Has jeremy committed the tort of negligent misstatement

Commercial Law


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Question 1

Western University (WU) had a large campus in suburban Sydney. In order to provide a reliable connection for staff and students, WU bought a disused Monorail from a theme park in Queensland and arranged for WU maintenance staff to install it in May 2014. Because of funding cuts several senior maintenance staff had taken early retirement and had not been replaced. The remaining staff were keen, but inexperienced, and none had worked on such a large scale project before.

The monorail commenced operation in July 2014 in time for second semester. John was a first year student in the School of Business at Western University. He was blind in one eye and had lost most vision in his remaining eye, but used a cane to assist him in getting around the campus. One day he was walking across the campus under the monorail track when he slipped on a large pool of oil, and suffered a broken leg and arm. Subsequent investigation showed that the oil had dripped from an inadequately sealed tank installed by WU staff as part of the monorail system.

When John's mother Steffi was told he was in hospital she tried to get there as soon as possible. In her panic she failed to turn on her car's indicator lights when slowing down to turn right into the hospital car park. Her car was hit by Michael, who was driving the car behind. Steffi suffered whiplash, and also suffered nervous shock on seeing John. She will need psychiatric treatment for some years, as well as having a permanent partial loss of movement in her neck. John has suffered permanent loss of use of his right arm. Michael is uninjured but has extensive damage to his car.

In these circumstances, advise WU, John, Steffi and Michael of any rights or liabilities they may have in the tort of negligence ONLY. In your answer, discuss the likelihood of success of each of these actions and appropriate defences which may be raised by WU, John, Steffi and Michael giving full legal reasons and referring to decided cases to support your answer.

Question 2

Jeremy owns a successful restaurant business in Parramatta. Jeremy's friend, Max wishes to purchase a restaurant at Parramatta. On Friday evening, Max finds a Lebanese restaurant, ‘Kababs Galore', for sale. The restaurant is full of customers and is located at the corner of George Street and Smith Street, Parramatta. ‘Kababs Galore' is also very close to John's restaurant at Duck Avenue in Parramatta. The following Monday, Max speaks with Jeremy about his plans. Max explains to Jeremy that he is keen to buy the restaurant but that he has never owned a restaurant or even worked in the industry before, and that he would appreciate Jeremy's advice and guidance. Jeremy assures Max that ‘Kebabs Galore' appears to be a very successful restaurant and that he is "almost guaranteed" to make a profit in the first year itself. Max immediately decides to purchase ‘Kababs Galore' with his brother Cameron. One year later, they are on the verge of bankruptcy. The restaurant was not as popular or profitable as they expected and the turnover has declined even further since they took over the business.

Has Jeremy committed the tort of negligent misstatement? Giving full legal reasons and referring to decided cases to support your answer focus on whether or not Jeremy owed a duty of care to: (1) Max and (2) Cameron; the likelihood of success if Max and Cameron bring an action against Jeremy; and appropriate defences which may be raised by Jeremy.

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Business Law and Ethics: Has jeremy committed the tort of negligent misstatement
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