Consumer Rights and Defective Goods Case

This assignment presents a case study about Peter purchasing a defective ring from Jewels King Ltd. The ring failed to meet quality standards and caused harm to Peter's wife. Students must analyze the situation under the Australian Consumer Law, examining Peter's and his wife's rights regarding compensation and potential legal action against the supplier and manufacturer.

Statutory Interpretation Project

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Presenting the extent to which Australian Consumer Law (ACL) apply on the case of Peter....3
Presenting rights do Peter and/or his wife have under the ACL in relation to his purchase of
ring...............................................................................................................................................4
Stating remedies which are available to Peter and/or his wife under the ACL...........................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Australian Consumer Law (ACL) may be defined as a national unfair contract terms that
includes standard form consumer and small business contracts. It lays emphasis on consumer
rights associated with the purchasing aspect of goods and services. ACL is applicable nationally
and in all the states, territories as well as to Australian businesses. The present report is based on
the case situation of Peter who is now seeking for compensation on the basis of mispresentation
by the manager of his local jewelers. In this, report will provide deeper insight about the laws
and legislation that offers protection to the customers. Besides this, report will also shed light on
the extent to which Peter and his wife is entitled to get compensation for the loss suffered by
them.
Presenting the extent to which Australian Consumer Law (ACL) apply on the case of Peter
On the basis of cited case situation, Peter went to Jewel King Ltd with the motive to buy
nice ring for his wife. In the concerned case situation, after negotiation Peter agreed to purchase
diamond ring @ $10500. At the time of giving description, James, manager of the firm, said that
ring contains the feature of 3 carat diamond and 22 carat gold socket. Along with this, at the time
of signing an agreement manager stated that if anything goes wrong with ring then I will replace
the same. Considering the information served by James both the parties was entered into an
agreement. Later, diamond was fallen out of its setting but at the time of claim store refused to
recognize such lifetime promise. Along with this, Peter found that ring was made with plated
nickel rather than solid gold. Due to such nickel Peter’s wife suffered from serious dermatitis and
infection.
By taking into account the case situation of Peter it can be depicted that ACL is highly
applicable as per following aspects such as:
According to the section 54 (2) of ACL, goods supplied must be of acceptable quality.
On the basis of such aspect goods supplied must be acceptance in appearance & finish, safe,
durable and free from defects. Along with this, such section of ACL entails that goods must be
fit for the purposes they commonly supplied. In addition to this, section 55 of ACL entails that

goods delivered must be reasonably for their intended purpose. In addition to this, S56 of the
concerned law presents that goods sold must be in line with the description given. Further,
section 29 highlights that an individual must not serve false information regarding standard,
quality, model, value etc1. Hence, under the given case breach of agreement occurs as diamond
ring sold to Peter, by James, manager of Jewel king ltd was not in accordance with the
description given. Moreover, before purchase Peter clearly said that he does not want a gem
below 2.5 carats and the ring has to be of pure gold. On the other side, in reality ring was not
made of pure gold. Along with this, injury was also suffered by Peter’s wife due to the
manufacturer’s fault in relation to taking proper diligence and care. Hence, referring all such
aspects it can be depicted that ACL’s section are suit to the situation of Peter.
Presenting rights do Peter and/or his wife have under the ACL in relation to his purchase of ring
By doing assessment, it has found that ACL offers several rights to the customer when
contractual breach occurs related to goods or services. Under Australian Consumer law,
customer has right to demand for repair, replacement or refund2. Remedy available to consumers
on the basis of above rights are highly influenced from the level of issue in terms of minor and
major.
Rights of Peter’s
In the context of major failure Peter has right to reject the goods and seek for either
refund or replacement. In addition to this, under the case of major failure innocent parties can
keep the good themselves and demand for compensation to the extent to which value of goods
are reduced. Hence, when breach of consumer guarantee occurs as per section 51 to 59 then
innocent party can take legal action for getting compensation3. In the context of current case,
1 The Australian Consumer Law. 2018. [pdf]. Available through:
<http://consumerlaw.gov.au/files/2015/06/ACL_framework_overview.pdf>.
2 Consumer rights & guarantees. 2018. [Online]. Available through:
<https://www.accc.gov.au/consumers/consumer-rights-guarantees>.
3 The Australian Consumer Law. 2018. [Online]. Available through:
<http://consumerlaw.gov.au/the-australian-consumer-law/>.

there are several aspects on the basis of Peter can claim in against to Jewel King Ltd such as
unfit for the disclosed purpose, failure pertaining to offering ring as per description.
Rights of Peter’s wife
According to section 2 of ACL, affected person in relation to the goods imply for the
consumer who acquires good. Further, section 2(b) depicts that along with the original
consumers, individual who acquires or receives goods from the buyer other than for the purpose
of re-supply can exercise rights mentioned in ACL. Along with this, person who receives or
enjoys the title of goods is entitled to claim for compensation.
Section 266 provides recipients of gifts with specific rights which they can exercise on
the occurrence of loss or injury. Such section entails that both rights and remedies are available
to Peter’s wife in line with others who directly acquire goods from supplier.
Stating remedies which are available to Peter and/or his wife under the ACL
Section 2 (1) associated with HCL presents that component, part of, minerals, accessories
etc are recognized as good. As per the given case, ring purchased by Peter comes under the
category of goods. Thus, on the basis of ACL remedies are available to both Peter and his wife:
Remedy to Peter: Section 259 of ACL states that consumer may take action in against to
the supplier of goods. On the basis of laws consumer can take action if guarantee pertaining to
acceptable quality, fitness for disclosed purpose, sales as per description is not met. Thus,
considering such aspect Peter can claim for the compensation on the basis of false presentation
about ring. Along with this, ring supplied Jewels King Ltd was also not fitted to the purpose of
Peter. Quality of the ring was also unacceptable because after the period of 6 months diamond
had fallen out. Hence, as per section 259 Peter has right in relation to either demand for
compensation or repudiate contract. Moreover, in the given case supplier refused to give
compensation on the basis of exclusion clauses mentioned in the agreement. Along with this, as
per section 260 major failures are when goods are substantially unfit for the disclosed purpose
and not of acceptable quality4. In addition to this, section 260 (b) also supports the aspect of
4 The Australian Consumer Law. 2018. [Online]. Available through:
<http://consumerlaw.gov.au/the-australian-consumer-law/legislation/>.

major failure because ring supplied was in accordance with the description provided. However,
according to section 262 consumers are not entitled to reject the goods if the period is ended. At
the time of selling ring and doing an agreement, James who was the manager of Jewel King Ltd
presented that you do not have any need to insure such fine piece of workmanship. Further, he
also said that in case if anything went wrong then ring will be replaced. Hence, mentioning such
mispresented facts Peter can claim for the loss suffered. Besides this, considering major failure
Peter can claim for the difference take place between the amount paid and value of plated nickel.
Remedy to Peter’s wife: Referring section 266, Peter’s wife can claim for compensation
in against to serious dermatitis. Further, plated nickel ring was also caused to serious infection to
Peter’s wife so she became hospitalized. As per session 2 related to the liability of manufacturer
Peter’s wife can sue on importer who supplies such gems to Australian jewelry firm. Moreover,
it is the accountability of manufacturer / importer to manufacture or supply goods that free from
all kind of defaults and safe in nature. Concerned case presents that due to the faulty material
issue pertaining to serious infection was faced by Peter’s wife. Hence, as per section 75AD by
proving the existence of defect in goods innocent party can demand for compensation. Along
with this, for getting compensation innocent party also needs to prove that infection was
occurred due to the defective goods. Thus, by satisfying all such aspects Peter’s wife can claim
for compensation in against to importer.
CONCLUSION
By summing up this report it has been concluded that both Peter and his wife has right in
relation to making sue for compensation. It can be seen in the report that ring was not in
accordance with the description given by James to Peter. Besides this, it can be inferred that
manufacturer or supplier owes duty of care towards customers. Hence, on the basis of such
aspect Peter’s wife can sue and demand for the compensation from importer.

REFERENCES
Online
Consumer rights & guarantees. 2018. [Online]. Available through:
<https://www.accc.gov.au/consumers/consumer-rights-guarantees>.
The Australian Consumer Law. 2018. [Online]. Available through:
<http://consumerlaw.gov.au/the-australian-consumer-law/legislation/>.
The Australian Consumer Law. 2018. [Online]. Available through:
<http://consumerlaw.gov.au/the-australian-consumer-law/>.
The Australian Consumer Law. 2018. [pdf]. Available through:
<http://consumerlaw.gov.au/files/2015/06/ACL_framework_overview.pdf>.