Business Commercial Transaction

Question: Discuss about theBusiness Commercial Transaction. Answer: Parties The assignment covers the business and commercial transactions in consideration to the Australian Consumer Law and Commercial Transactions. The concerned parties in the assignment are Fred, Southpac Bank, Freds parents, John and Abacus and Associates. Fred graduated in marketing subject and started his own advertising consultancy business that succeeded until two years. He wanted to expand the business after two years of success and approached John to prepare the business plan. John was a client manager in Abacus and Associates, an accounting practice firm. John service with the firm was under an agreement that the outside clients advice should be approved and signed by the partner of the firm. Other parties i.e. Southpac Bank and Freds parents are the parties provided loan to the Fred based on the business loan provided by John and his firm. Issues In the present situation, issue that have been observed are negligent misstatement made by John and his accounting firm, Abacus and associates, Liabilities of John and accounting firm towards the Southpac Bank and Freds parents for presenting the negligent misstatement. These issues have been raised because the business plan that was created by John in approval with Abacus and Associates did not contain true and complete information. The business plan did not contain the liabilities and obligations towards John and there was no identification of national competitor in the same business industry. Fred also discovered that the business plan prepared by John and his accounting firm had understated the cost of business setup. The same business plan had been forwarded to the Southpac Bank and Freds parents to borrow loan amount for the purpose of business development. Since both the parties i.e. Freds parents and Bank had approved and sanctioned loan to Fred for 5 years period, John and A bacus and Associates are liable to provide negligent misstatement. Due to such incorrect misstatement, Fred incurred losses and was unable to pay back to the Bank loan, his parents loan amount and lease rentals. Fred had to experience legal actions from the Bank and lessors who provided the place on lease because of the incorrect and negligent misstatement. Rules According to the section 18 (1) of Australian consumer Law, any statement provided by the parties to the business or agreement is deceptive, misleading or negligent is prohibited for the business consideration (Barker 2015). It states that any statement which have been either omitted or wrongly presented and that the presence of such statement provides material information to the parties would fall under the category of negligent misstatement. Further, negligent misstatement is an actionable claim under the common law that represents the intention of the provider of the statement is to deceive the receiver of the statement. In case the negligent misstatement is proved before the court, then the party can claim for the damage as per section 236 of Australian Consumer Law (Lasker, Klein and Barago 2015). Application Considering the rules and provisions on negligent misstatement and the present situation of the case, it has been analyzed that the business plan presented to Fred was contained with negligent misstatement. John and the accounting firm, Abacus and Associates willfully omitted the terms of Johns liability and deliberately understated the cost of business setup. Further, the parties also excluded to present the identification of a national competitor of Newtown in the same industry. According to the facts of the case, John was an old friend of Fred agreed to create business development plan for Fred and presented him after few days. However, John did not get the approval from his firms partner as per the employment terms and condition. On the other hand, John handed a letter to the Bank and Fred signed by the firms partner that mentioned the parties does not own any liability for the accuracy of the information. As a matter of fact, two situations arise in the present situation, one is the omission of important information and other is misleading information in the business plan. Another situation is the presentation of letter that stated the company has no liability on accuracy of the information. According to the case decision of Google Inc v ACCC, it had been concluded that the company was not involved in presenting the misleading information since it was lack of understanding at the readers part. On the contrary, it may be noted that the business plan provided by John did not contain the correct and complete information. Hence, it can be said that the there was negligent misstatement made by John to the defendant Fred. Further, as per the common law the superior party to the contract or action for providing misleading information of misstatement by the respondent also held liable. In the present case the misleading information had been given by John but his accounting firm Abacus and Associates also held liable. According to the employment terms and conditions, John did not get the business plan approved by the firms partner but the letter has been signed. Therefore, the firm and the partners are partly responsible for approving the letter without approving the business plan. Based on the case of Lister v Hesley Hall Ltd vicarious liability had been imposed on the employer for unlawful and illegitimate acts of the employees because of the employers superiority level and authorization rights. Mere presentation of the exclusion of liability in the letter does not waive the responsibility of the superior and contractor. In addition to this, approval of bank loan was also given by Southpac Bank on the basis of Freds application as well as the business plan. In this situation the signed letter mentioning the exclusion of liability of the contractor or party to the agreement cannot be regarded as clear evidence for stating all the required material and correct information. For any business transaction or business action significant documents like agreement between the parties, documents of business plan or any other specific documents are required. All such documents should be accurately and appropriately drafted with the approval of concerned parties. In case the documents are discretely drafted with the intention to deceive the respondent party then the creator of such documents would be held liable for negligent misstatement. Moreover, the misstated business plan prepared by John and his firm also deceived Freds parents as they provided loan to Fred $20,000 to be repaid in 5 years. However, the loan from parents was taken by Fred without letting John know therefore, it can be argued that John and his firm are not directly liable for misstatement. Besides, the firm Abacus can be held vicariously liable for representing misleading information in the business plan as well as approval of letter without approving the document of business development plan. In this situation, Johns liability to the parents can be excluded as decided in the case of Olley v. Marlborough Court Hotel (1949) based on the contract law. In case of presentation of misleading document to Freds Parents by one party i.e. John can be held for vicarious liability because the disclaimer made in the letter was not a part of the business plan and agreement. Likewise, Abacus and Associates is vicariously liable to the Southpac Bank because the disclaimer in the forwarded letter was not a part of the loan application disclosures and document of business plan. Apparently, it has been clarified in the legislation that the party to the contract or agreement is required to disclose all the necessary facts including the exclusion liability clause. However, in no case the party is allowed to present the misleading or inappropriate information with the intention to deceive the other party. Accordingly, John is responsible to present the correct and accurate information in the business plan since a mere disclaimer in the letter cannot exclude his liability. Conclusion Considering the facts and discussion on the present case, it can be concluded that John presented the negligent misstatement in business development plan whereas Abacus and Associates is vicarious liable for such misstatement. Mere presentation of exclusion of liability in the letter cannot waive the responsibility of presenting the appropriate and correct information in the business plan. Therefore, John and his accounting firm both are liable for representing negligent misstatement. Further, the misstated business plan was also presented to the Southpac Bank based on which the bank approved the loan to Fred. Therefore, John is directly liable to the Southpac bank whereas Abacus and Associates is indirectly liable to the bank being a superior respondent. On the contrary, Freds parents also provided loan amounted to $20,000 on the basis of the business development plan prepared by John and his firm. Although obtaining the loan from parents was not communicated to John, he is still in directly liable to present negligent misstatement. Since the plan was made under the authority of Johns accounting firm Abacus and Associates, the firm is also indirectly liable to represent negligent misstatement and providing misleading information. Declaration of exclusion of liability in the letter does not waive off the responsibility of John and Abacus to provide correct and appropriate information of the business development plan. Reference List Barker, K., 2015. Negligent Misstatement in Australia-Resolving the Uncertain Legacy of Esanda.Ch,13, pp.319-344. Lasker, E.G., Klein, S.A. and Barago, T.F., 2015. Taking the Product out of Product Liability: Litigation Risks and Business Implications of Innovator and Co-Promoter Liability.Def. Counsel J.,82, p.295. Battistella, C., De Toni, A.F. and Pillon, R., 2015. 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