Business Law Assignment: MacTools Ltd Case - Legal Position Advice

This business law assignment analyzes a case involving MacTools Ltd, whose power drill caused an explosion, leading to injuries and property damage. The assignment focuses on the tort of negligence, specifically duty of care, breach of duty, and incurred damages. It examines the company's responsibility to provide safe products, referencing cases like Donoghue v Stevenson and Bolton v Stone. The analysis considers contributory negligence, as Aurora, the neighbor, did not wear safety goggles, and the application of the eggshell rule to Jessie's shattered vase. The conclusion finds MacTools Ltd liable due to breach of duty, while Aurora's claim is subject to contributory negligence. Jessie is unlikely to recover damages under the eggshell rule. The assignment utilizes case laws such as Maureen Townsend v Phillip O’Donnell and Nader v Urban Transit Authority of NSW to support its arguments and provides a comprehensive legal analysis of the situation.

Business Law Assignment
Student Id:

BUSINESS LAW ASSIGNMENT
Issue
The central issue in the case is to advice MacTools Ltd about their legal position for the given
scenarios where their drill machine has caused severe explosion and losses.
 Loss of one eye of Aurora
 Shattering of glass vase of Jessie which has a worth of $1000
Law
Tort of negligence would be taken into consideration when the highlighted conditions are present
(Edlin, 2007).
 Existence of duty to care
 Breach of duty
 Incurred damages due to the breach of duty
As per the decision given in Donoghue vs Stevenson 1932 AC 522 case, any manufacturing
company who makes and offers their product to customers has duty to care towards their
customers. It means the company has duty to care to provide merchantable product to the
customers with proper detailed instruction and inbuilt safety measures. This is because any fault
or defect in the product can harm the customers and can result in significant losses. Hence, it is
pivotal responsibility of the company to provide the right product to the customers in regards to
prevent any potential loss to customers. Further, if any additional information regarding the
product is required, then it is essential that company must inform the customer about the same
(Gibson and Fraser, 2014).
When the company does not take requisite measures and provides faulty products to the
customers, then it has assumed that company breaches their duty to care. The verdict given in
Bolton v Stone [1951] AC 850 case is the evidence of this aspect. The level of duty to care is
dependent on several factors which are as highlighted below (Davenport and Parker, 2014).
 Possibility to being injured
 Nature of injury incurred to the customer
 Risk associated with the damage
Student Name & Id Page 1

BUSINESS LAW ASSIGNMENT
The person who has suffered due to the breach of duty is termed as plaintiff and the company
which has breached their duty to care is termed as defendant. Plaintiff has the legal rights to
claim for the damages from defendant or to sue the defendant for breaching of duty. However, it
is essential that plaintiff has sufficient evidences to prove the damages on the account of breach
of duty. It is because the honorable court would take a note of duty to care, breach of duty and
incurred damages before announcing the judgment (Gibson and Fraser, 2014).
It is noteworthy that if the incurred damages can be prevented by any type of measures that could
be taken by the plaintiff, then in such cases the plaintiff cannot claim for the damages. Moreover,
as per tort of negligence only foreseeable damages would be taken into consideration. In this
scenario, egg shell rule would be an imperative aspect which limits the obligation of the
defendant in case of any initial damages incurred on the plaintiff. Nader v Urban Transit
Authority of NSW (1985) 2 NSWLR 501 case is the witness of this aspect (Lindgren, 2011).
When the plaintiff does not take necessary steps to prevent the possibility of any harm, then the
incurred injury or harm would be called under contributory negligence. In this case, the plaintiff
is liable to claim for damages from defendant based on his/her contribution for the injury as
highlighted in the judgment given in Maureen Townsend v Phillip O’Donnell [2016] NSWCA
288 case (Harvey, 2009).
Application
It is apparent from the given facts that Mulan has purchased a power drill from MacTools Ltd. It
indicates that duty to care is applicable here on MacTools Ltd to their customer Mulan. He does
not use it and without unboxing, he has extended this drill to his neighbor Aurora. Also, it has
been mentioned in the safety warning that the machine should not be used without wearing
protective goggles. It can be seen that as the product is extended to Aurora and therefore, the
duty to care of the company would also be extended to Aurora. Aurora does not read the safety
instructions and she does not wear safety goggles. Also, she has used the drill machine for about
ten minutes. In between of using the machine, the drill machine catches fire and as a result of this
drill machine result explosion. It is apparent from the case study that MacTools Ltd was aware
that if the power drill machine is used for more than 5 minute at a stretch, than it can catch fire
Student Name & Id Page 2

BUSINESS LAW ASSIGNMENT
and can result in severe explosion. However, MacTools Ltd does not inform this to customer
Mulan because the recall of the machine would result in a cost $500,000. It can be said that it is
duty of MacTools to inform the customers that the threshold limit to use the machine is five
minute but they did not inform it and hence, it results in breach of duty. Aurora has lost her one
eye due this explosion. It would be fair to conclude that due to breach of duty to care on the part
of MacTools Ltd, Aurora has lost her eye but she also contributed in the injury because if she
used the safety goggles, then there is a possibility that she would not have damaged her eye.
Hence, she can claim for damages but the amount would be decided after taking the note of
contributory negligence of Aurora. Additionally, the electric power supply has been interrupted
and power goes off for some time due to this fault in the drill machine and explosion. Jessie is a
glass vase maker who has been making a vase with worth of $1,000 gets disturbed due to this
sudden power off. Also, the vase was shattered. This is the case of egg shell rule and would not
be termed as initial harm and hence, Jessie would not liable to claim for any damages.
Conclusion
It can be concluded based on the above analysis that MacTools Ltd has duty to care towards their
customers. However, company does not inform regarding the fault in the machine and hence, the
explosion incurred. Further, Aurora’s loss of eye would be come under the contributory
negligence because she does not wear safety goggles which have been mentioned in the safety
warning sheet. Therefore, she can claim for the damages from MacTools but the compensation
amount would be dependent based on level of contributory negligence. Also, Jessie cannot
recover any amount from MacTools Ltd because the loss (shattered) of vase is not considered as
the initial injury as per the provisions of egg shell rule.
Student Name & Id Page 3

BUSINESS LAW ASSIGNMENT
Reference
Books
Davenport, S. and Parker, D. (2014). Business Law in Australia, 2nd ed, Sydney: LexisNexis
Publications.
Edlin, D. (2007). Common law theory, 4th ed, Cambridge: University Press Cambridge.
Gibson, A. and Fraser, D. (2014). Business Law, 8th ed, Sydney: Pearson Publications.
Harvey, C. (2009). Foundations of Australian law, 2nd ed, Prahran, Vic.: Tilde University Press.
Lindgren, KE. (2011). Vermeesch and Lindgren's Business Law of Australia, 12th ed, Sydney:
LexisNexis Publications.
Case Laws:
Bolton v Stone [1951] AC 850
Donoghue vs Stevenson 1932 AC 522
Maureen Townsend v Phillip O’Donnell [2016] NSWCA 288
Nader v Urban Transit Authority of NSW (1985) 2 NSWLR 501
Student Name & Id Page 4