Commercial Law Report: Negligence, Consumer Law and Duty of Care

This report analyzes a commercial law case study involving negligence and consumer rights. It examines four key issues: whether a successful proceeding can be brought against Bruce, whether Hank's Distributor and Mower owe a duty of care, whether rights exist under the Australian Consumer Law (ACL), and potential defenses under the ACL. The report applies legal principles from cases like *Donoghue v Stevenson*, *Caparo Industries*, and relevant sections of the ACL to determine liabilities and rights of the involved parties. It assesses negligence based on the Caparo test and the 'but for' test, considering contributory negligence and potential damages. The analysis concludes with findings on Bruce's liability, the tortious liability of Hank's Distributor and Mower, and the applicability of ACL provisions, including potential defenses. References include key legal cases and the Competition and Consumer Act 2010.

Running head: COMMERCIAL LAW
Commercial Law
Name of Student
Name of University
Author note

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Part B
Issue
There are four issue which have been identified in relation to case study which are as follows
1. Whether carol and or Ann have the position of bringing a successful proceeding against
Bruce in relation to the provisions of common law
2. Whether Hank’s Distributor and Mower owe a duty of care towards Carol, Ann or Bruce
under the tort of negligence in common law
3. Whether Bruce, Ann or Carol has any right against Hank’s Distributor or Mower under
the provisions of Australian Consumer Law as provided through Schedule 2 of the
Australia Competition and consumer Act 2010.
4. Whether Hank’s Distributor and Mower have the right to take any defense under the
provisions of ACL
Rule
The concept of negligence had been incorporated into the Australian common law
through the case of Grant v Australian Knitting Mills. PC 21 OCT 1935. The case had used
the principles provided by the court in Donoghue v Stevenson 1932 AC 562 in relation to duty
of care. The case had given the legal world “neighbors’ principle”. According to the principle as
a person compared to a good neighbor must be careful towards his actions other persons
(neighbor) who can be affected by such actions. This means that they owe other persons a duty
of care.

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The existence of a duty of care in common law is done through the application of various
tests. One of the primary test for analyzing whether the duty exists of not is the caparo test as
provided through the landmark case of Caparo Industries pIc v Dickman [1990] 2 AC 605
House of Lords. According to the principles of this test if a person can be harmed foreseeably by
the actions of another the other person owes him a duty of care.
However to establish that there was negligence in the situation the duty of care has to be
contravened. The objective test is best applied for determining the breach of the duty of care
owed by a person. The objective test had been used in the case of Vaughan v Menlove (1837) 3
Bing. N.C. 467 where a reasonable person would have been placed in the position of the
defendant and then analyzed whether they would have taken the same decision or not which was
taken by the defendant, If the decision would involve additional care than the duty would be
deemed to be violated by the defendant.
The existence of a duty of care and a breach of duty of care alone is not capable of
establishing a tort of negligence. Whether the violation of the duty has caused the injury to the
person is also considered for the purpose of establishing negligence. The most popular test which
is applied for determining the element of causation is known as the “but for” test. The provisions
of the test have been provided in the case of Barnett v Chelsea & Kensington Hospital [1969]
1 QB 428. According to the test the injury should not have been caused of the negligent act was
not present, that is if the injury would have been caused irrespective of the negligent act there is
no claim of negligence.

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As stated in the case of Murphy v Brentwood DC [1991] AC 398 a person can only
claim damages in relation to negligence which are reasonably foreseeable in a objective manner.
The aggrieved party is not entitled to any additional damages.
Contributory negligence is a form of defense which can be taken by a wrongdoer against
the aggrieved party. According to the concept in case the injury had been caused to the plaintiff
because of his or her own negligence than the claim of damages by such person is either reduced
or totally defeated. In the case of Railways v Halley [1978] 20 ALR 409 the court held that the
damages of negligence were to be reduced as there was contributory negligence on the part of the
plaintiff.
ACL through part 3-5 provides rules in relation to the right of consumers against the
manufacturers towards product liability of dangers goods. These provisions are provided through
Section 138-150 of the ACL. The manufacturers’ and importers’ liability in relation to those
products from which safety issue may arise are dealt with by the sections. The following rights
are bestowed upon individuals who are subjected to injury by such products.
As per section 138 and 139 of the ACL any person getting injured through the use of a
product as the right to bring a claim against the manufacturer and the importer
Section 140 and 141 states that a claim against the manufacturer and the importer can be
bought by a person whose real property or goods have suffered damages due the use of such
product
Section 142 of the ACL however provides certain defenses to the importers and manufacturers.
The defense can be availed in the following situation

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 The defect did not exist when the goods were manufactured
 The defect resulted out of any legal compliance towards the standard of goods
 Any technique or scientific knowledge when the goods were manufactured was not
adequate to discover the defect.
 The product was a mixture of other products which were defective
Application
The above discussed rules have to be applied in order to determine the common law
rights of Ann and Carol against Bruce.
According to the application of the Capro test as per the Caparo case it can stated that it
was reasonably foreseeable for Bruce to known that his actions can harm those who are nearby.
Thus as per the neighbor principle Bruce owes a duty of care towards Ann and Carol. However a
reasonable person in the same situation would not have taken any additional care as he would
not now that the mower may explode. Therefore as the duty of care was not violated through the
application of the objective test it can be stated that there was no negligence on the part of Bruce
against Ann and Carole.
The second issue is in relation to determining the whether there is any negligence by the
importer and manufacturer against Bruce, Carol and Ann along with any defenses.
As per the application of the neighbor’s principle and the Capro test as provided through
Donoghue and Caparo case respectively it can be stated that the importer and manufacturer both
have a duty of care towards Bruce, Ann and Carol. This is because it is reasonable foreseeable

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for them that if a defective product is provided it can harm the users along with those who are
nearby.
A reasonable person in the same situation would have ensured that there is no defect in
the machine and thus according to the application of the objective test the duties of care have
been violated.
By applying the “But For” it can be determined that a injury to Bruce, Ann and Carol
would not have been caused if the machine was not defective. Thus were all three elements of
negligence have been established in can be said that a negligence claim is present in the
situation.
In addition the defense of contributory negligence is also not applicable in this case as
there is no fault of any party involved as provided by the case study.
The damages which can be claimed by Bruce, Ann or Carol include
Bruce: compensation for being unable to work for six months, the incurred extensive medical
expenses and cost of window replacement but not the damage of disk as it was not reasonably
foreseeable
Ann: compensation for fractured legs and severe cuts and being unable to work for three months
Carol: No compensation
The third issue is in relation to the rights of Bruce, Ann or Carol against the importer and
manufacturer under the provisions of ACL. As per section 138-141 they have the right to claim
damages for personal injury as well as any injury to property. Thus the damages which were

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provided in common law would be applicable here as well along with the loss of Eric’s data
contained in the Disk.
The possible defenses which the importer and manufacturer may rely on in the situation
are provided in section 142. However as per the facts of the case study none of the defenses can
be successfully availed by the importer or the manufacturer.
Conclusion
Thus it can be concluded that
1. Bruce has no liability against Ann and Carol under the provisions of common law
2. Hank’s, Distributor and Mower have tortuous liability against Ann, Bruce and Carol as
per the provisions of negligence in common law and they cannot avail any defense.
3. Ann, Bruce or Carol have the right to claim compensation in accordance to section 138 to
141 of the ACL
4. The defenses under section 142 are not applicable in this case

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References
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