Contract Law for Civil Liability Act 2002

Discuss About the Contract Law for Civil Liability Act 2002.

An important rule which is, to established in case of negligence is that of Causation, which means that a necessary condition of the harm should be the negligence and the harm is required to follow within the defendant’s scope of liability. The issues of remoteness and causations are required to be tended separately, the most essential test for establishing causation is the “but for” test the main question which needs to be answered under this test is whether there would have been sustaining of the harm “but for” the negligence of the defendant the same could not be sustained. An important case in which this rule was established was the case of Barnett v Chelsea and Kensington HMC case (Barnett v Chelsea and Kensington HMC, 1969). In this case too of Thermomix causation is established since had it not been for the negligence on the part of the manufacturers of allowing faulty machines in the market the injury to the bystanders could have been avoided, this harm therefore is within the scope of liability of Thermomix.

If damages are to be claimed for a negligence it needs to be established first that there was a “duty of care” that existed between the parties concerned. A “duty of care” would exist in situations where there is proximity between the two parties. It is be the way of test of “reasonable foreseeability” that there can be established a duty of care that one part would have towards another party. The reasonable foreseeability test states that there would exist a duty of care where one party could foresee reasonably that there might be harm that would be caused to another person due to an omission or act on their part. In the given case of Thermomix there was a fault seal on the product due to which the product burst open causing the hot contents inside of the Thermomix to fly out of it and cause third degree burns to the by-standards. This clearly indicates that there has been on the part of manufacturer a negligence to ensure the safety of the products which led to the damage being caused to the people using it. It can be reasonably foreseen that any negligent act on the part of the manufacturer would have ultimately caused harm to the people who were using it.

An another principle that would be applicable in this situation would be that of “product liability” that was established in the case of Donoghue v. Stevenson wherein it was stated that there would exist a duty to care even if there was no proximity between the parties or no direct contract between the parties (Donoghue v. Stevenson, 1932).

Further, it had also been stated that care that was reasonable should have been taken for avoiding any kind of act or omission which could have been reasonably foreseen that it would likely cause an injury to the neighbor (Stewart and Stuhmcke, 2012). The neighbors under law are those who are closely and directly affect by any act or omission. Further it is also important to the note that with respect to duty of care which the person owes is towards the ultimate customer with respect to the goods that are sold. Even in the case where there did not exist a direct contract of sale with the customer.

There existed a duty of care that the manufacturers of Thermomix owed towards the consumers, even if it was through the natural persons, with who Thermomix contracted, that the contract of sale was formed. Since the customers were the ultimate consumers therefore there is liability on Thermomix for the negligence that caused damage to the customers. It therefore, can be stated that a duty of care was established by the principle of product liability which will be owed by the manufacturer which will be owed to the customer who is the ultimate consumer of the product. It is required to be ensured that there is no damage that is caused to the consumer by a negligent act or conduct of the manufacturer.

There was a duty of care that is established that is owed by Thermomix being the manufacturers of the product even though there was a contract that had been made by them to supply the same through other natural persons (Barker, 2012). This duty of care is established through the principle of reasonable foresseability, the product liability principle and the principle of causation. Though, the contract was with the natural persons who were the consultants of the company and who then further the sold the appliance to the consumers which led to the contract of sale being made between the natural person and the consumer, however it was the negligence on the part of the manufacturer that had caused the damage to such people who were purchasing the product and who were the ultimate consumers of the manufacturer. Therefore there would be a duty to care on behalf of the manufacturer of the consumer.  Further also had it not been a negligence on the part of the manufacturer to ensure the safety of the product it would not have blasted and caused the injury to the customers and thereby the damage would have been sustained.

There are changes that have been made by the Parliament of Australian with respect the law of negligence and the Civil Liablity Act. The reasonably person test under common law has been replaced with the “three step test” when a personal injury has been caused to an individual due to negligence on the part of another individual. The Act, though still uses the terms forseeability and reasonable as had been used initially by Lord Atkins and then later established under common law through various case laws. The section 5B(1) states that an individual would be considered to have acted in manner that is negligent for taking a raise of there being harm unless precautions unless: (a) it is a risk that is foreseeable (b) it is a risk that insignificant and (c) precaution would have been taken by any reasonable person under the given situation (2) determining whether the precautions against the risk for harm would have been taken place had he been put in a similar position, the court, amongst other things which are required to consider would have to consider elements such as (a) the probability that harm would have occurred had there not been reasonable care which had been taken, (b) the likeliness of the seriousness of the harm that would have been caused, (c) the burden of the precautions which would have been taken for avoiding the harm, and (d) the social utility of the activity which would create the said harm.

There has been a “cap” which has been placed under the Civil Liability Act on the level of compensation that may be obtained for personal injury that has been caused due to negligence by placing on the damages that have  been caused generally a limitation and the payout that can maximum be achieved has been set as being three time the loss in the earning capacity of a average person  (Cullen, 2002). The limitation that has been placed by the Act is at the amount of $350,000 which would be the limit that would be maximum, for the losses which have been caused for those injuries that non-economic. However, bringing it in line with the indexation this had been adjusted to an amount of $384,500. A non-economic loss is one in which the damages referred to are the ones which are caused to a person leading to a personal injury as was in the case of Thermomix, which led to the pain and suffering of individuals, it also termed commonly as general damages. This maximum award would however, be awarded only in those cases where there has been extreme damage that has been caused. The economic losses that are smaller there is another test for threshold that has been established wherein claims that are made which are smaller are eliminated. It has been stated under section 16(1) (Austlii.edu.au, 2016) unless the damage caused in minimum 15% then the damages should not be awarded for those losses that are non-economic in nature. A limitation is there that has been based under section 12 (Austlii.edu.au, 2016) for damages that are caused due to there being loss in the economic earning of the person or the expectation with respect to financial support that a person may have. It is required by the court that it should disregard any type of claim for an amount which may be made by an individual which would be more than three times that amount that is earned in a week in average.  The major effect that this would have will not be on people who are earning average or below average but those people who are in the higher bracket of income earning. It has been stated under the Civil Liability act that when the courts are able to figure out the amount which would be earned possibly an individual in the future and either the person has been killed or there is an injury that has been caused to such a person then it that case they are required that they should stop at the amount which is thrice of that of the average wage. Therefore, in the situation where the individual is someone who is in the higher end of the wage earnings and he is the one who has lost his capacity to earn. Considering the fact that he earns much more than what would be earned by an average worker which would be considered as an average wage, there would only be damages paid which would amount to much less than that what he would have earned and what he cannot earn due to the injury or his death.

There is a restriction that has been placed on the duty of care principle which is there and also there is a restriction which has been placed on the test of causation. The enumeration of this act has been generally for ensuring that the notion has been promoted which makes it much more difficult for an individual to be able to make a claim for damages.

By capping the amount, this Act seeks to restrict the damages which an individual may be able to claim due to the injury that has been caused to him due to another person’s negligent act. A sever reduction has been there with the capping of the damages for the loss that has been caused which is nature non-economical. Also under section 5S there will be a 100 percent discount if it was found that there was an element of contributory negligence in the negligence that had been caused. It was initially that the courts previously were awarding damages in cases that were excessive and also there were faults being found in situations where there was no possibility of a fault being found. The main purpose of this act is to ensure that the damages which are awarded are controlled in those issues which are related to an individual’s person injury and this is ensured by capping of the damages that are to be given to an individual.

Therefore, it can be stated conclusively that in the case of Thermomix as well while calculating under tort the liability that may be considered, through the three step method, may be capped and the amount that would be paid as damages would not exceed the amount that is capped.

The users have been given under Part 3-5 of the Australian Consumer Law (Austlii.edu.au, 2016) users have been conferred with right and there is direct liability which has been placed on the manufacturers for the loss that has been caused by the products that are defective. It is on the “EC Directive on Defective Products, 1985” on which the ACL has been based on and the Trade Practice Acts Part VA is reflected through these parts except that instead of a corporation this Act refers to a “person”. There cannot be, like consumer guarantee, modification or exclusion of these rights. There is a claim that is allowed under these provisions to be made directly against the manufacturer when there is a loss or damage or an injury which has been caused due to any safety defects in the product. If there is some issue which the plaintiff has with respect to the identification of the product that is defective, then in that case the plaintiff will be allowed under the ACL to make a request that is formal to the supplier for identification of the manufacturer of the goods (Rochow, 2010).

“Safety Defects” means those goods that have a defect in their safety if the safety of the product is such that which the person who is using the product is not entitled to expect generally. There are two main elements which are involved with respect to the safety of a product (Malbon & Nottage, 2013):

• An expectation of a particular safety level; and
• An entitlement of a particular safety level.

It is an objective test, which is based on the knowledge of the community and its expectations.  There are however certain factors, which are to be considered such as (Malbon and Nottage, 2013):

There much actually be an element of the product that is not safe, it should not be just something that is inoperative or is of poor quality. Only because the goods are of a poor quality and there are chances that it may cause an injury does not mean that they are defective. It is not because of a defect in the product that the goods are harmful but they are harmful because of their nature that is inherent to it. As had been opine din the case of Cook v Pasminco that “it is a poison that does not do its deadly work that is defective rather than one that does.” (Cook v Pasminco, 2000).

The issues that are to be taken in account for the determination of the extent of the good’s safety include the way in which there has been a marketing of the goods, the reason for which they are being marketed, the packaging of these products, any marks which are used in connection to such products, anything that might be expected to be done reasonably with these products or with respect to these products, any usage instructions or warnings that might have been given for using these products .

• Any injury to the individual;
• death (claim for compensation is to be made by the relatives.);
• Liability would follow if there is a satisfaction of both subjective and objective test meaning there by loss that has been caused to the consumer of the goods for the usage or consumption of the damaged goods.

There are various obligations that have been placed on the manufacturer as well as the supplier of the goods under the statute with respect to product liability and safety of the products.

Therefore in the given situation there would be product liability on not just the manufacturer but also the supplier as there was safety issues with the product which led to the serious damage being caused to the person who were using such products that the manufacturer had supplied.

References

Austlii.edu.au. (2016). CIVIL LIABILITY ACT 2002. [online] Available at: http://www.austlii.edu.au/au/legis/nsw/consol_act/cla2002161/ [Accessed 12 Sep. 2016].

Austlii.edu.au. (2016). COMPETITION AND CONSUMER ACT 2010 - SCHEDULE 2The Australian Consumer Law. [online] Available at: http://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html [Accessed 12 Sep. 2016].

Austlii.edu.au. (2016). CIVIL LIABILITY ACT 2002 - SECT 12Damages for past or future economic loss-maximum for loss of earnings etc. [online] Available at: http://www.austlii.edu.au/au/legis/nsw/consol_act/cla2002161/s12.html [Accessed 12 Sep. 2016].

Barker, K. (2012). The law of torts in Australia. South Melbourne: Oxford University Press.

Barnett v Chelsea and Kensington HMC, 1 QB 428 (1969).

Cook v Pasminco, FCA 677 (2000).

Corones, S. (2011). The Australian consumer law. Rozelle, N.S.W.: Thomson Reuters (Professional) Australia.

Corones, S. (2011). The Australian consumer law. Rozelle, N.S.W.: Thomson Reuters (Professional) Australia.

Cullen, I. (2002). Civil Liability Act 2002. Sydney: NSW Young Lawyers.

Donoghue v. Stevenson, UKHL 100 (1932).

Malbon, J. & Nottage, L. (2013). Consumer law & policy in Australia & New Zealand. Annandale, N.S.W.: Federation Press.

Rochow, N. (2010). The Australian consumer law. [Adelaide]: Law Society of South Australia.

Stewart, P. and Stuhmcke, A. (2012). Australian principles of tort law. Annandale, NSW: The Federation Press.

Stuhmcke, A. and Barker, D. (2005). Essential tort law. Coogee, N.S.W.: Cavendish Publishing (Australia).

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