Business Law — Torts and Contract problem questions Essay Example


Question one


Several issues can be identified in the first case. First, the issue of recklessness on the part of Mary. Second, the issue of negligence on the part of Bob. Third, duty of care on the part of Bob as the driver. Fourth, injuries caused by Bob’s negligence on Mary. Fifth, damage suffered by Tom for failing to do his next repair job. Sixth, the damage suffered by Sam after $5000 worth of meat was destroyed after going bad due to Tom’s delay in the repair work that was to be done by Tom.


The above issues show that they fall under the law of torts. According to the Civil Law (Wrongs) Act 2002 (ACT) Ch 9, a tort is defined as an act that causes harm to another person whether intentionally or not, not being a breach of a duty arising out of a personal relation or contract, and which is either contrary to law, or an omission of a specified legal duty, or a violation of an absolute right (Gibson and Fraser, 2009, p. 32).

It is imperative to note that every tort results from a breach of a certain duty which is primarily fixed by law (Gibson and Fraser, 2009, p. 34). This makes torts to be different from other civil wrongs such as a breach of a contract where the duty in question is fixed by the parties themselves. According to the Civil Liability Act (2003) a tortuous liability arises from the breach of a duty primarily fixed by law; such a duty is towards person generally and its breach is redressible by an action for unliquidated damages as in Jarvis v Williams 1995 1 WLR 71, 75.

Every person is under the duty to compensate for his wrongful acts which have resulted in injury to another person. It is this duty to compensate that determines his liability in tort. One of the key principles that guide any remedy in some tort cases is Damnum Sine Injuria (Gibson, and Fraser, 2009, p. 35). The phrase refers to a situation where a person suffers

“Harm without legal injury”

This is when a person has suffered actual harm without any violation of his or her legal right as is the case in Mogul Steamship Co v McGregor Gow & Co 1982.

The fault principle is the basis upon which most torts are based. Under this principle, it is necessary to establish some fault on the part of the wrongdoer before he/she can be made liable in tort. In the case Perre v Apand Pty Ltd (1998) HCA 36, a fault is committed by a person is he/she fails to live up to some ideal standard and conduct set by law

In the determination of a fault, three elements are taken into consideration. First, the intention of doing a wrongful act desiring that its consequences should follow. In such a situation, it is said that a person have intended the action to occur (Gillies, 2004, p. 21). To that extent, there is some amount of fault on his part. The other element is recklessness.

An act is said to be done recklessly where it is done without taking into consideration or caring about the consequences might be. In this regard, recklessness constitutes fault on the part of the wrongdoer (Gillies, 2004, p.23). The third element is negligence. Basing on the judgment in the case Hackshaw v Shaw (1984) HCA 84 a person is at fault where he does a wrongful act negligently which means that the person ought to have foreseen the consequences of his act and avoided it altogether.

Negligence consists of three elements. The first element is the duty of care. In Donoghue v Stevenson 1932 Lord Atkin defined duty of care as the duty to take reasonable care to avoid acts or omissions reasonably foreseeable as likely to cause injury to your neighbor. In the case of a driver, every other person on the road is a neighbor in law and the driver owes all these persons the duty of care.

The other element of negligence is breach of duty (Gillies, 2004, p. 25). The duty of care is said to have been breached when the defendant fails to observe the duty of care required of him. Proof of existence of duty of care on the part of the defendant and its breach by the defendant is not enough to establish liability in negligence (Srivastava, Deklin and Singh, 1996). In s 5B and 5C of the Civil Liability Act 2002 (NSW) the plaintiff must proof that he/she has suffered damage or injury as a result of breach of duty of care by the defendant.

Application of law to the facts

As stated above, recklessness is one of the elements relevant in the determination of fault. The fact is that Mary drank heavily at a party and even though she could not walk properly she walked home and crossed the road without looking for traffic. In other words, Mary acted recklessly and therefore was at fault for drinking heavily and crossing the road without looking for traffic.

The other fact is that Bob acted negligently while driving and changing a CD in his car. This is the same as driving while talking over the phone where the concentration of the driver is diverted. Bob owes the duty of care to every passenger including the drunken passengers like Mary walking on the road (Srivastava, Deklin and Singh, 1996). Recklessness and negligence on the part of Mary and Bob resulted to loss of money on the part of Tom and Bob respectively.


Mary is liable for recklessness because she walked down the road under the influence of alcohol without caring whatever the consequences might be. As in the case Shaw v Thomas (2010) NSWCA 169 Bob is liable for negligence because he breached the duty of care and caused injury to Mary. Had Bob acted reasonably by driving his car carefully, he would have avoided injuring Mary.

Since, Mary was already at fault, it means that she has no legal ground to be remedied by an award of unliquidated damages (Kui Hua, 2007). Bob is liable for causing delays to Tom due to his negligence. Hence, Tom has legal ground to be remedied for losing his next repair job. Tom is liable for breaching his duty as a technician which caused Sam a loss of $5000. In this case, Sam has legal ground to be remedied for losing $5000 in form of the meat destroyed after going bad.

Question two

First case


The issues in the first case include offer and acceptance, communication of the offer by post and communication of acceptance by post.


The above issues fall under the law of contact. An offer is an expression to enter into a contract on definite terms as soon as the terms in the contract are accepted. Acceptance is the assent to the terms spelt out in the contract (Ryan, Gibson, Rigby and Tamsitt, 2001). Acceptance must however, correspond with the terms of the offer. An offer may be made in writing or by word of mouth. Similarly, an acceptance may be made in writing or by word of mouth.

The offer must be communicated to the offeree and it becomes effective only after the offeree has received the offer. In the case of the offers made by letters the relevant time is when the offeree receives the letter and not when the offeror has posted the letter (Ryan, Gibson, Rigby and Tamsitt, 2001). In the case R v Clarke (1927) HCA 47 the honorable judge ruled that an acceptance by post is effective as soon as the letter of acceptance is put into the postal box and subsequently a binding contract is created. This is sometimes called the Posting Rule as in Adams v Lindsell 1818. The posting rule was formulated so that when the letter of acceptance is delayed or lost, by post or by the offeror, the contract still binds the parties (Ryan, Gibson, Rigby and Tamsitt, 2001).


Basing on the Sale of Goods Act 1896 (Tas) s 9 and from the above rules that guide elements of offer and acceptance in contract law, it is evident that a binding contract was created immediately on 25th September when Sam sent a mail showing his acceptance to buy the laptops from Frank (Kui Hua, 2007). In this regard, Frank breached the contract between him and Sam by revoking the offer after it had already been accepted by Sam on 25th September. The fact that Sam’s letter reached Frank on 29th September amounts to a delay which is immaterial in this case.


Sam can therefore sue Frank for specific performance requiring Frank to sell the laptops to him and not to his cousin.

Second case


Frank signed document without looking at it. An offer was made by Frank. Acceptance was made by Trisha. Communication of offer and communication of acceptance were made by each party. Trisha performed her duties in the contract. Frank did not perform his duties in the contract.


According to the Limitations of Actions Act 1974 (Qld) a person is bound by a document which he has signed and it makes no difference whether he has read the document or not. The person will be bound by it unless he can prove that his signature was procured by misrepresentation or fraud as in L’Estrange v Graucob Ltd 1934. An offer may be implied or express (Terry and Giugni, 2005). An express offer is made by the offeror by making his intentions known to the offeree whether in writing or by word of mouth. An offer may be implied through the conduct of the parties particularly the offeror.

The offer must be communicated to the offeree orally or in writing. The offer becomes effective only after it has been received by the offeree (Terry and Giugni, 2005). It is only after the acceptance has been communicated that it becomes effective.


From the rules highlighted above that guide the conduct of the parties in the law of contract, it is evident that the implied conduct of Frank through his continued negotiations with Cool It Aircon Ltd, owned by Trisha amounted to an offer. Acting on the conduct of the Frank, Trisha sent the latest draft contract from Cool It Aircon with details of specifications of the air conditioners, price and the date of installation. This amounted to acceptance of the offer from the offeror.

Without looking at the document, Frank signed it and subsequently, acting on the signed document, Trisha delivered the goods specified in the contract document (Terry and Giugni, 2005). Frank is therefore bound by the document which he signed and it makes no difference whether he had read the document or not.


First, basing on the case between Brogden v Metropolitan Railway Company 1877 Frank is liable to fulfill his part of the obligation as spelt out in the contract document and it is immaterial whether he had read the document before signing it or not. Second, there was offer and acceptance (Turner, 2004). Through his implied conduct in continued negotiations with Trisha, Frank made an offer to Trisha to supply the new air-conditioning unit in his factory. Acting on the implied offer, Trisha send a document which was signed by Frank as her part of acceptance to supply the goods as per the specified conditions (Turner, 2004).

Hence, Frank’s mistake in signing the document is immaterial in this case and Trisha can sue Frank for specific performance. This is an equitable remedy which means that the court may require Frank to carry out the contract as agreed because he signed the contract document.



Mogul Steamship Co v McGregor Gow & Co (1982).

Donoghue v Stevenson (1932).

Adams v Lindsell (1818).

L’Estrange v Graucob, Ltd (1934).

Jarvis v Williams(1995) 1 WLR 71 75

Perre v Apand Pty Ltd (1998) HCA 36

Hackshaw v Shaw (1984) HCA 84

Shaw v Thomas (2010) NSWCA 169

R v Clarke (1927) HCA 47

Brogden v Metropolitan Railway Company (1877) 2 App Cas 666


Civil Law (Wrongs) Act 2002 (ACT) Ch 9

Civil Liability Act (2003)

Civil Liability Act 2002 (NSW) s 5B 5C

Sale of Goods Act 1896 (Tas) s 9

Limitations of Actions Act 1974 (Qld)


Gibson, A & Fraser, D (2009). Business Law (4th ed), Pearson Education Australia

Gillies, P. (2004). Business law (12th ed.). Sydney: Federation Press.

Ryan, H., Gibson, A., Rigby, S., & Tamsitt, G (2001). Commercial law in principle. Sydney: Law Book Company. (Or later edition)

Srivastava, D., Deklin, T., & Singh, P (1996). Introduction to Australian law. Sydney: Law Book Company.

Turner, C (2004). Australian commercial law (24th ed.). North Ryde, NSW: Law Book Company.
Terry, A., & Giugni, D (2005). Business, society and the law (4th ed.). Sydney: Harcourt Brace.

Kui Hua, W (2007). The international student guide to business law. Sydney: Law Book Company.

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