Basic Elements of Establishing Negligent Misstatement - Essay Example

Introduction Commercial law also referred to as business law, is a division of law that involves the rights, relations and conducts of individuals and businesses involved in commercial activities,trade,sales,and merchandizing(Crane & Matten,2010).It is normally considered a civil law and deals with both public law and private law issues. This law is important because it formulates rules that individuals and businesses must follow to prevent penalties, it offers guidance and direction for businesses, governs contracts between merchants and individuals. It also offers protection for properties and governs relationships like the one involving creditors and debtors, employees and employers (Carroll & Buchholtz, 2014). The importance of the law in business operations is clear and this essay will try to demonstrate this through a case study. This essay will discuss the basic elements of establishing negligent mistatement.The area of business law is supported by several cases that have established and clarified the required factors in developing an argument for damages on the basis of negligent misstatement. The essay will use relevant case law, to prove that in the circumstances surrounding the provided scenario, there is enough evidence to establish that Bliss Island had special expertise in the area in which it provided information about the quality of service they provide and that Julian and Anna, had expressly made it known to the them the particular purpose for which the services are required, so as to show that they relied on their skill and judgment, to purchase the services. These findings lead to the conclusion that Julian and Anna could pursue damages against Bliss Island. Hedley Byrne & Co Ltd V Heller & Partner Ltd established special relationship(noncontractual) negligent misstatements that could cause an action for negligent misrepresentation(). In this scenario, Julian and Anna relied on information offered by Bliss Island to make their booking in the Resort only to find out that the quality of the services and products did not match the description offered earlier. While Ellul v Oakes [1972] cases establishes the overlap between tort and contract law, with several other cases providing extra clarification of the requirements of establishing an argument for filling for damages on the basis of negligent misstatement. The finding of Mutual Life and Citizens’ Assurance Co Ltd v Evatt [1971] establishes the first element that the defendant must have claimed to have been an expert in that area that he is offering the information or advice ().This element is further explained in L. Shaddock & Associates Pty Ltd v Parramatta City Council, where the court stated that the information needed to be offered by a professional().In Julian and Anna case, the information offered by Bliss was about the services under their area of operation and about their products, thereby qualifying them as professionals and making their information as having been sourced from an expert and was unique in this case given it was concerning their own products. The Mutual Life & Citizens’ Assurance Co Ltd V Evatt[1968] case will explain the second element that the advice or information was offered in a professional context, despite the lack of a contract. It was found that when an individual offers information in a serious situation, they have a duty to exercise reasonable care while offering the information().It is very clear that Julian and Anna relied on the information provided by Bliss Island in their brochure and via its proprietor Sandra to make their booking at the resort. Still in Mutual Life and Citizens’ Assurance Co Ltd v Evatt [1971], the court held that the plaintiff must have relied on the information offered. This establishes the third element that it was reasonable and foreseeable that the plaintiff would have relied on the information. Julian made it clear when he called Sandra about his requirements and interests; cakes and diving. Sandra assured him that the food is exceptional and was sure he would love it. The brochure also refereed to the resort as five star and stated that Bliss Island provides some of the best reef diving anywhere in the world, available through out the year and it promised visitors the finest foods, prepared by some of Australian best chefs. Julian and Anna relied on this information to make their booking and even went ahead to visit the resort. Therefore, it is reasonable to conclude that they relied on the information that had been provided. The resort, did not limit their liability in their descriptions via the brochure and through Sandra. This element is also affirmed in the case of Ellul v Oakes [1972] where the court held that the representation as to the availability of sewerage was offered to induce a buyer to purchase the property and thereby qualified the representation as a term in the contract().A contact/tort overlap is seen in Ellul v Oakes [1972],and may result to several actions and it’s upon the plaintiff to choose the best one that may ensure he wins or give them a better measure of damages as depending on the case() The essay has demonstrated and made an establishment, with reference to applicable case law and through the necessary factors to argue a case for negligent misstatement, and applied them to the legal facts in the given scenario. It is clear that; Bliss Island Resort had expertise in the area of its operation and where it offered the information; the information was in a professional and serious context and it was foreseeable that Julian and Anna would rely on the information. On the basis of this argument, they can sue for damages against Bliss Island Resort. The Bliss Island Resort action also amounted to a breach of a contract (sale of goods).A breach of a contract occur where a party to a contact fails to perform their obligations accurately and exactly under the agreement (McCamus, 2012, p.78).It may take many forms form a failure to supply goods to failure to perform a service as agreed like in this scenario. The breach in this case is actual breach and more specifically a breach of condition like in Poussard v Spiers (McCamus, 2012, p.78).Bliss Island actions were against the sale of Good Act 1895. The clients made it clear and known what they expected and relied on Sandra’s description and the information described in the brochure to accept the offer only to get different condition later. . Conclusion Remedies for breach of the contract entails Anna and Julian suing for damages. The aim of the damages is to position the injured party into the same financial state they would have been had the contract been correctly performed (Mahoney, 2011, 155). In case damages are not enough remedy, equitable remedies like specific performance will be awarded and the court would only award it if it will be the just and equitable thing to do (Mahoney, 2011, 155). Therefore, Bliss would be required to provide Anna and Julian the package they had expected if specific performance were to be awarded. The court will assess the surrounding circumstances and award them for damages basing on the following consideration; Remoteness An assessment of the consequences of the breach will be performed to identify if Julian and Anna were legally responsible. The rule that determines the remoteness of damages in a contract was defined in Hadley v Baxendale, where the court established that where one party breaches the contract itself, or which may reasonably be assumed to have been within the observation of the parties at the time they made the contract as being the likely result of a breach, the other party should receive damages that can reasonably and fairly be considered to arise naturally from the breach of the contract and the measure of damages in monetary terms( Anson,et al.,2010pp.10-12). Measure of damages While evaluating the amount of damages payable, the courts will use the following principles: That the damage amount should compensate the injured individual for his loss and not punish the defendant and should be compensatory and not restitutionary.In Victoria Laundry v Newman Industries, for instance, Victoria Laundry were seeking the profits they would have made had the boiler been installed according to the date agreed in the contract (Nandana, 2010, p. 35) On the basis of the sale of goods contract, the damage would be measured as the difference between the market price at the date of the breach and the contract price, thereby Julian and Anna would have been awarded only nominal damages (Latimer, 2012, p.80).In this case Julian and Anna may choose to treat the contract as discharged and file for damages for breach immediately just like in Hochster v De La Tour() .Generally, damages are not awarded for losses which are non-pecuniary like enjoyment like in this case and mental distress. Jarvis v Swan Tours describes a case where an exceptional award is given for losses of contracts involving promotion of enjoyment/ happiness (contracts for holidays) like in this scenario(). References Anson, W. R., Beatson, J., Burrows, A. S., & Cartwright, J. (2010).Anson's law of contract.Oxford University Press.Brch PP12 Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder management. Cengage Learning. Crane, A., & Matten, D. (2010). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press. DOWLER, W., & MILES, C. (2006).A guide to business law.Pyrmont, N.S.W., LawbookCO,23. Latimer, P. (2012). Australian Business Law 2012. CCH Australia Limited.ACL, 78-82. Mahoney, P. G. (2011). 9 Contract remedies: general. Contract Law and Economics, 6, 155 Nandana, A. M. S. (2010). The Implied Terms and the Damages of Contracts under Common Law.SLQS Journal, 35. Legislation The sale of Goods Act 1895 Cases Ellul v Oakes [1972], Hedley Byrne & Co Ltd V Heller & Partner Ltd Hadley v Baxendale L. Shaddock & Associates Pty Ltd v Parramatta City Council Mutual Life & Citizens’ Assurance Co Ltd V Evatt[1968] Poussard v Spiers Victoria Laundry v Newman Industries Read More