BULAW5914 - Commercial Law: Case Study on Negligence and Consumer Law

This assignment presents a detailed analysis of two commercial law case studies. The first case examines Samsung's liability for negligence and violations of Australian Consumer Law (ACL) following the Galaxy Note 7 recall, focusing on Jane's personal injuries and property damage. It discusses the elements of negligence, available defenses, and remedies under the Wrongs Act and ACL. The analysis concludes that Jane can claim damages but recovering through ACL is more suitable. The second case analyzes a scenario where Alan, injured in a car accident with a drunk driver (Steven), seeks to sue Steven for negligence. It discusses the duty of care, the 'Caparo test,' and the defense of volenti non fit injuria, concluding that Steven might be able to avoid liability. Desklib provides a platform for students to access similar solved assignments and past papers.

Commercial Law

Answer 1
Material Facts
Samsung launched the Galaxy Note 7 smartphone in August 2016, and it was
discontinued by the company in October 2016. The reason for discontinuing the
smartphone was the battery issue in the phone which caused some phones to generate
excessive heat. Due to excessive heat, many smartphones caught fire, and they caused
physical injuries to the customers. The company recalled its smartphones and also took
measures to reduce the capacity of the battery and block the ability of people to connect
their phone to wireless network. Jane purchased Galaxy Note 7 in August 2016 it caught fire
in January 2017. Due to the fire, she suffers from severe burns, and her BMW car caught fire
as well which was destroyed completely.
Issue
The issue is relating to the rights which are available for Jane under the provisions of
the tort of negligence and Australian Consumer Law. Another issue is relating to possible
damages which can be claimed by Jane under these laws and what defences can be claimed
by the defendant to reduce its liability.
Rule
Negligence is the failure of a person to maintain proper care to ensure that other
parties did not suffer loss. There are certain elements which are necessary to be present in
order to file a successful suit of negligence (Stickley, 2016). The first element is that the
defendant must owe a duty of care. While determining this duty, the court uses ‘neighbour
test’ which was established by the court in the case of Donoghue v Stevenson [1932] AC 532.
As per this test, if the parties are in a proximity relationship and the risks are foreseeability,
then the duty of maintaining a standard of care is imposed on the party. Moreover, this duty
must be violated by the party by taking to take certain action which is expected for a
reasonable person in a particular position. The third element provides that the injury which
is suffered by a party must be the result of the failure of the party who owes a duty. This
element was recognised by the court in the judgement of Cork v Kirby MacLean Ltd [1952] 2
All ER 402. Lastly, the injury or damages suffered by the party due to the negligence of
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another person must not be too remote as provided in the case of The Wagon Mound no 1
[1961] AC 388. In case all these elements are present, then the victim has the right to hold
the defendant liable for negligence. Damages can be demanded by the aggrieved party for
psychiatric harm, personal injury and economic loss (Luntz et al., 2017). Moreover, certain
provisions are given under the Wrongs Amendment Act 215 (Vic) in relation to deciding the
amount of damages suffered by the party. As per section 28G, the victim has the right to
receive damages up to $577,050 for non-economic loss.
There are various defences given under the tort law based on which the defendant
has the right to eliminate the liability or reduce it to certain extent. Contributory negligence
is a common defence in the tort of negligence which provides that the amount of damages
which is paid by the defendant is reduced to the certain amount based on the contribution
of the claimant in the negligent act (Goudkamp & Klar, 2015). This defence is also provided
under the Wrongs Act 2015. If the claimant failed to maintain a duty to protect themselves,
then the amount of damages can be reduced to certain extent. The court evaluates the
extent up to which the parties have the right to reduce the amount for damages. The
Australian Consumer Law (ACL) focuses on protecting the rights of customers from unfair
trading practices of businesses. Various rights of customers are recognised under schedule 2
of the Competition and Consumer Act 2010 (Cth) (CCA). Section 7 provides that the meaning
of manufacturer include parties that are responsible for assembling, extracting, growing or
producing goods (Legislation, n.d.).
Under ACL, certain guarantees are recognised for customers to protect their rights
from fraudulent and unfair trading practices. Manufacturer of a product can be held liable
for failing to ensure that the customers are protected from any injury. Section 138 of ACL
focuses on protecting the safety of customers. As per this section, a liability can be imposed
on the manufacturer if the goods which are provided through trade and commerce contain
some safety defect which resulted in causing personal injury to the customers (Austlii, n.d.).
According to this section, the safety defect is referred to a condition when the good is no
longer remains in the condition where it is expected to be. Customers have the right to
claim damages for violation of their rights under the ACL. Along with section 138, section
139, 140 and 141 also provides key provisions for customers to claim damages. According to
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section 140, the manufacturer will be held liable for any safety defect in the goods which
caused an injury to another party.
However, while applying this section, it is important to determine that the person
who has suffered the loss must acquire the goods for personal/household/domestic
purposes. Various defences are available under the ACL which protects the manufacturers
from liability. Section 142 of ACL provides that a manufacturer cannot be held liable for any
defect in the goods if such defect was not present while the goods were supplied. As per
clause B of section 142, if the defect is there in goods due to certain compliances which are
necessary to meet the standard, then the manufacturer cannot be held liable to pay for
damages (Corones, 2014). Clause C of the section provides that at the time the goods were
supplied, it was not possible for the manufacturer to discover the defect by using technical
or scientific knowledge, then liability cannot be imposed. Lastly, clause D of this section
provides that the manufacturer is not liable if the defect in the goods attributed to the
design.
Application
In the given case study, Jane purchased the Galaxy Note 7 smartphone which is
manufactured by Samsung. A duty is imposed on Samsung under the ACL to ensure that
safety of customers. As per the law of negligence, a duty of care is owed by Samsung
towards its customers based on the neighbour test. There is a reasonable foresight of risk,
and the parties have a proximity relationship (Donoghue v Stevenson). Based on this duty, it
is important that Samsung acts in a reasonable manner to ensure the security of its
customers is maintained. The duty was breached by Samsung since he delivered defected
goods to the customers. The damages can only be awarded if the element of causation is
present as discussed in the case of Cork v Kirby MacLean Ltd. Lastly, the damages which are
too remote cannot be recovered by the parties. In the present scenario, the loss suffered by
Jane regarding its BMW car is not recoverable since it was not foreseeable as provided in
The Wagon Mound no 1 case.
The physical damages suffered by Jane are recoverable under the Wrongs Act based
on which she can claim damages up to $577,050. On the other hand, Jane is also liable for
claiming damages under the ACL based on section 138. The overheating of the smartphone
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was caused due to a manufacturing defect which means that it was not safe. Moreover,
Jane can also claim damages for her BMW car under section 140 by providing that she was
using the goods for domestic purpose and the same was destroyed because of this safety
defect in the phone. Moreover, Samsung can claim the defence of contributory negligence
in the present scenario since Jane did not exchange her phone after they were recalled by
the company. However, Samsung is less likely to be entitled to this defence, and the court is
less likely to reduce the damages caused to Jane due to overheating of the phone. Thus,
Jane can claim damages under the ACL and the tort of negligence; however, recovering the
damages through ACL is a more suitable option for Jane.
Conclusion
To conclude, Jane has the right to claim damages from Samsung for negligence and
violation of her duties under the ACL. Samsung cannot claim on the defence of contributory
negligence or the sections of ACL. Samsung is liable as a manufacturer under a suit for
negligence and the provisions of ACL based on which Jane can claim damages for her
personal injuries and her car.
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Answer 2
Material Facts
Alan was drunk when he got a lift from Steven; Alan knew that Steven was also
drunk since they were drinking in the same venue. Steven was driving rashly in order to
impress Alan due to which he lost control of the car, and it ran into a stationary truck. Both
Alan and Steven suffered significant personal injuries due to the accident.
Issue
The key issue is whether Alan has the right to sue Steven under a suit for negligence
and whether he is likely to succeed in receiving damages from him.
Rule
The parties who are in a proximity relationship owe a duty of care towards each
other. They have to ensure that they maintain a standard of care to avoid causing harm to
third parties. There are certain relationships in which a duty of care exists such as solicitor
and client, doctor and patient, parent and child and others (Stychin, 2012). The elements of
negligence are necessary to be present in a particular scenario to hold parties liable for a
suit of negligence. The success of the suit depends on the fact that whether the defendant
owes a duty of care or not. The second element is breach of such duty by acting or omitting
certain act. The third element is that the injury suffered by the party must be caused due to
the action or omission of the defendant. The last element is remoteness of damages; the
injuries which are not foreseeable cannot be recovered through a suit of negligence. In the
judgement of Caparo Industries PLC v Dickman [1990] UKHL 2, the court provided ‘Caparo
test’ which can be used in order to determine whether the party owes a duty of care or not.
This test evaluates three elements to impose a duty on the party which include close
relationship between parties, foreseeability of damages and imposition of penalty must be
fair and reasonable (Turner, 2013).
In a suit for negligence, the defendant can rely on different defences in order to
eliminate or reduce the liability to pay damages such as volenti non fit injuria, contributory
negligence, exclusion of liability and others. The defence of volenti non fit injuria provides
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that when the victim is aware of the risks involved in a particular scenario and still act while
knowing the same risk, then the victim did not have the right to hold the defendant liable
for negligence. This defence is relevance in a suit for negligence which is filed against the
defendant who was intoxicated while breaching the duty of care (Katsivela, 2013). In this
context, a relevant judgment was given by the court in the case of Morris v Murray [1991] 2
QB 6. In this case, the court provided that if a person takes a lift from an intoxicated person,
then it means that he/she has accepted the risk based on which the defendant can rely on
the defence of volenti non fit injuria. In this defence, the complete liability of the defendant
to pay the damages is eliminated, and the claimant did not have the right to demand
damages from the injury.
Application
In the given scenario, Alan has to establish all the elements of negligence in order to
hold Steven liable for the damages. A proximity relationship existed between Alan and
Steven since Alan took a lift from Steven. The damages were foreseeable since Steven was
intoxicated and he was rashly driving the car in order to impress Alan. It is also just and
equitable to impose a duty of Steven. Therefore, based on the Caparo test, a duty is owed
by Steven (Caparo Industries PLC v Dickman). This duty was violated by Steven because he
was negligently driving the car in order to impress Alan due to which the car lost control,
and it ran into a stationary truck. The damages suffered by Alan were caused due to the
negligence of Steven based on which the element of causation was present in the scenario.
Lastly, the injuries which are suffered by Alan are not too remote, and they are
foreseeable. Therefore, all the elements of negligence are present in this scenario. Alan has
the right to file a suit against Steven in order to claim damages from him for the personal
injuries suffered by him. In order to eliminate the liability to pay damages to Alan, Steven
can rely on the defence of volenti non fit injuria. Steven can argue that Alan was aware of
the fact that he was intoxicated still he agreed to get a lift from him based on which he
accepted the risk involved in the scenario. Steven can also rely on the judgement of Morris v
Murray case in order to claim that Alan has accepted the risk by agreeing to get a lift from
Steven. Therefore, Steven is likely to succeed in the defence and the court is most likely to
accept his arguments. Steven can eliminate his liability arise in the case based on which Alan
will not be able to claim damages from him.
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Conclusion
To conclude, Alan is less likely to succeed in the suit filed against Steven in order to
recover damages for the personal injuries suffered by him which were caused due to his
negligence. Steven can rely on the defence of volenti non fit injuria by claiming that Alan
agreed to the risk because he knew that Steven was intoxicated, but he still agreed to take a
lift from him. Therefore, it is most likely that Alan will not be able to held Steven liable for
the damages suffered by him.
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References
Austlii. (n.d.). Competition and Consumer Act 2010. Retrieved from
http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/toc-sch2.html
Caparo Industries PLC v Dickman [1990] UKHL 2
Competition and Consumer Act 2010 (Cth)
Cork v Kirby MacLean Ltd [1952] 2 All ER 402
Corones, S. G. (2014). Competition law in Australia. Toronto: Thomson Reuters.
Donoghue v Stevenson [1932] AC 532
Goudkamp, J., & Klar, L. (2015). Apportionment of Damages for Contributory Negligence:
The Causal Potency Criterion. Alta. L. Rev., 53, 849.
Katsivela, M. (2013). The Volenti Defence under Australian and Canadian Law: A
Comparative View. J. Comp. L., 8, 322.
Legislation. (n.d.). Competition and Consumer Act 2010. Retrieved from
https://www.legislation.gov.au/Details/C2013C00620
Luntz, H., Hambly, D., Burns, K., Dietrich, J., Foster, N., Grant, G., & Harder, S. (2017). Torts:
cases and commentary. New York: LexisNexis Butterworths.
Morris v Murray [1991] 2 QB 6
Stickley, A. P. (2016). Australian torts law. New York: LexisNexis Butterworths.
Stychin, C. F. (2012). The vulnerable subject of negligence law. International Journal of Law
in Context, 8(3), 337-353.
The Wagon Mound no 1 [1961] AC 388
Turner, C. (2013). Contract law. Abingdon: Routledge.
Wrongs Amendment Act 215 (Vic)
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