Legal Issues In Restaurant Operations

Johnny has been training a new chef, Rupali, in the kitchen of his restaurant. Johnny thinks Rupali is almost ready to prepare food for customers. Johnny and Rupali arrange for a small group of CDU students and their friends to come to the restaurant one evening, when the restaurant is ordinarily closed, to try Rupali’s food. Johnny explains to the guests that Rupali is being left alone in the kitchen to prepare the meal by himself, without supervision. Rupali prepares a delicious three-course meal for the guests, including a daring and innovative durian pie. Unfortunately, Rupali does not peel the durian fruit before putting it in the pie, and the sharp thorns cause three of his guests moderate injury before everybody else realises that the durian pie should be avoided.

(a)Has Rupali breached any legal duty of care?

(b)Did Rupali owe a lower duty of care to the guests due to inexperience? 

(c)Is Johnny vicariously liable for anything that occurred?

The Lame Duck Restaurant owned by Johnny appoints a sales and marketing representative (Summer) to design and launch a new website for the restaurant. Summer is very bright and her design looks amazing. As the website is exceptional, Johnny decides to revamp the pricing system and put a 15% mark-up on all food. Summer develops a beautiful design for the new pricing system and posts it online.

Two weeks later after the prices are changed, Li books the wedding using the menu he found on one of the tables. Summer mistakenly accepts the booking, asking Abu from accounts to accept the deposit and finalise the invoice. Li calls, accepts the quoted price, pays the deposit and books the date for the wedding. The same day, Li sends out invitations to all her friends studying at CDU. The day before the banquet, the error in the quotation is discovered. Johnny gets involved, calls the customer and says that the Lame Duck Restaurant cannot host the wedding because the quotation was made in error.  However, Li insists that ‘we have a contract’ and says that under the law the Lame Duck Restaurant must host the wedding banquet.

(d)Advise Johnny, whether the contract exists.

(e)Was there a mistake? If there was, what kind of mistake?

(f)Explain possible legal consequences if the Lame Duck Restaurant is obliged to provide the premises for the wedding, but refuses to do so.

Has Rupali breached any legal duty of care?

Issue

Has Rupali breached any legal duty of care?

Rule

According to Latimer (2012), the legal duty of care is characterised by certain salient features. These include, “reasonable foreseeability, reliance, compassion, knowledge, the vulnerability of the victim, control over the injury and a lack of policy reasons to deny a duty of care” (Latimer, 2012, pp. 230-231). These characteristics are were espoused in Donoghue v Stevenson [1932] AC 562 where the court held that one should adopt reasonable care to ensure their reasonably deducible acts and omissions do not injure those who are likely to be affected by them; directly or indirectly (Bermingham, 2011).

In Governors of Peabody Donation Fund v Sir Lindsey Parkinson and Co Ltd [1985] AC 210, the court held that in addition to foreseeability, it is paramount to determine whether the tortfeasor owed a duty within just and reasonable grounds and whether it is in breach of this duty that the injured party suffered loss. This holding was a departure from the original two-stage test used to determine duty of care as set in Anns v Merton LBC [1978] AC 728.

Application

Based on the rules highlighted above, a person owes a duty of care if they are in a position to discern whether their acts or omissions would be detrimental to another and that the plaintiff is vulnerable to suffer harm or loss at the defendant’s actions. In this particular case, there is reasonable foreseeability in the relationship between Rupali and the guests. He is in a position of knowledge as to the risks his actions as a chef would be detrimental to any clients of the establishment. Additionally, in his preparation of food, he has control over the possibility of harm suffered by guests due to ill-prepared food. By opting to prepare a durian pie, Rupali should have taken necessary precautions to ensure that it was prepared in a manner fit for consumption. His failure to peel the durian fruit before preparing the pie led to foreseeable injury on the guests who ate it.

In conclusion, Rupali was in a position to owe a duty of care which he breached by failing to peel the durian fruit and causing injury to guests.

Issue

The issue at hand is whether Rupali’s inexperience translates to a lower duty of care.

Rule

Under tort law, one of the defences against negligence claims is the principle of Volenti non fit injuria. This is a presumption that where the victim or plaintiff is made well aware of the risk involved with the action or inaction to be taken and they consent to it then the defendant will not be held liable (Bermingham, 2011). In Nettleship v Weston [1971] 3 WLR 370, the court held that a learner driver should be held to the same standard of care as a reasonably qualified driver as an inexperienced doctor would be held to the same standard as a seasoned professional. The defendant could therefore not rely on Volenti as a defence to lower her duty of care. It is important to note that mere knowledge of possible risk does not amount to consent to absolve the duty of care owed.

Did Rupali owe a lower duty of care to the guests due to inexperience?

Application

In the case study provided, prior to presenting the meal, Johnny made an effort to explain to the invited guests that Rupali would be preparing the meal alone without supervision. Rupali, although training as a chef, has less experience than Johnny. Based on the holding in Nettleship v Weston [1971] 3 WLR 370, Rupali as a training chef should be held to the same standard of care as an experienced chef. His inexperience does not accord him a lower standard. However, he could opt to rely on the Volenti principle as a defence to show that the guests were made aware of any possible risk and agreed to proceed with the exercise regardless.

Rupali does not owe a lower duty of care due to inexperience.

Issue

The issue in question is whether Johnny can be held liable for the actions of Rupali as his employer.

Rule

The principle of vicarious liability in the context of employment is three-fold. Firstly, an employment relationship must exist; that is a contract of service vis a vis a contract for service. Secondly, the employee should have committed an actionable wrong and thirdly the action in question should have been committed in the course of employment (Bermingham, 2011). As held in Century Insurance Co Ltd v Northern Ireland Road Transport Board [1942] AC 509, an action is considered to be within the course of employment if the employee was basically fulfilling their required obligations at the time. In Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555, the court held that an employer found to be vicariously liable can claim indemnity from their employee where the actions resulting to breach of duty amount to wilful misconduct as per the employment contract.

Application

In the case study provided, Rupali is being trained as a new chef in Johnny’s restaurant which illustrates the existence of an employment relationship. Secondly, failure to peel the durian fruit translated to an injury on the guests which presents a breach of duty of care. Thirdly, despite the fact that the guests were invited outside closing hours, Rupali was undertaking the duty expected of him as a chef in training under Johnny’s instructions and as such acted in the course of his employment. These elements, therefore, satisfy the tri-fold test for vicarious liability outlined above.

Issue

The issue in question is whether a contract to provide services exists between the Lame Duck Restaurant and Li.

Is Johnny vicariously liable for anything that occurred?

Rule

The basic principles of law dictate that an offer and acceptance are pertinent to the existence of a contract. It must be evident that an offer was made by an offeror to an offeree both of whom have the legal capacity to contract and intent to be legally bound by the terms of the contract (Latimer, 2012). In essence, the agreement must illustrate a meeting of minds between the contracting parties which can be adduced expressly or implied by conduct. In Smith v Hughes [1871] LR 6 QB 597, the court was convinced as to the existence of a contract between the two parties based in the conduct of the parties despite the fact that the dependent had purchased new oats where he initially believed the plaintiff was selling old oats.

Application

In the case study provided, prior to the discovery of the error, Li’s request to book the restaurant was accepted by Summer and invoice generated which led to the payment of an invoice. These actions demonstrate an offer and acceptance which translates to an agreement cemented by the deposit which served as part consideration. At the time, there was a consensus ad idem between the parties involved which, based on the basic principles of contract law, serve to establish a valid contract.

Issue

The issue in question is whether the error in quotation amount to a mistake under contract law.

Rule

As a general rule, an error or misconstruction of any aspect of a contract does not amount to an automatic dissolution of contractual obligations (Latimer, 2012). Under contract law, mistake is considered under various categories each bearing varying consequences to the contract. Where both parties are mistaken on the same fact, for example, the non-existence of the subject matter, a common mistake is said to have occurred. In such a scenario the equitable remedies such as rescission or rectification can be adopted, although in most cases the contract would be void (Latimer, 2012). A contract can also suffer a mutual mistake where the contracting parties are unintentionally mistaken on contrary aspects of the contract; in this case, the contract is also void. A mistake may also be unilateral where only one of the contracting parties is mistaken on the existing terms of the contract; this translates to a voidable contract which can either be rectified or rescinded (Latimer, 2012). In Taylor v Johnson [1983] HCA 5, the court allowed for rescission of a contract where only the plaintiff had been mistaken as to the contractual terms.

Advise Johnny, whether the contract exists.

Application

In the case study provided, Li made a booking based on menus which did not include the revised prices. Summer accepted the booking mistakenly and process the transaction on the mistaken prices. In this case, Li was mistaken as to the price of the service which is a significant element of the contract. Summer mistakenly assumed that Li made the booking on the revised prices. Johnny is however aware that the booking was processed in error. This scenario presents a unilateral mistake as Li made the booking based on old prices and as such the contract is voidable.

In conclusion, a unilateral mistake exists as only one party, Li, is mistaken on the terms of the contract.

Issue

The issue in question is an identification of the legal consequences arising assuming that Lame Duck Restaurant is legally obligated to fulfil the contract and fails to do so.

Rule

Under the basic principles of contract law, performance is required in order to discharge an existing contract; the terms of the contract must be met to their entirety in order to illustrate performance and failure to perform would amount to breach of the contract (Ewan & Qiao, 2015). The legal consequences for a breach of contract include damages, specific performance, estoppel and rescission. The defaulting party may be required to compensate the other, to perform their expected obligations, to desist from breaking their contractual obligation or face an order to terminate the contract with restitution. In Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66, the court held that compensation in damages sufficed for a breach of contract by failure to display advertisements for eight hours a day, which was a failure in performance.

Application

In the case study provided, assuming that the restaurant was legally bound to provide the premises for Li’s event, failure to comply would amount to non-performance. As aforementioned, non-performance of a contract amounts to breach of contract, of which various remedies are available in law. The restaurant could be required to compensate Li in damages or ordered to perform the contract.

In conclusion, as consequence to the refusal to provide the premises, the Lame Duck Restaurant could face an action for damages or specific performance or both.

References

Anns v Merton LBC [1978] AC 728.

Bermingham, V., 2011. Nutcases: Tort. London: Sweet & Maxwell.

Century Insurance Co Ltd v Northern Ireland Road Transport Board [1942] AC 509,

Donoghue v Stevenson [1932] AC 562.

Ewan, M. & Qiao, L., 2015. Contract Law: Australian Edition. s.l.: Palgrave Macmillan.

Governors of Peabody Donation Fund v Sir Lindsey Parkinson and Co Ltd [1985] AC 210

Latimer, P., 2012. Australian Business Law. Sydney: CCH Australia Ltd.

Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555.

Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66.

Nettleship v Weston [1971] 3 WLR 370.

Smith v Hughes [1871] LR 6 QB 597.

Taylor v Johnson [1983] HCA 5.