Commercial Law 1 Case Study: Rights and Liabilities Analysis

This document is a comprehensive analysis of a commercial law case study, focusing on the legal principles of negligence and duty of care within the Australian Common Law framework. The case involves assessing the rights and liabilities of various parties, including individuals and companies, in a scenario where a defective product causes harm. The analysis applies legal tests such as the Caparo test and the 'but for' test to determine breaches of duty and establish causation. The assignment also examines consumer rights against manufacturers and importers under the Australian Consumer Law (ACL), specifically sections 138-150. It concludes by determining the liability of each party and the available defenses, with references to relevant case law and legislation. The solution provides a detailed application of legal principles to the facts of the case, offering a clear understanding of the legal outcomes.

Running Head: COMMERCIAL LAW
Commercial law
Name of the student:
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Author Note

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Part B
Issue:
Four issues have been identified in this chosen case study. They are:
 Does Ann or Carol have the right to bring proceedings against Bruce according to the
provisions stated in the common law?
 Did Hank’s distributor and Mower owed a duty of care to An, Bruce or Carol under
negligence in common law
 Does Bruce, Ann or Carol have any right against Mowers Ltd or Hank’s Distributor Ltd?
 Do Hank’s Distributors Ltd. and Mower Ltd. have the right to take defense against the
charges brought against them?
Rule
It is to be mentioned that the provisions of negligence has been incorporated in to the
Australian Common Law in the remarkable case Grant v Australian Knitting Mills. PC 21
OCT 1935. The aforementioned case used the principles of the former Donoghue v Stevenson
1932 AC 562 which is a remarkable case dealing with the provisions of the Duty of Care and the
Neighbor principle. The Neighbor Principle as illustrated in this case states that a person is
compared to a good neighbor and such person has to be careful in conducting his actions towards
other people which can have adverse effects on people. According to this principle every person
has the duty of care to their neighbors.
To identify and establish duty of care in Common law, the actions of individuals are put
through several tests. It is to be stated that the primary test used by the courts to analyze Duty of

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care is the Caparo test as provided in the Caparo Industries pIc v Dickman [1990] 2 AC 605
landmark case. This test tries to identify if the actions of one person could forseeably harm
others. If so, then the former person owes a duty of care to the latter.
To establish negligence in a case it has to be proved that one of the parties failed to take
duty of care. To determine breach of duty of care, the objectives test is applied. The objective
test was first used in the remarkable case Vaughan v Menlove (1837) 3 Bing. N.C. 467. In this
case it was held that a reasonable person would be placed in the same situation as the defendant
to analyze whether he would have acted in the same way as the defendant and would have taken
the same decision. If it can be established that reasonable person would have taken additional
care in fulfilling the duty as imposed upon the defendant, it would be considered that the
defendant’s action constituted breach of duty of care.
It is also to be established that the breach of duty of care by the defendant was the
primary reason for the injury sustained by the victim. The important test to identify causation of
damage is the ‘but for’ test. The test was first applied in the case Barnett v Chelsea &
Kensington Hospital [1969] 1 QB 428. The ‘but for’ test is applied to assess whether the injury
or damage sustained by the claimant would have been caused irrespective of the action of the
defendant and whether negligence on the part of the defendant was primarily responsible for
such injury sustained.
In the case Murphy v Brentwood DC [1991] AC 398, it was held that damages can be
claimed for negligence if such damage is reasonably foreseeable.
However the defendant facing charges of negligence can claim contributory negligence
as a ground of partial defense. Contributory negligence states that the injury sustained by the

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plaintiff can be caused due to his/her own negligence and therefore the damages claimed from
the defendant is significantly reduced as held in the case Railways v Halley [1978] 20 ALR 409.
Part 3-5 of the Australia Common Law governs the rules related to consumers’ rights
against manufacturer of danger goods. Section 138-150 states the aforementioned provisions.
The importers and manufacturers have liability for the products which are considered to be
dangerous and from which safety issues may arise.
According to section 138 and139 of the ACL it can be said that any person who sustains
an injury by using a product has the right to claim damages against manufacturers and importers
of such products.
Section-140 and 141 states that any person whose property has sustained damages by the
use of any product, has the right to claim damages from manufacturers and importers of such
products.
According to section 142 of the ACL there are certain defenses available to such
manufacturers and importers. They are available in the following situations:
 When there was no defect in the goods manufactured
 The defect arose from legal compliance with the standard of goods
 The product was defective as it was a mixture of other products
 When there was no scientific technique available to test the product after they were
manufactured.

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Application
The principles and provisions as discussed above are to be applied in this case study to
determine the rights of Carol and Ann in bringing legal actions against Bruce.
The Caparo test is to be applied in this scenario. It can be stated that it was reasonably
foreseeable for Bruce to understand that the actions of Bruce could harm the neighbors. Thus it
can be established that Bruce had a duty of care to the Carol and Ann by the application of the
neighbor principle as discussed above. However further it can be stated that any reasonable
person placed in the same position as Bruce could not have taken additional care to prevent such
damage sustained. Therefore it can be established, there was no breach of duty of care on the part
of Bruce by the application of the objective test as discussed above.
The next issue is to determine whether there was negligence on the part of the importer
and manufacturer which affected Bruce, Ann and Carol.
According to the Caparo test and Neighbor principle as discussed above in the Caparo
and Donoghue case it can be said that manufacturer as well as the importer has a duty of care to
Bruce, Carol and Ann. It can be said that it is reasonable foreseeable that a defective product is
likely to cause harm to all individuals nearby.
A reasonable person would have ensured that no defect exits in the product and thus by
the application of the objective test it can be said that duty of care had been breached.
According to the ‘but for’ test it can be said that the aggrieved parties would not have
sustained the damages if the machine was not defective. Thus all three elements of negligence
have been established in this case.

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Provision of Contributory negligence is not applicable in this case as there was no fault of the
parties. In this case the following parties can claim damages and for the reasons enumerated
below:
 Bruce- for the medical expenses, cost of window replacement, and not being able to work
for six months
 Ann- medical expense and for not being able to work for three months
The aggrieved parties can claim compensation from the manufacturer and importer for
the injury sustained according to section 138-141 of the ACL. The damages would also include
loss of Eric’s data in the hard disk.
The manufacturers and importers in this case will have no successful defenses.
Conclusion
Thus to conclude it can be said:
 Bruce has no liability against Carol and Ann
 Hank’s Mowers and Distributors have incurred tortuous liability
 Bruce, Carol and Ann have the right to claim compensation
 There are no defenses available to Hank Distributors Ltd. and Mowers Ltd.

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Reference List:
Railways v Halley [1978] 20 ALR 409
Murphy v Brentwood DC [1991] AC 398
Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428
Vaughan v Menlove (1837) 3 Bing. N.C. 467
Caparo Industries pIc v Dickman [1990] 2 AC 605
Donoghue v Stevenson 1932 AC 562
Competition and Consumer Act, 2010
Grant v Australian Knitting Mills. PC 21 OCT 1935

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