Using The IRAC Method For Legal Analysis

1. This is an exercise in using the IRAC method flexibly.

Cathy is hungry, and goes to the supermarket called Lotsastuff. Fresh food is up the back. Cathy selects Chinese and Thai lunchpacks. She doesn’t have any money, and puts the lunchpacks in her bag, and walks towards the entrance intending to leave without paying. Someone has dropped blueberries on the ground just near the entrance/exit. As Cathy exits the store, she slips on the blueberries. She already has a broken left arm. She falls and breaks her right arm.

A) What are the issues here?

B) What areas of law apply here? What are the legal rules or legislation that applies? What cases support this?

C) Analyse. (Test the facts against the legal rules and cases.)

D) Conclude. (Provide your reasons, and include an assessment of the outcome for damages/remedies.)

1.1 Would your answer be different if Cathy had paid for the goods, and if there was a sign near the blueberries that stated “Caution. Wet Floor.”

2. This question is about contract formation.

Sonny advertises his registered car for sale for $650. Jane offers Sonny $600 for the registered car. Sonny accepts; but, Sonny does not have the registration papers. The car is registered in his father’s name. Sonny asks his father to mail the registration papers so that transfer of ownership can be effected. Instead, the father deregisters the car and advises Sonny. Sonny tells Jane. She asks Sonny to return her money as the car is unregistered and can’t be driven on public roads. Sonny has spent $350. He returns $300, and offers to pay the rest when he sells the car. Jane then advertises the unregistered car and sells it to Nick for $600. Nick tows the car away. He intends to drive the car on his farm. He does not tell Jane his surname or his address.

A) What are the issues here?

B) What areas of law apply here? What are the legal rules that apply? What cases support this?

C) Analyse. (Test the facts against the legal rules and cases.)

D) Conclude. (Provide your reasons, and include an assessment of the outcome for damages/remedies.)

Scenario 1: Negligence

1). 

a. Issue

The main issue is whether Cathy can sue the supermarket for negligence. This would require addressing the following sub-issues.

• Is there a duty to care on part of supermarkets for the customers?
• Has there been a breach of duty to breach by the supermarket with regards to the underlying conduct?
• Has Cathy suffered damages that have a causal relation with the breach of duty to care?

The specific area of law that the given situation deals with is tort of negligence. With regards to the tort of negligence, there are three basic conditions that ought to be satisfied that are discussed below.

The first critical aspect is that there has to be a duty to care present on defendant’s part aimed at the plaintiff. The duty of care tends to exist when the decision to act or not to act can potentially harm the plaintiff in question. Such parties that may be adversely impacted by the decision of the action doer (defendant) are termed as neighbours. It is imperative that reasonable measures should be undertaken to ensure that the neighbours are not harmed. This is in accordance with the landmark decision in the Donoghue v. Stevenson case. In case of supermarkets, the occupier and operator owes duty to care to all occupants including customers as has been highlighted in the commentary of Woolworths Ltd v Ryder case. Another key aspect is that the duty to care extends to only foreseeable damages which has also highlighted in the Woolworths case since the honourable case ruled that the duty to care for a supermarket is only limited to within their premises and does not include the common area since it is not under company’s exclusive control and not manned by company’s employees.

When the duty to care does arise, it is imperative that the same needs to be discharged by the defendant. In this regards, the level of care desired comprises of precautions that any reasonable person in the position of the defendant would undertake so as to discharge the duty to care. This is highlighted in the Fitzsimmons v Coles Supermarkets Australia Pty Ltd case. In this case, the supermarket had put a warning sign with regards to water spillage on the floor but the court held that it was insufficient and instead the supermarket should have created a barricade in that section or dedicated an employee considering the danger to the customers. Thus, it is apparent that reasonable care is dependent on the circumstances and the underlying risk of damage along with extent of damage. However, this duty only needs to be directed towards prevention of foreseeable damages.

It is imperative that the plaintiff should have suffered damages on account of breach of duty to care by the defendant. It can be possible that damages may be incurred due to no fault of the defendant. This happened in Woolworths Ltd v Ryder case where the plaintiff suffered damages but there was no breach of duty by the defendant or the supermarket. In order to establish negligence, a causal link ought to be established between the breach of duty to care and damages suffered. This can be established by proving that the damages would not been suffered if the duty to care had not been breached. Further, it is noteworthy that the damages need not be in the form of physical or monetary but can also be in the form of emotional or mental stress.

Scenario 2: Contract Formation

In the given case, it is apparent that Cathy is the plaintiff while the supermarket is the defendant. As highlighted in the Woolworths Ltd v Ryder case, it is apparent that the supermarket would have a duty to care towards the customers. Further, the customers would be neighbours for the supermarket since negligence on their part could potentially harm the customers. Hence, it is established that supermarket has a duty to care towards Cathy.

It is imperative to consider the steps taken by the supermarket to discharge their duty to care owed towards customers. In this case, the blueberries have fallen just outside the entry/exit and would have probably come to the notice of the supermarket employees especially those located near the entry/exit. In such a scenario, it is imperative that the same is removed as it does present a potential danger for the customer. Also, considering the fact that it lies near the exit, thus it presents a grave danger especially for customers exiting the supermarket. Despite this, no measure seem to have been taken by the supermarket.

Cathy has suffered physical injury which highlights that damage has indeed been suffered. Further, it is apparent that there is a causal link between the damage suffered and the breach of duty to care. If Cathy did not slip on the blueberry, then the damage would not have been suffered by her. Thus, it is apparent that all the elements of tort of negligence have been satisfied in this case.

d. Conclusion:

Based on the above discussion, it can be concluded that indeed Cathy has suffered damages on account of negligent conduct of the supermarket and hence she can claim damages from the supermarket in proportion to the losses incurred.

The answer would not be different even if a warning sign near the blueberries was present since it is essential that the supermarket gets the blueberries removed considering that the area is of high usage since it is used as entrance and exit. As a result, every customer would pass through the area and hence no safety hazard should be present in this area. Also, for customers exiting with shopping carts, the warning sign may be missed. Further, the decision to pay for the goods does not make any difference in the applicability of tort.

2). 

a. Issue

The issue is to determine whether there is any enforceable contract enacted between the parties (Sonny and Jane, Jane and Nick) or not and the available remedies based on the given case facts. This needs to be discussed in wake of the various elements of a contract.  

b. Law

Enforceable contract would be formed between the two parties when the following listed essential elements are present.

• Valid offer on the part of offeror
• Valid acceptance on the part of offeree
• Lawful consideration for both the parties
• Intention of the parties to create legal contractual relationship
• Capacity of the parties to enact a contract

When offeror has extended an offer to the offeree, then it is essential that offeree accepts the offer without any further conditions and communicates the same to the offeror for the enactment of contract as highlighted in the judgment of Adams v Lindsell case. It is noteworthy that conditional acceptance is not a valid acceptance because it leads to the counter offer due to which the initial offer gets revoked. The verdict of Hyde v Wrench (1840) 3 Bea 334 case is the testimony of this understanding. Further, un-communicated acceptance or mere silence is also not a valid acceptance as evident from Felthouse v Bindley case. Also, it is essential that both the parties who want to form contract for commercial arrangement must have fulfilled the essentials of contract such as consideration, willingness to form legal contract and competence to perform the contractual liabilities. Absence of any of the above elements would make the contract void. In relation to consideration, it is imperative to note that consideration for both the parties need not be same but sufficient and this sufficiency depends on the contracting parties as highlighted in the Chappell & Co Ltd v Nestle Co Ltd case.

Representations regarding the factual matters are generally made in the pre-contractual phase of contract formation. It is essential that parties must specify the terms or condition of the contract before execution of the contract. Further, it is critical to note that when the representation is imperative aspect for the party to create legal relationship, then it would be called as the term of the contract. Breach of contractual term would make the contract voidable as evident from the judgement of Schawel v Reade case. Hence, the innocent party has the legal rights to terminate the contract or continue the contract and recover the damages. However, when the condition (less significant aspect) of the contract has been breached, then innocent party cannot make the contract voidable and only recover damages.

c. Application

It is apparent from the case information that Sonny is the concerned offeror who has given an advertisement to sell his registered car for a consideration of $650. Jane is the concerned offeree who then offers Sonny the consideration amount of $600 for the registered car which is accepted by Sonny. Both the parties are in the position to enter into contractual relation and also having willingness to form legal relationship and hence, it can be said that all the necessary elements for the contract formation are present in the case. However, it is apparent that the car is not registered car as described by Sonny because the car is registered in Sonny’s father name who decides to deregister the same. It is noteworthy that the enacted contract could become voidable if the aspect car being registered is term of the contract. Hence, it is essential to find whether the car being registered to use on public roads is term of the contract or mere condition. It can be seen that Jane would enter into contract with Sonny only when the car is registered so as to drive on public roads. Hence, it can be said that car being registered is a contractual term for Jane and breach of this term has made the contract voidable. Also, as Jane has asked for the refund from Sonny and thus, the contract becomes void for the parties. Further, as no contract has been enacted between Sonny and Jane and hence, the ownership of the car remains with Sonny and Jane does not have any rights to use or sell the car.

This aspect is also evident from the aspect that Jane has received a partial amount of $300 out of $600 from Sonny and also would get the remaining amount when the car would be sold by Sonny.  Irrespective of the fact that Jane does not enact a contract with Sonny, Jane has made an advertisement to sell the unregistered car and she has received an offer from Nick for $600. Nick has given $600 to Jane and tows the car for farm use. It is apparent that Jane has made a contract with Nick for the object which she is not authorized to sell. It means contract made between Nick and Jane become void since she does not have any authorization to sell the car because she has terminated the contract with Sonny and the car belongs to Sonny only. However, she has sold the car to Nick and therefore, no contract has made between Jane and Nick because the contractual object does not belong to her. Hence, Sonny has the legal rights to sue Jane for selling his car to Nick and can also recover the damages from her.

d. Conclusion:

The conclusion can be drawn based on the above analysis, that the contract enacted between Sonny and Jane becomes void because the contractual term has been breached by Sonny. Further, no contract has been enacted between Jane and Nick because Jane does not have the ownership of the contractual object (car) and hence, she cannot enter into contractual relationship with Nick.  

References:

Davenport, Shayne & Parker, David, Business and Law in Australia, (LexisNexis Publications, 2^nd ed., 2014)

Gibson, Andy & Fraser, Douglas, Business Law, (Pearson Publications, 8^th ed., 2014)

Pathinayake, Athule, Commercial and Corporations Law, (Thomson-Reuters, 2nd ed., 2014)

Pendleton, Wayne & Vickery, Roger, Australian business law:  principles and applications, (Pearson Publications, 5^th ed., 2005)

Vermeesch, Robert Bryan & Lindgren, Kevin Edmund Business Law of Australia (Butterworths, 12^th ed. 2011)

Cases

Adams v Lindsell (1818) 106 ER 250

Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL1

Donoghue v. Stevenson [1932] AC 562 at 580

Felthouse v Bindley [1862] EWHC J35

Fitzsimmons v Coles Supermarkets Australia Pty Ltd [2013] NSWCA 273

Schawel v Reade [191] 2 IR 81

Woolworths Ltd v Ryder [2014] NSWCA 223