Australian Corporation Law: Analysis of Negligence and Consumer Law

This report examines key aspects of Australian Corporation Law, specifically focusing on the legal principles of negligence and duty of care in the context of product liability. It analyzes the responsibilities of manufacturers, referencing cases like Donoghue v Stevenson and Caparo Industries PLC v Dickman, and explores the application of the Wrongs Act 1958. The report discusses the requirements for establishing negligence claims, including the elements of duty, breach, and causation, as well as the concept of the 'neighbor principle'. It also addresses limitations on compensation for both economic and non-economic losses, including thresholds and caps implemented by the Australian Law Reform Commission. Furthermore, the report delves into consumer rights and manufacturer liabilities under the Australian Consumer Law, particularly concerning product safety and the ability of consumers to seek compensation for personal injuries resulting from defective products, as illustrated in the Thermomix appliance example. The report also explores the different types of damages, including general damages and the limitations on claims, providing a comprehensive overview of relevant legal frameworks and their practical implications.

Running head: AUSTRALIAN CORPORATION LAW
Australian Corporation Law
Name of the Student
Name of the University
Author Note

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Answer 1:
There is a duty of care on the part of an individual towards another person in regard to
their contractual obligations according to the principles of law of negligence. Therefore, it is
important on the part of such individual to apply certain measures in order to avoid the risk that
can be aroused as a result of negligent action by such individual. In this regard, it is noteworthy
to mention here that, the nature of the risk involved must be such that any person of reasonable
prudence could possibly foresee. In order to establish successful claim for negligence, it is
important that the aggrieved party must emphasize upon the following essentials-
I. The defendant is at the duty to maintain duty of care.
II. There must be a breach of such duty of care.
III. As a result of such breach, the plaintiff has been injured.
The concept of duty of care was first established in the famous case of Donoghue v
Stevenson [1932] A.C. 562. In this case, it was held by the Court that there is a duty of care on
the part of the manufacturer towards the customers. The term ‘neighbor principle’ was also
established in this case. The neighbor principle has been applied by the Courts for the purpose of
providing appropriate remedy to the injured parties as a result of negligence. Similarly, in the
case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 there involved a
negligent statement on the part of a bank which breached the duty of care owed by the plaintiff.
However, in the case of Caparo Industries PLC v Dickman [1990] UKHL 2, the neighbor
principle has been efficiently emphasized. In this case, the Courts applied the tripartite test in
order to emphasize upon the neighbor principle by relying upon the nature of foreseeability,
proximity and justice and fairness. Therefore, it is worth mentioning that, a neighbor under the

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law of negligence is referred to as the person who can suffer loss or injury due to negligent act
by the other party. It is worthwhile to refer here that, according to the provisions of the Wrongs
Act 1958; the subject-matter of duty of care can be briefly explained.
For the purpose of establishing that there has been breach of duty of care, the Court is at
the authority to investigate into the matter that whether the act of the defendant was such that it
caused breach to the duty owed by the plaintiff. The Court shall determine that whether the
defendant has taken reasonable care while exercising his duty. However, the nature of the care
was such which caused injury to the plaintiff. In this regard, the principle of res ipsa loquitor can
be emphasized which states that, the facts of the case itself reveal the truth.
It is required that the plaintiff must prove that the damages caused to him are as a result
of action of the defendant. For this purpose, the plaintiff can rely upon the ‘but for’ test in order
to establish that the injury caused to him is due to the act of the defendant. In order to bring
successful claim under the law of negligence, it is important on the part of the plaintiff to
evaluate the facts which is the actual causation of the injury. In this regard, the provisions of
Section 51 of the Wrongs Act 1958 can be emphasized which states that negligence is occurred
by the factual causation of harm and it is important for the plaintiff to establish that such
causation of harm contributed towards his injury.
Similarly, in the given case study, there was a major defect in the kitchen appliance
provided by Thermomix appliance and as a result of which the plaintiff suffered injury. In this
regard, the case of Donoghue v Stevenson [1932] A.C. 562 and Caparo Industries PLC v
Dickman [1990] UKHL 2 can be applied. This is due to the reason that there is always a duty of
care on the part of manufacturers towards their customers. At the same time, it is also important

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to protect the customers from any harmful injury. It is noteworthy to mention here that, in the
present scenario, it was essential on the part of Thermomix Appliances to maintain a duty of care
towards its customers in regards to the safety measures of the appliances. However, it failed to
do so. Therefore, the injury suffered by the customers in this case is as a result of negligent act
by the company. There is a right on the part of the customers to bring a claim for damages for the
injury against the Thermomix Appliances.
The provisions of the Wrongs Act 1958 can be referred in the present situation because it
states that an authority is not vested upon a customer to make claims which is non-monetary.
However, it is important that customers should bring claim for injuries along with their
percentage as depicted in the Medical Association Guidelines (AMA). Various amendments
were made to the provisions of the Wrongs Act 1958 so that the consumers can make claims for
severe injuries caused by companies. However, the claimant can only claim for damages within a
stipulated period on 5 years i.e. from the date on which the claimant suffered injuries.
Answer 2:
The Wrongs Act 1958 has set out various limitations for the purpose of compensating the
sufferers in case of both economic and non-economic loss by an act of the companies. The
Australian Law Reform Commission has investigated into such matter from time to time and in
such process introduced caps which can be necessarily applied to non-economic damages. Such
implementation on the part of the Australian Law Reform Commission shall ensure and at the
same time assure that appropriate remedy should be provided to the injured keeping in view the
privacy interest of both the claimant and the wrongdoer. In this regard, mention can be made of

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the thresholds containing in the provisions which have reduced personal liability according to the
law of torts which can be listed below-
I. The threshold has efficiently reduced the measures related to risk management.
II. The amount for compensation reduced which depends upon both eligibility and capacity
of the defendant.
III. The threshold from time to time has taken into account few negligent acts which excludes
the infringing party from the purview of financial disability.
In this context, it is worthwhile to refer here that the points listed above has been made in
order to support the threshold which shall be required in order to compensate the parties in injury
in relation to their economic and non-economic losses. In order to award thresholds to the parties
in injury emphasis has to be made upon the circumstances and thereafter the injured party must
prove that they have acted in accordance to the threshold in order to compensate themselves.
However, the nature of the injury has to be such that monetary compensation can be provided. In
order to receive monetary compensation, the injuries sustained by the claimant must be 30% of
the injuries mentioned in the threshold. It is noteworthy to mention here that as a result of the
new system of imposition of thresholds, the false claims in order to obtain compensation in
excess have considerably reduced. Therefore, the injured parties cannot receive compensation
based on inappropriate claims and without proper evidence. The injured parties shall only be
entitled to receive compensation in case of serious injuries however; the seriously of such injury
shall be measured by proper analysis of the facts which were involved in the matter in concern.
According to the law of negligence, the plaintiff is at the authority to claim for a varied
number of damages depending upon the nature of the harm. It is important on the part of the

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Court to identify the nature of the harm and provide appropriate damages for such injury. While
evaluating the nature of the injury, the Court shall examine a number of evidences that should be
presented before it by both the parties i.e. by the claimant and the defendant and thereafter the
Court shall make the decision accordingly. In such cases, the Courts after proper investigation
shall award damages by further restoring the prior position of the claimant. In most of the cases,
the nature of harm caused to the claimant is measured in terms of temporary and permanent
injury that has been caused physically and sometimes it is associated with non-monetary
damages as well. In this regard, mention can be made of different physical injuries which are
emotional trauma, death, disfigurement and physical sufferings. These physical injuries are
closely related to non-monetary damages suffered by the claimant as a result of act or omission
on the part of the wrongdoer. The damages awarded to the claimant in relation to the non-
economic damages are termed as general damages. In case, the claimant has suffered injury
which is caused as a result of emotional trauma, then in such cases, compensation can only be
provided in order to address the emotional injury. There are alternative sources in order to
provide appropriate compensation in case of mental and physical injury.
A number of limitations have been introduced for the purpose of providing appropriate
remedies to the injuries suffered personally by the claimant by different states. In this regard,
keeping in view their statutory and legal provisions, the damages claimed by the injured parties
have also been taken into consideration. From the very beginning, the states of Australia have
implemented caps on various economic and non-economic losses. In medical cases, these matters
are prevalent because only selected states have implemented these caps upon non-economic
losses in order to provide appropriate measures to the cases associated with personal injuries.

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The amount of the caps varies from state to state however; the amount remains confined to
$350,000 to $750,000.
The exceptions are different in case of death because in these cases permission is provided
towards the implementation of relatively higher caps and in most of the cases a damaged cap is
totally eliminated from the purview. In case of Victoria, there is a right entrusted upon the
claimant to claim compensation for the injuries suffered. In most of the cases, the claimant fails
to establish the percentage of the injuries caused to them. In order to claim compensation, it is
important that the claimant must establish that 30% of the injury suffered by him has been
caused under serious circumstances. The worth of a damage cap in Victoria in case of non-
pecuniary damages is $527,610.
Answer 3:
The provisions contained in Part 3-5 of the Australian Consumer Law deals with the
liabilities of the manufacturer which is concerned with the safety measures of various products
sold by them. In most of the cases, the personal liabilities of the part of the manufacturers are
concerned with both monetary and personal injuries. These monetary and personal injuries are
suffered by the consumers while handling the products or appliances supplied by such
manufacturers. The rights of a consumer to bring claim against ant manufacturer in matters
involving personal injuries are contained in the provisions of Section 138 of the Australian
Consumer Law. However, the nature of the damage must be such that it occurred as a result of
breach or negligent action on the part of the manufacturer. In most of the cases, the consumers
cannot identify the manufacturers and the suppliers cannot provide appropriate information. In

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such cases, an authority is vested upon the claimant to sue the supplier as he could not provide
the required information about the defective goods that has been manufactured.
In the given scenario, the injured consumers can bring a claim for compensation against the
Thermomix appliances which shall involve judicial proceeding. It is evident that the
manufacturer failed to comply with the safety standards of the kitchen appliance and as a result
of it; the consumers had to face serious consequences. It is worthwhile to refer here that as a
result of breach of duty of care on the part of the manufacturers, the consumers can effectively
claim for monetary compensation for the burn injuries.
Various defenses are available to a manufacturer in order to escape personal liabilities which
are depicted in the provisions of Sections 142 and 148 of the Australian Consumer Law. These
defenses can be listed below-
A. The manufacturers must prove that there were no defects in the product when it was sold
and the defects were observed under the possession of the consumers.
B. The technical department did not allow the manufacturers to check the defects in the
products.
C. The loss caused to the consumers is not as a result of the defect but, due to damages
caused to land or buildings.
The Court is at the authority to impose penalties under the Part 5 of the Australian Consumer
Law on the wrongdoer if in any case he has acted in violation of the provisions of the civil
standards which are mention in relation to the goods manufactured.
Therefore, in the present scenario, the company Thermomix Appliances did not comply with
the provisions depicted in the Section 106(1) of the Australian Commercial Law and as a result

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of this was liable to pay an amount of $1.1 million. According to the provisions of Section 131 or
section 132 of the Australian Commercial Law, the company Thermomix Appliances is liable to
pay an amount of $16,500 by compensating the burn injuries suffered by the claimants.
However, the most efficient remedy that should be made available to the injured parties is
contained in the provisions of Section 232 of the Australian Consumer Law. In the present
scenario, the consumers by relying upon the provisions of Section 232 can bring a claim for
injunction in order to restrict the company from performing such negligent act in the future.
However, the provisions of Section 271 of the Australian Commercial Law shall also be
applicable in this case for the purpose of providing alternative remedy to the injured parties. In
the conclusion, it can be stated that in case of conflict of consumer guarantee on the part of the
supplier or manufacturer, the injured consumer can bring action involving legal proceedings
against them.

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References:
Caparo Industries PLC v Dickman [1990] UKHL 2.
Donoghue v Stevenson [1932] A.C. 562.
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.