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Property and Tort Laws - Easy Pty - Case Study Example

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The paper "Property and Tort Laws - Easy Pty" is a perfect example of a law case study. Harry’s predicament in the event of economic loss incurred from personally guaranteeing payments for advertisings for Easy Pty Ltd upon its bankruptcy and following positive credit reference from a bank captures vital elements in the English law on pure economic loss resulting from misstatements…
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Law Case Analysis on Property and Tort Laws Name Grade Course Tutor’s Name Day, Month, Year Harry’s predicament in the event of economic loss incurred from personally guaranteeing payments for advertisings for Easy Pty Ltd upon its bankruptcy and following positive credit reference from a bank captures vital elements in the English law on pure economic loss resulting from misstatements. The specific question in this case is whether the bank has liability for the economic loss suffered by Harry by relying on information provided by the bank and most importantly whether Harry has the legal right to recover its losses from the Bank. In order to answer this question, it is important to determine under what circumstances a defendant may be liable for economic losses suffered by a plaintiff where a plaintiff uses negligent information from a defendant to make decisions that may result to economic loss. Banaka defined negligence as a tort or a civil wrong involving “a breach of a legal duty to take care, which results in undesired damage by the defendant to the plaintiff”(Banaka, 1999). To prove that a defendant was negligent, a plaintiff must show that the defendant owed him/her a legal duty of care, the defendant breached the duty of care , and a proximate cause existed between the loss suffered and the defendants breach of duty. In case where negligence results to no other harm besides economic loss, the loss is termed as pure economic loss. Pure economic loss and liability for such a loss is recognized in the case of professional misstatements. In such cases where negligent misstatements result to a breach of duty of care, the plaintiff must show that they relied upon misstatements made by the defendant to make their decisions, the misstatements were the direct cause for the economic loss incurred by the plaintiff, and the plaintiff under the circumstances reasonably relied on the defendants’. In addition, it was reasonable to assume that defendant either was aware or ought to have been aware that the plaintiff would rely on the statements, the statements dealt with a serious matter and the statements were made carelessly (Vernon, 2003). In this case, Harris sought for Easy Pty credit reference from Easy Pty’s bank before proceeding with an advertisement contract with Easy Pty ltd where Harry was to guarantee payment for newspapers and television advertisements. Whereas the bank said that the company was creditworthy, it also noted that it was not aware of Easy Pty dealing with such large amounts of money as it was the case in the dealing with Harry. Subsequently, Easy Pty went bankrupt and Harris considered the bank to be liable for the loss on the basis of misinformation. However, the bank argued that it had provided a disclaimer and it was not in the business of providing advice on its customers and as such, the information was to be treated as information and not advice. The first question is whether the bank owed Harry the duty of care. Duty of care may occur where an individual or company offering services voluntary assumes responsibility by virtue of performing a particular service. The case is similar to the case of Hedley v. Heller ltd (1964). In the case of Hedley v. Heller, a duty of care resulting to economic losses was found to exist as a result of negligent misstatements. In this case, Hedley, an advertising agency sough for a credit check on Easipower Ltd from Heller partners before entering a contract with Easipower. On receiving a positive feedback on the credit-worthiness of Easipower, Hedley proceeded to place adverts for them. Afterward, Easipower was declared bankrupt and Hedley Byrne alleged that Heller owed them a duty of care in consulting for credit reference. The courts recognized that a duty of care may in some circumstances exist when giving information such as was the case in Hedley v. Heller ltd, (1964). The courts proceeded to identify various elements that satisfied the requirements for duty of care including; reliance on the skills, ability and judgment of defendant to make a particular inquiry, knowledge by defendant that a claimant would rely on the provided information, and reasonableness on the claimant to rely on the defendant in the particular circumstances. In this regard, Harry was owed a duty of care by the bank since the circumstances satisfy the three court conditions identified in Hedley v. Heller ltd (1964). The bank assumed responsibility by providing information on credit worthiness of Easy Pty. The bank ought to be aware that such information was to be used as a basis for making decision by Harry. Harry was also likely to rely on the skills, ability and judgment of the bank in making the inquiry and the bank ought to have been aware that Harry would reasonably rely on the information in such particular circumstances to make various economic decisions. Once the duty of care has been established to exist, the courts may seek to determine whether the bank had breached its duty of care to Harry. In this regard, since the bank provided information on the firms position and especially noted that Easy Pty did not usually deal with such large amounts of money, it is arguable that the bank did not breach its duty of care in this case. In addition, the courts have in the case of Hedley v. Heller asserted that an individual may in some circumstances avoid responsibility and liability where they expressly include a disclaimer. The disclaimer was supposed to be unequivocally and clearly stated in addition to fulfilling the reasonableness test. The reasonableness test on disclaimer was brought to the fore in unfair contract terms (1977), which was evidenced in the case of Smith v. Bush where a surveyors misstatement was found to result to liability despite the disclaimer clause. In this case, Bush, a surveyor performed an erroneous valuation for Smith, an evaluation that Smith used to make a decision for house purchase. Smith discovered that the house required major repairs despite the valuations statement to the contrary. The defendant’s argument that a disclaimer existed was found wanting under the 1977 unfair contract terms act. However, the courts held that unlike for individuals where the disclaimer may not hold, in case of a disclaimer for businesses the same argument may hold. Since the bank and Harris were both businesses and considering that the bank had included a disclaimer, then its liability in this case was diminished. Consequently, the third test on whether a proximate cause existed between the decisions by Harry to do business with easy Pty would indicate that there was no proximate cause in information provided by the bank and the decision of the bank to do business with Easy Pty. Finally, where a bank is found to have deliberately given wrong information, it may still be responsible for liability. However, in this case it may be difficult to prove such a case existed with the Bank. Since most common law cases are often determined through precedents, using the precedent set by the case of Hedley Byrne V. Heller & Partners Ltd, the plaintiff although able to prove that a duty is owed may not be able to prove that the bank breached its duty considering the disclaimer. In this case, Harry may not win in case against the bank. PART 2 The issue of what constitutes chattels or fixtures and the issue of sharing of properties upon death of a partner is a common issue in most property cases. Whereas the issue of what constitutes fixtures and chattels is sometimes a grey area in property law and usually a major cause of dispute between real estate purchaser and vendor, the issue of joint tenancy and issues arising upon death of a partner is a joint tenancy are more straightforward.. An understanding of the difference between fixtures and chattels is crucial in a real estate sale contract. The distinction determines what a vendor may legally remove from the land and what is considered part of the property. Under the common law, a fixture is an asset fixed or installed on land or in a building in order to be part of the building or land in law (Megarry, 1993). Under the maxim quicquid plantatur so solo cedit, translated to “whatever is attached to land is part of the land”, fixtures are considered to pass to the buyer automatically and the vendor has no right to remove them (Megarry, 1993). Chattels on the other hand are assets that are tangible and moveable (Bagshaw, 2008). However, a chattel may become a fixture if fixed to land or building. In order to avoid disputes between the vendor and the buyer, it is usually advisable to have the chattels included in the contact. Most of the common chattels include door mats, floor coverings, furniture whether attached to walls or floor or not, curtains among others (Megarry, 1993). However, the vendor upon disposal of real estate property may remove chattels unless the contract expressly state that they are part of the contract. The two tests that have been established by the courts in determining whether an asset is a chattel or a fixture are the degree and method of annexing the asset and the purpose and object of annexation (Bagshaw, 2008). The first test identifies that since some degree of physical affixation is needed in converting a chattel into a fixture, if the asset cannot be removed without substantial damage to, or destruction of land or building then it is a fixture. However, this condition is neither sufficient nor necessary in identifying a fixture and the courts have proceeded to identify a second condition, which is now commonly more acceptable by the courts. The condition requires that the purpose and intention of affixation of an asset should be taken into consideration. Consequently, objective viewing of the asset in question involves identifying whether it was intended to be permanently affixed with an aim of adding permanent improvements on the property, in which case it is a fixture. Where it was meant to be temporary affixed on the basis for which it is to be used and enjoyed, then the asset is a chattel (Megarry, 1993 ). Another aspect of property law highlighted in the case concerns the aspects of joint tenancy. It is also referred to as joint tenancy with a right of survivorship (Steele, 2007). This means that where one of the owners die, the co owner retains all the rights to the property. In this case, the right of the co owner passes to the surviving co owner upon death of one of the co owners. This is what is referred to as right of survivorship. The interest of the deceased co owner is not inheritable by their heirs and their interest is extinguished upon their death. Co owners have equal share in a property (Steele, 2007). In the case given, an individual enters into a contract for sell of a house. The vendor takes an island bench from the kitchen of the sold house in the process having to damage the floor. In addition, the vendor takes tools and curtain which were included in the contract considering them to be chattels and moves with them together with a partner as joint tenants to the newly bought house. The partner dies shortly. The vendor is interested in determining the legal position of the bench, the tools, and curtains and of the interest of the partner on the property. An analysis on the legal position on the tools and curtain indicate that both are chattels since they are not fixed and are neither meant to be fixed. However, considering that the sale contract places the chattels under the contract indicate that the vendor has no further rights over the tool and curtain without going against the contract. Similarly, although the bench is fixed on the floor, considering the second condition on purpose of the fixture, it would also qualify as a chattel since it was fixed on the basis for which it was ti be used for which it was meant to be used for enjoyment. Furniture’s even when fixed are considered to be chattels. However, like in the case of the tools and curtain, since the contract involved the said items then the vendor has no further rights to interfere with these items without facing legal consequences. An analysis of the legal position of the interest of the deceased partner clearly indicates that the share of the deceased automatically transfers to the surviving partner upon death. References Banaka, E.K (1999). Liability for incorrect financial information: Theory and Practice in a General Clause System and in a Protect Interests System. European Review of Private Law, pp.261-286. Megarry, S. R. (1993). Manual of the Law of Real Property. Sweet & Maxwell. Vernon, P. (2003). Pure economic loss in Europe, Cambridge University Press. Bagshaw, R.N (2008). Property Law. Longman Publishers  Steele, J. (2007). Property Law: Text, Cases, & Materials: Text, Cases, and Materials. Oxford: Oxford University Press. Hedley Byrne & Co V. Heller & Partners Ltd (1964) Smith v. Bush (1977). Read More
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