Commercial and Corporation Law Assignment: Consumer Law and Negligence

This assignment analyzes two legal scenarios involving commercial and corporation law. The first question assesses Jane's rights against Samsung under Australian Consumer Law (ACL) and negligence, examining manufacturer liability for safety defects, damages, and available defenses. It compar...Read More

Running Head: Commercial and Corporation Law
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Commercial and Corporation Law
BULAW5914 assignment
Student’s Name
1/15/2019

Commercial and Corporation Law
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Contents
Question 1........................................................................................................................................1
Issue 1
Rules 2
Application 5
Conclusion 6
Question 2........................................................................................................................................6
Issue 6
Rules 6
Application 8
Conclusion 9

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Question 1
Issue
What rights Jane do have in against of manufacturer (Samsung) under the provisions of
Australian Consumer Law as well as negligence? Further, what are the provisions related to
damages and defense under both of these laws? In addition, this is to check that under which law
Jane should initiate a claim against the manufacturer.
Rules
As asked in the issue area, the rules related to the subjective case are mentioned below,
using the sub-headings further.
Provisions related to Australian Consumer Law (ACL)
In the current scenario and the word full of trade and commerce, it is very necessary to
have legislation for the protection and benefits of consumers. In Australia, Australian Consumer
Law (hereinafter referred as ACL) is there to protect the interest of Consumers. The act defines
the various provisions related to a consumer claim such as manner to initiate a claim, required
conditions, defenses to the defendant and damages. Firstly to say that the ACL itself is a part of
the Competition and Consumer Act 2010 (CCA) and mentioned in schedule 2 of this legislation.
The lead objective of the ACL is to ensure that all the consumers are protected from adverse
practices such as unfair contractual terms, false representation, deceptive conduct, misleading
conduct and so on. ACL mainly provide protection from the bad practices of the manufacturer.
Now the question is who the manufacturer is. Section 7 of ACL provides a definition of
manufacturer. According to this section a person who produces grows, extracts, or assemble any

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goods will is also be treated as manufacturer. In addition to this, a person who imports the goods
to Australia also comes into the category of the manufacturer.
Moving the focus towards the rights of a consumer/ liability of manufacturer under ACL,
this is to state that sections 138 to 141 provide the same. According to section 138 of the act says
that a manufacturer will be liable if the same supplies some goods with safety defect and because
of such defect a person suffers injuries (Legislation.gov.au, 2018). Section 139 of the act says
that manufacturer will also be held liable if because of the safety defect in the goods
manufactured by him an individual (other than the person defined under ACL) suffers from an
injury dies. Further section 140 of the act says that a manufacturer is responsible to pay
compensation if because of the safety defects in the goods manufactured by him/her; a person
suffers from a loss of other goods. Such other goods can be anything but the same is required to
be acquired by the person for household/domestic use or consumption. At last, Section 141 of
ACL provides that a manufacturer will also be liable if safety defect of the goods manufactured
by him/her gives rise to the damages to person's building, land, or fixtures (Australia, 2011). It
means if a person or the other individual faces injuries or losses in any one of the above-
mentioned circumstances then they will be eligible to ask for the compensation from respective
manufacturer. Here the meaning of safety defect is also necessary to understand. According to
section 9 of the ACL, a safety defect seems to be there if goods are not as safe as they were
expected to be (Classic.austlii.edu.au, 2018). In the case of Glendale Chemical Products Pty Ltd
v Australian Competition & Consumer Commission & Anor [1998] FCA 1571, the manufacturer
was held liable as he failed to provide the secured and safety goods to the consumer.

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In addition to the provisions of damages, some defenses are also there in ACL. The
defenses are mentioned in section 142 of the act. Following are the defense that a manufacturer
can use under ACL:-
 The defect was not there at the time of supply of goods (Subsection a of section 142)
 The defect is a result of compliance that was required to do as per standards (Subsection
b of Section 142)
 By using the technical and scientific knowledge, the defect could not be discovered
(Subsection c of Section 142)
 The defect is connected to the markings or designs of the final product ( Subsection d of
section 142)
Provisions under Negligence
Negligence is a term defined under Tort Law. A tort is a civil wrong that attracts civil
penalties. In addition to the common law, negligence is also defined under the statue. In
Australia, Wrongs Act 1958 (Vic.) is a legislation that covers the provisions related to
negligence. Section 18 of this act states the requirements, which needs to be satisfied in order to
make a person liable for the negligence. According to this section, the risk must be significant,
the same must be foreseeable, and the defendant must fail to prevent such risk. In addition to
this, a reasonable person must not behave in a manner in such a situation as the defendant
behaved (Legislation, 2010).
If to talk about the common Law, negligence can be understood as a situation where a
person breaches his/her duty of care. The duty of care, breach of such duty, a loss to the claimant
because of such breach are some of the important elements that need to be there to establish

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negligence under common law (Gibson & Fraser, 2014). The existence of the duty of care is
defined under the case of Caparo Industries PLC v Dickman [1990] UKHL 2. It was given in
this case that to establish a duty of care following elements are needs to be there:-
Proximate relationship of the defendant with the victim
Foreseeability of risk
It must be just and reasonable to make the defendant liable (Sethlovisproneg.co.uk, 2018)
The case Donoghue v Stevenson [1932] UKHL 100, stated that a manufacturer owes a
duty of care towards the consumer. In this case, a person consumed the ginger beer, which was
defective and court held the manufacturer liable (E-lawresources.co.uk, 2018).
Moving the focus towards, amount of damages that a person can claim under negligence,
this is to mention that the Wrongs Act, 2015 put some limits on the same. This act made certain
amendment in the earlier act i.e. Wrongs Act 1958. According to the provisions of section 28G
of Wrongs Act, 2015, maximum amount of damages in cases of non-economic loss is limited up
to $577050 (Williamroberts.com.au, 2018). Section 28F(2) prescribed the limit the damages in
the cases of economic losses. As per this section, a victim can claim the damages up to the limit
of 3 times of his/her average minimum weekly income.
As defenses are mentioned under ACL, some defenses are also available to defendant
under negligence. Mainly four defenses are there namely, contributory negligence, Volenti non
fit injuria, exclusion of liability and Ex turpi causa. Contributory negligence is one of the
significant defenses that exist in a situation where victim also contributes to the negligence of
defendant (Findlaw.com, 2018). Contributory negligence reduces the amount of damages up to a
level. In cases of Volenti non fit injuria, claimant voluntary take the risk.

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Application
In this case, Jane purchased a Samsung Galaxy Note 7. This phone had an issue with the
overheating of the battery. The company (manufacturer) soon realized this defect. Applying the
provisions of section 9 of ACL, the issue overheating of the battery will be considered as a safety
defect as the same was not up to the expectation of a person. Further, because of the use of this
phone, Jane suffered from a personal injury in hand. In addition to this, economic loss was also
there as her BMW car was destroyed. Here, applying the provisions of the case of Glendale
Chemical Products Pty Ltd v Australian Competition & Consumer Commission & Anor and
other provisions of ACL, the manufacturer is liable to pay compensation. Jane has the right to
commence the proceeding for compensation under section 138 and 140 of ACL. Further, as per
the provisions of the case of Donoghue v Stevenson, Samsung owed a duty of care towards Jane.
Providing goods with a defect, Samsung breached its duty of care. Because of this, Jane suffered
from an economic loss as well as personal injury. As all the conditions of negligence are
satisfied, Jane can initiate an action against Samsung under Negligence.
Under ACL, Samsung does not seem to have any defense as no situation mentioned
under four subsection of section 142 of ACL is there. However, the manufacturer has a defense
of contributory negligence and Volenti non fit injuria under Negligence. Samsung recalled the
defective devices in October 2016 but Jane did not get her phone exchange until January 2017
and was continuously using the same. Further, Under ACL, no limit on amount of damages are
there. If Jane would claim for the loss under Negligence, then the amount of damages will be
subject to the limit prescribed under Section 28G and 28F of Wrongs Act 2015. In order to
suggest the preferable option to Jane, this is to say that claim under ACL will be the same.

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Conclusion
This is to conclude that ACL would be the best preferable cause of action for Jane as
manufacturer will not able to use any defense and the amount of damages also do not have any
limit.
Question 2
Issue
What are the possibilities of success of Alan in a claim of negligence against Steven?
Rules
Under Tort Law, some relationships exist where a person owes a duty of care towards the
other. In such a situation, the person who owes such a duty is required to behave like a
reasonable person while dealing with the other one. Mainly these relationships are those where
parties to a case carry fiduciary relationship such as the relationship of doctor-patient, teacher-
student, and parent-child and so on. To be successful in a claim of negligence, certain conditions
are needs to be satisfied. These conditions are given under Tort law and the same is mentioned
hereunder:-
1. The duty of care must exist:- This is a very basic requirement according to which a
defendant must owe a duty of care to victim. The case of Caparo Industries plc v
Dickman, stated some conditions that need to be fulfilled to prove the existence of a duty
of care. According to the decision given in the case, there must be a proximate
relationship between the defendant and the victim. Further, the risk involved in a
situation must be foreseen and discoverable at the end of the defendant. At last, imposing

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the penalty or any type of action on defendant must be just and reasonable (Lunney &
Oliphant, 2013). If in any case, all these conditions would be satisfied then a person will
be held the owing duty of care in respect to the other person.
2. The duty of care must be breached: - Under a claim of negligence, a court checks that
whether the defendant has breached the duty of care or not. In order to decide the same
court reviews the facts of the case. It was given in the case of Vaughan v Menlove (1837)
3 Bing. N.C. 467, that objectives test will be used to decide that whether a breach of duty
is there or not. The objective test says that the opinion of defendant will not be
considered and court will check that what a reasonable person would have done in such
circumstance.
3. The victim must suffer from a loss: - According to this condition, the victim must be
suffered from a loss. Such loss can be in the form of personal injury, economic loss, and
psychiatric harm. It means the breach of duty by the defendant is not enough but the
victim must come out with some losses.
4. Direct Relationship between loss and negligence must be there: - According to the
provisions of Tort Law, the loss occurred by the victim must not be remote and must be
a direct result of the defendant’s action.
If anyone or more than one element would be missing, then the victim will not be able to
ask any damages under negligence. Moving the discussion towards the defenses, this is to
mention that volenti non-fit injuria is one of the defenses that a defendant can use in order to
avoid his/her liability under the action of negligence. This defense can be used in those situations
where the victim is aware of the involved risk, yet decides to ignore the same. For this defense,
three conditions need to be satisfied. Firstly, there must be an agreement whether expressed or

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implied; secondly, agreement by the victim must be voluntary, and lastly, the victim must have
full knowledge of the involved risk. According to the decision given provided in the case of
Morris v Murray [1991] 2 QB 6, taking a lift from the intoxicated driver can raise the defense of
Volenti non to fit injuria.
Application
In the given case, Alan asked for the lift from Steven. Both Alan and Steven were drunk.
Because of the reason giving a lift to Alan, Steven had a proximate relationship with him. He had
reason to believe that his driving at the drunk stage can bring some negative results and at last,
imposing penalty on Steven for any negligence seems to be just and reasonable. Applying the
provisions of the case of Caparo Industries plc v Dickman, Steven owed a duty of care to Alan.
The first condition of negligence is satisfied here as required under Tort Law. Further, to say that
Steven because of the duty of care was required to act as a reasonable person. Nevertheless, he
did not do so. He was driving car at a high speed and therefore met an accident. In such a
manner, the other condition i.e. breach of the duty of care is also satisfied. Because of the
negligence of Steven, Jane suffered from a personal injury in hand. In addition to this, he became
unable to return to his earlier employment and therefore he faced an indirect economic loss. Both
of these losses were the result of the accident that happened because of the negligence of Steven.
Steven also suffered from some personal injuries but the same is irrelevant while discussing the
rights of Alan.
As all the elements of a successful claim of negligence are there, Alan can initiate an
action against Steven. Nevertheless, he will not be able to receive the damages because of the
defense of volenti non fit injuria. He was aware with the drunken condition of Steven yet became
ready to be in the car of Steven. As all the requirements of this defense are there, the same can

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be used by Steven. Further, the facts and decision of the case of Morris v Murray also state that
in cases of intoxicated drivers, the passengers will not be eligible to ask the damages if accepted
the risk voluntarily.
Conclusion
This is to conclude that negligence was there on the part of Steven but still Alan will not be
successful in his claim as he voluntary adopted and accepted the risk.

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References
Australia. (2011)..Australian Competition and Consumer Legislation 2011. Austrlia: CCH
Australia Limited
Caparo Industries PLC v Dickman [1990] UKHL 2
Classic.austlii.edu.au. (2018). Competition And Consumer Act 2010 - Schedule 2. Retrieved
from: http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/
sch2.html#_Toc529456026
Competition and Consumer Act 2010
Donoghue v Stevenson [1932] UKHL 100
E-lawresources.co.uk. (2018). Negligence - duty of care. Retrieved from: http://e-
lawresources.co.uk/Duty-of-care.php
Findlaw.com. (2018). Defenses to Negligence Claims. Retrieved from:
https://injury.findlaw.com/accident-injury-law/defenses-to-negligence-claims.html
Gibson, A., & Fraser, D. (2014). Business Law 2014 (8th ed.). Melbourne: Pearson Education
Australia.
Glendale Chemical Products Pty Ltd v Australian Competition & Consumer Commission &
Anor [1998] FCA 1571
Legislation. (2010). Wrongs Act 1958. Retrieved from:
http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/LTObject_Store/
LTObjSt5.nsf/DDE300B846EED9C7CA257616000A3571/
F1F5385B484503F3CA2577C1001B5BE4/$FILE/58-6420a103.pdf

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Legislation.gov.au. (2018). Competition and Consumer Act 2010. Retrieved from:
https://www.legislation.gov.au/Details/C2013C00620/Html/Volume_3
Lunney, M., & Oliphant, K. (2013). Tort Law: Text and Materials (5th ed.). Oxford: Oxford
University Press.
Morris v Murray [1991] 2 QB 6
Sethlovisproneg.co.uk. (2018). Professional negligence, Caparo and assumption of
responsibility. Retrieved from:
http://www.sethlovisproneg.co.uk/site/professional_negligence_claims/
accountants_negligence_london/caparo_industries_v_dickman.html
Vaughan v Menlove (1837) 3 Bing. N.C. 467
Williamroberts.com.au. (2018). Righting a wrong? Amendments to the Wrongs Act 1958 (Vic)
in relation to personal injury claims. Retrieved from:
https://www.williamroberts.com.au/News-and-Resources/News/Articles/Righting-a-
wrong--Amendments-to-the-Wrongs-Act-1958-Vic-in-relation-to-personal-injury-claims
Wrongs Act 1958 (Vic.)
Wrongs Act, 2015