The Principle of Offer, Acceptance, and Consideration - Case Study Example

Question 1 (a): Issue Is Jo-Anne liable in negligence for Kate’s loss? Rule For one to succeed in a claim or negligence causing pure economic loss, general principle requires that plaintiff have a proof that the defendant in the case owed the defendant a duty of care or rather, the defendant was a subject to a duty of care to the plaintiff, that the defendant’s breach of duty of care caused pure economic loss to the plaintiff and that the breach of that duty indeed existed. In enunciating general principles the defendant is not negligent in failing to take the needed precautions against the risk associated with pure economic loss unless the risk was foreseeable, the risk was not insignificant and in the circumstance, a reasonable defendant in that person had the knowledge or ought to have known. On the other hand, general principle on duty to warn of risk (reasonable care) requires that the negligence was a necessary factor for the occurrence of the economic loss (facual causation) (McKendrick 2014). Application Basing from the case, it was reasonably foreseeable to Jo-Anne that the he did not tell Kate that the Australian Fishing Championships were held in Nelson Bay in 2016, and that had boosted the profits for the resort that year. From this position, there is existence between Jo-Anne and Kate a relationship that was characterized by law as one of ‘proximity’ or ‘neighbouhood.’ Beginning with proximity, it designates a separate as well as general limitation regarding the test of reasonable foreseeability between Jo-Anne and Kate. Just like it was noted in a case involving Pyrenees Shire Council v Day 1 there was existence of relationship between Jo-Anne and Kate. Relating to the case that involved Bryan v Maloney2 the majority (Mason CJ, Gaudron and Dean JJ) noted that when there is proximity then damages are foreseeable. The relationship between Jo-Anne and Kate can be argued to have comparable degree of proximity. On the other hand, courts have argued on four major principles that guided the outcome of different cases of negligence and limitation of liability in accordance with Act 2008. These have included: Indeterminacy of liability Reasonable foreseeability that loss would be suffered Autonomy of the individual Defendant’s knowledge regarding the risk and its magnitude Based on the principles above and recent court cases such as Woolcock Street Investments v CDG3, liability was restricted to the Jo-Anne as she was the only one the risks were manifested to. Additionally, the court in Woolcock Street Investments v CDG noted that where the defendant has the knowledge of the risk then imposition of a duty is strengthened. Nonetheless, in determining whether Jo-Anne would have taken precautions against risk of financial loss Kate suffered, a consideration is made on all relevant matters including the possibility that the financial loss would have occurred if she did not give the care. Indeed, Kate was cautious about purchasing the motel on the coast of New South Wales. Had Jo-Anne informed her should would have decided against the deal as it was clear the Australian Fishing Championships boosted the business but not ordinary performance of the motel. In accordance with s 5B(2), Jo-Anne had the information about the chances of the harm and that they would not occur if Kate did not purchase the motel, the likely seriousness of financial loss, the burden of taking the necessary precautions to help Kate avoid the risks associated and the social utility concerning the activity that precipitated the occurrence of financial harm to Kate. Conclusion Based on the reasonable foreseeability that loss would be suffered having known that indeed Australian Fishing Championships were held in Nelson Bay in 2016 and that she did not tell Kate, Jo-Anne is liable in negligence for Kate’s loss? Question 1 (b): On whether Herb Accounting Ltd is liable for Kate’s loss, where the loss Kate suffered is the result of negligent actions then the ordinary laws of negligence is applicable. However, the negligence action on Herb Accounting Ltd should be guided by the legislation as enacted in different Australian jurisdictions after the publications in 2002 on the Review of the Law of Negligence Report (Pearson 2017). Basing on this publication, Kate should prove three essential elements as follows: That Herb Accounting Ltd owes Kate the needed standard of care (scope of duty) There was material damage (in this case economic loss to Kate) and The economic loss caused to Kate was not too remote Beginning with the duty of care, Herb Accounting Ltd engaged in engaged in conduct fraught with unreasonable risk of loss to Kate by overstating the profit of $1.2 million in 2016 (Lindgren 2016). Furthermore, Herb Accounting Ltd did not take reasonable care to avoid reports that they could reasonably foresee would likely injure decisions that was to be made by Kate. This interpretation was held in the case involving Bendix Mintex Limited v Barnes.4 The second issue is whether Herb Accounting Ltd exercised enough care or standard of care to whoever was going to purchase Bay View Resort. Herb Accounting Ltd undertook negligence action in their scope of duty. According to Martin (2016), the needed standard of care from Herb Accounting Ltd should be treated as reasonable care. However, overstating the profits is not what the company could have reached but which the law provides it could have reached.5 The third issue is that as a result of overstating the profits, Kate suffered economic loss (causation) and that the financial loss and subsequent selling of the motel one year after buying it was not too remote (the principle of remoteness). The financial injury claimed in this negligence is the misrepresentation of financial position of the motel resulting in financial loss. Again, from the reporting, Kate can prove that causation as held at common law, Herb Accounting Ltd contributed to Kate’s loss. As a matter of fact, the law holds that Herb Accounting Ltd negligence does not need to be the only cause of loss. Question 2 (a): Issue Is the mortgage contract between the bank and Stella enforceable? Rule Principle binding enforceable contract should meet the threshold of offer, acceptance and consideration and existing intention to create legally binging agreement between parties in the contractual agreement (DiMatteo & Martin 2016). It seems in facile in light of these principles that there must be an offer from one party and that the other party should accept the offer. Regarding the principle of acceptance and consideration, the law provides that parties involved in the contract should agree to embody at the same time, conclude on what embodies them (Keyes & Therese 2016). However, there has to be existence of formal deed between the two parties agreeing that to be bound by the agreement reached.6 Application Applying rule to the issue, determining whether the mortgage contract between the bank and Stella existed need to follow the facets of contract law stipulating that there should be a binding agreement between the bank and Stella. Beginning with the principle of offer, acceptance and consideration, there was an offer from Stella who approached Westpac Bank with the mother’s property as security for the $450,000 loan she needed to secure another restaurant in Sydney called Olley. From this point of view, there was indeed relationship of quid quo between Stella and Westpac Bank. However, Meng (2017) argues that to assess whether a contract is enforceable, there has to be an offer from Stella and a proof that the offer was accepted by Westpac Bank. By Westpac Bank giving document to be signed (that was signed by Stella’s mother) shows that they offer from Stella was accepted by the bank. Thus, it is accepted as the prima facie presumption in this case that the document Stella presented to the mother detailed analysis of an offer and acceptance. The case that details what is an offer and acceptance was argued in the case involving Inglis v. John Buttery7. On acceptance, Stella and Westpac Bank agreed to embody and at the same time, conclude the contract by allowing proposal from Stella and thereafter giving Stella document to sign. This was not only an expression of acceptance but the low regard this stem as a formal deed as when the agreement was reached. According to the law, acceptance should meet the following admissibility: Offeree is having knowledge of and act in reliance to an offer Acceptance not unqualified The court in Carlill v Carbollic Smoke Ball Company8 expanded this position observing that there is acceptance commonly by conduct of both parties. That is, the requirements of acceptance should be impliedly waived and that acceptance is affected by Stella by performing the requirements that were specified to her in the document the mother signed. Conclusion Based on the principle of offer, acceptance and consideration there was a binding contract between Stella and Westpac Bank. As such, the mortgage contract between the bank and Stella is enforceable. Question 2(b): Issue Is there a contract between Stella and Angelo for the supply of tomatoes? Rule For existence of a valid contract, parties involved in the contract need to express themselves to an extent that their expression and meaning can be understood and determined with acceptable degree of certainty. It is therefore plain that unless the contact is on clear terms and expression determined, it would not be possible to hold that the contracting parties had the same view or intention. That is, statement of the rule provides that whereas there is not clarity of intention, the consensus ad idem would be considered as a matter of mere conjecture. On the other hand, certainty and completeness is essential. Certainty and completeness are relevant determinant of an existence of a contract. There has to be acceptable level of certainty to provide requisite intention of both parties to enter into legal contract or relations. When the offer is so vague that the respective obligations of the parties involved in the contract accepts unclear terms then it is unlikely to be a valid contract. On the other hand, acceptance of the offer will be valid if it corresponds to the offer. The rule requires that the offeree have the required knowledge regarding the terms of the offer at the time purported acceptance. The law will not consider the acceptance to be valid if a party performs the act of contracting without the knowledge of the offer. Furthermore, mere inquiry does not constitute acceptance. Application For a contract to be there between Stella and Angelo for the supply of tomatoes there has to be an offer, acceptance and consideration. While there was an offer communicated to Angelo for the supply of tomatoes, an acceptance did not meet the minimum threshold of the law. An acceptance made by Angelo did not take place in reliance upon an offer. Stella performed an act that did not correspond to the terms of the offer earlier communicated. Furthermore, she did this without the knowledge of the offer9. Secondly, there was uncertainty and incompleteness from Stella to the mother. Stella took advantage of the fact that the mother was not able to read and that she could sign the mortgaging contract thinking that it was one for supplies of tomatoes. To this extent, there was vagueness and as such, the offer made was not capable of acceptance and the mother could not have had the requisite intention into legal relationship with Stella had she had been told about the actual content of the agreement she signed. Tarr (2017) notes that in case the offer is vague and not communicated to those who cannot read then the respective obligation of the parties to acceptance is equally unclear. Thirdly, there was ambiguity and uncertainty to the terms as presented to the mother to sign. The law provides that there will be no contract that can be determined objectively since individual terms were ambiguous and unclear to the mother10. As it stands, there is unfair terms arising as the content of document signed is causing significant imbalance to the mother’s obligations and rights. The unfairness of the contractual term between Stella and the mother should is not considered in isolation but in terms of the contract as a whole. The balance between the legitimate commercial interests of Stella and the mother is likely to cause to the Mother financial loss if it is enforced as per the document signed. Conclusion Based on the principle of offer, acceptance and consideration there is no contract between Stella and Angelo for the supply of tomatoes. Bibliography DiMatteo, Larry A., and Martin Hogg, eds. Comparative Contract Law: British and American Perspectives. Oxford University Press, 2016. Keyes, Mary, and Therese Wilson. Codifying Contract Law: International and Consumer Law Perspectives. Routledge, 2016. Lindgren, Kevin. "A time difference between Australia and England: Urban 1 (blonk street) Ltd v Ayres." Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia 30, no. 2 (2016): 10. Martin, Paul. "Contract law: When changes to the law: Affect rights under contract." LSJ: Law Society of NSW Journal 22 (2016): 86. McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014. Meng, Xin. "The Labor Contract Law, Macro Conditions, Self‐Selection, and Labor Market Outcomes for Migrants in China." Asian Economic Policy Review 12, no. 1 (2017): 45-65. Pearson, Gail. "Current Issues for Consumer Protection Law in Australia." In Consumer Law and Socioeconomic Development, pp. 199-208. Springer, Cham, 2017. Tarr, Julie-Anne. "Transforming insurance law: A comparative review of recent insurance law reform in the United Kingdom and Australia." Insurance Law Journal 28, no. 1 (2016): 10-22. Read More