LST5CCL Company & Commercial Law: Consumer Rights and Legal Risks

This case study analyzes three legal issues related to Melons’ R Us and its liability under Australian Consumer Law (ACL) and common law. The first issue addresses Jocelyn's entitlement to damages after consuming melons containing poisonous bacteria, concluding that she can claim medical expenses due to a breach of consumer guarantees. The second issue concerns Arjun's right to compensation for illness caused by defective melons, determining that Melons’ R’U is liable under section 138 of the ACL. The third issue identifies legal risks for Melons’ R’U under common law, specifically negligence and breach of an implied term to provide products fit for consumption, leading to the conclusion that the company is liable for delivering poisonous watermelons.

Running Head: BUSINESS LAW
BUSINESS LAW
Name of the Student:
Name of the University:
Author Note

1BUSINESS LAW
Question 1
Issue:
The issue in relation to the facts of the case study is whether Jocelyn is entitled to claim damages
from Melons’ R Us.
Rule:
The Australian Consumer Law which is provided in schedule 2 of the Australian Competition
and Consumer Act 2010(Cth) deals with the rights of the consumers and the guaranties of the
consumers. The guarantees of consumers have been provided in part 3-2 division. The sections
that specifically deal with the guarantees of consumers are 51-59 of the Australian Consumer
Law.
It can be stated in accordance with the section that deals with the consumer guarantees that goods
which are sold for trade and commerce have to be of acceptable quality. Acceptable quality of
goods is to be assessed by a reasonable person. For the purpose of assessing any goods to be of
acceptable quality a reasonable person must signify such goods to be durable and safe. Further it
has been provided in the sections which contain the guarantees of customers that goods sold to
customers have to be compliance with the description of the goods that had been sold.
It can be stated that the Australia Consumer Law also provides guarantees to customers in
relation of purchase of services. It can be specified that the services provided to consumers must
e provided to sch consumers within a reasonable time period and such services have to be
provided with due care and diligence. The services provided to the customers must be fit for the
purpose.

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It has been provided in section 260 of the Australian Consumer Law, that in case of minor breach
of the consumer guarantees, such consumer will be entitled to reject the goods and also can claim
damages for the loss sustained by consumption of such goods. According to section 261 of the
ACL it can be stated that the consumers are entitled to make claims for replacements, refunds
and repairs in relation to the defective goods. In the case I & L Securities Pty Ltd v HTW
Valuers (Brisbane) Pty Ltd it had been held that the damages sustained by the consumers can
only be claimed by them if such damages are reasonably foreseeable in relation to supplier of the
goods and services. It can be stated that in the aforementioned case the High Court of Australia
had held that claimant had the right to claim the whole damages as the breach of the consumer
warranties of the customer was a result of material cause.
Application:
In this given case study it has been provided that Jocelyn had purchased the melons from R’Us .
Jocelyn after consuming the melons had been hospitalized as such melons contained poisonous
bacteria. Thus it is evident in this case that the cause of Jocelyn being hospitalized can be
directly attributed to the consumption of the melons containing the bacteria. Thus it can be
stated as per the provisions of section 54 of the Australian Consumer Law that goods supplied by
a supplier have to be of acceptable quality. However, in the given case scenario it is clearly
evident that the melons were not fit for consumption and were not of acceptable quality, thus it
contravenes the provision of section 54(2) of the ACL. In this case it has been provided that no
injuries were sustained by the consumer or her unborn baby. However as per the judgment of the
case I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd the consumer was it can be
stated that Jocelyn is entitled to claim the entire of her medical expense as the breach of the
consumer guarantee had been caused by material cause.

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Conclusion
Thus to conclude it can be stated that Jocelyn is entitled to claim damages from Melons’ R’U.
Question 2
Issue:
In this given scenario the issue that has been identified is what financial assistance is Arjun
entitled to
Rule:
It can be stated that in reliance with the provisions of part 3-5 of the Australian Consumer Law
that a consumer has the right to make a legal claim when the products supplied fail to comply
with the health and safety standards.
According to the section 7 of the ACL it can be stated that a person can be considered to be a
manufacturer, if such person had manufactured the goods themselves or has provided an
impression that such person ad manufactured the goods.
According to the provisions of sections 9(2) of the ACL it can be stated that good can be
considered to be defective if the defect is in relation to the packaging or marketing of the
product.
It has clearly been provided in section 138 of the ACL that in case of existence of any defect in
the product, the manufacturer is liable to pay compensation to the consumer.
It had been held in the notable case COOK V PASMINCO LTD (No 2) - [2000] FCA 1819 a
test was required to assess whether the product had the defect in relation to the product. Such test

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assesses c community’s expectation instead of relying on the expectation and the knowledge of
the consumer.
Application
Thus by analyzing the facts of the case it can be stated that goods consumed by Arjun were
defective according to the provision of section 9 of the ACL. It is not reasonably expected for
consumer to fall ill subsequent to consuming melons. And therefore by the application of 138 it
can be stated that Arjun is entitled to get compensation from the manufacturer.
Conclusion
Melons’ R’U is liable to compensate Arjun.
Question Three
Issue:
The issue is what legal risks are relevant in this scenario under provisions common law.
Rule
In the notable case of The Moorcock (1889) it had been held that a contract will be held to have
an implied term if it is assessed by the court that incorporation of such terms is necessary to give
efficacy to the contract.
In another notable case Donoghue v Stevenson (1932) it had been held that the manufacture will
have personal liability if it is assessed that such manufacturer had been negligent in his actions
and another person suffered a loss or injury due to such negligence.

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Application
Thus by analyzing the facts of the case it can be stated that in this given scenario Melons’ R’U
had been negligent in delivering poisonous watermelons to the customers and therefore such
manufacturer will incur liability
The second legal risk is that the company breached the implied term of delivering products
which should be fit for consumption.
Conclusion
Thus to conclude it can be stated that Melons’ R’U will incur liability for being negligent and
breaching the implied term of delivering watermelons fit for consumption.