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LST5CCL Company And Commercial Law

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Scenario Clean Aqua

Clean Aqua Pty Ltd has developed a technology for treating industrial waste streams that can recover about 97% of the water content, and up to 99% of mineral salts and other solids, for re-use. This technology has been tested successfully in aluminium smelters, biofuel plants, and other demanding applications. The first commercial installations will be made in the first half of this year.

The next step in the company’s plan is to market a domestic appliance for residential use of its technology. It has developed a small home appliance which it has named Clean Aqua. Clean Aqua treats “grey water” waste streams from homes, dormitories, hotels, apartment blocks, and other accommodation to produce water for use in gardens, swimming pools, toilets, washing machines and dish washers, and perhaps basins, showers, and troughs. A home appliance can be coupled with a solar hot water heater, air conditioner, or even a refrigerator.

At first, a small batch, of home Clean Aqua appliances are produced and marketed. The appliances come with a warning on the package which says:

Warning: Water produced by Clean Aqua is not fit for oral consumption. Water produced by Clean Aqua is only suitable for use in gardens, swimming pools, toilets, clothes and dish washers.

Charlie has heard about Clean Aqua and visits EnviroPro Pty Ltd, a retailer for the Clean Aqua products. At the entrance he notices a big sign saying 

Enviro Pty Ltd makes no promises, warranties or conditions in relation to the goods sold and shall not be liable for any damages except replacement of goods proved to be faulty at the time of sale.

He grabs one of the salesperson and says, ‘I did hear about a great product called Clean Aqua that allows me to recover water. I am really interested in this as I plan to live off the grid and want to have my own drinking water source. Is this product good for it?’

The salesperson looks around and says ‘Hmm, yes, it is a pretty good product. Let me have a look at whether we have some more of it. It has been extremely popular. Oh well, we only have this display model, I can give it to you for a good price though’.

The salesperson goes on and sells a ‘display model’ of a home Clean Aqua appliance to Charlie. This display model does no longer have the packaging for the home Clean Aqua appliance so they wrap it in recycled paper and hand it to Charlie who is very excited with their purchase.

Charlie takes the Clean Aqua appliance home, installs it and begins using the water produced by it for drinking and cooking as he did not read the warning. Charlie subsequently falls sick with mild dysentery, misses approximately five weeks of work and develops Irritable Bowel Syndrome which will impact his long term quality of life.

Charlie wants to be re-compensated by someone and wants to sue either EnviroPro Pty or Clean Aqua Pty Ltd. After all, some one has to pay for this, right?!

1. Discuss whether Charlie has a good case against EnviroPro Pty Ltd under general contract rules including Sale of Good Act (Victoria) but excluding the Australian Consumer Law.

2. Discuss whether Charlie has a good case against Clean Aqua Pty Ltd under the strict manufacturer liability in the Australian Consumer Law. 
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