Southern Oil of Negligence Misstatement, Breaching of Contract and Promissory Estoppel

Take Home Exam 1

In this case, Mary may accuse the Southern oil of negligence misstatement, breaching of contract and promissory estoppel.

Negligence misstatement

It is necessary for Mary to prove that the Southern oil is failure to take care the duty, breaching the duty, having a causation and leading damages to Mary. According to the case, Mary has suffered a great of pure economic losses:

Duty of care: It is to establish the Southern oil having the duty to avoid the pure economic loss to Mary. Firstly, it should test the ‘reasonable foreseeability’ from the case Donoghue v Stevenson.

•The Southern oil owns Mary’s a duty to take reasonable care.  The Southern oil has engaged the ABC consultant to estimate the petrol station’s sale if the station is facing the street. However, there is no reliable estimation when the station is behind the restaurant. The Southern oil reduced the target sales without the advises from the consultant. Therefore, we can assume the Southern oil has the ability and resource to estimate the station’s revenue. For instance, it can invite an expert people or company to estimate the petrol’s demand based on the location and traffic circumstance.

•Mary has suffered pure economic loss. Mary accepted the contract because the Southern said the station’s sales would soon reach 1,000,000 litres per year. However, the annual sale is only 5,00,000 litres. Besides, assuming that Mary could find other station or other business. Therefore. Marry has suffered pure economic loss, including the opportunity cost.

Secondly, the Southern oil should satisfy the ‘special relationship’ to Mary. That means the speaker realises the other party trust on him/her and take the actions based on the speaker’s advice, because the speaker has the special skills to access the information according to the case Barwick CJ in Mutual life and Ctizens’ Assurance Co v Evatt which is proved by Shaddock v Paramatta City Council. The test’s elements are:

•The Southern oil is the speaker, owning the special skills or being expertise in the petrol station operating. As the discussion above, we can assume the Southern oil has the ability and resources to estimate the reliable sales with the location and other information.

•The Southern oil could realize that it was being trust  in the relationship between the Southern oil and Mary. The company owns the important information about the petrol station and knowns that the location and the sales are important to the petrol station profit. That is likely the main reason for Mary to take the lease or not. Therefore, Mary relies on the Southern oil. Otherwise, the Southern oil has realized that it is being trusted, because the sale estimation, 1,000,000 litres, is in the contract negotiation in order to make the lease more attractive.