Business and Corporation Law for Tort of Negligence

Describe about the Business and Corporation Law for Tort of Negligence .

Issue 1

In this case, the 12 tonnes truck that Tom has agreed to hire from Steve is loaded with 10 tonnes of cargo because of which the suspension collapses while it’s on its way to make a delivery.

The Law of Contract and the Tort of Negligence

In the case of negligence in the performance of a contract, the above mentioned laws will be applicable.

Both the laws contain some following common topics –

The plaintiff has to file a suit against the defendant

The claimant will have to substantiate the case based on balance of probabilities

Remedies may be granted to the plaintiff given that the loss is result of a defendant’s breach.

The intention for providing the remedies is not to penalize the defendant but to compensate plaintiff for loss he/she had to suffer.

Relation between the parties is governed by contract. By signing a contract, the parties give their consent to agree to the ensuing duties (Lectric Law, 2016; Case Briefs, 2016).

Negligence may or may not result due to a contractual relationship.

If due to the negligence on defendant’s part, the other party is injured economically or physically, the party to the contract who has been negligent is liable for the loss and damages (ACC Global, 2016).


Steve and Tom have entered into a contract in which, Tom has hired a truck from Steve for delivering 10 tonnes of cargo. And without checking the specifications of the vehicle, Steve agrees to provide Tom, a Hino Cargo Master which can carry 12 tonnes.

The consideration was agreed by both Tom and Steve at $200 per day. Tom takes the truck and put cargo weighing 10 tonnes in it. While on its way to make the delivery of the cargo, the truck’s suspension collapses.

Due to which, Tom loses $5000 per day in profits.


As Steve hadn’t checked the specifications of the Hino Cargo Master before hiring it to Tom, it was negligence on the part of Steve, which resulted into heavy losses for Tom,

This makes Steve liable for the damages and losses that Tom has suffered.

Steve will provide the remedies to Tom.

Issue 2

In the given situation, Pamela has claimed that Steve has broken the contract that they had entered and that she will be consulting a lawyer.

Australian Contract Law

A contract is legally binding only on the fulfillment of certain conditions. A contract can be oral or written.

An oral contract is binding with the same force as of a written contract. However, it is only legally binding if it satisfies a few criteria (Clarke, 2010)–

  • If all the terms are agreed upon
  • The parties’ intention is to legally fulfill the agreement
  • Consideration
  • Offer
  • Acceptance


Here, Steve has agreed to help Pamela out in return of the time when Pamela had looked after Steve’s garden by lending her a car for the weekend.

However, when Pamela comes to collect the car, Steve informed her that he has already given the car to another client due to which Pamela claims that Steve has broken the contract.

This agreement between Pamela and Steve does not constitute as a legally binding contract since it was “incomplete” which means there were no agreed terms, there was no consideration involved and there was no intention of legal fulfillment of the agreement (Clarke, 2012).

No terms or conditions were specified of any sort, which is a necessary criterion when it a verbal agreement (R.P. Emery & Associates, 2016).


The lack of the intention to make legal relations prevents Steve from being held accountable to a promise he made as a gesture.

Steve will not be liable to fulfill the agreement or provide any remedies to Pamela in the case of a suit.

Issue 3

The issue in this case is that Steve fails to provide Toyota Corolla to Danny which he had specifically asked for and was agreed by Steve.

Australian Contract Law

A contract consists of set of promises that legally binds the parties to the contract when certain conditions are met.

  • Agreement
  • Intention
  • Capacity
  • Formalities
  • Consideration

The agreement means an offer and an acceptance. An offer is a promise to do something or refrain somebody from doing something. Acceptance is giving consent to the offer which may be written, oral or by conduct (Clarke, 2010).


Here, Steve and Danny have agreed to the specifications required by Danny and the consideration is payable at $40 per day plus fuel and has agreed to provide the car the next day,

After Danny arrives to collect the car, Steve informs him that the car has been destroyed and will not be available. Steve fails to fulfill the conditions of their agreement of providing Danny with Toyota Corolla for which, he had agreed to provide resulting in the breach of contract on his part.


Steve is liable to Danny for the remedies and any damages, if suffered by Danny.

Issue 4

In this scenario, Steve has signed and faxed the contract to Cool It Aircon Ltd. negotiated by them by mistakenly taking it for other contract.

Australian Contract Law

L’Estrange Rule

This rule governs the effect of the signature which states that a party is bound by the terms of a contract once it is signed irrespective of the situation whether the party reads or understands a contract.

Mistake about some certain conditions of the contract or mistakenly entering into a contract does not allow a party to escape from contractual compulsions (Bittakis, 2015).

There are the following types of mistakes which might have contractual remedies in certain situations.

  • Common Mistake
  • Unilateral Mistake
  • Non est factum
  • Mutual Mistake

In the case of these mistakes, in certain circumstances, in equity remedies of rescission or rectification may sometimes be available (Olswang, 2008).

Relevant Case Law

Toll (FGCT) v Alphapharm Pty Ltd (2004) HCA 52

(This case upheld that the person who puts his/her signature on the contract has either read and accepted terms and conditions mentioned in contract or is prepared to take a chance to be bound by terms and conditions mentioned in contract) (Susman Godfrey, 2016)


Steve had negotiated with Cool It Aircon Ltd for installing in new air-conditioning unit at his location for which he had received a draft contract sent by Cool It Aircon, which included information about AC unit along with the charge and the date of installation.

Steve had later signed it by mistaking it for a contract sent to him by a supplier of microchips and had it faxed.

When later he realizes the mistake, Cool It Aircon refuses to take the unit back.

Here, it was a mistake on Steve’s part which led the other party to perform their part of the contract.


This contract will be binding on Steve, as it was a result of his mistake due to which, Cool It Aircon Ltd had performed the contract according to the specifications decided by them. They are not liable to take the air-conditioning unit back if they refuse to do so.


ACC Global. (2016, February 17). Key aspects of the law of contract and the tort of negligence. Retrieved from

Bittakis, M. (2015, April). Duty under a negligent breach of contract claim. Retrieved from

Case Briefs. (2016). Contracts Essay Examination. Retrieved from

Clarke, J. (2010). Overview of Australian contract law. Retrieved from

Clarke, J. (2012, June 23). Agreement. Retrieved from

Lectric Law. (2016). Customized Legal Forms. Retrieved from

Olswang. (2008, November 21). Unilateral mistake: the party’s error must be as to the terms of the contract. Retrieved from

R.P. Emery & Associates. (2016). Is a verbal agreement legally binding? Retrieved from Find Law Australia:

Susman Godfrey. (2016). Breach of Contract. Retrieved from is the best option for those who are looking for reliable academic writing services. To show our genuineness, we submit only high quality assignments so that students never lose out on important grades. Our mission is to provide plagiarism-free solutions at very affordable prices. Students can get academic writing help on any subject or topic from us.

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