Compensation for fixing the chair

In this particular question, the issue that will be addressed is; can Felicia (buyer/plaintiff) claim $500 of compensation from Tyson for fixing the chair? Before Felicia could proceed in claiming for the $500 from Tyson, she must first establish whether there was a formation of contract between Felicia and Tyson under Section 14 of the Sales of Goods Act 1985 (SA) [1] .

A contract under SoGA is formed on the basis that a particular seller be in agreement to transfer, the property of commodities (transfer of ownership) to a buyer for a price called as money consideration. Therefore, Felicia has to establish these three requirements in order to have a formation of contract;

(a) Goods

From the facts of the case, Felicia made it apparent that the goods she wishes to buy is of an

antique chair (furniture) , is physical in form and also a tangible item.

(b) Money consideration

Money consideration is present when Felicia paid Mandela $1,500 in order to purchase the

Rosewood Antique Armchair.

(c) Transfer of Ownership / Property

After Felicia bought the armchair from Tyson’s shop, there is an automatic transfer of

ownership from the seller to the buyer.

Therefore, the Sales and Goods Act does apply.

Issue: Can Felicia return the armchair and ask for a compensation of $500 from Tyson?

According to Gibson and Fraser; the law under the Section 55 of Consumer Guarantees 2 states that

“there is an implied guarantee that where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required, and shows that there is reliance upon judgment and skill of the seller, the goods must be reasonably fit for that purpose."

(2011, p.583)

Therefore, these questions are to be considered to the fact of each case;

(a) Has the buyer made known, impliedly or expressly, the particular purpose for which goods are

required?

YES, Felicia had made known to the seller of her ultimate purpose that she wants the armchair

as a furniture.

Precedent: Griffiths v Peter Conway Ltd [1939] 1 AII ER 685 3

(b) Has the buyer relied specifically on the seller’s skill and judgment?

In this case YES since Tyson is an antique shop owner, he is expected to have sufficient

knowledge and expertise in antique furniture. This is also similar to the authority of Grant v

Australian Knitting Mills [1936] AC 854 and Wallis v Russell [1902] 2 IR 585 5

(c) Are the goods of a description which it is in the course of the seller’s business to supply?

YES, as Tyson sells Antique items and furnitures.

(d) Has the buyer ordered goods under their patent or trade name so that it is clear there is no

reliance on the skill or judgment of the seller?

NO as Felicia relied only on the judgment and skill of the seller, not in trade name or patent.

As a conclusion, Felicia can claim for a compensation of $500 and return the armchair to Tyson as Section 55 of the Consumer Guarantee (fit for purpose)6 has been breached.

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Question 2

The main issue that is concerned with this question is; Did Mandela breached Section 187 of the Australian Consumer Law by declaring “It is a solid old thing. I sit on it all the time. You will be able to use it safely for many years"?

The law of Section 18 is a condition that prohibits a person from engaging in a conduct or act that is misleading or deceptive or is likely to mislead or deceive 8. In order to establish Mandela’s breach towards section 18 of the Australian Consumer Law, three elements must be fulfilled.

(a) Conduct by a person

YES, Mandela’s demeanour of using a pre-contractual statement to induce Felicia into

entering a contract, which was clearly false.

Precedent: Henjo Investments Pty Ltd & Ors v Collins Marrickville Pty Ltd (1988) 79

ALR 83 9

(b) The activity of trade or Commerce

YES, because there are obvious negotiations (verbally) and bargain between Felicia

(the buyer) and Mandela (the seller).

Precedent: Re Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] ATPR

40-094 10

(C) Misleading or deceptive conduct

YES, since the statement Mandela made has assured Felicia that the armchair would

be safe “for many years" to come, the antique armchair only lasted a day after the

purchase was made.

Precedent: Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] ATPR 40-303 11

In specific, Mandela’s statement also resulted in a breach of false representation in accordance to section 29 (g) that proclaims

“Falsely claiming sponsorship, approval, performance characteristics, accessories, users

or benefit of goods and services" 12

(Gibson and Fraser, 2011, p. 613)

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Therefore, Mandela had falsely proclaimed that the armchair is fit for its use (users).

Precedent: Eva v Mazda Motors (Sales) Pty Ltd [1977] ATPR 40-020 13

As a conclusion, since all the three elements are fulfilled, Mandela’s statement indeed breached Section 18 and Section 29(g) of the Australian Consumer Law.

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Question 3

In this question, Mandela is classified as the general agency. According to (Gibson and Fraser, 2011, p. 666) 14, the general agency is to make contracts in between classes that are typical for such agents or to perform an act for a principle that shape elements of the ordinary course of business for the agent necessary for managing the business.

First issue: Has Mandela acted within the scope of an agent’s authority?

According to the Law, the agent has authority to act on the principle’s behalf and the principle is restricted by the acts of the agent that fall within the scope of their apparent/ostensible authority.

In this case, YES, Mandela has acted within the scope of an agent’s authority (Apparent) as Mandela has the authority to sell the antique furniture on behalf of Tyson to Felicia.

Precedent: Tooth & Co v Laws (1888) 9 LR (NSW) 154 15

Therefore, Mandela did act within the scope of an agent’s authority.

Second issue: Did Mandela breach his duty as an agent?

(a) The duty to follow the principle’s instructions

In this case NO, Mandela did not follow lawfully the instructions of the principle

(Tyson) as he sold the chair for $1500 rather than the price of $3,500.

Precedent: Bertram, Armstrong & Co v Godfray (1830) 12 ER 364 16

(b) Duty to act in person

YES, Mandela did not delegate the authority given by Tyson to him.

Precedent: John McCann & Co v Pow [1975] 1 AII ER 129 17

(c) Duty to exercise reasonable care and skill

YES, Mandela has acted reasonable care and skill in carrying out the principle’s order

although he did not comply with the instructions of the principle regarding the price.

Hence, Mandela has breached his duty as an agent by not following closely the principle’s instruction.

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Third issue: In what circumstances can Tyson claim the losses from the third party (Felicia)?

Tyson can only claim the losses from the third party when the agent did not disclose principle’s existence or name. The law states that the third party can be sued by the undisclosed principle or by the agent.

In relevant to this case, Mandela did not disclose Tyson’s existence or his name to Felicia throughout the negotiations and bargainings - Since Mandela has actually sold the armchair cheaper than the suggested price by Tyson. Hence, Tyson can sue or claim the losses from Felicia from the basis that the third party does not know the existence of the principle.

Precedent: Cooke v Eshelby (1887) 12 App Cas 271 18

As a conclusion, Tyson can claim losses from the third party (Felicia) only under the exception that the agent did not disclose principle’s existence or name.

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Question 4

In this particular question, the main issue that can be raised is; can Felicia (the buyer) sue Tyson under the Tort of Negligence and claim for compensation? In order to proof the onus is on the defendant in a negligence case, the plaintiff must first establish the first three elements/steps of an act based in negligence.

Step 1: Does the Defendant (Tyson) owe the Plaintiff (Felicia) a duty of care?

In appliance to this case, Felicia must validate to the court whether Tyson had owed her a duty of care in the first place. In other words, ought Tyson to have anticipated that the negligence on his part would have led the plaintiff to being injured. Therefore, Felicia must determine this by reference of;

(a) The reasonable foreseeability test.

The law says that in any negligence event, the defendant must take reasonable care to

avoid omission in which he/she can logically foresee and would warrant the injury of

his neighbour. In this case, Felicia as the neighbour is directly affected by Tyson’s act

as he can foresee that she will injure herself when she decided to sit on the fragile

chair – he failed to cautioned her. This is also relevant to the precedent case of

Donoghue v Stevenson [1932] AC 562. 19

Therefore, the test is objective.

(b) Was there a vulnerable relationship?

In this case; YES Tyson has the controlling position of the resources, knowledge,

legal duty and rights. Since Tyson is the owner of the Antique shop, he is in control

of the possessions and has the knowledge that things sold in his antique shop are not

necessarily the most sturdy furniture sold. Similar to precedent case of Green v

Country Rugby Football League of NSW Inc [2008] NSWSC 26. 20

The next question to be asked is whether the plaintiff is reliant on the defendant. In

this case YES because Felicia assumed that since Tyson didn’t caution her of the risk

of injury, she relied on his part as where dependency is concerned. Also was the

defendant in a position that required him to be of protective to the plaintiff? YES.

Therefore, there is a vulnerable relationship between Tyson and Felicia.

(c) Are there any policy considerations?

NO as there is no indeterminate liability between Felicia and Tyson that can lead to

future claims that are unforeseeable. Jaensch v Coffey (1984) 155 CLR 549 21

Hence, Tyson did owe Felicia a duty of care.

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Step 2: Has the defendant (Tyson) breached that duty?

In this 2nd element, after Felicia has established that Tyson did in fact owed her a duty of care, Felicia has to then prove that Tyson has breached that duty of care by proving Tyson has failed to exercise the required standard of care;

(a) There was a foreseeable risk

YES, in this case Tyson could foreseen the risk as a “reasonable person" would have

known that the chair was fragile and the risk of injuring one’s self is possible.

(b) The risk was not insignificant

In this case YES the risk is not insignificant as Felicia’s fall may have resulted in

fracturing of her right arm similar to Big Mac’s fall.

(c) Would a reasonable person in defendant’s position would have taken precautions in

that condition:

i. The likelihood of the occurrence.

Similar to the precedent case of Boulton v Stone [1951] AC 850 22, Tyson may be

reasonable to disregard the foreseeable injury as there was only a small probability

that any person who sat on that chair will fall as the result of their weight.

ii. Seriousness of the injury.

From the case, Since Felicia is considered to be of a “normal" person with no other

health issues, therefore Tyson did not take special precautionary method to avoid

harm and the probability of a normal person to get injured is small.

Precedent: Paris v Stepney Borough Council [1951] AC 367 23

iii. The burden of taking precautions to avoid the risk of harm.

Eventhough Tyson did not take special precautionary method to avoid harm,

however he did post a signage to warn customers of the fragility and may cause

harm but the Plaintiff ignored.

Precedent: Roads and Traffic Authority of NSW v Dederer [2007] HCA 42 24

iv. The social utility of the activity that caused the harm.

NO as the activity of sitting on the chair is not worth to take the risk as the

detriment outweighs the benefit.

Therefore, Tyson has breached his duty of care towards Felicia.

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Step 3: Has the Plaintiff (Felicia) suffered damage?

When there is establishment of breached of duties by Tyson, Felicia must then ascertain that the damages she suffered is recognisable by the law as being recoverable.

(a) Has the Plaintiff suffered actual damage or actual loss?

YES, Felicia did suffer actual damage when she fell to the floor and assumed to have

fractured her right arm in the process.

(b) Was the damage caused by Tyson’s breach of duty (causation)?

In this case YES the damaged was caused by Tyson’s act and breached of duty. If

Felicia had been warned by Tyson first hand that the risk of her falling from the

fragile chair is possible, She would not have sit on the chair. Therefore, the failing of

Tyson to warn her of the risk is regarded as a cause of injury. (causation of fact).

Precedent: Chappell v Hart (1998) CLR 232 25

(c) Was the risk reasonably foreseeable, not too remote ?

YES, because Tyson is liable to the damages sustained by the plaintiff that is

reasonably foreseeable as a consequence of the negligence conducted by Tyson

(causation in law).This is similar to the precedent case of Overseas Tankship (UK) Ltd

v Morts Dock & Engineering Co Ltd [1961] AC 388 (The Wagon Mound (No 1)) 26

Hence, Felicia has suffered damages as a result of Tyson’s negligence.

Seeing that the element of duty, breach and damage has been established, Tyson must then establish any defences that he might have to eliminate or reduce his liability towards Felicia. The sub issue that can be raised is; does Tyson have any defences made available in his position?

Tyson is entitled to the law of Voluntary Assumption of Risk where the plaintiff willingly accepted the risk of damage at the individual’s own expense. From the facts of this case, Felicia had complete and precise knowledge of the risk when she acknowledged the signage that read “Please do not sit on the chair – fragile – considered sold if damaged". Also, Felicia has free and full understanding of the risk involved of the fragile chair but chose to ignore and sit on the chair anyways. Other than that she also voluntarily accepted that risk.

Precedent: Morris v Murray [1991] 2 WLR 195 27

As a conclusion, although Tyson has fulfilled the element of duty, breach and damage; however Felicia is not entitled for any compensation from Tyson as she is liable under the Voluntary Assumption of Risk.