DOUGAL & DOUGAL

In *Dougal & Dougal*, the Supreme Court of Victoria was asked to determine whether a party had breached their duty of care to another by failing to disclose material facts during the sale of a business. The dispute arose from allegations that the vendor had failed to disclose significant financial irregularities and operational issues that materially affected the value and profitability of the business being sold.

The central legal issue before the Court was whether the vendor's conduct constituted a breach of the duty of care owed to the purchaser, particularly in relation to the disclosure of information that would be considered material to a reasonable purchaser. This involved an examination of the scope of the duty of care in contractual negotiations and the standard of disclosure required in such circumstances.

Macmillan J found that the vendor had indeed breached their duty of care. The Court reasoned that a vendor owes a duty to disclose material facts that are not readily discoverable by the purchaser through reasonable inquiry. In this instance, the undisclosed financial and operational issues were of such a nature that they significantly impacted the business's true value and future prospects, and their non-disclosure was therefore a breach of the required standard of care. The Court applied principles of negligence and contractual good faith to reach its determination.