Commercial Law Assignment - Consumer Law, Negligence, and Legal Risks

This Commercial Law assignment analyzes three scenarios related to consumer law and negligence. The first scenario examines whether a consumer, Jocelyn, is entitled to compensation after consuming contaminated melons, focusing on the application of Australian Consumer Law (ACL) sections 51-59, particularly section 54 on acceptable quality, and the precedent set by I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd. The second scenario assesses Arjun's right to financial assistance from the manufacturer, Melons’ R’U, after falling ill from the melons, referencing ACL sections 7, 9, and 138, and the case of COOK V PASMINCO LTD. The third part identifies legal risks for Melons’ R’U, including negligence (Donoghue v Stevenson) and breach of implied terms (The Moorcock), due to the sale of contaminated products. The assignment concludes that Jocelyn and Arjun can claim compensation and that Melons’ R’U faces potential legal liabilities.

Running Head: COMMERCIAL LAW
COMMERCIAL LAW
Name of the student:
Name of the University:
Author Note

1
COMMERCIAL LAW
Question One
Issue
In relation to the given scenario the issue that has been identified as whether Jocelyn is
entitled to receive financial compensation or assistance.
Law
In this given scenario the Australian consumer law which has been provided in schedule 2 of
the competition and consumer act of Australia is relevant. Section 51 to 59 of the Australian
consumer law deals with the consumer guarantees. It can be stated that in section 54 of the
Australian consumer law it has been provided that when a person supplies goods in trade or
commerce or by way of sale buy auction he has to ensure that the goods delivered are of
acceptable quality. It is in for the provided in this section that Goods will be considered to
be of acceptable quality if it is fit for the purposes for which goats are supplied, acceptable in
appearance, defect free, durable and safe.
Section 260 of the ACL discusses what constitutes a major failure to comply with the
consumer guarantees. Section 251 of the ACL clearly states that a person who is a consumer
has the right to claim replacement repaired or refund for products, which majorly failed to
comply with the consumer guarantee. It is worth mentioning that in addition to remedies for
major and minor failure of complying with consumer guarantees consumers also have the
right to recover and claim damages suffered by the consumer for the failure of the goods to
comply with the consumer guarantees. Such damages can only be claimed if the damage
sustained by the consumer was reasonably foreseeable to the supplier. In the notable case I &
L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd the High court of Australia had held
that the claimant had the right to claim whole of damage as the damage suffered was due to a
breach of material cause.
Application
In this given scenario it has been clearly provide that Jocelyn had to be hospitalized after
consumption of melon from R’Us melons as the melons contained a certain strain of
poisonous bacteria. Jocelyn was pregnant at the time she consumed the melon. Thus it can be
established that the melons were not of acceptable quality as per the provisions of section.
Therefore contravention of section 54 can be established. She had to pay the hospital bills.
Therefore she is entitled to claim compensation for suffering consequential loss after the

2
COMMERCIAL LAW
consumption of the melons as per the provisions of the case I & L Securities Pty Ltd v HTW
Valuers (Brisbane) Pty Ltd.
Conclusion
Jocelyn can claim compensation for sustaining consequential loss after consumption of the
melons.
Question 2
Issue:
What financial assistance or compensation is Arjun entitled to get
Law:
In relation to part 3-5 of ACL it can be stated that a consumer has the legal rights to make
claims against the manufacturer and the supplier for failing to comply with the standards of
health and safety.
The definition of a manufacturer has been provided in section 7 of the Australian Consumer
Law. This section defines manufacturer a person who manufactures goods or represents
himself as a manufacturer or allows others to know him as the manufacturer.
In accordance with section 138 of the ACL it can be stated that a manufacturer has the
obligation to pay compensation if any defect exists in the product manufactured by the
manufacturer.
In the notable Australian case COOK V PASMINCO LTD (No 2) - [2000] FCA 1819 it had
been held that a key test was required to asses whether defect that had been pointed out by the
manufacturer is in relation to the product. Such test is based on the expectation and
knowledge of the community as opposed to the knowledge and expectation of the consumer
in consideration.
In accordance with section 9 of the ACL it can be stated that goods are to be considered to be
having a safety defect if the safety of the goods is not such as expected by the persons.
Specifically as provided in section 9(2) of the ACL it can be stated that goods are to be
considered to be defective if the defect is in relation to the marketing or packaging of the
product.
Application

3
COMMERCIAL LAW
It has been provided through the facts of the second scenario that Arjun had consumed the
melons from the supplier from Yummy Stuff in Victoria subsequent to which he had fallen
ill.. The melons had been delivered to Yummy Stuff by Melons’ R’U. Therefore in this case
Melons’ R’U can be treated as the manufacturer of the melons in accordance with section 7
of the ACL. It can be stated that the Melons had safety defect in accordance with the
provisions of section 9 of the ACL. Thus in relation to the provisions of section 138 of the
ACL it can be stated that Melons’ R’U is liable to pay compensation to Arjun for the loss
suffered by him. The loss is in relation to the purchase of medication and the loss of salary.
Conclusion
Thus to conclude it can be stated that Melons’ R’U is liable to pay compensation Arjun.
Question 3
Issue:
In this given scenario the issue that can be identified is what the two major areas of legal risk
likely to be faced by the Melons’ R’U.
Law:
The first legal risk which is associated with the provisions of common law that is relevant in
this scenario is the principle of Negligence. The principle of Negligence had first been
established in the notable case Donoghue v Stevenson (1932). In this case it had been held by
Lord Atkin that a person will incur liability if another person suffers a detriment in relation to
health or economic condition due to the negligence of the former person. The neighbor
principle had been established in this case. Neighbor principle states that it is the duty of
person to prevent any loss or injury likely to be sustained by the neighbor of the person due
his negligent acts.
The second legal risk relevant to this scenario is the provision implied term. In the case The
Moorcock (1889) the court held that a term can be implied or inserted in a contract if it is
assessed that incorporation of such a term is necessary to give efficacy to the contract. An
implied term is one without which the contract is impossible to be performed.
Application
Thus it has been provided through the facts of the given scenario that Melons’ R’U had been
negligent in delivering melons which was infested with bacteria. Jocelyn and Arjun sustained

4
COMMERCIAL LAW
damages by consumption of such melons. Therefore, they can claim damages from Melons’
R’U
Secondly it can be assessed by the court there was implied term of delivering the melons
which are safe to consume. However the melons were infested by bacteria and therefore there
had been breach of such implied term due to which Jocelyn and Arjun fell ill.
Conclusion
Thus to conclude it can be said that the two possible legal risks which are associated with
common law and which are likely to be faced by Melons’ R’U are:
 Breach of implied term
 Negligence

5
COMMERCIAL LAW