BULAW5914: Explain the Basis of Possible Liability in the Tort of Negligence - Commercial law Assessment Answers

December 18, 2017
Author : Julia Miles

Solution Code: 1ADAC

Question:

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Purpose

This is a significant task that requires forward planning and adequate time for research, reading and reflecting. It comprises 35% of your assessment in this subject.

You should begin researching early to gather information and establish a plan as soon as possible.

The purposes of the assignment are to enable you to:

  • develop your law reading, research and writing skills;
  • enhance your understanding of law as a dynamic process;
  • learn how to independently research a particular aspect of the law;
  • reflect on and consider particular legal issues;
  • demonstrate understanding of the legal environment, including relevant laws as well as economic, ethical, social/cultural, international and political issues;
  • develop your knowledge about the subject area of your research;
  • demonstrate the ability to investigate, synthesise and analyse;
  • communicate the findings in a formal piece of work and meet a deadline;
  • enhance your analytical and written communication skills; and
  • apply your legal skills.

The total length of the assignment must not be more than do not include the references or bibliography in the word count. Submission of the assignment is due in teaching week 9 on Friday by 9pm. The specific procedures for submission will be advised by your lecturer and typically this will be via Moodle. Please note that late penalties apply to assignments where no alternative arrangements have been made with lecturing staff (subject to the discretion of the course coordinator).

Answer all 3 questions

Consider only the position of the Thermomix appliance Australian users whose burn injuries were summarised in Appendix One (pages 21-23) to the CHOICE Mass Incident Report.

  1. For the injured users explain the basis of possible liability in the tort of negligence that any manufacturer or distributor of the Thermomix appliance might have to those users. Leave aside the question of the amount of damages, but in your answer refer to common law legal principles and (where relevant) to any relevant civil liability statute provisions that apply in your State.
  2. Why do caps (i.e. limits) on personal injuries damages exist in Australia? Byreferring to the relevant civil liability statute provisions that apply in your State, explain what role those caps play in limiting the extent of possible tort liability (considered in question 1) that might be owed to the injured users.
  3. Do the injured users have possible rights under Part 3-5 of Australian ConsumerLaw (ACL) against any manufacturer or distributor of the Thermomix appliance? If so on what grounds could they bring such an ACL action and what defences might a sued manufacturer or distributor have? Leave aside any question of the amount of damages under the ACL.

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Solution: Commercial Law Assignment

Question 1

Advancement in technology is one of the current issues usually embraced by different people across the world due to its significance. Once a new product is available in the market, all the consumers appreciate the innovators by purchasing and using the product. One of the companies that experienced such a positive response from its consumers was the German company Vorwerk & Co. KG which exclusively imported Thermomix to Australia. The high-end electrically powered kitchen appliance was made in France but sold in Australia by Thermomix in Australia Pty Ltd (TIA) through consultants who had a contractual right to conduct the transactions between them and retail as well as trade customers. However, although the sale of the appliance was high enough there was a negative impact as it caused burn injuries to a large number of its users in Australia (Choice, 2016).

After the cases of the injured users had been reported, there was a need to evaluate the basis of possible liability with regard to the tort of negligence that either the distributor or manufacturer of this appliance would have to the users affected which can be treated as criminal acts (Allen, 2013). Product liability is one of the possible liabilities relevant in this situation as it is an area of law whereby the responsibility for any injuries caused by products imposed on manufacturers, distributors, and suppliers. Under the Consumer Protection Act as well as the common law of negligence, the manufactures are held liable for damage caused by defective parts of the products sold regardless of any contractual limitations of liability and the location of the manufacturers (Barker et al., 2012). The liability is imposed strictly on manufactures whose products are defective and cause harm to the users as the case of Thermomix appliance (Carter Newell Lawyers [CNL], 2014). Statutes, as well as common law in Australia, are the main bodies that regulate the liability. This arises since the federal system in Australia possesses relevant legislation operating at the state and national level.

As stated earlier, product liability can be applicable in this case and is based on several issues. One of them is duty whereby the main question was whether the consumers in Australia were affected directly by the decision of the German company to manufacture and sell the Thermomix appliance (Dyson, 2014). According to the product liability, the company that caused harm to the consumers certainly owed a duty to the Thermomix appliance users as they could have been considered when making the decision. The Civil Liability Act 2002 outlined the principles governing the liability. A person is not negligent at any circumstance when he or she fails to take precautions against a risk that may result to any harm. The legislative provisions are applied especially when the risk is foreseeable and not significant, and if a reasonable party performing the same task took precaution against the risk of harm. As outlined in Choice, the use of Thermomix products caused severe harm to the users through minor burns and most of them remained understandably cautious about using the appliance and felt unsafe (David, Gvin, & Debbie, 2013). In most cases, the reported cases were due to mechanical problems such as unlocking of lids when used at high speeds, mechanical failure together with spilling out of the liquid on the sides when the appliances were in use. In addition, the cases of lids moving to the unlocking position were rampant and caused harm. During the manufacture of the appliance, the manufactures would have considered the users of the products and their vulnerability. Thus, they would have considered the conditions such as the high speed at which the product was to be subjected to and dislocation of the lids. Thus, this could have helped to eliminate the harm caused to the Australian consumers. The manufactures would have tested all these risks before the distributors availed the product in the market for the users (Owen, 2014).

Another basis of this liability is the breach. This usually answers the question if the risk of injury experienced by the consumers due to the mechanical problems of Thermomix was one of the risks that the German company had unreasonably not considered and taken precautions against it. The company breached its duty of care as it failed to make the tests before introducing the new product in the market. According to the Australian Consumer Law at the national level, there are set of statutory standards whereby the breach of which both the manufacturers and suppliers are supposed to compensate consumers for the damage caused (Corones, 2013). The manufacturers and suppliers are viable under the provisions involving negligent manufacture and supply of goods and service as in the case of Thermomix. The injuries recorded due the failure of the appliances are high although the burden of taking precautions which could have included testing the appliances properly would have been low. The company would have observed the precautions to avoid the risks (Hunt, 2014).

The issue of casual loss can also be associated with product liability. Out of the injuries that took place amongst the consumers caused by the spilling of the lid and failure at high speed to Australian consumers seemed not to be associated with many questions. A huge number of people think that the cases would not have occurred, but it was due to the negligence of the company when manufacturing and distributing the appliance (Hunt, 2014). As a matter of fact, other appliances would also have caused spilling of the liquid on the sides, and thus many consumers would have faced similar challenges, and it was seen as an ordinary as well as a foreseeable consequence. The consumers thought that care was not taken when making the products although the staff members claimed that the injuries were due to the fault of the consumers when complaints were presented. The failures of these appliances were due to contributory negligence of the manufacturers as well as the voluntary assumption of risk (Hunt, 2014). Although there are possible defenses associated with product liability claim, the mechanism seems to have failed in the case of this company. The applications of the defenses are limited and are not usually relied on. Suppliers only avoid liability for actions with regard to their defective products when the safety defect satisfies the following conditions. The defects never existed when the products were supplied; it came about as the company complied with some mandatory standards and if it was not discovered by means of either scientific or technical knowledge when the goods were supplied (Richardson, 2012).

In Australia, the Civil Liability Act caters for the circumstance where a wrongdoer contributes to the harm suffered by the affected people. In case a claim involves people injury, the defendant is given a chance to be liable for the entire loss incurred by the plaintiff. This can take place even when they have only contributed to the loss and it is avoided by joining parties responsible for the loss during proceedings. The proportionate liability cannot be applied in the case of Thermomix Company since the damage caused by the defective appliance was limited to damage to property. The regime states that the defendant is not liable for or supposed to pay for a proportion greater than the suffered loss, and it is usually just and reasonable. The proportionate liability could also revolve around the manufacture and distributor as the former produced defective products, although the latter had no knowledge about the risk that could have occurred. The manufacturer can be established as the concurrent wrongdoer. However, the proportionate liability does not apply in the case of personal injury claims (CNL, 2014).

 

Question 2

When faced with personal injuries damages in Australia, the affected persons can seek for help and compensation. However, there are limits imposed on the damages in personal injury due to several reasons which can either be state statutes or legal concepts. These limits exist due to the differing actions under the Australian Consumer Law and those under the general law. There exist a number of overlapping periods governing the defective goods actions in the ACL (Cane & Patrick, 2013). On the other hand, the defective goods action in the case of the general rule which might occur other than damages for personal injury needs to be commenced within 10 years after the products are supplied by the manufacturer. Thus, the limits exist since no victim of defective goods action is given the chance to claim damages if three years have passed upon them being aware or need to have been aware of the loss they suffered as well as the defects in the products. Also, the manufacturer of the goods needs to have been known. Limitation periods for both tort and contract act under state legislation. In tort, once the damage has been suffered, the relevant authority can move ahead in taking into account the cause of action. On the other hand, when the contract has been breached the cause of action is taken for the breach of contract (Cane & Patrick, 2013).

There exist two different damages cap regimes that are necessary in offering the guidance on how compensation should be provided. The first one is under the tort of negligence. It is known as the State Law Cap dealing with personal injury liability. These laws usually put limits on the amount of money that can be awarded to the affected people. For the State Law Cap, the victim suffers from economic damage whereby the plaintiff or his or her insurance company has paid out or continue paying some cash due to the injury (Cane & Patrick, 2013). For instance, the person has to cater for medical bills and suffer other miss outs like lost wages. Similarly, due to the negligence of the manufacturer, the victims suffer from non-economic damages through pain and suffering as well as loss of joy in life. For instance, for the case of Thermomix appliances, those affected suffered several problems due to the mechanical problems of the appliances. Most of them had burns which demanded them to seek medical care and also suffered some pain. From the appendix one, there were several cases of accidents that occurred. Some of them included blowing off of the lid causing burns to the user on the face, arm and chest, spitting of hot water by the cleaning function leading to burns on arm and stomach. Among the people affected, some of them were taken to the burn units and expected to be under treatment for two years before recovering due to the breakdown of the machine at blender stage. Others were affected by second-degree burns when liquid splattered out to the arm and chest, and the scars were to remain for 12 months. From these cases, it can be understood that the victims suffered from different cases although this could have been avoided if the company took precautions (Cane & Patrick, 2013).

Apart from the State Law Cap, the Commonwealth law cap also exists. The cap operates under Australian Consumer Law for personal injury liability. Compared to the State caps, these caps are less generous as stated under the Competition and Consumer Act 2010. Similar to the State Cap, the damages under Australian Consumer law are mainly addressed to remedy some harm (Australia Safe Work [ASW], 2012). These are the problems caused by the act of breach of the standards of the ACL which guards against the safety of the defective products available to the consumers.

When a party is affected by a problem like the damages suffered by the Thermomix appliance users, it is necessary to pursue a product liability claim (ASW, 2012). This function under the ACL whereby the remedy is available for the loss and damage the victims suffer due to the defective product. These compensations may include medical bills, lost wages together with the cost of repairing the property. Therefore, the court can order injunctions which prohibit repeated contraventions of the law protecting the Australian consumers. Moreover, the manufacture may be ordered to perform community services and conduct awareness raising campaigns as well as insurance. The manufacturer may also be ordered to pay damages which are determined on the basis of loss suffered by the plaintiff due to the conduct of the defendant. Some of these policies about the caps will be related to performing the task of curtailing cost together with risk to the company from doing business in Australia (Micklitz, Lucia, & Kornelia, 2011).

 

Question 3

According to Australian Consumer Law, part 3-5 supports that the Australian consumers have rights against manufacturer and distributor who violate the laws. The cause of action under ACL differs from the tort of negligence leading to the creation of different liability in manufactures. Part 3 points out specific protections addressing various forms of business conduct. One is banning of specific unfair practices as ACL prohibits the supply of unsolicited goods which lead to destruction. Two is dealing with transactions for consumer goods, and the ACL guaranteed consumer rights were to be enforced on the safety of product related services to the consumers. Next, there is also the issue on the liability of manufacturers for products with safety defects. The ACL set out the statutory rules aimed at dealing with all liability claims for damage such as economic, and the affected people to be allowed to commence actions against the manufacturer in order to be compensated (Latimer, 2012).

Part 4 covers the offences related to matters captured in part 3. In this part, the ACL provide that there are breaches of the law that are serious and need to be treated as criminal offences. In return, the criminal sanctions should apply. In part 5, there are enforcement and remedies in relation to consumer law. The consumer law regulator is supposed to use enforcement powers including civil penalties together with remedies related to the ACL. For instance, the affected persons can opt to ask for refund and replacement in case the obligations related to consumer guarantees are not satisfied. As discussed earlier, the tort of negligence is formulated around the elements such as the duty of care, remoteness of damage, as well as breach of duty. All these elements are relevant when claiming in case a negligently-caused personal injury arise regardless of the action that results to the problem (Elbers et al., 2013). Apart from the product liability discussed earlier, strict liability may also arise under ACL. The manufacturer is liable after it has been established that the goods supplied by the cause of action under this statutory are not an additional requirement, demanding that the manufacturer had acted negligently when supplying the defective product to the market.

The tort of negligence and ACL part 3-5 are different. According to the later, when a manufacturer of a certain product like the Thermomix appliance is noted to be defective and renders its safety not as what other people expect, the company is held liable. Such cases mostly arise when the Australian users are injured even when the goods are produced by manufactures in a foreign country and availed in Australia by a consultant who is the distributor. The distributer ought to adhere to these rules. For instance, in this scenario, there were cases of design defects whereby the lids which caused most of the injuries should have been well placed and tested, and the appliance subjected to high temperatures before being introduced in the market. During the manufacture of the products, the manufacturers of the appliance ought to have considered the purposes to be served by their products and the damage that would have arisen. For example, the spilling of food and soup cause injuries and damages on the people affected (Holland & Amanda, 2012).

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