Question 1

The Competition and Consumer Act 2010 (Cth) incorporated the Australian Consumer Law under Schedule 2 to ensure that the suppliers and manufacturers of Australia supplies and manufactures goods and render services to the consumers that are of acceptable quality. Any injury suffered or damage caused to the consumers due to the defect in goods or deficiency in the services shall be compensated by the supplier and the manufacturer. Under [Part 3-2, Division 1] of Australian consumer law, consumers are provided with certain guarantees with respect to the safety of the goods and services. The consumer guarantees are governed under section (51-59) of the Australian Consumer law.

As per the legislative provisions, goods provided to the consumers must be of acceptable quality that is, they must be in accordance to the description and must fulfill the purpose that is reasonably expected of them. Further, the provisions stipulate that the use and/or consumption of such goods must be safe and long lasting. The legislative provisions also provide guarantees with respect to the services that are rendered by the supplier to the consumers. The suppliers are obligated to exercise due care, skill and diligence while rendering services and ensure that they are provided within stipulated time or in the absence of specified time, it should be provided within reasonable period.

In the landmark case of ACCC v Hewlett-Packard [2013], the court held that rights of consumers against any defect in goods includes remedies in the form of repairing, replacement and refund of such goods provided such defect results from fault on part of the manufacturer. Damages may arise in the form of consequential losses as well apart from being monetary loss. For instance, such defect in goods might affect productivity, income and result in loss of time of the aggrieved consumers. The remedies are also set out under section [260] and [261] of the ACL for violating the consumer guarantees.

From the facts of the given case, it can be stated that Jocelyn is a consumer who purchased melons from R’Us firm and fell sick after its consumption. The disease that caused the sickness resulted from listeria bacteria and the melons were contaminated with the listeria bacteria. Now, Part 3-2 and section 54 of the ACL requires suppliers must ensure that the goods provided to the consumers are of acceptable quality and maintains its reasonable standard that is otherwise expected from such product by the consumers. Based on this provision, the melons provided by R’Us were contaminated with listeria bacteria, which amounts to a clear contravention of section 54 and Part 3-2 of the ACL.

Furthermore, apart from the injury that has been caused to Jocelyn due to the contaminated melons, for which she is entitled to be compensated, R’Us firm is also liable for causing consequential losses. The consequential losses were reasonably foreseeable as she had three kids to be looked after and had to pay hospital bills due to her sickness caused by the R’Us contaminated melons. Therefore, R’Us is liable to pay the hospital bills and provide monetary assistance in arranging childcare services for her three kids.

Question 2

In Australia, the manufacturers are held strictly liable for any injury that is caused to the consumers due to the products supplied to them. As per section 7 of the Act, a manufacturer is defined as any person who is the owner of the goods or represents himself as the owner of the goods. A manufacturer may also permit third parties to represent themselves as the real manufacturers of the products.

The rights of the consumers to seek compensation for such injuries or damages are governed under Part 3-5 of the ACL. Now, in order to claim compensation, the consumers must establish that the defect in the goods have contravened the safety standards that is expected by any reasonable person to be existing within such products as is also set out under section 9 of the ACL.

Further, section [9(2)] of the Act, safety standards in any good is maintained in the form of any statutory warning about the characteristics of the product, marketing and packaging style of the goods. It is also conveyed if the product serves the purpose and meets its reasonably expected standard. The reasonably expected safety standard of the products is an essential determinant tin establishing that the product contravened such safety standards causing damage or injury to the consumers. This principle was upheld in the landmark case of Cook v Pasminco Ltd (No 2)[2000]. The liability of the manufacturer, if established, he shall become strictly accountable to compensate the injured consumer.

As per the facts here, R’Us firm is the manufacturer of the melon that is contaminated with listeria bacteria and was sold to the Yummy Victoria. Therefore, as per section [7] of the ACL, R’Us is the original manufacturer of the melons which caused injury to Arjun. Hence, Arjun may establish that any reasonable person would have expected that the melons were of acceptable quality that is, safe for consumption. Hence, the contamination of such melons  amounts to a clear violation of the reasonable safety standard that is expected from the melon by any prudent person to be present within the food product.

Therefore, being the manufacturer of the melons, R’Us shall be held liable to compensate Arjun for the defect in the food product with respect to its safety and the firm shall be liable for the consequential losses, which was followed from the sickness caused due to the defected melons. The consequential losses are to be compensated in the form of medicine bills and for the loss of income that occurred from his absence from work due to his sickness under section [138] of the ACL.

Question 3

Apart from the above two legal risks that might arise due to the defect in the food product under ACL, it might give rise to legal risks under the Company law and Law of Torts as well. Firstly, the defect in the melons amounts to negligence under Tort law. In the case of Donoghue v Stevenson [1932], the court upheld the duty of the manufacturer to exercise due care towards the customers for the goods provided to them. The law of negligence requires manufacturers to be liable for any injury that results from defect in the product, which causes injury or damage to the consumer. The injury caused resulted in consequential losses for both the parties and R’Us is liable to compensate for both the parties.

In Moorock [1889], a contract is enforceable if the parties to the contract perform the terms of the contract. The terms of a contract may be implied and express terms where express terms are mentioned within the contract and implied terms are those that are reasonably expected to be performed as they are fundamental to contract. The melons were contaminated with bacteria which caused both the consumers suffer from sickness. This implies that it failed to comply with implied terms, which requires the food products to be safe. Hence, it amounts to breach of the implied terms of the contract that is fundamental to perform the contract. Thus, R’Us firm is responsible for compensating the aggrieved consumers.

References

ACCC v Hewlett-Packard [2013] FCA 653

Australian Competition and Consumer Act 2010 (Cth)

Cook v Pasminco ltd (No 2) – [2000] FCA 1819

Donoghue v Stevenson (1932) AC 562

The Moorcock (1889)