BUSINESS LAW OF TORTS

QUESTION

2105AFE Introduction to Business Law

Hypothetical Assignment Question

Students’ answer to the hypothetical question must be written under the framework of – Issues, Legal principles, Application of Law and Conclusion (ILAC).

You will be assessed on:

• depth of understanding of the question and identification of relevant issues;
• accuracy of the law (cases and legislation) used to support arguments;
• the extent to which you have applied the law to the issues and argued as required by the question;
• correct spelling, grammar and proofreading.

The use of relevant headings within the body of your answer is encouraged.

A detailed marking schema is available on the Learning at site.  Students should scrutinise the schema before submitting their assignment to ensure they have covered all relevant requirements.

Pages should be numbered and stapled together (top left hand corner).  Assignments must be handed in ‘hard copy’ in the students’ Week 11 tutorial.  Assignments will not be accepted via email or fax.  Students should retain a copy of their assignment. 

Student answers must be typed and double-spaced (no hand written answers) and should have the student’s name, student number and tutorial time clearly visible. 

Due Date: To be handed in at the beginning of your assigned tutorial in Week 11.

Max Word Limit:  1,500 words.

Assessment:  15%

Facts:

Jackie is a Kung Fu student with the Grasshopper Kung Fu Club. When he joined the club three years ago, Jackie signed a contract in which he agreed to pay monthly fees in exchange for being taught Kung Fu, complying with the Club’s Rules, and obeying all instructions of the Club’s Master Instructor. This contract contained the following clause:

“Grasshopper Kung Fu Club does not accept any responsibility for any injury or harm to any student, however such injury or harm may arise or be caused.”

Now, Jackie is required to sit his triple degree black belt grading examination. Before the grading examination, the Club’s Master Instructor, Harry Highpants tells Jackie that he must, when grading, wear special Kung Fu shoes – the “Grasshopper” brand – which grip the floor of the examination hall tightly. No one at the Club has ever before been required to wear the shoes in training or at a grading examination. Harry Highpants then orders Jackie to break eight wooden boards using a jumping spinning back kick over the shoulders of five other students, followed by a triple flying turning kick in which he must leap over six very large motorcycles.

Jackie is aware that Harry Highpants manufactures and sells the Grasshopper brand Kung Fu shoes throughout Australia, and plans to require all his black belts to wear them in the future.  However, Jackie believes the shoes are dangerous because they grip the floor too much, placing too much lateral strain on the knee and risking serious injury to the knee. The increased grip of the shoe is due to a unique and secret manufacturing process of Harry Highpants. Alongside Jackie is a fellow student, Dr Jenny Butcher, who by happy coincidence is a surgeon specialising in knee reconstructions and replacements. She agrees with Jackie, and tells Harry Highpants that if Jackie wears the shoes when doing fancy kicks, he risks snapping the ligaments in his knee.

Harry Highpants insists that Jackie wears the shoes when doing his kicks during the grading examination. Jackie objects, telling Harry Highpants that he just won’t sit for the grading examination.

Harry Highpants takes Jackie aside and encourages him to continue with the grading examination. He says to Jackie, “Look Jackie, I have no knees left at all, but I can still do these kicks, and I wear these Grasshopper shoes all the time. Doctors only tell you not to do these things because they’re worried about being sued. They’re over-cautious! If I tell you to do something, I can assure you the shoes entirely safe – I know more about Kung Fu than any surgeon and besides, I’d remind you that when you joined us, you agreed to obey all instructions I gave.”

Very reluctantly, Jackie attempts his first kick, but comes crashing down, snapping every ligament in his knee. Unable to walk, he is carried out of the grading examination by a number of students and taken to hospital, where he requires very expensive and intricate knee surgery.

Jackie, who has done that same kick in bare feet without injury many times before in training, is understandably angry because he must now have very expensive and intricate knee surgery so that he can walk, let alone continue to do activities such as Kung Fu. He asks you whether he could sue for compensation.

Required:

Advise Jackie (using the ILAC methodology) whether he can sue Harry Highpants and / or the Grasshopper Kung Fu Club for compensation for his injuries:

(a)   in the tort of negligence;                                                                              (8 marks)

(b)   under the Australian Consumer Law (Cth);                                                   (7 marks)

In your answers, DO NOT discuss liability under the common law of contract.      

 SOLUTION

Issues

Jackie was learning Kung-Fu from past three years in Grasshoppers club where he had done much practices and much training. Under the contract between Jackie and Mr. Harry Highpants, as a Kung-Fu learner, Jackie had to listen or obey his instructor. On the day of black belt grading examination, the style he was doing was done many times before by him. He was doing it bare footed as was doing before at the practices successfully but Mr. harry told him to wear a Grasshopper shoes while doing the kicks. Despite of the refusal by Jackie from wearing the shoes, Harry continuously insisted him to wear the shoes which was manufactured by his company and he wants everyone to buy it from him so that he can raise more money. In order to sell his shoes, Harry completely ignored the safety of the students. As a result of which Jackie suffered serious knee injury and was unable to even walk. He was required to go through his knee surgery which was very expensive. Now, it is very important to have a look on the essential provisions of Law related to these issues to be successful in the action against Harry.

1. a.     Law of Torts

Law of torts is the Civil wrong and derived from the principle that a person is responsible for his acts and omission while dealing with others. Among many types of Torts, Negligence is one of them. Negligence under the Law of Torts can be applied in such scenario. The main objective behind Torts since ancient times is to help the person who had suffered a loss because of the act of some other person. This ‘Loss’ or ‘Harm’ may be of temporary or permanent nature but it must be an economic loss. Modern theory of Law of Torts was laid down by Justice Atkins in the most celebrated case of Donoghue v Stevenson in 1932. This case raised a concern about the consumer’s right to claim related to the harm caused by the product they are using. (Bugg,2006)Decision of this case puts the extra responsibility on the manufacturer of any product that needs special care. This rule was the extension of duty to care. In other words we may say that this case makes Negligence an important area of Torts. Law of Torts define Negligence as the omission from doing ant act which a reasonable man would do in particular situation or doing any act which a reasonable prudent man would never do in that particular situation. The essentials which are to be fulfilled in order to succeed in the claim under Negligence against any person are:

1. There existed the duty to care
2. Failure to take standard measures for performing the duty
3. The injury is caused to someone due to this breach of duty and the cause is not so remote.

It was the observed in Grant v Australian Knitting Mills, that the forseability of the loss is very important for the claim. It must be established that the carelessness on the part of the defendant caused the plaintiff or the claimant to suffer that loss. Earlier applicable test of proximity is no longer applicable now in modern doctrines of Tort. (Sullivan v moody)

Applicability of Negligence Law

Here in this case, Mr. Harry Highpants was the manufacturer of the Grasshopper Shoes; this puts him into the criteria of responsible manufacturer to use their product with care that they require. The shoes were with the tendency of gripping the floor tightly which is sufficient to cause injuries to the knees of the performers. Under the Negligence rule of Law of Torts, Harry is supposed to know about this and a duty to tell the users about the techniques which he failed to. He completely ignored the information given by the Knee surgeon Dr. Jenny Butcher about its dangerous affect on knees and insisted Jackie to wear those shoes while doing that Kung-Fu style. Due to Harry’s this act, serious knees injuries were caused to Jackie resulted in his great financial expenses in operation. Also the loss to Jackie was directly related to the failure of duty to care by Harry. Hence, the provisions of Law of torts are applicable here.(Filorder,2009)

Conclusion

From above points, it is clear that, Jackie is entitled to bring an action for compensation of his loss against Mr. Harry Highpants on the grounds of Negligence on his part when he had the duty of care towards the students whom he compelled to wear that shoe, where the shoes are not at all required in that technique of kung-Fu.

1. b.     Australian consumer Law

The question that arises here is that, whether Jackie can sue Harry Highpants under Australian consumer Law. Let us have a brief look on the facts of this case. Harry Highpants was the manufacturer and sellers of the Grass hopper shoes which he was asking Jackie to wear while the examination of black belt grading. The quality of shoes to have a very tight grip of the floor caused various ligament injuries to Jackie. Jackie also suffered financial losses, as he had to operate his knees.

According to Australian Consumer Law, a consumer can take manufacturer of the defective good which he had supplied to him, to the court for the award of compensation for him suffering loss due to that defective good or service. Australian Consumer law deals with all consumer related issues and unfair trade practices. There is no particular definition of a consumer, but it is supposed to be a person who purchases a product or hire a service for personal use. As per Section 3(10) of ACL, a person in any proceeding, claiming himself to be the consumer is presumed to be consumer unless contrary is proved. If Harry wants to defend himself by claiming that Jackie is not a consumer, the burden lies on him to prove the contrary.

From very early times, consumers are being protected by Law because the merchants or the sellers are supposed to be wealthy and powerful and are likely to harm or exploit the consumers. There are some statutory rights provided by Australian Consumer Law to the consumers as a remedy against the exploitation of the manufacturers. They are usually sued on the ground of breach of Consumer guarantee or under the negligence. [Competition and Consumer Act, 2010] The extent to which the negligence is to be claimed varies in case to case because the damage caused to consumer may be very serious or trivial in different situations. There is a rule in Australia that any supplier or the manufacturer must comply with the product safety test laid by ACL. Also the seller or the manufacturer of product is under the duty to match the product as per the description. The consumer relying on his description buys the product and later on suffers injury or loss can claim compensation.(Velorum,n.d)

A consumer has a legal right for the remedy, if the goods or the services do not meet with consumer guarantee and it will apply to both minor and major problems. If the consumer suffers any loss because of the faulty product sold by the manufacturer, he may seek compensation from the supplier or manufacturer for any loss or Damages associated with suppliers failing in his duties for matching products with Consumers Guarantee. The condition is attached to it that the consumer may seek remedy only if the damage is foreseeable and not caused anything out of it or beyond Human control.( http://www.ocba.sa.gov.au,2012) The supplier or the Manufacturer of the faulty product must repay the aggrieved consumer the money he paid for the product or return in any other form claimed by the consumer.

Application of Law

Here in this case, Harry as a manufacturer of Grasshopper shoes supplied this defective shoe to Jackie with the misrepresentation about the quality of the shoes. (Butcher v Lachlan Elder realty Pty ltd) He influenced Jackie to wear those shoes which are not meant to be worn in an activity like Kung-Fu. He also did not listen to Dr. Jenny, who was a Knee Surgeon and informed him about the kind of injuries likely to be caused due to this. The situation resulted in the gross injuries suffered by Jackie wearing those shoes. Mr. Harry can also be held responsible on the basis of Negligence he showed.

Conclusion

The purpose of any remedy or damage under any law is to put the aggrieved person to the situation before suffering such loss. Jackie can not be taken back to his previous conditions; the only way to help him out is providing compensation. Hence, Jackie can sue Harry in the court of Law for the compensation under Australian consumer Law against the loss he suffered in paying the operation fess for his knees. There is sufficient evidence to prove that the injury caused to him was not remote and because of the shoes which Harry instructed him to wear during the kicks.

References:-

1. Filorder, (2009 ), ‘Common Law in Australia: A Tort of Negligence’, retrieved on 15^th May 2012 from http://www.coursework.info/University/Law/Tort_Law/The_tort_of_negligence_L64048.html
2. Tim Bugg, (2006), ‘Negligence & Damages: Personal injury, property Damage and pure economic loss’, Page 2, retrieved on 15^th May 2012 from http://www.lawcouncil.asn.au/shadomx/apps/fms/fmsdownload.cfm?file_uuid=A8312F3C-1E4F-17FA-D250-8D96F04FC030&siteName=lca
3. Velorum, ‘The Modern tort of Negligence’,University of Ballart, ppt, retrieved on 15^th May 2012, from http://velorum.ballarat.edu.au/~rshaw/BL502/Duty%20of%20care.ppt
4. Common Wealth of Australia, (2010), Product Safety: A guide for the Businesses and practitioners, page-19, retrieved on 15^th May2012 from http://www.ocba.sa.gov.au/assets/files/consumer_guarantees_guide.pdf
5. Action against the Manufacturer’, Legal service Commission of South Australia, (2012), retrieved on 15^th May 2012 from http://www.lawhandbook.sa.gov.au/ch28s07s02.php
6. Fitzroy Legal Service Inc.,(2012), Australian Consumer Law, The Law Handbook, retrieved on 15^th May 2012 from http://www.lawhandbook.org.au/handbook/ch12s03s01.php

Case Laws:

1. Donoughe v Stevenson, [1932] UKHL 100
2. Grant v Australian Knitting Mills, ([1936] A.C. 562)
3. Cole v South Tweed Heads Rugby League Football Club Ltd, [2004] HCA 29
4. Sullivan v moody, (2001) 207 CLR 562
5. Butcher v Lachlan Elder realty Pty ltd, [2004] HCA 60

LA45