Analysis of Consumer Law: Guarantees, Liability, and Compensation

This case study analyzes two scenarios related to consumer rights and manufacturer liability under Australian Consumer Law (ACL). The first scenario involves Jocelyn, who suffers from Listeria after consuming a contaminated melon purchased from R’U melon. The analysis determines that R’U melon breached consumer guarantees under section 54 of the ACL, making them liable for damages, including hospital bills, childcare costs, and compensation for Jocelyn's suffering. The second scenario concerns Arjun, who purchased the melon from a distributor. Despite not buying directly from the manufacturer, Arjun can claim compensation from R’U melon under the strict manufacturer liability rule in Part 3-5 of the ACL, as the melon was a defective product. The study also identifies additional legal risks for R’U melon under the Corporations Act 2001 and tort law, specifically concerning the duty of care and potential negligence in supplying defective products.

Running Head: Commercial law 1
Commercial Law

Commercial law 2
Answer 1
Issue:
Whether part 3-2 of the Australian Consumer Law includes any remedies for the Jocelyn, which
means whether it is possible for her to get any remedy under statutory consumer guarantees?
Rule:
Australian consumer law introduces various statutory consumer guarantees such as section 54 of
this law defines the provisions related to the acceptable quality. As per this section, if any
person sells any goods or services to any other person in trade or commerce then such sale is
made under statutory consumer guarantee that goods are of acceptable quality. This section
further states goods are considered of acceptable quality if such goods are fit for all the purposes
for which these goods are purchased by the consumers and goods are of acceptable quality when
such goods acceptable in terms of appearance, free from defects, safe, and durable.
This section also state that goods sell by seller must meet its description, but there is difference
between the merchantable quality and acceptable quality, and goods which meet the
merchantable quality sometimes fails to meet the acceptable quality. This can be understood
through example; goods when sold to consumer have some minor scratches. ACL also stated
that any person cause any damage of harm because of the product can seek different remedies
from both manufacturer and supplier. However, such damage and harm must be cause from the
failure of product from complying with the consumer guarantee. Person who can seek remedy
include those person who buy goods from the seller and those also who get goods from the
person who purchased them. It also include those persons also who derive their title of goods
through the consumer. This can be understood through case law Samsung Electronics
Australia Pty Ltd (ACN 002 915 648) (Samsung).
It must be noted that, ACL provide remedy on the basis of the type of guarantee breach.
Damages and compensation can be taken by the consumers if they suffer any harm or loss
because of the product. Consumer can also seek losses which mainly result in failure to fulfill
the guarantee.
In case consumer sues the seller for damages then such damages include amount spend by the
consumer in context of product issue. It can be said that this cost is financial in nature such as
cost spend by consumer in medical treatment, etc.

Commercial law 3
Application:
In this case, Melon is purchased by Jocelyn directly from the shop of R’U melon established in
Victoria. After consuming the melon Jocelyn suffers from the Listerias bacteria because of
which she need to admit in hospital for getting the treatment. Jocelyn is pregnant and before this
pregnancy, she is the mother of three children’s. She is tensed in context of hospital bills and
about her child’s care. In this product supplied by company fails to meet the consumer
guarantee stated under section 54 of the ACL which means melon supplied by company are not
safe and fails to meet the acceptable quality. Therefore, company is liable towards the Jocelyn
to breach their consumer guarantee.
In this case, Jocelyn directly purchased the product from manufacturer and she has power to sue
the manufacturer, and under this section she can seek damages and compensation from the
company because of the loss and harm caused to her from melons. Damages claimed by Jocelyn
against the company include cost related to hospital bills, cost related to her child care, and
compensation for her sufferings. Therefore it can be said that Jocelyn has power to take
damages and compensation from the R’Us melons.
Conclusion:
Company is liable to pay damages to the Jocelyn, and damages claimed by Jocelyn against the
company include cost related to hospital bills, cost related to her child care, and compensation
for her sufferings.

Commercial law 4
Answer 2
Issue:
Whether it is possible for Arjun to get financial compensation from the company under the strict
manufacturer liability in Part 3-5 of the Australian Consumer Law as he does not purchase the
melon directly from the manufacturer?
Rule:
ACL law state strict liability of manufacturer rue in the part 3-5 of the ACL, and it make the
manufacturer directly liable towards the consumers. As per this provision manufacturer of the
company manufactures the product with the clear intention that such product or services is
rendered by the consumer, and this intention of the manufacturer makes him directly liable
towards the consumer. Following are some situations in which manufacturers of the product
directly held liable towards the consumer:
 Goods manufactured by the manufacturer fail to meet with the description stated by the
manufacturer in context of goods.
 Goods manufactured by the manufacturer are not of acceptable quality.
 Goods which are match with the sample provided by the manufacturer.
 Goods manufactured by the manufacturer do not meet with the purpose stated by the
consumer.
It must be noted that, manufacturer of the product or service will be held liable directly towards
the consumer if any loss or damage is caused to consumer from the product. In other words, such
goods are seemed as defective goods which fail to meet consumer guarantees. In case,
Donoghue v. Stevenson, Court gives the historic judgment and held the manufacturer liable
towards Mrs. Stevenson for the snail found in the bottle.
As stated by the section 271 of the ACL, in case manufacturer does not fulfill his duty in context
of consumer guarantees then such affected person gets the right to seek damages from the
manufacturer also.

Commercial law 5
Application:
In this case, Arjun purchased the product from the distributor of the product that is yummy
bakers but still he possesses the right to take action against the manufacturer on the basis of
strict liability rule under part 3-5 of ACL. As per this rule, if manufacturer supply any such
product which fails to meet the criteria of acceptable quality then such product is considered as
the defective products. In this company manufactures the product with the clear intention that
such product or services is rendered by the consumer and this intention of the manufacturer
makes him directly liable towards the consumer. Therefore, Arjun has right to get financial
assistance from the R’U melon.
Conclusion:
In this case, company falls under the category of strict liability rule under part 3-5 of the ACL
because of the defective product supplied to Arjun, and Arjun has power to get compensation. If
manufacturer supply any such product which fails to meet the criteria of acceptable quality then
such product is considered as the defective products.

Commercial law 6
Answer 3
In context of legal risk, there are some other risks also which must be identified by the legal
officer while conducting legal assessment of the organization in present case. These risks are
imposed by Corporation Act 2001 and Tort law of Australia. Details of two other risks which
can be faced by the company in this context are stated below:
 Section 180 of the Corporation Act 2001 and common law imposed some statutory and
general duties respectively such as duty to act with due care while performing the acts of
the company. This section further stated that company supply defective product to the
consumers.
 Another legal risk faced by company is negligence under the tort law and as per this tort
management of the company fails to take due care while performing their functions.