BULAW5914 Commercial Law

BULAW5914 Commercial Law

BULAW5914 Commercial Law

Question:

The purpose of the assignment is to enable you to achieve outcomes in knowledge, skill and application across the designated learning outcomes mentioned in the BULAW5914 course Description.

It Is Also To Enable You To:

·Learn how to independently research a particular aspect of the law;
·Reflect on and consider particular legal issues;
·Demonstrate your understanding of relevant laws;
·Develop your knowledge about the subject area of your research;
·Demonstrate the ability to investigate, synthesise and analyse;
·Communicate your findings in a formal piece of work and meet a deadline;
Enhance your written communication skills;

Answer:

Material Facts

Samsung launched the Galaxy Note 7 smartphone in August 2016, and it was discontinued by the company in October 2016. The reason for discontinuing the smartphone was the battery issue in the phone which caused some phones to generate excessive heat. Due to excessive heat, many smartphones caught fire, and they caused physical injuries to the customers. The company recalled its smartphones and also took measures to reduce the capacity of the battery and block the ability of people to connect their phone to wireless network. Jane purchased Galaxy Note 7 in August 2016 it caught fire in January 2017. Due to the fire, she suffers from severe burns, and her BMW car caught fire as well which was destroyed completely.

Issue

The issue is relating to the rights which are available for Jane under the provisions of the tort of negligence and Australian Consumer Law. Another issue is relating to possible damages which can be claimed by Jane under these laws and what defences can be claimed by the defendant to reduce its liability.

Rule

Negligence is the failure of a person to maintain proper care to ensure that other parties did not suffer loss. There are certain elements which are necessary to be present in order to file a successful suit of negligence (Stickley, 2016). The first element is that the defendant must owe a duty of care. While determining this duty, the court uses ‘neighbour test’ which was established by the court in the case of Donoghue v Stevenson [1932] AC 532. As per this test, if the parties are in a proximity relationship and the risks are foreseeability, then the duty of maintaining a standard of care is imposed on the party. Moreover, this duty must be violated by the party by taking to take certain action which is expected for a reasonable person in a particular position. The third element provides that the injury which is suffered by a party must be the result of the failure of the party who owes a duty. This element was recognised by the court in the judgement of Cork v Kirby MacLean Ltd [1952] 2 All ER 402. Lastly, the injury or damages suffered by the party due to the negligence of another person must not be too remote as provided in the case of The Wagon Mound no 1 [1961] AC 388. In case all these elements are present, then the victim has the right to hold the defendant liable for negligence. Damages can be demanded by the aggrieved party for psychiatric harm, personal injury and economic loss (Luntz et al., 2017). Moreover, certain provisions are given under the Wrongs Amendment Act 215 (Vic) in relation to deciding the amount of damages suffered by the party. As per section 28G, the victim has the right to receive damages up to $577,050 for non-economic loss. BULAW5914 Commercial Law

There are various defences given under the tort law based on which the defendant has the right to eliminate the liability or reduce it to certain extent. Contributory negligence is a common defence in the tort of negligence which provides that the amount of damages which is paid by the defendant is reduced to the certain amount based on the contribution of the claimant in the negligent act (Goudkamp & Klar, 2015). This defence is also provided under the Wrongs Act 2015. If the claimant failed to maintain a duty to protect themselves, then the amount of damages can be reduced to certain extent. The court evaluates the extent up to which the parties have the right to reduce the amount for damages. The Australian Consumer Law (ACL) focuses on protecting the rights of customers from unfair trading practices of businesses. Various rights of customers are recognised under schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA). Section 7 provides that the meaning of manufacturer include parties that are responsible for assembling, extracting, growing or producing goods (Legislation, n.d.). BULAW5914 Commercial Law

Under ACL, certain guarantees are recognised for customers to protect their rights from fraudulent and unfair trading practices. Manufacturer of a product can be held liable for failing to ensure that the customers are protected from any injury. Section 138 of ACL focuses on protecting the safety of customers. As per this section, a liability can be imposed on the manufacturer if the goods which are provided through trade and commerce contain some safety defect which resulted in causing personal injury to the customers (Austlii, n.d.). According to this section, the safety defect is referred to a condition when the good is no longer remains in the condition where it is expected to be. Customers have the right to claim damages for violation of their rights under the ACL. Along with section 138, section 139, 140 and 141 also provides key provisions for customers to claim damages. According to section 140, the manufacturer will be held liable for any safety defect in the goods which caused an injury to another party. BULAW5914 Commercial Law

However, while applying this section, it is important to determine that the person who has suffered the loss must acquire the goods for personal/household/domestic purposes. Various defences are available under the ACL which protects the manufacturers from liability. Section 142 of ACL provides that a manufacturer cannot be held liable for any defect in the goods if such defect was not present while the goods were supplied. As per clause B of section 142, if the defect is there in goods due to certain compliances which are necessary to meet the standard, then the manufacturer cannot be held liable to pay for damages (Corones, 2014). Clause C of the section provides that at the time the goods were supplied, it was not possible for the manufacturer to discover the defect by using technical or scientific knowledge, then liability cannot be imposed. Lastly, clause D of this section provides that the manufacturer is not liable if the defect in the goods attributed to the design.

Application

In the given case study, Jane purchased the Galaxy Note 7 smartphone which is manufactured by Samsung. A duty is imposed on Samsung under the ACL to ensure that safety of customers. As per the law of negligence, a duty of care is owed by Samsung towards its customers based on the neighbour test. There is a reasonable foresight of risk, and the parties have a proximity relationship (Donoghue v Stevenson). Based on this duty, it is important that Samsung acts in a reasonable manner to ensure the security of its customers is maintained. The duty was breached by Samsung since he delivered defected goods to the customers. The damages can only be awarded if the element of causation is present as discussed in the case of Cork v Kirby MacLean Ltd. Lastly, the damages which are too remote cannot be recovered by the parties. In the present scenario, the loss suffered by Jane regarding its BMW car is not recoverable since it was not foreseeable as provided in The Wagon Mound no 1 case.

The physical damages suffered by Jane are recoverable under the Wrongs Act based on which she can claim damages up to $577,050. On the other hand, Jane is also liable for claiming damages under the ACL based on section 138. The overheating of the smartphone was caused due to a manufacturing defect which means that it was not safe. Moreover, Jane can also claim damages for her BMW car under section 140 by providing that she was using the goods for domestic purpose and the same was destroyed because of this safety defect in the phone. Moreover, Samsung can claim the defence of contributory negligence in the present scenario since Jane did not exchange her phone after they were recalled by the company.