LAW100 Business Law | Violation of the Contract Law

3: Has there been a negligent misstatement by the Council worker? 

Answers:

Introduction

In this report a study has been done by using a case study regarding the tort law and contract law and its applicability in different situation. The tort laws are the act of omissions which results in forming a case in the court of law. The contract law is the formation of a contract between two parties and the legislation involving the violation of the contract law.

1. Issue

First issue is that whether there is a claim of Ellen against the council because of the fact that wrong information has been provided to her by the council.

Rule

The rules that are going to be applicable in this case are the tort of negligent misstatement.

There is a concept called tort which means that in case there is an omission of act or a wrongful act can result in the development of a civil action against the one who has committed the act. The case of tort of omission can be undertaken in the court of law. Negligent misstatement suggests that if a party who possesses the required skill to inform regarding a subject even with honesty provides information that is wrong it is going to be considered to be under a negligent misstatement. There are three conditions that are to be fulfilled for proving the aspect of negligent misstatement. One is that there has to be evidence showing that there is wrong information that is being provided by the person with authority. Two is the evidence that the negligent act has resulted in a certain amount of damage to the person who is making the victim in this case. Third and final step is that there should be actions that can be taken to omit the impact of the wrongdoing.

Application

In this case the council employee who was sitting in the “business inquiries” section was liable to provide information regarding business queries. So Ellen was right to seek information from the person in that counter. The council employee was liable to provide Ellen with information which was sought by her. But the information that was given by the council employee was wrong and hence it has to be considered that the person can be charged under the tort of negligent misstatement (Gergen 2013). But there are two issues in this case first is the fact that there is no written document which has been received by Ellen regarding the statement that has been made by the council employee and secondly the council employee’s statement was also ambiguous in nature.

There are basically three steps for proving tort of negligence first is the evidence of misstatement which cannot be proved directly in this case (Stickley 2016). The second is the evidence of damage which can be proven in this case and last is the chance of redeeming the misdoing which is not likely to come as the first statement has not been fulfilled.

Conclusion

In conclusion it can be said that even though a misstatement has been made by the council employee but the three mandatory steps to prove the tort cannot be proven in this case as there is no written evidence of the misstatement that has been given by the council employee.

2. Issue

The second issue is that Ellen has taken lease of the terrace house for a period of 12 months. But in 1 month time into the lease Ellen has been falling behind in the payment of the lease.

Rule

Australian contract law has a provision for ‘termination by frustration’. There are only certain cases where the application of the doctrine of frustration can be done. The occurrence of termination by frustration occurs when the plan on which the contract was made completely turns and the person who has entered the contract becomes incapable of executing the contract. The common law terminates a contract in case frustration can be established. The loss because of such contract is not addressed in this case. In the year 1983 the doctrine of frustration has been established as par the opinion of the court (Corrin and Paterson 2007). The court has made this judgement under the consideration that there are certain situations where it becomes impossible for a party to continue with the obligation of the contract. This clause is not under the ‘void ab initio’ that is considered as nullified at the very start of the contract but the event of frustration occurs much after the contract is in effect. But it has been taken care of that the clause is not misused so the court verifies the cause of frustration. In this case the occurrence of frustration can be considered under the clause of non occurrence of events which forms the basis of the contract. This judgement has been formed under the common law from the case of Krell v Henry 2 KB 740 (Goldberg 2010).

Application

In this case Ellen can claim to implement the clause of frustration because before making the contract she has enquired with the council to ensure that there is no need for the violation of the clause later in the contract yet because of unforeseen circumstances she was unable to run her business. There continuous construction noises have also caused her to have nervous disorder. She was unable to sustain clients because of the noise which resulted in reducing her financial stability. The construction was also not likely to stop soon because the construction was going to continue for 6 months which is half of her lease period. So the conditions can be considered to be frustrating and also her nervous disorder and financial instability can also be considered as evidence of her being unable to pay the rent.

Conclusion

In conclusion it can be said that the common law provisions for frustration can be considered as a major factor for the termination of the contract. However as mentioned before the doctrine of frustration is one of the most sensitive issues and hence there the court doesn’t allow the application of this clause in case there is no strong evidence to support it. The factors like hardship, inconvenience or bad bargain cannot be considered as elements of frustration. The event cannot be considered under force majeure because of the fact that the event of frustration is caused by manmade event.

3. Issue

The third issue is whether a case of negligent misstatement has occurred in the statement of the council worker.

Rule

Negligent misstatement is applicable in this case. The case of Hedley Byrne & Co v Heller & Partners under the English court of law has also been accepted by the Australian high court by the Mutual life & Citizens’ Assurance Co Ltd V Evatt (Furmston et al. 2012). This judgement has been the cause of the formation of the common law. The negligent misstatement is caused when a person with the responsibility of providing certain information has not taken care enough to provide the correct information to the inquiring party resulting in the harm of the party. The negligence is a tort. The tort of negligence is governed by the civil liability act 2003. The three steps of judging whether negligence has occurred. These steps involve the judgement of whether the person giving the information is bound by the ‘duty of care’ with the person seeking the information (Vandekerckhove and Tsahuridu 2010). Next is whether there is substantial evidence that the duty of care has been violated by the person giving the information and last is the confirmation of the damage either financial or non financial in nature.

Application

In this case negligence can claim to have occurred because of the fact that misinformation has been provided by the council employee who was employed for giving information regarding business enquiry apart from that the misinformation has also been resulted in both financial and health related harm of the person seeking the information that is Ellen. The first clause that is the duty of care is applicable in this case because the council has established the business enquiry for the purpose of giving information and Ellen has made an enquiry regarding the business. The council employee is an “employee” and not a voluntary worker so duty of care is applicable. The third point is evidence regarding the existence of harm both financial and non financial in nature but the key problem comes from the second point that is the evidence that misstatement has been given. Now in this case there is concrete proof regarding the fact that negligence of misstatement has occurred. In case the information has been provided in writing than the existence of negligence in terms of misstatement could have been proved. In this case the second clause of negligence of misstatement cannot be proved.

Conclusion

In conclusion it can be said that negligence of misstatement has been done by the employee of the council but there is no sufficient evidence to prove the event which is the second clause of the neglect of misstatement as par the regulation.

References

Corrin, J. & Paterson, D., 2007. Introduction to South Pacific Law. Routledge-Cavendish.

Furmston, M.P., Cheshire, G.C. & Fifoot, C.H.S., 2012. Cheshire, Fifoot and Furmston's law of contract. Oxford University Press.

Gergen, M.P., 2013. Negligent misrepresentation as contract. Cal. L. Rev., 101, p.953.

Goldberg, V.P., 2010. Excuse Doctrine: The Eisenberg Uncertainty Principle. J. Legal Analysis, 2, p.359.

Stickley, A.P., 2016. Australian torts law. LexisNexis Butterworths.

Vandekerckhove, W. & Tsahuridu, E.E., 2010. Risky rescues and the duty to blow the whistle. Journal of Business Ethics, 97(3), pp.365-380.