Enforcing Legal Measures on Bank Client to Pay the Borrowed Amount from His Remaining Own Business - Case Study Example

Assignment Submission Student Name: Course: Institution: Instructor: Date: Introduction Negligence is failure to conduct a task with certain levels of care that someone responsible would exercise under same circumstances. The behaviour is mostly consistent of omissions in situations where duty performance is concerned (Storey 2016). Negligence protects several interests which include those of the claimant, economic and property interests and three main aspects namely; duty of care, breach of duty and causation, ought to be considered before any negligence case is determined in a court of law (Daly et al 2003). Issue Kate has to prove three main things for her to be compensated. First she has to prove that Jo-Anne owed her the duty of care, secondly she has to prove that Jo-Anne breached the duty of care, thirdly, that she suffered damages coursed by the breach of that duty. Therefore it is advisable that Kate oversees the legal hurdles before filing any complain. Issues of concern in negligence include; Duty of care Individuals have collective responsibility to act in a manner that does not impose harm to others. The nature of care circumstances can consequently affect standards of care. Therefore it can be concluded that Jo-Anne failed to exercise duty of care while advising Kate on motel business in Nelson Bay that led Kate to purchasing a non-profit making Motel at extremely high price that the required market price, this is for the fact that she purchase the motel at $ 4.3 M and sold it for $ 1.5M which a substantial loss due to false information. Breach of Duty Duty of care is considered breached when an individual exposes another to foreseeable risks of harm, if the person responsible for the damage did it in the form that any other reasonable person would do in the same situation, then there will be no result of liability. The risk reasonableness depends on social utility of the individual’s conduct, the ability to minimize the risk, the likelihood of a risk occurring and the level of seriousness that will be inflicted by the risk. Jo-Anne breached duty by providing Kate with false information concerning possible returns for the Motel and yet Jo-Anne knew very well that the auditor’s report availed to Kate did not reflect the true sales or business picture of the Motel Causation Causation indicates that negligence is considered to be the root course of the complainant’s damage. In the case of Kate and Jo-Anne, it is noted that Jo-Anne could not sell her Motel at the price that she bought it or more due to the false information provided by Jo-Anne. Therefore it can be suggested that was it not for Jo-Anne’s actions there would be no damages. Categories of risk course a) Proximate cause Jo-Anne is liable only if her actions were the proximate cause of Kate’s damages, consequently, if Kate’s damages could not be reasonably foreseen, then it is stipulated that no liability exists for the damages caused by negligence. In reference to Kate, it is assumed that Jo-Anne knew very well that the availed auditor’s report on the Motel was a one off profit report but she went ahead to sell the property basing its market or sales capabilities on very inconsistent information. Therefore it is safe to indicate that liability exists. b) Intervening Cause Intervening forces occur after negligence has been exercised. This forces play significant role in increasing the damages. This may relieve Jo-Anne if the intervention was unforeseen, but if it was foreseen, then liability will exist (Ali et al 2014). Rule Not all negligence actions result into liability. Furthermore, some level of control has to be present in order to evaluate and determine when possibility of liability is likely to occur. The author further stated that an individual must take reasonable care to avoid acts or omission which he or she can reasonably foresee (Daly et al 2003). In reference to the case of Donoghue v Stevenson [1932] AC 562, defence to negligence suits include some standards of care that are owed between the plaintiff and defendant, negligence crimes are normally caused by deliberate actions of an individual1 . Application Contributory negligence This refers to self-inflicted damages due to negligence. If it is Kate’s negligent behaviour that caused her damages, then compensation is prevented by court. If Kate had done more research on the market trends for the Motels in Nelson Bay, then she will not be entitled to compensation. a) Risk Assumption This refers to the case where Kate oversaw the risks and intentionally neglected them. In such a case she will not be compensated. In order for Kate’s claims to be valid, she ought to fully understand the extent and nature of the involved risk (Bond et al 2015). Conclusion In reference to the case study, it is clear that Jo-Anne had adequate prior knowledge of the true financial status of the motel before advising Kate to purchase it. This indicates that Jo-Anne had come across an opportunity that she opted to grab for monetary benefits. In return she put Kate in an unexpected financial dilemma since she could not make profit from the motel sell the property as he intended nor sell it at intended price. Therefore I am of the opinion that Kate should take necessary legal measures in the process of claiming compensation. Herbal limited Liability Issue The case study indicates that the Herbal limited liability was responsible for preparing and availing financial reports for interested clients. The company had prepared a report for the year 2016 in which sales of Kate’s newly purchased Motel were correct as per that period in time. It is understood that Australian Fishing Championships were held in Nelson Bay in the year 2016. Due to this factor, business in Nelson Bay was booming unlike before. Rule Borrowing from the case of Caparo Industries plc v Dickman [1990] AC 605, Dickman negligently approved account statements of a company’s profitability in order for shareholders to invest in it, only for shareholders to realize that the profitability was overstated and the finances were poorer that stated. This led to shareholders suing the auditor for negligence. The House of Lords however dismissed the case stating that the auditor had done the audit for the company but not for the client or bidder (Paterson 2009). Moreover, the House of Lords stated that if the client wanted to know the exact financial position for the company, he/she would have initiated for his/her own audit 2 Application The case study clearly indicates that the financial report prepared by Herbal limited was not solely intended for Kate for the purpose of enticing her to purchase the Motel. Therefore, Herbal limited cannot be held liable for her loss since the company was performing its duty of statement preparation according to the Motels financial status at the period. Moreover, if the study indicated that the financial statement was directly prepared for Kate, then she could have legal grounds to sue the company for damages and/or compensation. Conclusion The report prepared by Herbal limited was genuine and reflected sales that were made at that point in time. Therefore, I am of the opinion that the company does not owe any liability to Kate since the reports provided were a true reflection of the sale at the time of the sale. although if Kate had asked for more reports on previous year’s sales and Herbal limited for any reason refuse to provide or manipulate them to lie, then the company would be liable for her loss Q2 The law of contract is all about legal enforceability of a given premises. In the context of law of contract, a contract is referred to an agreement that can be enforced by the law. The whole notion of law enforcement is central to the law of contract, if one party breached the agreement or contract, then the other party has more than one legal remedies. Remedies include the party suing you for the breach of contract and secondly, the affected party may request the law to intervene and order you to perform the contract. Contract law is entirely based the judicial decision of a state and is not governed by a single code or statute. Most common contract laws include; contract of record, simple contract and contract under seal (Cantatore & Johnston 2016). Mortgage contract Issue The mortgage contract between Westpac Bank and Stella can be enforceable or not. It whole process of enforceability depends on several issue; firstly, if Stella was aware and willing to sign for the loan “knowing that he was signing for her son” then the contract is enforceable and the bank has the right to take her to court in the verge of trying to get their money back. If the situation is contrary, then the contract can be non-enforceable. In reference to the study, Angelo lied to his mother that whatever she was signing was a tomato sale agreement but in the real sense she was signing bank loan paper. Therefore, the contract was not intended for the bank but for Angelo. Secondly, there is aspect of physical inspection or visit to the property or premises being mortgaged for a loan ought to have been done (Stuhmcke & Stewart 2014). Rule In reference to the study, it is not indicated whether the visit was done or not. It is therefore safe to state that Stella and the Westpac Bank have no legal contract that can be enforceable in court. Moreover, borrowing from the case of Four-Maids ltd v Dudley Marshall (properties) ltd. 1975 ch 317 at 320- it is presumed as the right of a mortgagee to gain possession of a property or mortgagor immediately the contract period elapses3. Application The study elaborates that the bank signed an agreement with Angelo and not Stella. If the bank had entered into a valid contract with Stella, it would have legal rights to acquire her premises for loan recovery. However, since the bank signed the contract with Angelo who is believed to be Stella’s son and who does not own the premise in focus, then the bank is not permitted to attach Stella’s property. Conclusion The bank ought to enforce legal measures on Angelo to pay the borrowed amount from his remaining own business and revoke the earlier illegal agreement signed by him indicating that Stella was the one liable for the loan payment. Angelo-Stella Contract. Angelo and Stella have a Simple contract. There contracts was made verbally and in the absence of any witness. The contract has no specified formalities except where legislation requires one. Simple contracts are more predominant that any other form of contracts and they mostly apply to most business contracts for instance where Angelo and Stella made their agreement that could as well be transferred to a legal binding document if it was to be written and presented in court (Teubner 1983). 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Paterson, J 2009, 'The Australian Unfair Contract Terms Law: The Rise Of Substantive Unfairness As A Ground For Review Of Standard Form Consumer Contracts', Melbourne University Law Review, 33, 3, pp. 934-956, Stuhmcke, A. G., & Stewart, P. (2014). High Court Negligence Cases 2000–10. The Sydney Law Review. Storey, M 2016, ' The Australian Indigenous Business Exemption As A 'Special Measure': Questions Of Effectiveness', Deakin Law Review, 21, 1, pp. 1-24, Teubner, G. (1983). Substantive and reflexive elements in modern law. Law and society review, 239-285. Read More