Advice Anna and Julian - Essay Example

Scenario Attached A Legal Essay Submitted By: NAME: INSTITUTION: COURSE: INSTRUCTOR: DATE: © 2015 Julian and Anna recently celebrated their 20th wedding anniversary. To properly celebrate this milestone, they decided to go on a holiday together to Bliss Island, a small exclusive, tropical island in the Whitsundays in Queensland. The brochure for Bliss Island shows white, sandy beaches, beautiful tropical vegetation and an amazing five start resort. The brochure also states “Bliss Island offers some of the best reef diving anywhere in the world, available all year round.” It also states that “visitors will enjoy some of the finest foods, prepared by some of the best chefs in Australia.” Pictured alongside this statement about food are several delicious looking cakes. Given that Anna and Julian are both keen divers and that Julian enjoys eating cake, the choice of venue for the holiday is easily made. When Julian phones to book the holiday, he speaks to Sandra who runs the resort. Julian asks Sandra “so how’s the diving?” and Sandra replies “It’s always brilliant here.” Julian also mentions that he enjoys cake and comments that he is really looking forward to eating lots of them when he gets there. Sandra says “the food here is really exceptional, I am sure you will love it.” As it turns out, the diving isn’t really that good. Tropical storms and an algae bloom have meant that there is very low visibility and the easily accessible parts of the reef have been damaged. Sandra also failed to mention that the chef who had prepared all the cakes used in the promotional pictures had left the Island and had been replaced by a Two-Hat Pakistani chef, who specialises in Indian food. When Julian and Anna arrive at the Island the next week, they check in and are shown to their room. There is a large sign on the back of the door in their room which states that “Visitors are advised that Bliss Island takes no responsibility whatsoever for any items left in rooms –including actions in contract law or tort. All items left in the room are done so at the visitor’s own risk. “ The next morning, the housemaid forgot to lock the door to Anna and Julian’s room. Unfortunately, this was noticed by Pete, who entered the room and stole all of Anna’s jewellery and Julian’s wallet. Shortly afterwards, Julian and Anna become aware of the poor diving conditions and the lack of cakes (although there is plenty of curry available) When they get back from their holiday, Anna and Julian call you, very upset, and ask for your advice. Advice Anna and Julian The couple, Julian and Anna, expected to enjoy their 20th wedding anniversary to the fullest. To do this, they booked in at Bliss Island resort based on the information in a brochure about the island as well as advice from the person who ran the resort. However, they went home very upset and dissatisfied and sought legal advice on what they should do. This essay advises them on the legal implications of negligent misstatement. To do so, the essay first discusses the essential elements necessary in instituting legal grounds for damages in such scenario before giving the couple the right legal advice. In law, a negligent misstatement is a false information or statement or misleading opinion that is made honestly but carelessly1. A person’s expression of opinion is treated as factual if the statement implies that the maker of the statement has good grounds for the opinion. A negligent misstatement is an actionable tort in law if a breach of duty of care occurs with the effect that the statement causes some damage to the claimant. When a person is making a statement, general duty-of-care is not mandatory, particularly in financial transactions. However, responsibility for negligent misstatement is legally imposed on the person making the statement if the statement is made under circumstances that make it reasonable to rely on it in making a decision2, 3. If a negligent misstatement influences a person who receives the statement to enter into a contract with the maker of the statement, the resulting statement is termed a negligent misrepresentation and is actionable in tort.4 A contract is a legally enforceable agreement between persons or organizations in which the purpose of litigation is compensation to the claimant and not punishment to the wrongdoer. The major difference between negligent misstatement and negligent misrepresentation is that while the latter is an actionable tort in a contractual relationship, the former may not be. The advice to Julian and Anna falls in a larger area of business law in which cases of negligent misstatement are supported by numerous precedent cases which have established all the essential factors required to lodge a successful argument for compensation. This essay argues using appropriate precedent cases that, under the prevailing circumstances surrounding Julian and Anna, it is clearly evident that: the Bliss Island’s brochure influenced both Julian and Anna to make a decision to celebrate their wedding anniversary at the Island where they hoped to satiate their tastes; the manager of the resort, Sandra, had special expertise and knowledge of the resort for which he could offer reliable advice; Sandra’s advice was offered in a serious context; and that Sandra realised that Julian and Anna would take his advice as factual and rely upon the advice to make their decision. It is therefore conclusively clear that Julian and Anna can pursue compensation for incurring pure economic loss against Sandra on the basis of negligent misstatement. It was established in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] that a negligent misstatement which caused a financial loss gave rise to a legal action because of negligent misrepresentation, even when no contractual relationship existed between the parties.5 In the scenario of this case, the plaintiff relied on and actually acted upon the advice provided by the defendant which led to a pure economic loss to the plaintiff. Another case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] laid the fundamental foundation for torts that arise from negligent misstatement6. Outlined below are further cases that clarify the major elements needed to sustain an argument necessary for awarding compensation arising from negligent misstatement. Mutual Life & Citizens’ Assurance Co Ltd v Evatt [1971] shows that the advising party had special knowledge and skill7, and L. Shaddock & Associates Pty Ltd v Parramatta City Council proves that a given advice need not be given by an expert advisor8. Sandra, who manages Bliss Island resort, answers Julian’s questions about diving and cakes affirmatively. In addition to foregoing, the Bliss Island’s brochure contained the kind of information that Julian and Anna required to make a decision to holiday at the Island. For example, the brochure displayed a brilliant beach and stated that the Island offered one of the best reefs in the world available all year round. It is added in the brochure that visitors will enjoy finest foods prepared by best Australian chefs. All the information in the brochure is confirmed by Sandra when telephoned by Julian. That is why Julian and Anna relied upon this advice in selecting Bliss Island resort as the place to celebrate their wedding anniversary. As a matter of fact however, Julian and Anna found that diving was not good due to tropical storms and low visibility caused by algae bloom while the easily accessible parts of the reef damaged already. Sandra failed to advice Julian on this situation. He failed to tell Julian that the present chef is a Two-Hat Pakistani who specialises in Indian foods only. For these reasons, it is therefore clear that the advice given by Sandra to Julian and Anna is a negligent misstatement since this advice provided by Sandra to Julian was given in a serious business context. Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) established that if a person provides information in a serious circumstance, the person is under the requirement of duty of care i.e. a duty of exercising reasonable care when providing information9. In this case, Sandra managed Bliss Island resort, a serious business entity with a serious business motive. This is evident from the brochure. Since there is no indication of any other relationship between Sandra and Julian and Anna, it is reasonable to state that Sandra provided advice to Julian and Anna in a serious context. It is also clear therefore, that Sandra committed a tort either negligently or intentionally. The court showed that for a person claiming damage, the person needs to prove that he suffered actual damage by relying on the advice received10, in Mutual Life and Citizens’ Assurance Co Ltd v Evatt [1971] case. Furthermore, it was reasonably foreseeable to Sandra that Julian and Anna would draw on his advice to decide to holiday at Bliss Island. As mentioned already, Julian told Sandra that he (Julian) would eat ‘lots of cake’. It was known to Sandra that contrary to the brochure, and based on his experience at the Island, the beach suffered tropical storms and low visibility due to algae bloom and that the easily accessible parts of the reef were damaged. With reference to relevant case law and based on the facts established above, this essay has sufficiently identified the essential elements required to argue a ‘negligent misstatement’ case for Julian and Anna to claiming damages for pure economic loss. This essay has also shown that: Sandra had expertise in running Bliss Island resort and knew its surroundings well; Sandra offered the advice to Julian in a serious business context; and that it was reasonably foreseeable to Sandra that Julian and Anna would surely act upon his (Sandra’s) advice. For these reasons, Julian and Anna are advised to seek legal redress for incurring pure economic loss by pursuing compensation for damages against Sandra and Bliss Island resort. Bibliography Articles and Books Blay, Sam, Andrew Gibson and Bernadette Richards, Torts Law in principle (Lawbook Co, 2005) Ciro, Tony and Vivien Goldwasser, Cases, Material & Commentary on Law and Business (Oxford University Press, 2004) Gamble, Roger, Jean Du Plessis and Luke Neal, Principles of Business Law (Thomson Lawbook Co, 2008) Gibson, Andy and Douglas Fraser, Business Law (Pearson, 2012) Ipp, David, ‘Themes in the law of torts’ (2007) Australian Law Journal 81 Lambiris, Michael, First Principles of Business Law Source Materials (CCH Australia, 2008) Law, Jonathan and Elizabeth Martin, A Dictionary of Law (Oxford University Press, 2012) Trindade, Francis, Peter Cane and Mark Lunney, The Law of Torts in Australia (Oxford University Press, 2007) Walmsley, Stephen, Alister Abadee and Ben Zipser, Professional Liability in Australia (Lawbook Co, 2007) Cases Chaudhry v Prabhakar [1989] 1 WLR 29 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 L. Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 571 Tepko Pty Ltd v Water Board (2001) 206 CLR 1 Read More