Consumer guarantees under the Australian Consumer Law
Peter owns and operates a fish supply company. He says to Jason (a long-time friend, and a supplier of commercial refrigerators): "I store my fish in a 2,000-litre refrigerator and it needs replacing. I want one that does not have any problems." Jason says: "Fujitsu refrigerators are the fridges I always recommend."
Peter says: "The changeover must be smooth. I will be arranging for an electrician and plumber to install the new fridge. Thus, give me a firm date for delivery. Moreover, I supply fish to many restaurants and hotels. If there are disruptions, they will go elsewhere." They both agreed Jason would sell a 2,000-litre Fujitsu refrigerator to Peter and deliver it to Peter on the first day of the next month.
An electrician and plumber agree to install the new fridge for $1,250. After Jason had delivered the fridge and it was installed, Peter transferred all his fish supplies into it. Three days later, the new fridge broke down. Peter called the electrician and the plumber to check what was wrong, and they found that the electronic components of the fridge are faulty. Unfortunately, the fridge cannot be repaired, and Peter immediately telephones Jason, who says that he will send a replacement fridge the next day.
Peter is terribly worried that his supplies will spoil. Therefore, he orders $200 worth of ice, to keep the fish cold. However, by the next morning, some of the fish has gone bad, and Peter has to throw them out. As he cannot send the pre - ordered fish to a prestigious Japanese restaurant, the restaurant owner, Turgay, says he will not accept any more fish supplies from Peter. This contract with Turgay was a one - year supply contract.
As promised, Jason delivers a replacement fridge, and Peter gets the plumber and electrician in again, at a further cost of $1,250. In addition, the replacement fish supplies cost Peter $5,000, and Peter wants to bring an action against Jason, for a breach of contract, to recover the following: — $2,500, being the amount paid to the electrician and plumber. — $5,000, being the cost of replacing the fish that went bad. — $200, the cost of the ice — $20,000, the profit he would have made on the contract which Turgay has now terminated. Such contracts are very hard to get. — $1,000 for the anxiety he suffered while dealing with these events.
Jason says he has now delivered a working fridge and denies any further liability to Peter under the contract.
a) Explain clearly, whether Jason is liable or not, to pay for the damages that Peter suffered. If yes, for which of the claimed damages is Jason liable?
Jason finds out that Peter has engaged a lawyer and is bringing an action against Jason and Elah Brody Pty ltd, the company for which Jason works. Jason went to Peter's office and asked that he stop the legal action against him and Elah Brody Pty Ltd.
As expected, Peter declined Jason's request. Therefore, Jason told Peter quietly, "I know, as a close friend, that your son, Amery, owes a huge debt to loan sharks, due to the lavish wedding he had a year ago. If you carry on with the legal action, I will report your son's mounting debt to the police and his association with these low life criminals. They will see fit to arrest him and he will lose his job. Then you will have to help him, and that will bankrupt you, if you try to pay back his debt. I will also tell those criminals with whom he deals, about his arrest and they will give him a good beating for the amount of money he owes them."
b) Explain clearly, if Jason subjected Peter to any form of duress and/ or undue influence. What are the consequences for Peter and Jason?
While installing the replacement fridge, the electrician, Marin, informed Peter that a live wire is hanging from the side of the refrigerator. It will be dealt with tomorrow, as Marin did not have the required tools with him. Mahn has also asked Peter to ensure that no one touches the wire and mentioned that the fridge that Jason sent has some wiring problems.
Peter, visibly shaken after Jason left the restaurant, did not notice the wire hanging from the side of the fridge and grabbed the cable, thinking it was the door of the refrigerator. Peter passed out from the shock of the live wire and fell head first against the table. When Peter woke up, he has a deep cut on the side of his face, and his hands suffered third-degree burns.
c) Explain clearly, if Jason and/ or Marin are liable for the tort of negligence.
Consumer guarantees under the Australian Consumer Law
Whether Jason is liable to pay Damages or Compensation to Peter for the defective fridge?
The Australian Consumer Law is the applicable law that will govern the given scenario.
The Australian Consumer Law guides consumer contracts that are establishes amid manufacture, suppliers etc and the consumers. A consumer contract is defined under section 3 of the Act. Any contract which is up to $ 40,000 comes under the preview of the Act,. However, the contract must be for the acquisition of goods and services for household, domestic or personal use/consumption. (Australia, 2011)
Whenever any consumer contract is established amid the parties then there are few consumer guarantees which are provided to the consumers and which must be cater by the supplier, manufacturer. Some of them are:
i. If any act which is deceptive of misleading in nature, then, it is breach of section 18 (1) of the Act. When one party acts in such manner so as to deceive or mislead any other party, then, any contract which is based on such misleading or deceptive conduct is prohibited under section 18 of the Act. There must be some kind of misrepresentation which is made by one party upon another and the other party rely on such representation that is made in order to establishes a contract with such party. In (Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd, 1993), it was held that when no information or wrong information is provided by one party to another then it is an act of misleading or deceptive nature as the contact is made without gaining full knowledge of the truth of the matter. In (Miller , 2010), it was held that if the relying party is resting on the information of the other party considering him to be an expert and such expert if hide the truth of the matte, then, such acts are also comes within the preview of section 18 of the Act. Any statement of future which is known to be untrue by the maker of the statement is held to be deceptive under section 18 of the Act and is held in (McGrath v Australian Naturalcare Products Pty Ltd, 2008)..
But, if the aggrieved is already aware of the truth of the information, that is, the presence of deception in the representation so made, then, there is no violation of section 18 and is held in (Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd, 1982). (Clarke, 2014)
ii. Unconsiousable conduct is prohibited under section 20 (1) and section 21 (1) of the Act – If the stronger party acts in such a manner which bring advantage to himself at the cost of the weaker party, then, it is an act of unconsiousable conduct and which is prohibited under the Act. In (Commercial Bank of Australia v Amadio, 1983), it was submitted that when one person has an expertise in a particular field and is aware that the other party is relying on his expertise, then, if such expert acts in such a manner to bring advantage to himself at the cost of the relying party then it is an act of unconsiousable conduct which is prohibited under section 20 and section 21 of the Act. (Duncan, 2012)
Liability for faulty fridge
iii. Any misleading representation is not permitted under section 29 (1) of the Act – If one party to the contract falsely and knowingly makes representation and is aware that the other party is relying on such representation, then, such representations are invalid and will make the contract voidable and is held in (The Jewellery Group Pty Ltd v ACCC, 2013) and (ACCC v Prouds Jewellers Pty Ltd , 2008). (Peter, 2008)
iv. Every goods that is supplied must be of acceptable quality as per section 54 of the Act and is held in (Liebeck v. McDonald's Restaurants, 1994);
v. The goods which are supplied to the consumers are of such a nature so as it must fit the purpose for which it is acquired by the consumer as per section 55 of the Act and is held in (Graham Barclay Oysters Pty Ltd v Ryan, 2002);
Every supplier must supply the goods with all skills and care. It is obligatory that repair of spare parts within reasonable time must be provided to the consumers. (Paul, 2012)
Any aggrieved party have few remedies that can be availed:
Breach of section 18 will grant remedy under section 236 of the Act and is held in (Italform Pty Ltd v Sangain Pty Ltd , 2009).
Ancillary orders can be sought under section 243 (2) of the Act;
The contract can be declared void;
Injunctions can be sought under section 232, Schedule 2 Pt 5-2 Div 2;
Damages can be attained;
The law is now applied.
Peter is the owner and controlled of a fish supply company. Jason was the friend of Peter and deals in supplying of refrigerator.
Peter specifies to Jason that he is in need of a 2000 liter refrigerator for the storage of his fish. He further submits that he supply fish too many restaurants and of the fridge would be defective then he will lose business. Considering the requirements of Peter, Jason suggests him that he must buy Fujitsu refrigerator as it will fit in for the purposes of Peter.
Thus, as per section 55 of the Australian Consumer Act and the law established in (Graham Barclay Oysters Pty Ltd v Ryan, 2002), it is submitted that Jason has a legal obligation to supply the products that fits in the purpose of Peter. If there product supplied does not fit in, then, there will be breach of section 55.
Then, Peter arranged for an electrician and Plumber @ $1250 for the installation of the refrigerator. However, after three days, the fridge broke out.
Peter can sue Jason on the following grounds:
i. It was later found out that the electronic components of the fridge were faulty. The refrigerator was defective and does not fit for the purpose of Peter, so, there is breach of section 55 of ACL by Jason;
ii. Also, there is violation of section 54 of the ACL as the fridge that is supplied by Jason to peter was not of acceptable quality. The defect did not incur later but was inherent when the fridge was supplied by Jason to Peter. So, there is complete breach of section 54 as per (Liebeck v. McDonald's Restaurants, 1994);
Damages suffered by Peter
iii. The fridge was beyond repair and when the same was communicated to Jason to peter he assured that he will send the replacement fridge the next day. However, considering the urgency of the matter the repair and replacements must be done within resonate time. However due to delay some of the fish of Peter were rotten and one of the supplier turn peter down. Thus, there is complete breach of section 58 of ACL by Jason;
iv. Further, Jason has violated section 18 of ACL because he was aware that the fridge that I supplied by him to peter was defective, however, in order to deceive Peter he portrayed the fridge to be fit for the purpose required by Peter. So, there is clear breach of section 18 of the Act;
v. Also, peter relied on the expert knowledge of Jason prior purchasing the fridge. However, he mis-utilized his position and provided misrepresented statements and induced peter to establish contract with him, so, there is complete breach of section 29 and section 20 and section 21 of ACL.
So, Jason was in several breaches and peter can sue him for damages:
i. Peter can recover the extra $ 1250 for electrician and Plumber;
ii. He can recover $ 5000 for rotten fish and $200 for ice;
iii. He can declare the contract void and sue him for compensation;
iv. He can recover $1000 for anxiety.
Thus, Peter can sue Jason for breach of various ACL provisions and seek damages and compensation for the losses that are suffered by him.
Whether Jason can be held liable to exert Undue Influence of Duress upon Peter?
To establish a contract, every party must make sure that they have complied with every contract essentials. If any two parties are willing to make a contract amid themselves then it is necessary that one person an offeror) must communicate his desired terms and conditions to another person offeree). This communication of terms and conditions is called an offer. Once an offer is made, then, the offeree when approve of such an offer without bringing any changes then it is an acceptance in law. An acceptance must be the mirror image of the offer. The offer and acceptance together make an agreement and is held in (Carlill v Carbolic Smokeball Company, 1892).
This agreement must be made by the parties with legal intonation. The parties must also be capable to enter into a contract, that is, they must be of sound mind and major. Further, the agreement should be supported by consideration (some benefit) in order to make the contract enforceable in law. (Paul, 2012)
However, many a times, a contract is established by all the element of the contract but later can become voidable because the contract is either suffering from undue influence or duress.
i. Undue influence - Any contract which is based on undue influence will be considered as voidable. Undue influence takes place when the parties who have established the contract has unequal bargaining power wherein one party is dominant and the other party is weak. When the dominant party by using his stronger position influences the weaker party and persuade him to establish a contract with him, which the weaker party would have not established, then, undue influence is used by the dominant party and such contract are not valid in law. The influence which is used by the dominant party over the stronger party must be undue in nature. In the leading case of (Johnson v Buttress, 1936)the concept of Undue Influence was explained. Undue influence are of two kinds –
Claimed damages and compensation
Express - The weaker party must be deprived of his free will while establishing a contract. When the weaker party has no choice but to establish a contract with the stronger party then there is express undue influence.
Presumed – When the stronger party is in the position of trust and the weaker party establishes the contract based on such trust, then, there is presumed undue influence and the contract can be held to be voidable. Such relationship of trust includes, child-father; ward-guardian, etc. (Julie, 2010)
ii. Duress - When any contract is based on duress then the aggrieved party has very right in law to terminate the contract and treat the contract as voidable. Duress occurs, when stronger party uses illegitimate actions or inactions in order to persuade the weaker party to establish a contract with the stronger party. The illegitimate threat can be directly to the body of the weaker party (by threatening to kill) or to the property of the weaker party (destroy the property). (Julie, Duress, 2010)
When the threat that is caused was so grave, that is, serious personal injury or death, that the aggrieved cannot deny the acts which is desired by the stronger party, then, such acts are carried out under duress and the aggrieved party cannot be hold accountable or the same and is held in (R v Howe, 1987)
The main essentials to prove any act to be an act of duress are:
i. There has to be some kind of pressure which has forced the weaker party to enter into a contract with a stronger party ((Barton v Armstrong, 1976)
ii. The pressure is not the only reason to enter into the contract;
iii. The pressure that is so exercised is illegitimate in nature ((Universe Tankships of Monrovia v Int’l Transport Workers Federation, 1983), that is, it comprises of threats that are unlawful ( (Crescendo management Pty Ltd v Westpac Banking Corp, 1988);
When any act is considered to be duress then there few remedies that are provided by the statue. As per section 50 of the Australian Consumer Act, no corporation can use any undue harassment or physical force or coercion while supplying any services or goods or the payment thereof or at the time of sale of grant or interest in land or payment thereof. If section 50 of the Act is violated then pecuniary penalties can be imposed.
Because of the defective fridge provided by Jason to Peter, Peter is now intending to sue Jason. Jason asked Peter not to proceed with the action but Peter declined.
Now, Jason privately tells Peter that he is aware that his son, Amery, owns a huge sum of money to loan sharks. If peter will continue with the proceedings then he will tell about the debts to the 'police and will also tell Amery’s association with the low criminals. If he will be arrested then he will lose his job. If Amery will lose his job the Peter has to help him and eventually peter will be bankrupted. The low criminal will also gave Amery beating if they will be aware of his arrest.
Jason's denial of liability
In this entire scenario, Jason can be held liable both for duress and Undue Influence.
Peter can prove that Jason has by words has exerted illegitimate actions on him and threaten him that his son will face consequences if peter will initiate any action against Jason. Jason is at the stronger position and he is forcing Peter not to terminate the contract by taking any legal proceedings. By threatening that he will provide all the information regarding Amery to police and local criminals, he is mainly threatening grievous hurt to the body of his son which will certainly impact the decision of Peter. The injury is so grave that peter has no other option but to comply the desires of Jason otherwise has to face consequences. All these actions of Jason are nothing but the act of duress as there is a pressure which is bold upon peter by Jason not to terminate the contract. This pressure is the only reasons to continue with the contract which peter would otherwise have been terminated.
Thus, Peter can consider the contract as voidable and sue Jason for damages.
Jason can also be held liable for Undue Influence because since Jason is awrae of the position of Amery, who is the son of peter, and by using his position he can persuade peter not to terminate the contract, thus, Jason is mainly using his stringer position to influence the decisions of Peter.
Thus, Jason is incurring undue influence on peter and thus peter has every right to consider the contract as voidable.
It is thus concluded that Jason can be held liable both under the law of duress and undue influence as he is using his position to mold the decision of Peter, that is, by using his stronger position (undue influence) and by threat (duress), so, peter has every right to consider the contract as voidable.
Whether peter has any right to sue Jason or Marin under the law of negligence?
The law of negligence is a very important piece of legislation of common law. It is a tort law which signifies that no person must indulge in any act of omission which may harm some other person. In (Donoghue v Stevenson, 1932), the law of negligence has its roots. The leading case has established that when any defendant is pursuing anything then he must make sure that his acts or inactions should not caused damage to his neighbor. Lord Atkin in the given case has asked few question, that is, who is neighbor, what is reasonable forseeability? etc. (Andrew & Michael, 2016)
Thus, to prove negligence there are few basic elements which needs to be proved. The same are:
i. DUTY OF CARE – The duty of care implies that when the defendant acts in a particular manner or decide not to carry any particular tasks then it is his responsibility that no person should be injured by his acts or omissions. This care and protection that is expected from the defendant is a legal duty which he must comply with in every scenario. But, is this duty applicable to very person and in every situation(Thomas v Quartermaine, 1887). No, in order to impose this legal obligation of duty of care there are two requirements to fulfill. The same are:
Jason's attempt to stop legal action and the issue of duress and undue influence
Neighbourhood principle – the principle submits that the defendant is answerable for his actions and inactions only towards his neighbors. The term neighbor implies that person (plaintiffs) who are so closely connected with the defendant that the acts/inactions carried out by the defendant will directly affect those persons. This direct impact makes such persons the neighbor of the defendant and the defendant has a legal duty to provide care against such plaintiffs and is held in (Blyth v Birmingham Waterworks Co , 1856).
Reasonable foreseeability- Further, the defendant though has an obligation to provide care towards the plaintiffs (neighbors) but this care is not for all the acts. The care is only for those actions the impact of which can be reasonably foreseeable by the defendant. If the defendant cannot predict the impacts, then, there is no obligation to provide care for those actions to the plaintiffs and is held in (Grant v Australian Knitting Mills, 1936). (Conference, 1999)
Both, these elements makes a defendant obligated to carry out his tasks with all due care and responsibility.
ii. BREACH – the defendant when is imposed with the legal duty of care then he must do so in all and best possible manners. But, at times the duty of care that is carried out by the defendant is not considered to be carried out appropriately. This is beaus the level of acre that is expected from him is not met. So, what is the level of care that is expected from him?
Level of standard of care – The level of care that a defendant must carry out while fulfilling his legal duty of care must be of adequate standards. The level of standard that is required in each and every scenario is different. When the plaintiff is age old or illiterate or child then the level of care is high. Also, when the gravity of harm in any transaction is high then the level of care must also be very high and is held in (Dovuro Pty Limited v Wilkins, 2003).
iii. DAMAGES – Once it is settled that the defendant is under legal duty of care and that legal duty of care is violated by him by not carrying out the precautions as per the desired level of care and thus there is breach, then, it is necessary that some harm must be faced by the plaintiff to make the defendant negligent. But, there are two requisites of to prove damages:
Causation – It is necessary that the damages that are caused to the plaintiff must be because of the breach of the acts or inactions by the defendant. There must be direct cause of breach which has resulted in causing harm to the plaintiff. There should be link amid the breach and the damage that are caused to the plaintiff and is held in (Chaplin v Hicks , 1911).
Remoteness – Further, the damage that is caused to the plaintiff must be reasonably foreseeable by the defendant. The damages should not be very remote and those damages which cannot be predicted by the defendant then there cannot be any responsibility that can be furnished upon the defendant for the same and is held in (Re Polemis , 1921).
Negligence of Jason and Marin
Once all the elements are fulfilled then the defendant is held to be negligent in his actions. Now, the defendant still has a chance to protect himself by availing the defense. The two defenses that can be availed by the defendant are:
i. Voluntary non fit injuria – when the plaintiff is aware that there is some danger in any particular act or inactions and he still prefers to carry out with the same then the risk that is involved is voluntary and the defendant can protect himself (Imperial Chemical Industries Ltd v Shatwell, 1965).
ii. Contributory negligence – when the defendant is negligent in his actions but the loss that is caused to the plaintiff is also because of some negligence that I contributed by her own, then, the defendant is not liable for all the losses and his liable can be reduced proportionately and can be held liable for the liability which is caused by his negligence and not by the negligence of the plaintiff.
Peter can sue Marin under the law of negligence by proving that:
i. Since Marin is the person who is authorized to fit the refrigerator thus he must do the same with all care so that no loss is caused to peter. The duty of care is imposed on Marin because the acts of Marin will directly impact peter because the refrigerator belongs to peter and he will in any manner will use the same. Thus, there is a direct link amid the acts of Marin and the impact on Peter. So, Peter is the neighbor of Marin. Also, Marin can risibly fosse that if he will not do the electric wiring properly, then, Peter may get electric shock from the same. Thus, there is presence of reasonable foreseeability. Thus, there is duty of care that is imposed upon Marin.
ii. Now this duty of care that is imposed upon Marin is not taken care of by Marin and has not comply with the required standard of care. While fitting the fridge he left a live wire near the fridge. He must have used adequate standard of care so that he comply with his duty of care. So, there is breach of the said duty.
iii. This breach of duty of care by Marin has resulted in causing damage to Peter. Peter got shock from the live wire and he collapsed and fell against the table. He hands suffered third degree burn and he also faced cuts on his face. Thus, the damage sis the direct result from the breach of duty and the damages that are so suffered By peter can be reasonably predicted by Marin.
So, there is duty of care upon Marin which is breached by him resulting in damage to Peter. So, Marin is negligent in his actions.
But, Marin can take the defense of contributory negligence berceuse when he left the wire at that time he informed Peter that there is a live wire and he must be aware of the same. Peter knowing the facts still touches the wire,
Thus, the loss that is caused to peter was also contributed by his acts.
So, the liability of Marin can be reduced proportionality.
Whereas, Jason is aware that there is live wire left on the fridge but had left the premises when Peter suffered Shock. He has no reason to believe that peter will touch the wire even after getting aware of the same. Further, Jason was not fitting the fridge that he has not duty of care against Peter. Also, the damages were too remote for him to predict.
So, Peter cannot sue Jason under the law of negligence
Peter can sue Marin for the law of negligence as all the elements are comply with but he cannot bring any legal proceedings under the law of negligence against Jason.
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