Federation University BULAW5914 Commercial Law Assignment, Semester 1

This assignment analyzes the legal issues of product liability, negligence, and consumer guarantees within the context of Australian commercial law. The first question addresses the rights of Priya and Rahul to sue under the tort of negligence, focusing on the manufacturer's duty of care for defective products and the limitations of negligence claims. It examines the elements needed to establish negligence, including the failure to exercise reasonable care in manufacturing, design, testing, and warnings. The second question delves into the liability provisions of the Australian Consumer Law (ACL), defining manufacturers, safety defects, and consumer guarantees. It outlines the factors considered in determining a safety defect, the obligations of businesses and manufacturers to provide consumer guarantees, and the remedies available to consumers for breaches of these guarantees, including repair, replacement, or refund. The assignment uses the scenario of a defective cot, 'Sleep Sound,' to illustrate the application of these legal principles and the responsibilities of both the manufacturer and the retailer, Baby’s R Us, under the ACL.

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Student Name:
Date:
Institution:

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Question 1
In this question, the issue is related with rights that are available to Priya and Rahul to sue under
the tort of negligence.
When a claim has been initiated, the negligence rests on the assumption that the manufacturer of
the product has a duty of care to all who are reasonably estimated to use such a product. The law
mentions that regarding dangerous products, for example, the products which, if found defective
may result in extensive harm, duty of care exists in favor of any person who may be rationally
impacted by the presence of the defect in such a product. The result of this position of law is that
a claim that has been initiated under negligence is not restricted to the doctrine of privity of
contract. As per this doctrine, it has been provided that only a party to the contract is allowed by
the law to sue under such a contract. However, the law provides that a claim can be brought by
the purchaser or the consumer of the product, any using the product or a third-party spectator
who has underwent hurt due to using the product (Bruce, 2011).
For the purpose of bringing a successful claim under negligence and to establish the negligence
of the manufacturer, the following points need to be established:
There should be a failure on the part of the manufacturer to exercise care during the process of
manufacturing due to which there was a defect present in the particular product.
There was a failure of exercising care what redesigning the product. This includes the failure to
carry out extensive research.

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There is a failure to carry effective tests;
There is a failure to provide an effective warning regarding the dangers associated with the
product;
There is a failure to recall a product or to issue submission warning if the danger has become
apparent after the product was put into circulation.
In this context, it is worth mentioning that responsibility in such cases is not restricted to the
manufacturer. Therefore the parties who have delivered the constituents of the product or who
had dispersed the product can also be held responsible if it can be established that there are
certain negligence present on part of these parties (Corones and Philip, 2008).
Limitations: although the significance of liability under negligence cannot be undermined but
there are certain limitations that may restrict the effectiveness of the doctrine in case of the
claims related with product liability. Therefore the negligence can be held responsible only if it
can be proved by the victim that the manufacturer had failed to take reasonable care. This is a
difficult requirement and may prove to be expensive. Another difficulty that is present in this
regard on part of the claimant is the requirement related with establishing a casual link among
defendant’s negligence and the damage or loss (Corones, 2011).
Due to the reason that the litigation is brought under common-law negligence, the manufacturer
is allowed to depend on general defenses that are accessible under tort. For instance, it may be

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claimed by the manufacturer that in a particular case, the partial defense of contributory
negligence is available if it established that the claimant had ignored warnings or had misused
the product or continue to use the product even after the danger became apparent (Englard,
1993). Another restriction, that is present in case of the action under negligence is that, even in
damages can be granted for the personal injury or the damage caused to the property but
generally damages are not awarded for purely economic loss (Garber, 2013).
There are some cases, mainly related to manufacturing defects, where the damaged party may be
permitted to depend on the doctrine of 'res ipsa loquitur'. The meaning is that no explanation,
apart from negligence can be the case. If such doctrine is applicable, it is the responsibility of the
manufactured to prove that reasonable care was taken. However, in such cases, it becomes
difficult for the manufacturer to avoid responsibility unless the manufacturer is in a position to
establish how the defect has taken place (Golding and Edmundson eds., 2005). At the same time,
the manufacturer will also be under an obligation to show how it had taken reasonable care for
establishing a safe system of production for the purpose of avoiding any defects and also to
reveal that the employees who have the responsibility of implementing the system exercised
reasonable care to do so.
In the present case, Priya and Rahul purchase the cot named 'Sleep Sound' because it was more
portable and was easy to assemble and disassemble. However on the first night they found that
after sometimes sound sleep had collapsed and folded. Their child Aaru was trapped inside, and
she was crying. She did not suffer any physical injuries, but she was treated for shock at the
hospital. Under the circumstances, it can be said that Priya and Rahul can bring action against
Baby’s R Us under the tort of negligence.

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Question 2
The liability provisions of the Australian Consumer Law (ACL) are generally applicable in case
of the manufacturers who have supplied consumer goods. In context of trade or commerce. In
this regard, a manufacturer can be described as a company that:
Has made all assembled the goods;
Imported the goods (in case the maker of the goods does not have any office in Australia);
Uses its own brand name regarding the goods:
Promotes itself as the manufacture of the goods among the public:
Allows any other person who promotes the goods as being manufactured by the company.
It can be stated that a safety defect is present in the product if the product fails to meet the level
of safety that the people are generally entitled to expect. However, it needs to be mentioned is
that the expected level of safety is different in various cases and it is ultimately for the court to
decide if a safety defect is present in a product or not (Hershovitz, 2014). Interesting that there
are a number of factors that have to be considered by the court while deciding if a safety defect is
present in the product or not. These factors include:
The packaging of the product
The purpose of marketing the product
The use of any market related with the product
The instructions and warnings that have been given regarding the assembly and use of product
The time of the supply of the product
What can be reasonably expected to be done with the product

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It needs to be noted that the ACL requires that southmost of the consumer goods and services,
consumer guarantees should be provided by the businesses.
In this regard, consumer guarantees are a set of rules that apply regarding goods and services that
have been bought by the consumers under the ACL. These rules prescribed the conditions
according to which, a business is under an obligation to provide a remedy to the consumers
(Jackson, 2012). The consumer guarantees are applicable automatically irrespective of any
voluntary or extended warranty provided by the seller or the manufacture of the goods or in cases
where the warranty has expired (Malbon and Nottage eds., 2013).
The ACL provides a definition of the term consumer. If a person or business can be considered
as a consumer if it has purchased boards or services less than $40,000; the price of goods or
services is more than $40,000, but they are of the nature that are generally required for domestic
purposes; or the goods are commercial Road vehicle mainly used for transporting goods on
public roads.
The businesses that provide goods or services to the customers are required to abide by the
consumer guarantees. Simultaneously the manufacturers and importers are also under an
obligation to abide by consumer guarantees (Jeff, 2010). Therefore it is necessary that again they
should be given by the manufacturers and importers that the goods are of acceptable quality;
goods have been described accurately; goods satisfy the express warranty provided by the
manufacture and spare parts or repair facilities are reasonably available, unless the consumer has
been advised otherwise (Arenson, 1994).
Failure to meet consumer guarantees: in case the manufacturer or the seller has sold a product to
the consumer that fails to fulfill one or more consumer guarantees, the consumer is permitted to

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seek remedy. This remedy can be present in form of repair, replacement or refund and at the
same time. Compensation also needs to be provided for any consequential loss, that has to be
decided on the basis of circumstances of each case (Body, 2012). Generally, when there is a
minor problem, the seller can decide if to remedy the problem by replacement, refund or repair.
If the seller had decided to repair the product but it takes too long, the consumer may ask
someone else to fix the problem and then ask the seller to pay reasonable costs. On the other
hand, the customer may discard the goods and get full repayment or replace the product (Carter,
2010). On the other hand, if the problem is major and not capable of being fixed, the consumer
may decide to (i). Reject the goods and demand full refund or replacement; or (ii) retain the
goods and ask for reimbursement for decrease in worth (Corones, 2011).
It can be said that a major problem is present better product when there is a problem in the
product. That would have prevented some other person from buying the product if they knew
about it; or if the product is considerably dissimilar to sample; or if the product is considerably
unfit for the general purpose, and it cannot be easily repaired in rational time; or if the product
doesn't do what they consumer asked for and it cannot be fixed easily; or , if the product is
unsafe (Duschesne, 2015).
It has also been seen that in a number of cases the affected consumer brings a claim against a
supplier even if the failure to abide with the consumer guarantee can be attributed to the
manufacture. Doing so particularly makes sense, because in a number of cases, the consumer is
not aware of the identity of the manufacture. However, the law provides that when a supplier has
been held responsible for the breach of a consumer guarantee as against the manufacture, such
supplier has the right of indemnification from the manufacture, which allows the supplier to

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recover the loss provided the consumer guarantee preached is (i) of acceptable quality; (ii),
fitness for disclosed purpose; or (iii) supply by description.
Under these circumstances, it can be said that the remedies provided by Part 3-5 of the ACL
related with the breach of consumer guarantees when they purchased Sound Sleep Cot from the
retail store, Baby’s R Us. The product turns out to be defective and the manufacturer of the
product Lars Aaberg, does not have an office in Australia. Therefore Baby’s R Us is liable to
Priya and Rahul for the breach of statutory guarantees.

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References
Arenson, K. J. (1994). ‘The Evolution of Products Liability in Australia: a Critical Analysis’, 2
Trade Practices Law Journal 4
Body, D, (2012). ‘Product Liability Claims under the Consumer Protection Act 1987: Some
Practical Problems’ Journal of Personal injury Law 79
Bruce, A. (2011). Consumer Protection Law in Australia: LexisNexis Butterworths
Carter, JW. (2010) ‘The Commercial Side of Australian Consumer Protection Law’ 26 Journal
of Contract Law 221
Corones, S. (2011) ‘Getting What They Paid For: Consumer Guarantees and Extended
Warranties’, 39 Australian Business Law Review 331
Corones, S. (2011). The Australian Consumer Law, Thomas Reuters
Corones, S. and Philip H C. (2008). Consumer Protection and Product Liability Law:
Commentary and Materials 3rd ed., Lawbook Co.
Duschesne, C. (2015) ‘Consideration of what Constitutes a “Defective” Product under the
Consumer Protection Act 1987’, 26(1) Australian Product Liability Reporter 4
Englard, I. (1993). The Philosophy of Tort Law: Ashgate Publishing Group
Garber, S. (2013). Economic Effects of Product Liability and Other Litigation Involving the
Safety and Effectiveness of Pharmaceuticals: RAND Institute for Civil Justice

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Golding, M. and W. A Edmundson (eds) (2005). The Blackwell Guide to the Philosophy of law
and Legal Theory (Blackwell Publishing
Hershovitz, S. (2014) ‘Tort as a Substitute for Revenge’ in John Oberdiek (ed) Philosophical
Foundations of the Law of Torts: Oxford University Press, 89
Jackson, E. (2012). Law and the Regulation of Medicines: Hart Publishing
Jeff, H. (2010). ‘Products Liability’ in Ian Kennedy, Andrew Grubb, Judith Laing and Jean
McHale (ed) Principles of Medical Law 3rd ed., Oxford University Press, 967
Malbon, J. and L. Nottage, (eds) (2013). Consumer Law and Policy in Australia and New
Zealand (Federation Press