The Tort of Negligence; Candice courier driver for Rapid Deliveries, Rotorua-based

Question One: Topic 6 – The Tort of Negligence [12 Marks]
Candice is a courier driver who works for Rapid Deliveries, a Rotorua-based courier firm. At 9 a.m. one Friday morning the Rapid Deliveries manager told Candice she was to deliver an urgent parcel of documents to Star Corporation Ltd, in central Auckland. “Star Corporation must have these by the deadline, which is now in only three hours’ time”, the manager told Candice. “You have only just enough time to get there so you cannot waste any time on the way. These documents are absolutely urgent!” Candice immediately took the parcel, jumped into the van and (making sure to not break the speed limit) sped out onto the motorway to deliver the parcel.
But Candice had only driven a few kilometres when she noticed the petrol light in her van was flashing, indicating that she was almost out of petrol. Fortunately Rapid Deliveries kept a charge account at the next petrol station only a kilometre further along the motorway. Candice pulled into the petrol station, leapt out of the van and ran into the petrol station office. “I’m in a huge hurry with an urgent Auckland delivery”, she told the petrol station attendant. “Here’s our company charge account number. Just open up the petrol pump, I will fill the van up myself. I can see you’re busy and this will save me a bit of time”. “OK, I’ve got your company’s charge details here, and I’ve opened the pump for you, so go ahead”, said the attendant. Candice ran back out to the forecourt, put the petrol pump hose into the van tank, and pressed the ‘Fill’ button. Petrol flowed into the tank. Soon the pump bell rang and the petrol flow stopped to indicate that the tank was now full. Candice jumped back into the driver’s seat and accelerated out of the petrol station back onto the motorway. Unfortunately in her haste she forgot to remove the petrol pump hose from the van. The hose caught on the side of the van and tore away from the petrol pump. Too late, the petrol station attendant noticed and frantically waved to Candice to stop. But Candice was focused on one thing only – the need to get to Auckland as fast as possible. She did not notice what had happened and kept on going. The attendant immediately had to spray foam all over the forecourt to prevent a fire. The costs to the garage of doing so and cleaning up the mess was $9,500.00.
When Candice arrived in central Auckland part of the petrol pump hose was still dangling from her van dripping a tiny trail of petrol as she drove. Kevin was driving his hotted-up 2007 Holden Commodore along the road behind Candice’s van. (Kevin liked to race his car off road, and had made $15,000.00 worth of modifications to the Commodore to make it even faster). Unbeknownst to Kevin, the Commodore’s exhaust had been damaged in the previous day’s off-road racing, and had just broken off. The exhaust began to rub along the ground, scraped through the trail of petrol from Candice’s van, and caused a spark which resulted in Kevin’s car catching fire. Kevin managed to drive onto the motorway verge, leapt out of his car and dialled 111 on his cell to report the fire. Fire engines quickly raced to the scene blocking all the roads. Candice was forced to stop and was horrified when she realised what had happened. “I had no idea I was leaking petrol!” she told Kevin and the fire-fighters. “I am so sorry, I was only trying to get this urgent package delivered by the deadline!”
By now the flames were burning strongly beneath Kevin’s vehicle and the firefighters had to douse the whole car in chemical foam to put the fire out, causing extensive damage to the car. Kevin was beside himself. “I’ve put so much effort into making that car the best I’ve ever owned!” he shouted at Candice.
“I’ve spent a fortune on it but thanks to you, it’s ruined!” This upset Candice even more but she could not stay to argue the point, she had to get the urgent documents delivered. Unfortunately the delay meant she was an hour late. Star Corporation needed the documents to finalise a multi – million dollar purchase, but Candice’s lateness meant they missed the deadline and lost out to a rival bidder. The petrol station, Kevin, and Star Corporation decide to bring a collective action in tort against the person/s who caused their problems.
Required
Discuss who, if anyone, will be liable for
i) the damage to the petrol station including the torn off petrol pump hose and clean-up costs (3 marks)
ii) the fire spreading through the petrol leaking from the Rapid Deliveries van (3 marks) iii) the destruction of Kevin’s car (3 marks)
iv) the loss of the multi-million dollar contract due to the late delivery of the urgent documents
(3 marks)
Your answer to the above questions should cover the principles of the tort of negligence; vicarious liability, and negligent action and apply these to the above case details, as appropriate. [Total marks: 12]Question Two: Topic 7 – Creation of the Contract [12 Marks]
Kiwi Pavlovas Ltd and an Australian company, Ozzie Desserts, were negotiating for the supply of pavlovas which Kiwi Pavlovas manufactured in NZ. Ozzie Desserts wanted to get the deal settled quickly so that they could get the pavlovas to the lucrative Australian market in time for Christmas.
The following communications took place between the two parties:
1) 2 September 2014: Ozzie Desserts emailed Kiwi Pavlovas Ltd: “Please advise your price for 10,000 pavlovas”.
2) 6 September 2014: Letter from Kiwi Pavlovas Ltd. to Ozzie Desserts:
“Pavlovas available in three sizes: Mini (5 inch), Medium (8 inch) and Large (12 inch).
Prices wholesale $3, $5, and $7 respectively. Your order can be filled in any size or a mixture of sizes. Delivery of 10,000 pavlovas would be filled by two equal air shipments 15 December and 20 December. Purchaser responsible for all insurance and Kiwi Pavlova’s terms apply”.
3) 12 September 2014: E mail from Ozzie Desserts to Kiwi Pavlovas Ltd:
“Please deliver 10,000 Medium (8 inch) pavlovas wholesale price $4.50; delivery in two equal air shipments on 13 December and 20 December 2014. All orders subject to the standard contract terms of Ozzie Desserts as attached”. (A scanned copy of Ozzie Desserts’ standard terms of business was attached to this e mail).
4) 17 September 2014: Letter from Kiwi Pavlovas to Ozzie Desserts:
“For a minimum order of 10,000 medium pavlovas $4.75 ea. is acceptable”
5) 18 September 2014: E mail from Ozzie Desserts to Kiwi Pavlovas Ltd:
“Agreed – deliver 10,000 Medium (8 inch) pavlovas wholesale price $4.75”
6) 18 September 2014: Letter from Ozzie Desserts to Kiwi Pavlovas Ltd: “Re pavlovas – reduce order to 7,500 pavlovas @ $4.75 ea. All other terms the same”.
7) Kiwi Pavlovas Ltd. commenced shipment of 5,000 pavlovas on 13 December 2014. The packing slip and invoice set out KIWI Pavlova’s standard terms. These included a statement that insurance was the responsibility of the purchaser. The second instalment of 5,000 pavlovas was duly shipped by Kiwi Pavlovas Ltd on 20 December 2013. Alas the container of pavlovas was dropped on arrival at Sydney Airport. The pavlovas were badly damaged and were no longer fit for sale.
8) Kiwi Pavlovas Ltd. then forwarded a letter to Ozzie Desserts asking that Ozzie Desserts and its insurer, forward the price of the 10,000 pavlovas @ Australian $4.75, to Kiwi Pavlovas Ltd.
9) Ozzie Desserts and its insurer jointly responded, refusing the claim, saying that:
(i) only 7,500 pavlovas were ordered; and
(ii) the price quoted was in NZ dollars; and
(iii) that in the Ozzie Desserts terms and conditions, Kiwi Pavlovas Ltd. were liable to insure the shipments.
Required
For each of the numbered paragraphs above, brieflydiscuss if any step in the formation of a contract is occurring. Your answer for each numbered paragraph should be no more than a paragraph or two in length. Your answer to the above questions should cover Intention to create legal relations (6 marks) and Offer and Acceptance and apply these to each numbered paragraph above as appropriate. (6 marks).
[Total marks: 12] Question Three: Topic 8 – Consideration [10 Marks]
a) Your neighbours are away on holiday. You notice that their lawns are growing out of control and so you mow them once a week for the three months your neighbours are overseas. When your neighbours return, they are very grateful and promise to pay you $100 to cover your time and cost of petrol. But you never receive the $100. Advise with reasons whether you have a legal right to the $100.
(2 marks)
b) Explain what, if any, consideration applies in each numbered scenario – (i) and (ii) – below.
Samir made the following promises
i) To give his daughter Amandeep $1000 to give up her career as a model and become a nurse. (2 marks)
ii) To pay Kapali, the Pacific Island paper delivery boy who has a contract with the local newsagent to
deliver newspapers in the area, $5 if he delivers Samir’s newspaper by 6.30 a.m. every day for a
month and puts it through the letterbox without tearing it. (2 marks)
c) Lara’s car breaks down on a remote West Coast road, many kilometres from the nearest town. Max, a passing motorist, stops and gives Lucy a tow to the nearest garage. On arrival at the garage a very thankful Lara obtains Max’s address and promises to send him $100. A month passes and Max has still not received the promised $100.
i) Advise Max whether there is consideration for Lara’s promise to pay. (2 marks) ii)Would it make any difference to your advice if Lara, on seeing Max’s car approaching, had waved him down to stop and told him “If you give me a tow to the nearest garage I’ll pay you $100?”
(2 marks)
Your answer to the above questions should cover Intention and Consideration – executed, executory, past, and/or no consideration and apply these to each scenario as appropriate. [Total marks: 10]
Question Four: Topic 9 – Vitiation of the Contract [4 Marks]
Lok, aged 17, wanted to photograph wildlife as a hobby. Conor’s Camera Shop advertises a special offer for nodeposit hire purchase terms for professional quality camera equipment. The offer is only open for a week. The day before the special offer closes, Lok sees the advertisement, and rushes into Conor’s Camera Shop to see what’s available. He then sees some professional quality camera equipment worth $10,000 on the special offer hire purchase terms. This equipment is of far higher quality than Lok needs. Lok works part time at the local dairy after school, but this job doesn’t pay enough to cover the hire purchase instalments and he only has $300 in savings. But Conor the camera shop owner tells Lok that it would be a better investment for Lok to buy the much higher quality equipment. Conor tells Lok. “If you buy this much better quality equipment on hire purchase now, you don’t need to pay anything at all yet. And you might be able to sell some photos commercially once you’ve had a bit of practice. That will help too, so you will be OK, this equipment, it’s much better than anything else we have. And just to be sure, you could get someone to go guarantor for you.”
This sounds pretty good to Lok, so he phones his mother from the camera shop and tells her he wants to buy the equipment on no deposit hire purchase and the offer will expire tomorrow. Lok talks his mother into giving a guarantee, and then hands the phone over to Conor. Lok’s mother tells Conor, Yes, she will be responsible for payment for the equipment should Lok default. So Conor notes down that Lok’s mother has agreed to act as guarantor. Lok then signs both copies of the hire purchase agreement, and, thrilled with his purchase, leaves the store with a carry bag full of expensive new camera equipment. But Lok finds making the hire purchase payments are a real struggle. He does sell a couple of photos to a wildlife magazine for $100 each but can’t sell any others. Lok uses up the remainder of his savings making the payments on his camera equipment and then after six months he defaults.
Required
Advise Conor:
i) Whether he can enforce the contract for sale of the camera equipment against Lok. (2 marks) ii) Whether he can enforce the guarantee against Lok’s mother. (2 marks)
[Total marks: 4]
Your answer to the above questions should cover Capacity of minors, guarantors’ rights and obligations, and consent, and contractual misrepresentation, and apply these to the above case details as appropriate.
Question Five: Topic 9 – Vitiation of the Contract [4 Marks]
Nelly Naïve, a 22 year old young woman, inherited a fortune from her beloved multi-millionaire father who had unexpectedly died suddenly. Feeling very depressed the week after the funeral, she went to a public meeting where Titan was the keynote speaker. Titan claimed to have been visited by Higher Beings from a wonderful Alternate Universe, who had instructed him to form the Order of the Sacred Spheres of Space.
“One day I and all the Faithful Followers of our Order will be teleported to an Alternate Universe, where we will live Forever in a State of Utter Bliss with our loved ones and the Higher Beings”, Titan told his audience. Nelly was immediately smitten with Titan, who was quite a handsome man and a charismatic speaker. “I’ve been so sad and confused since my darling Daddy died last week, I can hardly think straight just now”, she told Titan. “But you have inspired me! It is so wonderful to know that one day I can join Daddy if I am part of the Order! How can I become a Faithful Follower? “ “Just sign here, my child”, replied Titan soothingly, noticing as he spoke Nelly’s expensive clothing, costly jewellery, and wallet bulging with $100 dollar notes. “We will solve all your earthly woes. You will live with us in the Peaceful Place, our temporary home on
Planet Earth, in a remote and lovely part of the countryside, far away from meddlers and unbelievers.” Excitedly Nelly signed up on the spot.
Titan, wasting no time, immediately organized her removal to the Peaceful Place, the Order’s walled compound in a remote location. The compound walls were patrolled by heavily armed Trusted Guards (“to stop anyone unauthorized from getting in”, said Titan soothingly, when Nelly noticed the Guards, “or”, he added as an afterthought, “out…”). On her arrival Titan called Nelly into his private office, and explained she should divest herself of all worldly goods. “It is all for the Greater Good of the Order”, Titan soothingly assured her, “You don’t need your earthly possessions here!” Willingly Nelly signed all her property and her fortune over to Titan.
For the next eighteen months Nelly remained at the Peaceful Place. Her family tried to see her many times over this period but all efforts to communicate or meet with her were rebuffed by Titan and the Guards.
“Nelly does not wish any contact with you”, the family were told. “Please leave her alone. Her future is with us now”. But finally the family did manage to smuggle a message into Nelly. From this Nelly learned that, far from using the fortune she had signed over for the Order’s Greater Good, Titan had transferred it all into his own name, and was regularly seen in Monaco, living the high life, throwing splendid parties, and entertaining a bevy of good-time girls. “No wonder he spends so much time away from the Peaceful Place!” Nelly angrily thought to herself. “Get me out of here!” she secretly messaged her family.
Nelly’s family managed to trick the Guards into letting Nelly out. The next four weeks Nelly spent being deprogrammed by an expert in dealing with cults. At the end of that time, Nelly, fully restored to her old, independent self, decided to recover the fortune she’d signed over to Titan. “Titan knew I was weak and vulnerable, as my father had just died”, Nelly told the Court. “He knew I idolized my daddy and he also knew I worshipped the ground he (Titan) walked on because I thought everything he told me was true. I truly believed Titan but now I see he is just a cheap fraud, and so is his so-called Order. I would never have signed anything over to Titan if I hadn’t been under his spell! Now I want my property back!”
Required
Analyse any issues that you believe are relevant and advise Nelly on her rights and any remedies.
Your answer to the above questions should cover duress; undue influence; and unconscionable bargains, and apply these to the above case details as appropriate.
Question Six: Topic 10 – Contractual Remedies [10 Marks]
Ben owns and runs a small business exporting organic fruit. He had just signed off on a contract with a large Japanese supermarket chain for supply of 2000 cartons of guaranteed organically grown, top quality Fuji apples. The Japanese apple market is large and potentially very lucrative. But it is notoriously perfectionist and difficult for Western suppliers to crack. So the Japanese contract represented a real gain with lots of growth potential for Ben, as long as his apples met the exacting organic quality standards the supermarket chain had made a condition of the contract.
After the Japanese contract had been agreed, Ben contracted Sun Valley Orchards Ltd (who branded themselves as “Pure NZ – 100% Certified Organic Pipfruit” to supply the required 2000 trays of organic, top quality, unblemished Fuji apples for Ben to sell onto the Japanese supermarket chain. Sun Valley Orchards Ltd assured Ben that they could guarantee supply of the required quantity of pure organic apples to the demanding quality specifications Ben’s Japanese customer had insisted on. When Ben and Sun Valley Orchards Ltd discussed the various requirements prior to their agreeing and signing off on the terms by which Sun Valley Orchards Ltd would supply the organic Fuji apples to Ben, Sun Valley’s Managing Director had made the following verbal statements to Ben:
• “Sun Valley Orchards has been involved with the pip-fruit industry for 25 years”.
• “Our apples were nominated by ENZA for the Pure New Zealand pip-fruit awards”.
• “We have marketed our product at the annual Brussels Organic Foods Trade Fair for the past five years”.
• “Our fruit is at least 15% larger than that of our competitors”.
• “Our pipfruit is 100% organically grown, no chemicals are applied at any stage of the growing process through to final harvest.”
• “We expect a significantly higher yield from our trees this year because we applied a very expensive organically produced fertiliser over the winter which has worked well on similar orchards in Tasmania.” None of these statements was included in the final contract.
Since entering into the contract Ben has discovered the following information:
• Although one of the directors had been involved in the avocado growing industry for 30 years, Sun Valley
Orchards, as the company itself, has only been in existence for one year and the other four directors are new to the industry.
• The Fuji apples were part of a different orchard’s nomination for an exporting award in 1985. • The fruit produced by Sun Valley Orchards Ltd last year was 3-4% larger than average.
• Last season the trees produced a yield that was slightly smaller than expected: it seems that the organic fertiliser was incorrectly applied.
• Sun Valley had applied a chemical spray to their last crop of Fuji apples after harvesting to preserve their unblemished appearance and prevent bruising while being transported to market. This caused their “100% Pure Organic” certification to be revoked.
Required
a) Analyse any issues that you believe are relevant and advise Ben on his rights and any remedies.
(8 marks)
b) Assume the Japanese supermarket have now cancelled their contract for supply with Ben on grounds of frustration. Advise Ben. (2 marks)
Your answer to the above questions should cover consent – misrepresentation; discharge; cancellation; and damages – and apply these to the above case details as appropriate. [Total marks: 10 Question Seven: Topic 10 – Contractual Remedies [6 Marks]
Jada bought a house that needed complete redecoration before she could move in with her family. She contracted Bob Bodgett to redecorate the house. The contract provided that the work would be finished in twelve weeks. Jada had just sold her existing house. The new owners had agreed to let all Jada’s furniture remain in her old house for the twelve weeks it would take for the redecoration of her new house to be completed.
“My husband and I and our four kids will be living in the local hotel while the work is going on”, Jada told Bob Bodgett. “There is no other suitable rental or motel accommodation available for that period of time, and we can’t stay at the local motor camp because that’s fully booked out as well. It’s costing a fortune to stay at the hotel so the redecoration absolutely must be finished on time!” “Don’t worry”, replied Bob, “We will get the work finished as agreed, on time”.
But the work was not completed on time. Bob and his team of decorators took 15 weeks to finish the work. Jada was faced with the following costs:
• The extra three weeks’ hotel accommodation for herself and her family cost an additional $10,000.00. • The rates and mortgage interest on the house were a further $3250.00.
• The final straw was when all Jada’s furniture worth $35,000.00 was destroyed by a fire at the warehouse she had been obliged to store it in for the extra three weeks, as it could not be moved into the new house on the expected date.
Required
Advise Jada whether she may claim damages for:
i) The extra $10,000.00 for the additional three weeks’ hotel accommodation (2 marks) ii) The $3250.00 on rates and mortgage interest on the house (2 marks) iii) The loss of the $35,000.00 furniture whilst in storage for the additional three weeks. (2 marks) Your answer to the above questions should cover the measure of damages; causation; and remoteness apply
these to the above scenarios as appropriate. [Total marks: 6]
Question Eight: Topic 11 – Interpretation of Contractual Terms [12 Marks]
Contractual terms can be classified in various ways.
a) i) Give a realistic example of each of the following contractual terms – Express, Implied, Statutory and
Customary – that you would expect to find in a simple business contract. (2 marks)
ii)Explain what is a restraint clause is (2 marks)
b) Sam Smart is just starting out in business installing, repairing and selling upmarket gas appliances to discerning customers. Sam is not a qualified gasfitter or plumber but he has engaged three staff who are, plus an apprentice, and it is these people who will do the actual gas appliance installation etc. Sam expects most of his work will be in the domestic home owner market. He knows he needs proper business contracts and he plans to use a standard form contract which all customers will be required to sign before any work commences. The contract Sam proposes to use is set out below.
Required
Analyse Sam’s proposed contract and:
i)List, giving the clause number and title, of the following contractual terms in Sam’s contract:
• Four terms that exclude or limit either party’s obligations or rights under the contract (4 marks)
• One term that provides for dispute resolution (1 mark)
• Two terms that provide for contractual variations (2 marks)
• One term that sets out how the contract may be terminated (2 marks) ii)Identify, with reasons, any two of the terms you have listed in your answer to (a) above that you believe do not meet legal requirements. (4 marks)
[Total marks: 12]

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