Contract rules and liability under the Goods Act 1958 for EnviroPro Pty Ltd
The issue here is to determine whether Charlie has a good case against EnviroPro Pty Ltd under Good Act (Victoria) and general contract rules.
To determine whether Charlie has a good case against EnviroPro Pty Ltd, we have to first understand whether the statement of the salesperson is a term of the contract, and if so, to determine the kind of term that is.
A term of a contract and puffery differs from each other in the sense that both parties are legally bound by a term of a contract and puffery has no legal significance whatsoever. The landmark case of REA Group Limited v Fairfax Media Limited, statements made by a salesperson to over-exaggerate the qualities of a particular product or products is known as puffery. It is also concluded in this case that a rational person is presumed to be capable of differentiating between puffery and a term of a contract.
In the Carlill v Carbolic Smoke Ball case, the honourable court concluded that when the puff goes to the extent of inducing a prudent person to get into a contract, then such puff shall be considered to be a valid term of the contract.
The benchmark case of Esso Petroleum v Mardon, the learned judges opined that the determination of the intention of parties to bind each other to a particular contract must be examined through objective intention and not a subjective intention thereof. The objective test is based on the ground whether a prudent and rational person would be induced into a particular contract in respect of relying on the representation or not.
In another landmark case, namely, Harling v Eddy, it was concluded by the honourable courts that when a seller makes a representation that is beyond the reasonable knowledge of a buyer, such representation becomes a binding term of the contract.
A deeper examination of the various terms of contract provides us knowledge that there are three kinds of terms, namely, conditions, warranties, and intermediate terms. The landmark case of Poussard v Spiers lays down that a term of a contract is regarded as a condition when such term relates to the substantial enjoyment of the contract.
Section 8 of the Goods Act, 1958 stipulates that the conduct of the parties leading to a contract for sale of a particular good or goods may take the forms of a binding term of a contract with respect to the subject matter of the sale.
Strict Manufacturer Liability under Australian Consumer Law for Clean Aqua Pty Ltd
Section 19 of the Goods Act, 1958 provides that when the buyer clearly intimates to the seller of the specific purpose in respect of which he is going to use the goods, that is enough to establish that the buyer depends of the seller’s judgment. It also establishes the fact that the goods should be appropriate for the purpose expressed by the buyer.
In the landmark case of L’Estrange v Graucob, it was concluded by the honourable court that in a situation where a person is not even aware of an exclusion clause and it is established that there has been no fraud or misrepresentation involved, such exclusion clause shall be binding on the person.
A careful examination of the facts of the case leaves us with the conclusion that Charlie expressed his intention of using the Clean Aqua for the purpose of manufacturing water for consumption. This makes it a condition of the contract of sale of the Clean Aqua. The exclusion clause is not enough for EnviroPro Pty Ltd avoid liability as there has been a clear misrepresentation. Hence, it can be established that EnviroPro Pty Ltd, through its agent (the salesperson), is guilty of misrepresentation and beach of contractual term. In addition to these, EnviroPro Pty Ltd has also breached the provisions stipulated under Section 8 and section 19 of the Goods Act, 1958.
Conclusion
It can be safely concluded that Charlie is well within his rights to sue EnviroPro Pty Ltd and he indeed has a good case against the retailer under general contract rules and Goods Act, 1958 (Victoria).
The issue here is whether Charlie has a good case against Clean Aqua Pty Ltd under the strict manufacturer liability in the Australian Consumer law or not.
It is a widely established precedent that when a person claims to have suffered injuries or damages in respect of a product, such person may file a suit for compensation. The compensation is generally by the following three virtues:
- in respect of the contract of sale of the goods,
- in respect of tort of negligence under common law,
- in respect of breach of the stipulated provisions of the Australian Consumer Law
For the present purpose our scope is limited to the application of the Australian Consumer Law to the present case. The Australian Consumer Law provides certain guarantees and statutory warranties against damages in respect of goods.
Part3-2 of the Australian Consumer Law lays down that liability lies with the manufacturers towards the consumers when:
- the goods do not comply with the express warranties
- the goods sold are not fit for the stated use
- the goods are different from the one exhibited as a sample
- the quality of the goods are unacceptable
- the goods are different from their description
In a general sense, these provisions operate the claims of the consumers regarding the damage or loss that resulted in the course of use or the consumption of specified consumer goods. In respect of the provisions of the Australian Consumer Law, the manufacturers are strictly liable to the consumers for any injury caused to them in respect of the goods.
In the landmark case of Grant v Australian Knitting Mills, a consumer sued the manufacturer after the former contracted dermatitis after wearing woolen underpants manufactured by the latter due to excessive sulphite leftover from the process of manufacture. In this case, the court held that the presence of excessive leftover chemicals was sufficient evidence of negligence on part of the manufacturer.
In the case of Baxter v Ford Motor Co., defective windscreen of an automobile purchased by a consumer from a retailer resulted in grave injuries to the consumer. The description of the automobile claimed that the windscreen was shatter-proof and the consumer depended on such claim when purchasing it. The court held that it is the liability of the manufacturer to compensate the consumer for the damages caused even though there was no express contract between the consumer and the manufacturer.
In the present case, Charlie relied on the information provided by the salesperson that the water produced by Clean Aqua is safe for consumption and purchased the appliance. The appliance came with a statutory warning from the manufacturer that the water produced by the appliance is not fit for oral consumption. However, Charlie didn’t see the warning and suffered injuries after orally consuming the water. It is clear in this case, that Clean Aqua Pty Ltd didn’t breach any term of the contract and cannot be held liable for the injuries suffered by Charlie. This can be said evidently as per the above discussed legal principles.
Conclusion
Charlie does not have a good case against Clean Aqua Pty Ltd.
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