Legal Analysis: Contract Law and Australian Consumer Law - Case Study

This case study analyzes a legal dispute between Charlie and two companies, EnviroPro Pty Ltd and Clean Aqua Pty Ltd, focusing on contract law principles and the Australian Consumer Law (ACL). The assignment examines whether Charlie can successfully sue the companies due to the unsuitability of a product, Clean Aqua, for its intended purpose (drinking water). The analysis delves into the Sale of Goods Act (Vic), consumer contracts, implied terms regarding fitness for purpose and merchantable quality, and the implications of a sign limiting liability. Furthermore, the case study explores the strict liability provisions under the ACL, particularly concerning manufacturer's obligations to consumers and statutory guarantees. The document provides legal arguments, referencing relevant case law and legislation, to determine the liabilities of both EnviroPro and Clean Aqua regarding the damages and injuries suffered by Charlie.

Answer 1
Issue: On the basis of the facts that have been provided in this assignment, the issue has to be
decided if Charlie can bring a case against EnviroPro Pty Ltd. in accordance with the general
rules of contract law, including the provisions of the Sale of Goods Act, (Vic). The issue arises
due to the fact that EnviroPro Pty Ltd. had placed a very large sign in which it has been
mentioned that the company loads its liability regarding any type of damages except from
replacing the goods that have been established as being faulty when they were sold.
Rule: The provisions of Sale of Goods Act (Vic) are applicable in case of the sale of goods only.
According to this legislation, there is a difference between the consumer contracts and the non-
consumer contracts (Trade Practices Commission v Radio World Pty Ltd., 1989). It has been
provided by this legislation regarding the consumer contracts that the terms are the same as the
terms that are applicable and implied under the Trade Practices Act. The above-mentioned law is
applicable only in case of the contracts that have been concluded in Victoria. In the same way,
similar legislations have also been enacted by the other States of Australia.
This legislation provides that a consumer contract can be described as a contract that deals with
the sale of goods for less than many thousand dollars or when such contract deals with the sale of
goods that are usually required for personal, domestic or household purposes and when the goods
are not purchase for the purpose of the sale or being used as inputs in manufacture (David Jones
v Willis, 1934). In this regard, there are certain terms that have been implied by the Goods Act
regarding such contracts. Among these implied terms, there is a condition that the goods should
match the description, when the sale is made by description. Implied terms are present in case of
a contract related with the sale of goods, expressly or impliedly when the purchaser had informed

the seller regarding the purpose for which the goods being purchased. In the same way, these
conditions also applied when it can be assumed under the circumstances that the seller should
have known regarding the fact that the buyer relies on the skill or the judgment of the seller
while producing the goods. What this purpose, it has been mentioned in section 20 of the Act
that there is an implied condition according to which the goods sold, should be fit for purpose in
case of the circumstances mentioned above. The requirements related with the fitness for purpose
overlaps with the implied condition that is related with merchantable quality. For example, in
Griffiths v Peter Conway, it was provided by the court that the buyer needed to reveal the
purpose for which the goods were being purchased.
Application: Enviro Pty Ltd at least a large sign at the entrance. It has been mentioned in this
sign that the company is not liable for any damages, except from a placing the goods when it is
clear that the goods were faulty at the time of the sale. But in this case, while purchasing Clean
Aqua, Charlie had clearly told the salesperson of the company that he was looking for a source of
drinking water and asked if clean aqua was a good product for this purpose. The salesperson
assured Charlie that clean aqua will fulfill all these requirements. But the reality was that the
water produced by this product was unfit for drinking. After purchasing clean aqua, Charlie
started to use the water produced by it for drinking and cooking. After some time, Charlie fell
sick. Due to the illness, he also had to miss work for five weeks. He also became a victim of
irritable bowel syndrome as a result of which, his long-term quality of life was going to suffer.
Therefore in the present case, it can be said that EnviroPro Pty Ltd is liable to Charlie for the
beach of a condition. According to which the goods should have been fit for purpose.
Conclusion: it can be concluded in this question that Charlie can bring a case against EnviroPro
Pty Ltd under the general contract laws rules and the provisions of Sale of Goods Act (Vic).

Answer 2:
Issue: In this question, the issue that arises on the basis of the given facts is if Clean Aqua Pty
Ltd is liable for the injuries caused Charlie in accordance with sex liability of the manufacturers
as provided by the Australian consumer law.
Rule: The Australian Consumer Law requires that the manufacturers are under an obligation to
treat the consumers fairly while conducting business. When it has been discovered that any of the
consumer guarantees that have been provided by the Australian Consumer Law are breached by
a manufacturer or a supplier of goods, the manufacturer can be held liable in such a case for
strict liability offense (Haros v Linfox Australia Pty Ltd., 2012). According to the strict liability
imposed on the manufacturers, a breach may take place even in cases where there is no
negligence on the part of the manufacturer. The consumer guarantees fall under the purview of
strict liability offense in order to ensure that the manufacturers or the suppliers of goods keep in
mind the expectations of the consumers (Keays v J P Morgan Administrative Services Australia
Ltd., 2011).
Generally, the strict liability provisions of the Australian consumer law apply to the
manufacturer, supplying goods in context of trade or commerce. According to the ACL, in such
cases, the manufacturer of goods is the company that has imported the goods, assembled the
goods, used its brand name or the company that has been promoted among the public as the
manufacturer of the goods. The goods are said to contain a safety defect if the goods are not of
the safety level that is generally expectable regarding such goods. Even if the level of safety that
maybe expectable regarding particular goods may vary from case to case, ultimately it has to be
decided by the court in the particular goods have a safety defect or not.

Application: In view of the rules that have been mentioned above, the strict liability provisions
that have been mentioned in the ACL provides that a breach of the strict liability provisions may
take place even when there is no negligence of the manufacturers. Consequently, in this case
also, the liability of Clean Aqua Pty Ltd may arise due to the breach of the statutory guarantees
that have been provided by the ACL. As a result, it is available to Charlie to initiate a claim
against Clean Aqua Pty Ltd for the damages that he had to suffer as a result of this breach of
statutory guarantees.
The statutory guarantees provided by Israel include the guarantee which requires that the goods
should be fit for purpose and the goods are also required to comply with description. In this case,
it was clearly told by Charlie that he was looking for a product that can produce drinking water.
But in reality the water produced by clean aqua could not be used for drinking purposes. This
was done was to be used only for swimming pools, gardening etc. Hence, it can be said that there
has been a breach of statutory guarantee and due to this reason, Charlie can initiate claim against
Clean Aqua Pty Ltd .
Conclusion: A good case is present for Charlie to sue Clean Aqua Pty Ltd for the breach of strict
liability provisions imposed on the manufacturers by Australian Consumer Law.

References
David Jones v. Willis (1934) 52 CLR
Griffiths v Peter Conway Ltd [1939] 1 All ER 685
Haros v Linfox Australia Pty Ltd (2012) 287 ALR 507
Keays v J P Morgan Administrative Services Australia Limited [2011] FCA 358
Trade Practices Commission v Radio World Pty Ltd (1989) 16 IPR 407
Legislation
Australian Consumer Law (ACL) Schedule 2 Australian Competition and Consumer Act 2010
Sale of Goods Act (Victoria) 1958