Samsung Galaxy Note 7 Study On Product Liability And Consumer Rights

Question: Discuss about the Samsung Galaxy Note 7 Study On Product Liability And Consumer Rights. Answer: Liability of manufacturer or distributor to Australian consumers in the tort of negligence A tort is the conduct of a party amounting to a civil wrong in which the aggrieved party can bring a civil action for compensation(Latimer, 2012, p. 223). Negligence is a tort which seeks to protect a person, their property or any other interests from damage arising from the actions or omissions of another; that is lack of reasonable care. The common law principle of negligence as it is known today arises from the case of Donoghue v Stevenson (1932). In this case, the plaintiff had ordered a drink at a restaurant; she found the remains of a decomposing snail in the bottle. As she had already drunk some of the beverage, she fell ill and sought recourse in court. This case illuminates the liability of a manufacturer to their consumer regardless of the lack of direct proximity; the plaintiff could not sue the retailer as it was the manufacturer who owed them a duty of care(Donoghue v Stevenson, 1932). In the determination of liability with regard to the tort of negligence, common law provides certain elements that should be considered. At common law, it is paramount that the consumer establishes that first and foremost they were owed a duty of care by the manufacturer(Gillies, 2004, p. 69). A duty of care is owed where a relationship between the parties is evident; this can be based on the test of proximity and foreseeability. In Caparo Industries v Dickman (1990), Lord Roskill highlighted foreseeability, fairness, voluntary assumption of risk and reasonableness as some of the tests for duty of care. In essence, one owes a duty of care to those who would be closely and directly affected by their actions(Bermingham, 2011, p. 36). Having established the existence of a legal duty, the subsequent element would be identifying a breach of said duty by a manufacturer. At common law, a manufacturer must have their consumers in mind when determining their design, product safety and subsequent distribution; suppliers are also tasked with a duty not to supply defective goods(Loveday, Product Liability, 2016). Where the fail in these obligations then they are said to have breached their duty. The actions of the manufacturer, or their omissions, are pitted against a prescribed standard; that is the standard of care which is the reasonable man test. Deane J stated that measuring the discharge of a duty of care is based on what a reasonable person under similar circumstances would do(Hackshaw v Shaw, 1984). The third element of the tort of negligence is determining whether the plaintiff suffered damage as a result of the breach. This brings about the principle of causation which provides that, but for the defendants act or omission, the plaintiff would not have suffered the injury they did. This causal link is crucial in determining the liability of any manufacturer. Australian courts relied on the common sense test, as illustrated in Medlin v SGIO (1995) to establish causation; first, they determine that the harm caused to the plaintiff resulted from the negligence and then they determine the scope of liability(Loveday Morrison, 2016). The onus is on the plaintiff to prove causation where he or she makes a claim for negligence. The discourse above highlights the common law principles guiding the establishment of liability under the tort of negligence, it is important to note that some of these common law provisions have been codified and modified by statutes such as the Civil Liability Act 2002 as well as the Australian Consumer Law 2010. However, guided by the aforementioned principles, it is evident that Samsung owes its consumers a legal duty of care in that they are directly and foreseeably affected by any acts or omissions with regard to the products it puts on the market. The explosions of the smartphone were linked to a defect in the manufacture and design of the battery. Manufacturers are tasked with the duty to ensure their products are safe as per common law principles. As the battery was unsafe it led to explosions which caused damage to property and personal injuries. As such, the three elements of negligence are evident in this case study; the manufacturers, therefore, are liable in the tort of negligence as per the provisions of common law. Rights of Australian consumers under Part 3-5 of the Australian Consumer Law (ACL) against the manufacturer In addition to the common law principles establishing liability, a manufacturers liability can also be derived from statute. The provisions of the Australian Consumer Law 2010 ensure that manufacturers, suppliers and distributors are all cautious in the production and distribution of their products so as to avoid the risk of liability. Part 3-5 of this law specifically highlights certain rights of consumers with regard to the liability of manufacturers on items with safety issues. In essence, the manufacturer, being the assembler or importer, shall be considered liable under the ACL if; the goods are supplied in the course of trade or commerce, if they have a safety defect and if the damage is suffered either by a person or property(Hughes, 2014, p. 17). According to s 138 of the ACL, a manufacturer would be liable where an individual suffers injury or dies as a result of a safety defect in the goods they have supplied. Additionally, where the safety defect leads to the injury of another person, the destruction of property, land, buildings or fixtures then the consumer could hold the manufacturer liable. In Glendale Chemical Products Pty Ltd v ACCC (1998), the plaintiff experienced burns in his eyes and face after water spurt out of a blocked shower pipe. The court, in this case, found the defendant liable under section 138. In determining liability the court looked into whether the defendant was the manufacturer, whether the goods had a safety defect, if warnings were necessary and adequate and if the relevant scientific and technical knowledge was available to foresee this risk. In determining this, the court was able to establish that the manufacturer owed the plaintiff a duty of case and said duty was breached based on their negl igence. In the case study in question, Samsung Electronics are identified as the manufacturers who, as per the provisions of Part 3-5 of the ACL 2010 are expected to ensure any products they provide in the course of trade are safe. Where safety defects are established and the manufacturers actions in mitigating any risk that would arise leading to a safety defect are insufficient, then the court would find the manufacturer liable for negligence. With this in mind, it is evident that Samsung electronics breached this duty of safety as there methods for detecting the defect were inefficient as such leading to personal injuries and damage to property. Consumers, therefore, can claim a breach of their duty to safe products on the grounds that they products led to injuries of persons and damages to property. Additionally, they can cite that, their safety was not to up to the reasonable standard they expected and should have been accorded. Defences available to the manufacturer or distributor In as much as consumers are entitled to certain duties as illustrated in the discourse above, the law also provides manufacturers with defences where cases of breach of duty are brought before them. Under common law, a manufacturer can rely on certain defences against a claim in negligence; voluntary assumption of risk and contributory negligence among others(Loveday Morrison, 2016). However, ss 142 and 148 of the ACL 2010 highlight specific defences that a manufacturer can rely on where they are faced with a claim of negligence with regard to a safety defect in their products. Their defences include; the fact that the defect arose as a result of compliance with a particular standard, the defect was non-existent during supply, the defect was undiscoverable due to lack of scientific of technical knowledge and finally, the defect was caused by other goods where the manufacturers goods were contained. These defences are specific to the duties raised under the ACL 2010(Hughes, 2014). In Drake v Myler Pty Ltd Anor (2011), the court deliberated the defence of the availability or technical knowledge to discover the defect. In this case, the court appreciated that the available tests at the time had been used and no defect indicated, future developments would lead to the earlier detection of the issue, however as the currently available technical and scientific knowledge could not detect the defect then the defendant could rely on it as a defence. In that regard, the onus is on Samsung Electronics to establish that the available technology at the time of issuing the smartphones was unable to detect any defects in the new battery model. This proof will enable it to reduce liability as it is illustrated that the defect was not born out of negligence on the part of the manufacturer. The limiting role of caps on personal injuries damages on any tort or ACL liability Under tort law, one of the key remedies to any damage is compensation for either monetary or non-monetary loss(Latimer, 2012, p. 271). A monetary or pecuniary loss would be a loss that can be easily valued in monetary terms such as medical expenses. Pain and suffering, loss of limb among others form the non-pecuniary losses. The tort law crisis led to the formulation of civil legislation by way of the Civil Liability Acts 2002 which in turn placed certain restrictions on personal injury claims under consumer law. The reason behind these restrictions was to promote expediency and fairness and also to avoid plaintiffs cherry-picking causes depending on the one with the highest possible reward. Litigation had become excessive and damages offered were not uniform with some being excessive while others too little to compensate the injury suffered. In Australia, the determination of damages is calculated according to the injury suffered or likely to be incurred(Hughes, 2014, p. 27). The ACL under s 87M caps damages for the supply of goods with safety defects at $250,000 on non-economic losses. In New South Wales, s 16 of the Civil Liability Act 2002 sets a statutory limit on damages for non-economic loss; they currently stand at $551,500 from $350,000. As such, a tortfeasor or any manufacturer in breach would only be liable to the extent of the stipulated amount. In addition to the stipulated amount, legislation further sets a limit through an exceptional or extreme case(Lindfield, 2017). The severity of the case is also considered so as to determine whether damages will be awarded. In Hall v State of New South Wales (2014), the court deliberated the issue of proportion of extreme case where the appellant sought to challenge the percentage established by the trial judge in order to increase their recoverable sum in damages. In the determination of the issues arising the court in this case recognised and appreciated that statutory caps expedited proceedings by allowing a quicker end to proceedings which in essence is of benefit to all parties. In conclusion, as per the provisions of the law, the purpose of damage caps on personal injury claims was to establish a uniform compensation system that would be fair and expedite legal proceedings. It was also a way of curbing cherry picking by clients. The recoverable costs for personal injuries, especially non-economic loss injuries which are difficult to value were becoming extremely high and as such unfair to defendants. The existing caps are found in statute and set a maximum recoverable amount which is subject to other conditions; for example, the injury must attain a certain degree of severity. These provisions guide the court in determining the recoverable amount; they also limit the liability of defendants to the set amount. As such, statutory caps, in this case, would limit the liability of Samsung Electronics to first and foremost the portion of severity of the case and secondly the capped amount; they will not be able to go beyond the set amounts and neither is the deli beration at the discretion of the court. References Australian Consumer Law 2010 (Cth). Bermingham, V. (2011). Nutcases: Tort. London: Sweet Maxwell. Caparo Industries v Dickman, 605 (2 A.C. 1990). Civil Liability Act 2002 (NSW). Donoghue v Stevenson, 562 (A.C. 1932). Drake v Mylar Pty Ltd Anor, NSWSC 1578 (December 20, 2011). Exploding Samsung Note 7 ruins Australian hotel room. (2016, September 6). Retrieved from The Australian: https://www.theaustralian.com.au/business/technology/exploding-samsung-note7-ruins-australian-hotel-room/news-story/093d67da670f8c1ed20df88aafbb2f66 Gibson, A., Fraser, D. (2013). Business Law 2014. NSW: Pearson Higher Education AU. Gillies, P. (2004). Business Law (12th ed.). Sydney: The Federation Press. Glendale Chemical Products Pty Ltd v Australian Competition Consumer Commission, FCA 1571 (December 10, 1998). Hackshaw v Shaw, 155 CLR 614 (1984). Hall v State of New South Wale, NSWCA 154 (May 19, 2014). Hughes, A. (2014). Liability. Retrieved from Corrs Chambers Westgarth: https://www.corrs.com.au/assets/thinking/downloads/Product-Liability-First-edition-2014.pdf Latimer, P. (2012). Australian Business Law. Sydney: CCH Australia Ltd. Lindfield, M. (2017). The State of Tort Reform and the Law of Negligence. Retrieved from FindLaw Australia: https://www.findlaw.com.au/articles/1477/the-state-of-tort-reform-and-the-law-of-negligence.aspx Loveday, C. (2016). Product Liability. Retrieved from Clayton Utz: https://www.claytonutz.com/ArticleDocuments/501/16_ProductLiability.pdf.aspx?Embed=Y Loveday, C., Morrison, A. (2016, May 23). Product liability 2016. Retrieved from ICLG: https://iclg.com/practice-areas/product-liability/product-liability-2016/australia#chaptercontent2