUDENT NO.: ………………………………………………………….… TUTOR’S NAME:………………………………………………………………… DAY AND START-TIME OF TUTORIAL:……………………………………..

LAW2442 Commercial Law: Mid-Semester Test SAMPLE TEST

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QUESTION ONE A melted ice cream had been spilt on the floor in the doorway of Zoles supermarket for about half an hour. Jimmy is a courier who uses his rollerblades to deliver mail. Jimmy was injured when he slipped in the spill while entering the supermarket to deliver a letter. Consequently, Jimmy suffered severe spinal injuries, the seriousness of which was partly due to an old ice skating injury. Jimmy is an experienced rollerblade user and at the time of the accident he was wearing his rollerblades. However, at the entrance to the supermarket a prominent sign warns customers that appropriate footwear must be warn at all times while in the store. REQUIRED: Advise Jimmy whether he would be successful in negligence to recover compensation from Zoles supermarket for his injuries? (15 marks)

GUIDE TO ANSWER Issue Rule Application Conclusion 1.

ISSUE:

A good example of how an issue of negligence could be phrased: The facts raise the issue as to whether Jimmy would succeed in an action for negligence against Zoles Supermarket for the injuries he has sustained.

2.

RULE

In order to establish negligence, the plaintiff must establish the three elements of negligence: Duty of Care, Breach of the Duty of Care, and Damage as per Donoghue v Stevenson.

3. a.

APPLICATION Duty of care Jimmy is an invitee of Zoles Supermarket (the occupier) and Zoles hence owes a duty of care to take reasonable precautions to avoid acts or omissions that will foreseeably injure the invitee, Jimmy. This was established in Australian Safeway Stores P/L v Zaluzna.

Further, Jimmy is a neighbour of Zoles in the context of Donoghue and Stevenson together with Bourhill v Young.because Jimmy is so closely and directly affected by the actions of Zoles that they ought reasonably to have Jimmy in

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contemplation as being so affected when they were directing their mind to the acts or omissions which are called into question’. The neighbours of Zoles are anyone who enters the supermarket because they might be affected by the actions or failures to act by Zoles. Jimmy enters the supermarket as is hence considered the neighbour of Zoles in legal context.

The relevant salient features of the matter at hand are the control or vulnerability test as per (Sullivan v Moody). Zoles as the occupier of the premises are in control of the safety of the premises, they have to power to instruct staff to clean up spilled products etc. whereas Jimmy is in a weaker position as he does not have any influence on the safety at the store. There is hence a strong argument for the existence of a duty of care owed to Jimmy.

b.

Breach of the duty of care

The objective test refers to the standard of care of a reasonable person as established in Imbree v McNeilly. An ordinary and careful entity such as Zoles would have cleaned up the ice cream immediately or at the very least have put up a sign to alert customers to the safety risk. The court then asks whether the defendant has met that standard. Did Zoles do what an ordinary and carful entity would have? It appears that Zoles has done what a reasonable occupier would do in order to warn entrants to its store as to the appropriate footwear to be worn. However, Zoles left the ice cream there for an hour and the facts do not support that they took any kind of action. Zoles hence did less than an ordinary and careful entity would have and they hence breached their duty of care. In establishing breach, the court additionally applies certain tests to determine whether a breach has been committed: i.

ii.

iii.

iv.

The probability of the harm: Bolton v Stone When leaving spilled product on the floor of a busy store there is a high risk of someone falling and sustaining an injury, this hence suggests breach of DOC. The seriousness of the harm: Paris v Stepney Borough Council Slipping in spilled product on a hard floor could potentially cause serious physical injury. This hence supports breach of DOC. The burden of taking the precaution: Latimer v AEC Ltd It would have not have been excessively expensive to clean up the floor, this hence supports breach of DOC. The social utility of the activity: Watt v Hertfordshire County Council. Zoles was not providing benefit for society at the time of the incident – they were not saving lives as per the Watt v Hertfordshire matter.

Causation and Damages It must be established that the damages were caused directly by the breach of DOC also referred to as factual causation, see Yates v Jones. In establishing causation,

c.

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the ‘but for’ test is relevant as per Rowe v McCartney. From the facts at hand, it appears that was it not for the failure of Zoles to clean up the spilled ice cream, Jimmy would have not fallen and sustained injuries. Finally, the Jimmy must establish that the damage is not too remote (ie, too far away) from the breach of the duty: The Wagon Mound No. 1. Suffering physical injuries from falling on a floor where product had been spilled is not too remote. Additionally, there is a rule called the eggshell skull rule (p 236 of the text) which says that only the type of harm must be foreseeable, not the extent of the harm. So if the plaintiff suffers more damage than would be usual for someone without a pre-existing injury, the defendant is nonetheless liable for the full harm suffered. Zoles will hence be fully liable for the damages suffered by Jimmy in spite of his previous injury. Because of this legal rule, the fact that the seriousness of Jimmy’s injury has been increased due to a previous ice skating injury, will not reduce the amount awarded for the damage suffered. The defendant must take their victim as they find the victim. Therefore, Jimmy’s old injury will not reduce the damages which Jimmy may be awarded.

d.

Defences

There are two defences: the first is that of contributory negligence (Ingram v Britten) where both the plaintiff and defendant have contributed to the loss sustained. This is a partial defence to the action in negligence and, if successful, liability will be apportioned between the defendant and plaintiff. It reduces the amount of damages payable to the plaintiff. Zoles may argue that by Jimmy not paying attention to the notice at the entrance, Jimmy contributed to the damage he suffered. Hence the liability may be shared.

The second is that of the plaintiff’s voluntary assumption of risk (Rootes v Shelton) which is a complete defence to an action in negligence because only the plaintiff is said to be liable for the damage caused. (Wrongs Act 1958 (Vic) ss 53-54) Zoles cannot argue voluntary assumption of risk on the part of Jimmy as Jimmy did not have full knowledge of the nature of the risk and is not the ONLY PARTY responsible for it. Jimmy did not therefore agree to incur the risk.

4.

CONCLUSION

Jimmy is likely to succeed in his action for negligence but his damages may be reduced to the extent to which he contributed to the damage suffered.

LAW2442 Commercial Law: Mid-Semester Test SAMPLE TEST

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QUESTION TWO Andy wants to buy Betty’s car. On Monday 1 June, Andy writes to Betty offering her $10,000 for her car. Betty telephones Andy and asks if she can have a little time to think about the offer and Andy says, “Certainly. I will leave the offer open until Friday.” On Thursday 4 June, Betty posts a letter to Andy in which Betty says she agrees to sell the car at the specified price subject to Andy’s assurance that Andy will pay in cash. Later that Thursday afternoon, Ken who wants to buy the car approaches Betty. Ken offers Betty $12,000 in cash. Betty accepts and immediately rings Andy and tells Andy that she has sold the car to Ken. Betty’s letter to Andy is not delivered until Monday 8 June. REQUIRED: Advise Betty of her liability, if any, to Andy and Ken. (15 marks) GUIDE TO ANSWER 1. ISSUE: The facts raise the issue of whether a contract exists between Andy and Betty and Ken and Betty. 2.

RULE

The elements necessary to create an enforceable contract are: agreement (offer and acceptance), intention and consideration as per Carlill v Carbolic Smoke Ball.

3. APPLICATION Here, you need to identify the different offers made – there might not only be one but several so use the information in the text (dates etc) to identify them. You then also have to establish where these are accepted (refer to dates if possible. What are the potential offers in this problem? Please differentiate between, invitations to treat, binding offers and unilateral offers that can be accepted by conduct), see Carlill v Carbolic Smoke Ball.

On 1 June Andy offers to buy Betty’s car – this is a binding offer as it is made to Betty specifically. However, the question at hand is whether this was actually accepted. Option Contract: An offer may not be revoked at any time prior to acceptance unless an option contract has been created: Goldsborough Mort v. Quinn.

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An option contract is separate from the main contract. It is a contract ‘to buy time’. This contract has nothing to do with the main transaction which is to buy and sell a car. An option contract therefore, is a separate contract which only relates to the buying of ‘time’ to keep an offer open. Betty’s response via phone is not acceptance but is considered an offer of option contract which is accepted by Andy. Andy says he will leave the offer open until 5 June. If this is a binding option contract (agreement, intent and consideration), then Andy will be bound to keep it open till 5 June but there is an issue of consideration (see below) That means that if a contract had been entered into to give Betty the option to decide whether or not she will accept Andy’s offer by Friday and Betty has paid consideration for this right, no matter how small the amount she has paid to keep the offer open till Friday, then Andy would have been bound to keep the offer open for Betty to accept by Friday as promised. An option contract would not bind Betty to accept the offer – that would be up to her. Consideration is the price paid for another’s promise: Carlill v. Carbolic Smoke Ball Co. It needs to be sufficient but not adequate: (Thomas v Thomas) But an option contract was not created here. Betty gave no consideration to buy Andy’s promise to leave the offer to buy Betty’s car open until Friday and Andy can revoke his offer at any time prior to Betty’s acceptance. Communication on 4 June Since Betty did not give any consideration, no matter how small, to Andy to keep the offer to buy open until Friday, Andy is free to revoke his offer to at any time before Betty’s acceptance and similarly, Betty can choose to accept or not accept as she sees fit. But Andy has not revoked his offer here and his offer is therefore still open for Betty to accept. On Thursday 4 June, Betty advises Andy that she would like to accept but the acceptance is not unqualified (has a condition of cash) and it is hence not acceptance in unqualified as per Hyde v Wrench. This rule provides that the offer must be accepted exactly on the terms it contains. If the offeree attempts to change the terms of the offer, then the offeree will have rejected the original offer and made a counter offer of his/her own. Hence, the offer of 4 June is not acceptance but is counter offer which rejects the offer of 1 June ( Hyde v Wrech). As this is no acceptance, the postal rule will not apply, see Adams v. Lindsell. This means the original offer no longer exists, only the counter offer does which will then again require the acceptance of Andy. Andy has not accepted Betty’s counter-offer and in order to protect herself from the possibility that Andy may accept her counter-offer, Betty should revoke her counter-offer to Andy and then enter into the contract with Ken, as per Dickinson v Dodds Here, Andy has not accepted Betty’s counter-offer and Betty is in a position to revoke her counter-offer to Andy. Since she has rung Andy and told him that she has sold the car, she has effectively revoked her counter-offer before Andy accepts it. The fact that Andy receives the letter on the 8 th is of no significance here because effectively, the letter does not contain an acceptance, but a counter-offer by Betty

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which Betty has effectively revoked when she told Andy that she sold the car before Andy could accept her counter-offer. Note: A. If Betty had accepted Andy’s offer unconditionally, there would have been a contract at the time she posted her letter of acceptance according to the postal acceptance rule. The element of consideration would have been present in that situation. The consideration would have been present in the exchange of promises – to buy and to sell – and would have satisfied the rule that consideration must be present and need not be adequate, but must be sufficient: Thomas v Thomas. B. The element of intention would also have been satisfied because this appears to be a commercial transaction and would have satisfied the legal presumption that in commercial transactions, the courts assume that the parties intended to create legal relations between them: Edwards v Skyways. Betty is therefore free to enter into any contract she wishes with anyone she wants because she has no contract with Andy. Betty has entered into a valid contract with Ken. All the elements of a contract are there: - Ken made Betty an offer which has been made and communicated to Betty. - Betty has accepted the offer unconditionally. - The exchange of promises to buy and sell between Ken and Betty is sufficient consideration to create a binding contract. - There is an intention to create legal relations since this is a commercial contract. In a commercial contract, the court presumes that the parties did intend to enter into legal relations with each other: Edwards v Skyways Ltd. Since this is a commercial transaction, the court will presume that Ken and Betty intended to create legal relations between them. 4. Conclusion. A contract therefore exists between Betty and Ken but not between Andy and Betty. Betty therefore has a valid contract with Ken and is not in breach of any contract with Andy since no contract with Andy was ever made.

LAW2442 Commercial Law: Mid-Semester Test SAMPLE TEST

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