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LAW514 COMMERCIAL LAW
ASSIGNMENT 2 - PROBLEM-BASED QUESTION
VALUE: 20% OR 20 MARKS
WORD COUNT: 1,500. THIS INCLUDES ALL FOOTNOTES AND REFERENCES. (10% margin under or over)

This assignment may be submitted on or before 11.59pm (ACST),
Study Week 9
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ASSIGNMENT 2 - PROBLEM-BASED QUESTION
Johnny’s friend Arnold wishes to purchase a restaurant. One Friday evening he finds an Indian restaurant called Puluub for sale, which is located on Kerouac Avenue around the corner from Johnny’s restaurant The Lame Duck. The restaurant is full of customers. The following Monday Arnold speaks to Johnny about his plans. Arnold explains that he is very keen to buy the business but that he has never owned a restaurant or even worked in the industry before, and he would appreciate Johnny’s advice and guidance. Johnny assures Arnold that Puluub appears to be a very successful restaurant and that he is ‘almost guaranteed’ to make a profit in the first twelve months. Arnold immediately decides to purchase the restaurant with his brother Cameron. One year later they are on the verge of bankruptcy; the restaurant was not as popular or as profitable as they expected, and turnover has declined even further since they took over the business. Has Johnny committed the tort of negligent misstatement? In your answer focus on whether or not Johnny owed a duty of care to (1) Arnold and (2) Cameron.
Important: Your answer must use the IRAC structure and refer to the relevant case law.

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