Company Law: Analyzing Consumer Rights and Manufacturer Liability

This case study analyzes a company law scenario involving a food product (melons) sold by R'Us that caused harm to consumers due to bacterial contamination. The assignment examines the application of the Australian Consumer Law (ACL), specifically focusing on consumer guarantees related to acceptable quality, fitness for purpose, and manufacturer liability. It discusses the rights of consumers, including the ability to seek compensation for damages, medical expenses, and consequential losses. The analysis references relevant sections of the ACL (Sections 54, 7, 9, 138, 260, and 261), and legal precedents, such as Bartlett v Weatherill and Grant v Australian Knitting Mills. Additionally, the case touches upon common law remedies like breach of contract and negligence, emphasizing the manufacturer's responsibility to ensure product safety. The conclusion highlights the potential liability of R'Us to compensate the affected consumers, Jocelyn and Arjun, for their incurred damages.

Running head: COMPANY LAW
Company Law
Name of the Student
Name of the University
Author Note

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Answer 1
ISSUE
Can Jocelyn sue R’Us
RULE
There is a significant difference in the bargaining power of the sellers and consumers. The
parliament has enacted consumer protection laws to provide protection to the consumer. They
have been provided with consumer guarantees under the provisions of the Australian Consumer
Law. The law is a part of Schedule 2 of the Australian Competition and Consumer Act 2010
(Cth). The consumer guarantees includes providing in the course of trade and commerce goods
which are of an acceptable quality, goods should match description and goods should be fit for
the purpose which have been disclosed by the consumer at the time of purchase. These
guarantees are provided through part 3-2 division 1 of the ACL. However consumer guarantees
are not applicable of goods which have been sold via an auction.
A person is only to be considered as a consumer where the goods or services have been procured
in the course of trade and commerce, the price which has been paid to procure such goods
$40000 or below and the purpose of the goods purchased are for household and domestic
consumption. The goods which have been purchased to be resupplied or to manufacture other
goods do not form a part of the consumer law.
Further section 54 of the ACL provides that goods have to be of a quality which can be expected
by a reasonable consumer. It has been provided through the section that the goods are of an
acceptable quality of not depends upon their appearance, durability and safety in terms of used.

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Where the consumer guarantees are violated by a manufacturer or a seller the consumer has
remedy under section 260 and 261 of the ACL. The remedy under section 260 provides for major
defects and remedy under section 261 applies minor defects. Under section 260 the consumer
has the right to reject the goods and claim damages from the supplier. In Bartlett v Weatherill
[2017] NSWSC 31 the court ruled that the consumers have to be compensated for consequential
losses incurred through the use of goods supplied in trade and commerce.
Application
The situation in hand provides that the inured party, Jocelyn has indulged into the purchase of
Melons form the seller hereby referred to as R’Us. The melons in context had been infected by a
bacteria which is not safe for human consumption. The injured parties have consumed the
melons and have suffered significant distress from which she had to be hospitalized.
As discussed above section 54 of the ACL provide that goods have to be of a quality which can
be expected by a reasonable consumer. It has been provided through the section that the goods
are of an acceptable quality of not depends upon their appearance, durability and safety in terms
of used. The case study on the other hand provides that the melons were not of an acceptable
quality as they have been infected by bacteria. Any reasonable consumer will not expect that the
melons to be infected with virus. Thus the guarantees as provided by section 54 under part 3-2
division 1 of the ACL have been violated. The Injured party had to incur cost relating to caring
services and hospital bills.
Conclusion
Thus she has to be compensated through section 260 of the ACL and Bartlett v Weatherill by
R’Us.

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Answer 2
Issue
Can Arjun sue R’Us
Rule
A manufacturer can be made liable for any loss which has been incurred by the consumer
through the application for part 3-5 of the ACL. The claim can be made by the manufacturer
under where there has been any concern relating to the breach of consumer guarantees and safety
of goods. The consumer can make a claim for a damage or loss which he or she have borne by
using a defective product which had been supplied by the manufacturer in the course of trade and
commerce.
A manufacturer has been defined through the ACL under section 7. The section states that any
person who has actually produced the goods in context, and or they have provided express or
implied consent to any person to address them as manufactures and or they have represented that
they are the actual manufacturers.
The definition of defective goods in terms of safety is provided via the rules in section 9 of the
ACL. It has been stated under the rules of this section that any defect which a reasonable person
will not expect to be present in the goods in terms of safety, if actually present in the product
makes such product defective. In addition defects in relation to a product may also be present in
terms of the way of packaging, safety warnings, any signs used in the product, the general reason
for which the product is used and purpose for which the product has been purchased under
section 9(2) of the ACL. Where the goods are found to be defective under the section the

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purchaser can make a claim under the provisions of section 138 of the ACL which applies to
provide compensation to the injured party for any loss incurred.
Application
Arjun has also purchased and consumed the melons. Thus it can be stated that melons in contexts
were defective goods under the provisions of section 9 of the ACL. This can be said at a
reasonable consumer will not have an expectation that the melons have a bacteria. In addition
R’Us are manufactures of the melons as they have produced the melons under the provisions of
section 7 of the ACL. Where the provisions of section 9 have been violated any person affected
can make a claim from manufacturers under section138. In this situation Arjun has been
subjected to medical treatment because of the consuming the melons. He has borne the expenses
off medicines and is thus has the right to make a claim against such expenses from R’Us.
Conclusion
R’Us would have to compensate him for the expenses incurred as they were the manufactures of
the melons which have caused damages.
Answer 3
Along with the ACL which is a statutory law there are also common law remedies which are
applicable in relation to the provided scenario.
One of such remedies relates to contract law. It has been provided through the case of Taylor v
Caldwell (1863) 3 B & S 826 that there are two types of terms in a contract which are expressed
and implied terms. Implied terms are made a part of the contract to ensure that it has business
efficacy or can be carried out properly. These terms are necessary and obvious. In the situation in

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hand it is an implied terms that the melons would be safe to consume and where they were not
the terms have been breached signifying a breach of contract.
In the case of Grant v Australian Knitting Mills [1935] UKPC 62 the court stated that any person
who has purchased a product can make the manufacturer liable if they have an injury by suing
the product. Thus rule is that of negligence. Thus in this case R’Us being the manufactures have
to compensate Arjun and Jocelyn for their losses.

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Law list
Australian Competition and Consumer Act 2010 (Cth)
Grant v Australian Knitting Mills [1935] UKPC 62
Taylor v Caldwell (1863) 3 B & S 826
Bartlett v Weatherill [2017] NSWSC 31