LAW504 Business Law

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LAW504 Business Law

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LAW504 Business Law

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Course Code: LAW504
University: Panola College

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Country: United States


Sam Speed runs a business which provides a re-fuelling service for aircraft at the regional airport at Albury in New South Wales. Sam stores his fuel at a depot he owns in an underground tank. One day, Sam receives a tanker load of 10 000 litres of fuel from his supplier. The fuel is pumped into Sam’s underground tank, and Sam puts a dip-stick into the tank to check that the correct amount has been delivered. Unfortunately, Sam is distracted by a phone call, and forgets to screw the lid back onto the tank, with the result that dust enters the fuel during the night, contaminating it.
The next day, still unaware of what has happened, Sam refuels three light aircraft with the fuel. Each aircraft is owned by a different company, White Ltd, Blue Ltd and Green Ltd.
The aircraft owned by White Ltd takes off successfully, but about 2 km from the end of the runway the engine cuts out because of the fuel contamination and the aircraft, which is worth $ 1 million, crashes onto a road and is totally destroyed, although the pilot miraculously survives without any injury. 
The aircraft owned by White Ltd also destroys a Mercedes Benz car worth $ 75 000 owned by Ms Susan Swift, who usually never parks her car on that street but did so that day because the parking lot she uses was full.
Sam hears on the radio what happened to the aircraft owned by White Ltd, and that the pilot reported a problem with the fuel system to air traffic control moments before the crash. Fearing that the accident might have been due to contaminated fuel, Sam runs across to the aircraft owned by Blue Ltd, waving his arms to attract the attention of the pilot, who is just about to start his engine. Sam tells the pilot that there seems to be something wrong with the fuel and that it could damage the engine, and the pilot decides not to take off for Sydney.  There are no other aircraft able to fly to Sydney, and because the aircraft owned by Blue Ltd does not take off, one of the passengers, Ms Mary Harper, who is a maritime engineer, is unable to get to Sydney to certify that a cargo ship owned by Safmarine Ltd is seaworthy, with the result that Safmarine Ltd loses $ 250 000 in profit because its vessel cannot put to sea that day. 
After alerting the pilot of the Blue Ltd plane, Sam also runs to the aircraft owned by Green Ltd and gives him the same information about the fuel, but the pilot says “Look, mate, I understand what you are saying, but I don’t have time for this. I’m going to take off anyway.  I have to get to Melbourne by 10 am”, and with that the pilot closes his window and taxis towards the runway. As the pilot starts his take-off run, the aircraft’s engine cuts out, it swerves across the runway and suffers $ 200 000 worth of damage.
Accident reports confirm that the aircraft owned by White Ltd and Green Ltd crashed because their engines were damaged by the contaminated fuel. 
Advise Sam on what liabilities he may have to all potential plaintiffs who have suffered loss under the above facts.  
Please comply with the following Style Guide:

Do not re-state the question.
Use in-text referencing. Do not use footnotes.
Names of statutes should be italicised, and followed by the jurisdiction not in italics, for example: Acts Interpretation Act 1901 (Cth). Note the abbreviation for ‘Commonwealth’ is ‘Cth’ not ‘Cwlth’.
 The names of the parties must be italicised, but the citation must not, for example: Smith v Jones (1967) 345 CLR 34.
An in-text reference to a book should be structured as follows: (Latimer, 2010, p. 75). There is no need to put the author’s initial. Note the positioning of brackets, stops and commas. You use ‘pp.’ only if referring to more than one page. If you are referring to a book with more than one author, the in-text reference would be as follows: (Smith et al, 2002, p. 78).
An in-text reference to the subject’s Modules should be structured in brackets as per the following example – obviously you will alter the reference depending on the subject, year of study and Module number : (CSU LAW220 Modules, 2015, Topic 7).
Do not start a new line simply because you are starting a new sentence.
Be careful of apostrophes: director’s = of a director, directors’ = of many directors, directors = many directors. Also particularly prevalent is confusion between its (it possessive) and it’s (contraction of “it is”).
The following words always start with a capital letter: Commonwealth, State, Act, Bill, Regulation, Constitution, Parliament. Do not unnecessarily capitalise other words.
One should not use terms such as can’t, won’t, don’t and shouldn’t, neither should one use “ie” and “eg” in formal writing.
A sentence must always begin with a full word and a capital letter – so a sentence would start ‘Section 55 says…’, not ‘S 55 says…’ or ‘s 55 says…’.  The abbreviation for ‘section’ in the middle of a sentence is ‘s’.
Start each paragraph on a new line, and leave a clear line gap after the preceding paragraph.
You must put page numbers on your assignment.
Quotations and excerpts from legislation should be indented from the rest of the text in a separate paragraph. The text in quotations should not be in italics.
 You must end your assignment with a bibliography that is divided into three separate parts, listing statutes, cases and books / articles / on-line Modules.
A listing of a book in a bibliography should appear in accordance with the following format: Latimer, P (2010). Australian Business Law, 29th ed, North Ryde: CCH. If listing a book with multiple authors, do so as follows: Heilbron, G, Latimer, P, Nielsen, J and Pagone, T (2008). Introducing the Law, 7th ed, North Ryde: CCH.
When listing statutes at the end of your assignment you should conform to the format: Acts Interpretation Act 1901 (Cth). List the statute only once – you do NOT list individual section numbers relied on. You should not list textbooks as the source of Acts – the Act itself is its own source.
When listing cases conform to the format: Gordon v Richards (1976) 123 CLR 32.
When listing article conform to the format: Jones, J ‘The new analysis of law’ (2010) 4 Journal of Recent Law 34.
When listing CSU Modules conform to the following format: CSU LAW220 Modules.
Make sure that your sentences are grammatical – it may be useful to read your assignment out loud if you have any doubts about this.

Key issue:
Who are the potential plaintiffs in the case for whose losses Sam is liable for?
A party who suffered any loss due to the negligence of another party can hold him liable for his/her damages and claim for compensation under the tort of negligence. Certain elements must be fulfilled in order to claim damages based on negligence of a party. Firstly, the party against whom a suit for negligence is filed must have a duty of care to maintain a standard of care (Barker et al, 2012). The party who did not have a duty of care cannot be held liable for negligent action. Furthermore, such duty must be breached by the defendant due to failure to maintain a standard of care. Lastly, due to such failure, a party must suffer a loss which is not too remote and caused due to the actions of the defendant. In order to understand these elements, Donoghue v Stevenson (1932) AC 562 case can be evaluated. In this case, the court provided an important judgement which provides provisions regarding the implementation of the principle of negligence. The claimant, in this case, suffered a personal injury due to the negligence of the defendant (CSU LAW504 Modules, 2018, Topic 3).
Due to failure to maintain a standard of care by the defendant, the drink of the claimant included remains of a snail. The claimant demanded damages for the personal injury suffered by him. The court provided a leading judgement in which it was held that the defendant had a duty of care towards the safety of its customers. Such duty was breached which caused damages to the claimant. Furthermore, the damages were not too remote and caused directly due to the action of the defendant, thus, a suit for negligence was valid. Section 5B (1) of the Civil Liability Act 2002 (NSW) provided the provision regarding foreseeability of the risk based on which the party is required to take necessary steps in order to prevent such harm. Section 5B (2) of the act provides various provisions regarding identifying whether the party breached a duty (CSU LAW504 Modules, 2018, Topic 3). It provides four principles to evaluate whether a duty of care has been breached which include:

Likelihood of occurring of any injury
Seriousness of the injury which might occur due to breach of duty
Social utility
Efforts and cost required to prevent such injury

The first element is discussed in the case of Bolton v Stone (1951) AC 850 in which a cricket ball hit the plaintiff which caused him personal injury. The court provided that in the previous 30 years no injury has occurred near the area and the chance of risk was low. Thus, a suit for negligence cannot be applied in this case. In Paris v Stepney Borough Council (1951) AC 367 case, the court provided provision regarding the seriousness of the harm. In this case, the court provided that the chances that an eye of the employee can be lost are a reasonable ground for the employer to take appropriate steps to prevent such risk (Butler, 2018). Denning L.J. provided in the case of Latimer v AEC Ltd (1953) AC 643 that in order to protect him the defendant must prove that reasonable steps were taken by him to prevent the risk.
Causation of the damages is another element of negligence which provides that the actions of the defendant must be the direct cause of the injury suffered by the plaintiff as given in section 5D (1). In order to evaluate the causation, the court provided ‘but for’ test in the case of Cork v Kirby Maclean (1952) 2 ALL ER 402 (Montague, 2013). The test evaluates that the injury suffered by the plaintiff would not have occurred, but for the action of the defendant, he suffered substantial loss. Remoteness of damages is also necessary to be evaluated by the court since compensation cannot be awarded for the damages which are too remote as given in the case of Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (1961) AC 388. One of the main defences against a suit of negligence is ‘voluntary assumption of risk’ (CSU LAW504 Modules, 2018, Topic 4). It provides that the party who understands and accepts the risk cannot rely on the suit of negligence to claim for damages.
Sam was responsible for filling right fuel into the aircraft based on which he owed a duty of care. As the accident reports showed, the accident of White Ltd’s aircraft was caused due to the contaminated fuel put by Sam into the plane, thus, White Ltd can hold him liable for his negligence. The loss suffered by the owner of Mercedes Benz was too remote based on which Sam cannot be held liable to pay for his damages. Sam prevented the accident of Blue Ltd’s aircraft by stopping the pilot from flying it based on which he is not liable towards Blue Ltd. The damages suffered by the customer of Blue Ltd were too remote based on which a suit for negligence against Sam cannot be filed. Lastly, the pilot of Green Ltd rejected all the warning signs of Sam, and he still flies the plane which has resulted in an accident. Thus, Sam can rely on the defence of voluntary assumption of risk to prevent the liability from paying the compensation for the loss suffered by Green Ltd.
To conclude, White Ltd is the only potential plaintiff that can file a suit against Sam for the loss suffered by him due to the negligence of Sam.
Civil Liability Act 2002 (NSW)
Bolton v Stone (1951) AC 850
Cork v Kirby Maclean (1952) 2 ALL ER 402
Donoghue v Stevenson (1932) AC 562
Latimer v AEC Ltd (1953) AC 643
Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (1961) AC 388
Paris v Stepney Borough Council (1951) AC 367
Books/Articles/On-line Modules
Barker, K, Cane, P, Lunney, M and Trindade, F (2012). The law of torts in Austraila. Oxford: Oxford University Press.
Butler, D (2010). Employer liability for workplace Trauma, Abingdon: Routledge.
CSU LAW504 Modules
Montague, JE (2013). Q&A Torts 2013-2014, Abingdon: Routledge.

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