Commercial Law Assignment: Negligence and Consumer Rights

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COMMERCIAL LAW
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Table of Contents
INTRODUCTION............................................................................................................................. 3
QUESTION 1................................................................................................................................... 3
QUESTION 2................................................................................................................................... 5
CONCLUSION................................................................................................................................. 8
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INTRODUCTION
Every man owes a duty of care towards each other. Every individual has to protect his
neighbors or neighborhood and take reasonable steps or preventions to avoid any harm or
damage to other person or their property. The tort of negligence can be referred to as a wrong
which is legal due to which a person suffers any loss (Luntz et al, 2017). Such wrong is caused
due to the carelessness or avoidance of proper care for a risk which was foreseeable. The
concept of negligence in tort requires fulfillments of the three elements and also the
foreseeability of the risk or damage or loss which have been caused (Fulbrook, 2017).This
assignment will be focusing on the various rights which are entitled to the person(s) mentioned
in the case i.e. Joe and Kamela, who have suffered due to the tort of negligence. Also, the
various provisions of the Australian Consumer Law will be mentioned, with the help of which,
Joe and Kamela can sue the person(s) responsible for the loss they have suffered.
QUESTION 1
Negligence refers to a situation where a person fails to take reasonable care to prevent causing
harm to any other person. In such cases, the accused has a duty of care towards the victim,
which he fails to perform and consequently, a loss has been caused (Lacobucci and Trebilcok,
2016). The tort law in Australia is governed by the Civil Liability Act, 1936 and The Law of
negligence and Limitation of Liability Act, 2008. To sue any person for the tort of negligence, 3
conditions need to be fulfilled. These conditions are:
 Duty of Care:The First and foremost element to sue a person for negligence is the
existence of a duty of care. Here, Steve (the salesperson) and Defektny (the
manufacturer), had the duty of care towards Joe and Kamela. They were obliged to
provide Joe and Camela with good quality heaters and appropriate instructions and
warnings to use the heater (Rajapakse, 2016).
 Breach of Duty of Care:The next element is a breach of such duty of care. In this case,
both Steve and Defektnyhave breached the duty of care, as defective goods, which
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would have caused harm or injury to another person have been provided to Joe and
Kamela. Due to lack of care, Joe and Kamela received defective goods and not only this,
their gas bill was high, which was assured by the Steve that both the heaters are energy-
efficient and most suitable for the house of Joe and Kamela (Beran, 2017).
 A loss or damage has been caused as a result of such breach:The last element
attracting the tort of negligence is that a loss or damage should have been caused to a
person or persons, due to failure to perform such duty of care, as happened with Joe
and Kamela where they suffered injuries and lost their house due to breach of duty of
care of Steve and Defektny. Not only this, they lost their money, their house and they
have also suffered mentally and physically (Foley and Christensen, 2016).
 Foreseeability: Foreseeability of risk or loss refers to the proximity of the loss or
damage which could have been caused by not taking reasonable prevention or care. In
the case of Joe and Kamela, the damage or loss suffered by both of them was
foreseeable as it was a gas heater, there would be always a probability of leaking of gas
or ignition of things if due care is not taken (Stickley, 2016).
According to the provisions of the Civil Liability Act, 1936, Joe and Kamela have the right to sue
the salesperson and the manufacturer of the heater as they had a duty of care towards them.
Steve, the salesperson of the heater owed a duty of care towards the couple and should have
checked for the defects in the heater before it was installed in the house of Joe and Kamela
(Mulheron, 2016). Steve should have also guided them about the placing of the heater and the
surrounding in which the heater should have been placed. Before referring Fred to install the
heater in Joe and Kamela’s house, Steve should have instructed Fred and the couple about the
precautions which were needed to be taken and the consequences of not undertaking such
reasonable preventions and care (Feng and Huang, 2016). Moreover, Defektny, who was the
manufacturer of Hades 5000 owed a duty of care towards the victims as well even though they
had no contact between them. The manufacturer can be sued on the ground for the omission
of taking reasonable care to avoid any harm or injury which has been caused to Joe and Kamela
(Chamallas, 2018).
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Another right or remedy available to Joe and Kamela is that they have the right to ask for
compensation from Steve and Defektny for the loss and damages which they have suffered.
They can ask for the compensation to recover the damages and injuries caused after
determining the foreseeability of such damage or loss and the presence of the elements of the
tort of negligence (Goldberg et al, 2016).Furthermore, they can also claim for the excess
amount of gas bill amount which is the result of the operation of the gas heater which had
affected their gas bill and led them to pay huge amount of money for the gas bill. Apart from
claiming compensation, Joe and Kamela also have some restitution rights such as replevin
where they both are allowed to recover the personal property which has been lost due to the
tort or negligence (Zellmer, 2017).
Some of the cases of the tort of negligence are as follows:
1. Donoghue v. Stevenson (1932): One of the landmark cases of the tort of negligence is
Donoghue v. Stevenson (1932), where the court held that every person has a duty of
care towards other people. One man owes a duty of care to another man even when
there is no contact between them (Goh and Round, 2017).
2. Lee v Carlton Crest Hotel (Sydney) Pty Ltd. (2014): One of the recent cases involving
compensation for the damages or injuries caused is Lee v Carlton Crest Hotel (Sydney)
Pty Ltd (2014). In this case, the number of damages was decided by the court based on
the salary per annum of the deceased husband of the plaintiff (Tidswell, 2017).
The purpose of these cases is to provide a basis to the new cases where the question of
breach of duty of care arises. In Donoghue v Stevenson (1932), the court has provided for a
very important principle stating the duty of care of every person towards each other
(Barker, 2016). In the case of Joe and Kamela as well, it was the duty of Steve, Paymart and
the Manufacturer to act responsibly and warned or informed Joe and Kamela about the
reasonable steps to take care and avoid such incidents. Moreover, in the recent case of Lee
v Carlton Crest Hotel (2014), the amount of compensation was not decided on the basis of
the victim's loss but on the basis of the gain of the defendant, which means in the case of
Joe and Kamela, they will be compensated for the damages which have been caused, the
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cost of heaters, the additional amount of gas bill and an average amount of the house which
exploded due to the gas heater (Geistfeld, 2017).
QUESTION 2
The Australian Consumer Law has been enacted to protect the interests of the consumers and
prevent them from any sort of exploitation by manufacturers, suppliers or sellers. Joe and
Kamela can also sue under the Australian Consumer Law (ACL). Under the Australian Consumer
Law, the Competition and Consumer Act, 2010 was established to impose certain obligations to
the manufacturers or suppliers of the goods to the consumer (Foster, 2016).The Australian
Consumer Law also provided for the protection in the cases concerning misrepresentation or
deceptive goods or selling goods with the help of false information or false advertisements that
claim something else and the product has something else. With the help of the Australian
Consumer law, the manufacturers and suppliers can also be sued and the interests of
consumers can also be protected (Pearson, 2017). The persons who can be sued by Joe and
Kamela under the Australian Consumer Law are:
Paymart, the departmental store: Joe and Kamela have the right to sue the discount
departmental store, Paymart, as the heater was purchased from them and they had a duty of
care towards them. Paymart must provide good quality goods to its consumers which are free
from any defects or poor quality parts, and here, it has failed to do so (Dietrich, 2017). Due to
the lack of duty of care, Joe and Kamela have not only suffered from the loss of their money,
but they have also lost their house. Also, while receiving the product from hot Stuff Pty Ltd,
Paymart should have checked for any defects or damaged in the product and also confirmed
about the energy efficiency of the heaters (Corones and Clarke, 2015). Moreover, at the time of
the delivery of the product to Joe and Kamela’s house, information and warning regarding
proper care and prevention while using the heater must have been informed to the consumer
and necessary action should have been taken to avoid such accident. If such loss or damage
would have been minor, Joe and Kamelacould be assisted with repair, replacement or a refund,
but because the loss and damage are high, they will be compensated with the amount equal or
more than the loss or damage occurred (Pearce and Pinto, 2018).
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Steve, the salesperson: Joe and Kamela can sue Steve, who was the salesperson of the heater.
Any business who sells any good to the consumer shall ensure that such good is of acceptable
quality i.e. safe, lasting and having no faults, as defined under Section 54 (2) of the Australian
Consumer Law. Here, the heater Hades 5000, which was suggested by Steve was not of
acceptable quality and was not free from defects (Kariyawasamand Wigley, 2017). Steve also
assured Joe that the heater is energy sufficient, although it was not and eventually led to a high
gas bill when the heaters were operational in the house. Steve also suggested to them about
Fred, who installed the heater at Joe and Kamela's house. Fred should've also guided Joe and
kamela about the place where the heater could have been placed. Thus, Section 56 of the
Australian Consumer Law has been breached, which states that the goods shall match the
description which is being provided in relation with them and here, the information provided by
the Steve regarding the energy efficiency of the heaters have been proved false and doesn’t
match with the description provided by Steve (Cooper, 2018).
Defektny, the manufacturer: To sue the manufacturer, Joe and kamela need to prove the
breach and negligence of the manufacturer, due to which, Joe and Kamela faced such a
situation. They need to prove that the manufactured did not provide for the precautions or do's
and don'ts which shall be provided on such hazardous appliances to prevent huge losses or
damages (Pearson, 2017). The manufacturer is at fault because he has created such a situation
or failed to discover it and consequently eliminating it. Section 138, 140 and 141 of ACL
provides for the responsibility of the manufacturers if any person suffers from any injury due to
a safety defect, or the goods or products which were purchased for domestic, personal or
household consumption have been damaged due to such safety defects, or any private use
land, building or fixture have been damaged due to such safety defects in the products,
respectively. In such instances, the manufacturer is liable for the damages caused to the person
(Foster, 2016).
The manufacturer should have mentioned the instructions and warning on the packaging of the
heater to not to place heater near curtains or other such things which may catch fire easily.
Moreover, the manufacturer should have mentioned about the precautions which should’ve
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been taken while installing the heater in the room. Steve also, before handling the heater to Joe
and Kamela must have warned them about the necessary precautions which were supposed to
be taken to avoid such hazards (Paterson and Wong, 2016). He must have instructed Joe and
Kamela about the places where they can place the heater and also have warned about the
consequences of keeping them near such things which might ignite easily. The manufacturer
can also claim that such damage might have caused due to the negligence of Hot stuff Pty Ltd
while importing the heaters from Russia to Australia. If reasonable care or preventions would
have been taken, this incident could have been avoided and Joe and Kamela would not have
suffered such huge loss including loss of their house (Wallace et al, 2015).
All the three bodies/ individuals i.e. Steve, Paymart, Defektny, and Hot Stuff Pty Ltd. are
responsible for the damages which have been caused to Joe and Kamela. Joe and Kamela are
entitled to receive compensation and recover damages from all of them (Bant, 2016). Joe and
Kamela could have placed the heater in an open area of their rooms where there is no such
thing which might catch heat so easily. Such losses or damages can only be recovered when Joe
and Kamela prove that there was a defect in the heaters which caused them to explode or if
they prove that due to lack of information and warning from Steve and Paymart, such incident
has been caused (Pearson, 2017).
CONCLUSION
To conclude, it may be said that a tort is a legal wrong due to which a loss or damage is caused
to another person, while on the other hand, negligence refers to non-performance or
performance of an act which has been undertaken carelessly and by avoiding necessary or
reasonable step to avoid any loss or damage (Cooper, 2018). Joe and Kamela had suffered huge
loss for which they are entitled of various rights through which the number of such damages
can be recovered to a huge extent. Moreover, Joe and Kamela shall have ensured that they take
proper precautions as well to avoid such an accident. If the damage caused to Joe and Kamela
would have been minor, the seller could have provided them with repair, replacement or a
refund, but as the loss is huge, they have the right to recover the maximum amount of damages
so that the loss could be compensated in the terms of money (Fairweather et al, 2016).Lastly,
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Joe and Kamela can sue 3 persons (The salesman, the Seller or departmental store and the
manufacturer) and recover the number of damages from them. Thus, the duty of care shall be
performed properly to avoid such accidents and necessary actions should be taken in the
future. Every person should take care of the consequences of their negligence and the loss or
damages caused by such negligence (Martin, 2015).
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