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September 5, 2023

Hypothetical Legal Problem – Camilla

Hypothetical Legal Problem – Camilla. Camilla’s financial advice firm provides you (her client) with advice regarding the establishment of an online business supplying mail-order coffee beans to customers around Australia. Your written (and signed) contract contains the following clause:

Camilla’s firm agrees to provide you with financial advice on the terms set out in this contract, but under no circumstances shall Camilla be liable for any loss or damage caused by negligence or in any other way whatsoever. You start up your business, on the basis of the advice you receive, but it quickly fails after incurring very large debts. The advice provided by Camilla’s firm was negligently prepared. It turns out that Camilla had delegated preparing the advice to a very junior (and inexperienced) colleague. When they weren’t sure what to do, they flipped a coin to decide whether or not to advise in favour of starting up your business. You contact Camilla seeking compensation, but she refuses, pointing to the exclusion clause set out above. This takes you by surprise. You hadn’t read the contract before signing it (you were in a hurry at the time), and you didn’t know that the exclusion clause was in there. You are concerned about the legal consequences of the situation mentioned and seek advice from a Generative AI system regarding its contract law implications. The AI system responds with the following advice:

Hypothetical Legal Problem - Camilla

‘The main issue is whether the exclusion clause in the contract is enforceable in this situation, given that the client did not read the contract and was unaware of the clause at the time of signing. In contract law, exclusion clauses are terms in a contract that seek to limit or exclude one party’s liability for certain types of loss or damage. Hypothetical Legal Problem – Camilla. The enforceability of exclusion clauses depends on several factors. The enforceability of the exclusion clause in Camilla’s contract is uncertain in this case. Several factors, including the lack of notice to the client and the attempt to exclude liability for negligence, could weigh against its enforceability.’

Part A – Using the Generative AI produced response above, identify the elements of the IRAC method that are reflected in this response. That is, identify which sentence(s) addresses the issue, rule, application, and conclusion steps of the IRAC process.

Hypothetical Legal Problem – Camilla. Part B – The Generative AI response provided is incorrect and lacks identification of all legal issues. Additionally, it does not accurately apply the law to the facts. Your task is to present a clear overview of the legal situation. You are therefore required to write a new response that explains whether Camilla’s financial advice can firm rely on the exclusion clause, according to the law of contract? Explain why or why not. Refer to relevant legal cases to support your analysis and ensure that you fully explain the legal position you have taken. This question is worth 5 marks. Use APA referencing style.

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