Company and Commercial Law

This article discusses Australian Consumer Law and product liability in relation to two case scenarios. It covers consumer guarantees, strict manufacturer liability, and legal risks such as receipts and proof of purchase. The scenarios involve compensation claims by customers who suffered damages after consuming melons from a shop.

Running head: COMPANY AND COMMERCIAL LAW
Company and Commercial Law
Name of the Student
Name of the University
Author note

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Question 1
Issue
The issue that has been identified in this scenario is whether Jocelyn will be entitled
to receive compensation from Melon R’ Us.
Rule
As per the Australian Consumer Law (Part 3-2), the agencies of consumer protection
have developed and enacted the legislation stating what consumer guarantees apply to
specific goods and services. Consumer guarantees is referred to as a set of rights and
remedies for defective services and goods. The consumer guarantees are based on the implied
warranties and conditions. Generally according to the Consumer guarantees, Part 3-2 of
Australian Consumer Law, manufacturers and suppliers provide guarantees on the
mentioned goods and services sold by them to the consumers. The suppliers and
manufacturers provide guarantee to all the customers who have purchased certain goods and
services. Due care and skill relies on the customers. For instance, when a consumer for
painting the house hires a painter he failed to remove the old paint. After a period of five
months, the new paint on the wall fades. Therefore,, the painter failed to meet the guarantee
of due care and skill. Such a situation was also observed in the case of ACCC v Reckitt
Benckiser (Australia) Pty Ltd1. However, under the Australian Consumer Law, claim can be
achieved from the retailer if he fails to meet the guarantee of the consumer. The remedies that
can be provided by the retailer are replacement, refund and compensation for the loss and
damages.
1 [2016] FCAFC 181

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Application
In the given scenario, Jocelyn had purchased melons from the shop of Melon R’Us.
She was carrying her fourth child and was hospitalized. During her prognosis, it was
observed that her unborn child was fine and so was she. However, her responsibility towards
the bills of the hospital was her concern. In such a situation the guarantee will be granted by
the hospital if the Australian Consumer Law is applied. There will be no such remedies as
Jocelyn did not suffer any kind of loss or damage by consuming the melons from the shop of
Melon R’Us.
Conclusion
It can be concluded that financial support will not be provided to Jocelyn as she did
not suffer any damage from consuming the melons from that shop.
Question 2
Issue
The issue of this situation states whether financial compensation will be offered to
Arjun under the strict manufacturer liability, Part 3-5 of Australian Consumer Law.
Rule
The rule or the law explains the concept of product liability provisions that are the
principal source of remedies against the manufacturers. According to Part 3-5 of the
Australian Consumer Law, liability is imposed in a pharmaceutical product liability claim
where the defects are concerning the manufacturing, nature and the design. Under the
Australian Consumer Law, safety defects define a situation where the goods are said to have

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a safety defect if their safety is not such as persons who are generally entitled to expect.
Goods are not usually and always risk free. It engages the potential defects that are linked to
the composition and defects of the product. The expectations of the consumers depend on
relevant circumstances of the product involved as observed in Australian Competition and
Consumer Commission v Bunavit Pty Ltd2. However, the product liability laws of Australia
are a mixture of both the legislation and common law. An individual who has suffered any
kind of loss or damage by purchasing a product can opt for compensation based on the law of
contract, common law tort of negligence and breach of provisions of the Australian
Consumer Law.
Application
The case scenario states that Arjun, the customer had purchased sliced melons from
Yummy Stuff in Victoria. These melons were bought from Melon R’Us. It was observed that
Arjun had to seek medical treatment after consuming those melons. Arjun was suffering from
listeriosis and needed proper medical treatment. Due to such an incident, Arjun had to take a
few days off from his full employment as he was an accountant of a big firm. If the
appropriate law is applied in this scenario, it can be observed that if any consumer has
suffered any kind of loss because of the manufacturer’s negligent behavior, he will be
compensated. If the manufacturer is strictly liable for the damage, he will be bound to pay for
the loss incurred as per the Australian Consumer Law. Therefore, a manufacturer must
provide remedy when the goods fail to meet the guarantees of the customer. A manufacturer
will be solely responsible for the express warranties. According to the law, a consumer is
entitled to ask for an amount to cover up any kind of drop in the value of the goods.
Conclusion
2 [2016] FCA 6.

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It can be concluded stating that financial compensation should be provided by the
manufacturer that is Melon R’Us to Arjun.
Question 3
According to the Australian Consumer Law and the Foundations of Company and
Common Law, the two other existing legal risks involve receipts and other proof of purchase
and also when a supplier has the power to fix a problem when they are not at fault. Both of
these legal risks can be applied in the given scenario. If the customer provides the proof of
purchase and the manufacturer is liable, he is bound to compensate for the damages. It was
observed in this scenario that Melon R’Us being the manufacturer had to compensate for the
damage caused to Arjun and not to Jocelyn. Secondly, the supplier does have the authority to
solve the problem despite not being at fault. Melon R’Us saved themselves from
compensating the hospital expenses of Jocelyn. This is because she did not fall sick and
neither did her baby after consuming the slices of melon. Therefore, the manufacturers were
not at fault but were accused of being at fault for serving rotten melons to the customers.
Therefore, these are the possible other risk that can occur in this given situation.

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