C05119 Corp/Buss Law Assignment: Consumer Guarantees and Negligence

This business law assignment solution analyzes two key legal issues: consumer guarantees under the Australian Consumer Law (ACL) and the tort of negligence. The first question examines whether a refrigerator is covered by consumer guarantees, even after a time lapse, and if the seller can rely on the manufacturer's warranty. It concludes that the consumer, James, is entitled to a replacement due to the product's failure to meet consumer guarantee standards. The second question delves into negligence, assessing whether Sarah owed a duty of care to Jason, when a breach of duty occurs, and the available defenses. It applies the Civil Liability Act 2003 (Qld) and relevant common law principles, including the three-stage test from Caparo Industries plc v Dickman (1990). The analysis covers concepts such as duty of care, breach, and defenses including ex turpi causa non oritur actio, contributory negligence, volenti non fit injuria, and inevitable accident. The solution provides a comprehensive understanding of the legal principles involved in both consumer law and negligence, supported by case law and relevant legislation.

Running Head: C05119
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CORP/ BUSS LAW: C05119
Student’s Name
Institutional Affiliation

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QUESTION 1
ISSUES
1. Whether the product, the refrigerator, was consumer guaranteed under the Australian
Consumer Law.
2. Whether the Australian Consumer Law applies after the lapse of the frame of time given.
3. Whether the seller can rely on the manufacturer warranty.
4. Whether James is entitled to the replacement of the refrigerator.
RULES
Fundamental rights of consumers are protected under the Australian Consumer Law (ACL).
These rights are enforced regardless of any warranty provided by the manufacturer.
The general principles of the Common Law precedent and relevant to this case will also be of
essence in this case.
The general principles Australia Contract Law such as the offer, acceptance, consideration,
capacity and formalities, are important in this commercial transaction case.
ANALYSIS
1. Whether the product, the refrigerator, was consumer guaranteed under the Australian
Consumer Law.
According to Chapter 1 of the Australian Consumer Law (ACL), businesses must guarantee the
products they sell for products worth less than $40,000.
Under the Australian Consumer Law, all goods purchased by a consumer are covered under the
consumer guarantees embodied in Part 2 under Chapter 3 of the Australian Consumer Law. Any
business that supplies goods and services is mandated to ensure that all the relevant consumer
guarantees under the Australian Consumer Law are complied with.
Moreover, according to part 2 chapter 3 of the Australian Consumer Law, there are consumer
guarantees that are ab initio applied automatically which includes that:
a) The buyer will have the right to sell the goods.
b) The goods are of merchantable quality.

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c) The goods are fit for the purpose which it was bought.
d) The goods match their description.
2. Whether the Australian Consumer Law applies after the lapse of the frame of time given.
Australian Consumer Act was specially construed and with the intention of protecting the
consumer against warranties that would infringe his consumerism rights and to bridge the
difference in knowledge between the manufacturer and the consumer, the seller and the buyer.
Under the Australian Consumer Act, regardless of any warranty that the manufacturer can rely
on to escape liability, the consumer is still entitled to repair, refund or replacement even after the
time lapses (Grubb, 2018). This remedy is still likely to be available if the following conditions
should be satisfied subject to which the consumer will be entitled to a replacement (Grubb,
2018):
a) If the consumer asks the Australian Consumer Law to be applied or primarily regarded in
his case.
b) If it is proved that it is a manufacturing defect that rendered the refrigerator to stop
working.
c) If it is reasonable that the refrigerator should still be working quality when compared to
other ordinary refrigerators.
3. Whether the seller can rely on the manufacturer warranty.
The manufacturer warranty is also called the warranty against defects. The manufacturer cannot
escape liability on the reliance of a warranty that enables him to fail to perform in a contract that
he is party substantively. Every party to a contract has his/her obligations and duty to
performance of that relevant contract.
Furthermore, the manufacturer is under an obligation under the Australian Consumer Law to
supply goods, and in this case, refrigerator, that is fit for the purpose which it was intended, that
is of merchantable quality and that corresponds with its description.
4. Whether James is entitled to the replacement of the refrigerator.
The warranties of defect in products are guarantees made to the consumer during the time of
contract of sale or supply, that if the goods sold or supplied are defective, the manufacturer will
(Australian Competition and Consumer Commission., 2019).

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a) Repair or fix the defects in the goods.
b) Replace the good, in this respect, the refrigerator or resupply the goods.
c) Compensate or maybe refund the consumer.
If a product fails to meet the standard of goods as dictated by the consumer guarantee, the
consumer has a right to claim for repair, replacement or refund under the Australian Consumer
Law. This depends on whether the term of the contract that is breached is of a major or minor
stipulation.
In the case of LG v Australian Competition and Consumer Commission (2019), customers who
had relied on misrepresentations made by LG Co. Ltd and had purchased faulty products were
entitled to rights of repair, replacement and refund under the consumer guarantees in the
Australian Consumer Law
If it is a minor problem with the respective product, the manufacturer may choose to give the
consumer free repair instead of refund or replacement, but if it’s a major defect in the goods, the
consumer has a choice of choosing whether to get a replacement of the goods or refund
(Australian Competition and Consumer Commission, 2019).
Conclusion
Therefore, James, the consumer is entitled to replacement of the identical type of the refrigerator
originally sold or supplied to him. The refrigerator failed to meet the standard set by the
consumer guarantee and thus, James is entitled to replacement of the refrigerator.

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QUESTION 2
ISSUES
1. Whether Sarah owed any duty of care to Jason.
2. When is the duty of care breached?
3. What are the possible defences that Sarah has in the court of law?
RULES
The Civil Liability Act, 2003 (Qld) will apply in this case and all the relevant common law
principles on the tort of negligence as derived from Lord Atkin’s dictum on the neighbor
principle in the case of Donoghue v Stevenson (1931).
ANALYSIS
A tort is a tortious liability that arises from breach of a duty primarily fixed by law, it is towards
persons generally and its breach is redressable by an action for unliquidated damages (Van Dam,
2013). The tort of negligence enables a person who suffers harm or injury due to someone else’s
carelessness or inadvertence to claim for damages under the court of law.
For a duty of care to be established in a case, the three-stage test as set out in the case of Caparo
Industries plc v Dickman (1990) should be met
The claimant, who in this case is Jason, must prove the following to be entitled to damages:
1. That Sarah owed him a duty of care.
2. That there was a breach of that fundamental duty.
3. That the breach of duty caused damage or injury to Jason.
1. Whether Sarah owed any duty of care to Jason.

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Schedule 2 of the Civil Liability Act 2003 (Qld) defines the duty of care as:
“It is a duty to take reasonable care or to exercise reasonable skill”
The first element to consider in determining negligence is the duty of care. For a duty of care to
be ascertained, the requirements of proximity, foreseeability and justice, fairness and
reasonableness of any policy to be enforced should be met (Greene, 2016).
2. When is the duty of care breached?
A breach of duty will arise when the standard of a reasonable driver is not met. According to
section 9 (1) of Civil Liability Act 2003 (Qld), breach of duty arises if as in Section 9 (1) of the
Civil Liability Act 2003:
a) The defendant knew or ought to have known of the risk of injury.
b) The risk was significant.
c) That a reasonable man in such circumstances would have taken precautionary steps to
avoid the risk.
3. What are the possible defences that Sarah has in the court of law?
Sarah has the following defences against the action brought by Jason:
a) Ex turpi causa non oritur actio
The defendant cannot sue in tort when he suffers harm while engaged in illegal activity as was
held in the case of Ashton v Turner (1980). The rule developed as a matter of public policy to
disallow such claims as it would be against the public confidence.
Jason had ridden a bicycle during the night with no lights nor had he any reflective material on
the bicycle nor his clothing. It is against the law to ride a bicycle without lights and reflective
clothing as provided in the Road Traffic Act 1961.
Jason was also riding in the middle of the road instead of the sides of the road making him a
wrongdoer.
b) Contributory negligence

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This is not a complete defence. It serves to reduce the quantum of damages payable to the
claimant based on his or her share in the responsibility for the damage.
Under the common law, where a party suffers damage partly due to his or her own negligence,
the compensation available to the claimant is reduced to the extent which the court deems just
and equitable according to his or her share in the responsibility of the claim brought in court.
c) Volenti non fit injuria
This is also called consent in different contexts.
It is a voluntary agreement either express or implied by the claimant to absolve the defendant
from legal actions and assume the risk of injury of unreasonable risk of harm caused by the
defendant where the claimant has full knowledge of the risk and the extent of risk and error of
judgement of the defendant.
d) Inevitable accident
A defendant is not liable for pure accident (Turner, 2013). Pure accident means that it was
beyond the control and power of the defendant and could thus not be avoided as was held in the
case of Stanley v Powell (1891).
Conclusion
Therefore, Sarah has complete defences such as ex turpi causa non oritur actio, volenti non fit
injuria, inevitable accident and partial defence of contributory negligence. Sarah was driving
within the speed limit and paying reasonable attention when Jason was negligently riding his
bicycle in the middle of the road.

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References
Australia’s Magna Carta Institute; Rule of Law Education (2018). Case Note - QLD -
Negligence and Risk - Australia's Magna Carta Institute - Rule of Law
Education. Australia's Magna Carta Institute - Rule of Law Education. Retrieved 26
September 2019, from https://www.ruleoflaw.org.au/negligence-and-risk-qld/
Australian Competition and Consumer Commission. (2012). Warranties. Retrieved 26
September 2019, from https://www.accc.gov.au/consumers/consumer-rights-
guarantees/warranties.
Australian Consumer Law (ACL).
Civil Liability Act 2003(Qld)
Commonwealth of Australia (2013, July) Australian Consumer Law: A framework Overview.
Retrieved 26 September 2019, from
https://www.agenciabahia.com/downloads/ACL_framework_overview.pdf
Competition and Consumer Act 2010.
Greene, B. (2016). Course notes - tort law. Routledge
Grubb, B. (2018). How LG avoided consumer guarantees, and didn't break the law. The Sydney
Morning Herald. Retrieved 26 September 2019, from
https://www.smh.com.au/technology/how-lg-avoided-consumer-guarantees-and-didn-t-
break-the-law-20180629-p4zofw.html.
Road Traffic Act 1961
Turner, C. (2013). Unlocking torts. Routledge.
Van Dam, C. (2013). European tort law. OUP Oxford.