Week 6

1. In order to bring a claim of negligence against the tore owner, the first thing that needs to be proved is whether the store owner owed a duty of care to Barbara (or any other customer generally visiting). The store owners usually are expected to act in a practical and customary ways to make sure that no one visiting their store would suffer from unforeseeable harm or injury. This is broken down into a threefold test as required by the Civil Law (Wrongs) Act, 2002 and as presented in English law case Caparo v. Dickman.

Therefore, it can be well argued that a duty of care in fact existed.

(b)        The level of standard required to exhibit that the duty of care is not breached is given under section 42 of the Civil Law (Wrongs) Act 2002. It describes it as the level of care exercised by a reasonably knowledgeable person having information of all related facts and circumstances of the situation to avoid causing harm.

In the instant case grapes have slipped into a completely different aisle, perhaps by another customer walking through the store and the store manager failed to take notice thereof and restore it in a way to avoid any harm. There is also evidence of regular spillages across the store and even then, it so appears that no effective control measure was employed to clean up the spillages across the store as soon as possible to avoid any injuries due to fall. The store policy of 15 minutes check also failed in this situation to avoid the incident causing injury to Barbara. In addition to above there is no other evidence for measures taken by the store to prevent injuries, therefore it may be said that the duty of care was in fact breached.

(c)        The fruits section of the store is more expected to have fallen fruits like grapes being spilled on the floor, consequently the precaution expected to be taken by the customers when walking through the same would be greater as compared to that when walking through pet-food aisle. This shows a somewhat lesser duty of care required to be exercised. However, it does not dispel the requirement of the store owner to regularly check the store aisles and floor for spillages and employ measures to avoid harm of injury. Accordingly, some level of duty still exists to be taken care of.

The answer would be same; however the courts would take into account the measures adopted by the store owner including presence and effectiveness of control measures, circumstances causing the fall, was the harm reasonably foreseeable inter alia to decide the matter.

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Week 7

The Australian Consumer Law (ACL) is established under the Competition and Consumer Act 2010. It provides for certain statutory guarantees within the contract executed with a consumer for the supply of goods. The guarantees are similar to those provided under the Sale of Goods Act but goes ahead to provide protection to the consumers. The contract comprises of consumer contract if the amount payable for goods is less than or equal to 40,000 or are acquired for personal, domestic or household consumption by the general end consumers.

The sale of woolen underpants from the undergarments store qualify for a sale to consumer within the meaning of ACL and therefore would be subject to guarantees under section 54 and 55 of the ACL. Under section 54(1) of ACL there is implied guarantee that the goods purchased are of acceptable quality, fit for the purpose for which they are being purchased, and free from any defects, as well as safe and durable. The presence of bisulphite of soda which is leftover from the manufacturing process renders these underpants unfit for human consumption as it is a dangerous substance exposure to which could lead to skin inflammation and the condition called dermatitis. Accordingly, Brown could argue and will have to prove that the purchased goods were in fact not safe and there is a material deficiency on the part of the manufacturer. However, possibility of action be brought against the retailer is minimal with least chances of success since goods were unsafe not because of his fault or failure to meet duties under the contract, but because of a manufacturing defect.

Similarly, under section 55(1) of ACL the goods supplied have to be fit for the purpose disclosed by the consumer or represented by the seller i.e. normally wearable as an undergarment without suffering from the risk of any harm. The main question int his case also would be whether the retailer why aware of the fact, or was ought to know that such substance would end up inside the packaging by any means, if yes then whether he took reasonable steps to ensure that the goods being sold is free from the defects or safe for consumption.

Since Brown is aggrieved, he may sue for damages for the breach of contract, and the measure of damages would depend on whether the underpants he purchased has been accepted or not. As held in Doughan v Ley (1946) specific performance is unlike in case of consumer sale of goods contracts unless the goods are of specific nature and it would be unfair to not commit to specific performance of the contract.

The probability of success would depend on the condition of goods and any labels containing “wash before first use” signs warning customers to wash the undergarments before first use. If such precautionary measures were specified but not taken, then the chances of success of Brown are minimal.

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Week 8

Franchising is a means of doing business whereby the franchisor provides to the franchisee developed and proven ways of doing business, ongoing guidance for processes related to production or sale of goods and training of staff and an established appealing brand name which helps in the popularity of business, in return for an agreed fixed percentage of amount over sales , a fixed fee or purchases from the franchisor. It provides a very good advantage to a person going into business for the first time, whilst it also takes away some of the flexibility that a new owner enjoys.

Week 9

The fundamental principal based on which the entire corporations law is developed is the separate and distinct identity of a company that is separated from the owner’s personal identity. This is called “corporate veil” and this concept was first founded in the famous British case law Salomon v A Salomon & Co Ltd (1897). This concept of separate legal personality (SLP) of the company is still prevalent and is celebrated as the foundational core of the corporate laws in various jurisdictions around the world.

In the case law Salomon v A Salomon & Co Ltd, the liquidator of the company sought to recover the liability owned to the creditors by the company from the personal assets of the owners of the company Salomon, upon liquidation of the company wherein he was a majority shareholder. The Court of Appeal at the first stage ruled in favor of the liquidator.

In second stage of appeal, the above ruling was however overthrown by the House of Lords who stated that the motives of those forming the company are irrelevant in deciding matters pertaining to rights and liabilities. Thus, the legal fiction of corporate veil was created establishing SLP of company and its independence in debts and rights from its owners. It allows individuals to gather as a single unit for an economic purpose without exposure to risks in their personal capacities.

There are two existing theories when corporate veil can be lifted:

• (i) Alter-ego theory which considers a distinctive boundary between corporation and its shareholders
• (ii) Instrumentality theory where under courts examine the exploitative use of corporate veil for a purpose that benefits the owners rather than the company itself, when for example fraud could be perpetrated behind the corporate veil.