Material Facts
Jodee acquired a mobile phone from Right Phone Pty Limited. The phones that are supplied by Right Phone are usually manufactured abroad and then imported into the country by a company known as Viking Pty Limited. Right Phone then acquires the phones from this importer and supplies them to consumers. In supplying the phones, Right Phone requires consumers to sign a contract where they agree to pay a certain figure (the price of the phone) and a network connection fee which is paid monthly. The consumer after acquiring the phone pays for services such as phone calls on top of the payment mentioned earlier. In this contract, there is a clause where consumer’s knowledge that Right Phone does not provide any warranty itself for any defects in the supplied products. The only warranty applicable is the one provided by the actual manufacturer, and this warranty is only valid for 12 months. In Jodee’s case, he noticed the effects of the phone’s defects after 13 months meaning that the said warranty had already expired. His phone kept turning itself on after 10 minutes of continual use. When he tried to recharge it, he was electrocuted and had to go to hospital. His kitchen appliances were also damaged. When he contacted Right Phone, he was informed that the company had not issued any warranty with him and the only warranty available was the one with the manufacturer and that was for 12 months which had already expired.
Issue
Did Right Phone breach the statutory customer guarantee through the product it provided to Jodee and does therefore mean that Jodee is not obliged to pay anything more under the contract and can also claim damages? Does Jodee have any rights against the importer, Viking Pty Limited under Part 5-4 Division 2 or Part 3-5 of the Australian Consumer Law in regards to the defective phone?
Rule
Right Phone breached its statutory guarantee by providing a defective phone under Part 5-4 of the Australian Consumer law and therefore, Jodee is not obliged to pay anything more under the initial contract. Subsection c of Part 5-4 Division 1, section 265 states that if a person supplies through commerce or trade services to a consumer that are connected with a rejected good, then the consumer has the right to terminate the contract for the supply of these services and therefore not pay for these services anymore. However, he cannot sue for damages from Right Phone; he cannot only sue for damages from the manufacturer. The manufacturer under these circumstances is taken to be Viking Pty limited and Jodee can sue for damages for the injuries and damage resulting from the defective mobile device. Part 5-4, Division 2, Section 271, Subsection 3 of the Australian Consumer Law states that damages can be recovered from the manufacturer of a product that was supplied by a third party on behalf of the manufacturer.
Application of the Rule to Facts
Although Right Phone claims that it did not provide any warranty, Jodee under the law has the right to terminate the contract which he signed meaning that he will not pay any amounts that were agreed upon any more including the monthly network connection fee of $20. He claims that the good which was supplied is defective, and he is, therefore, rejecting it.
The Australian Consumer Law provides statutory guarantees for goods supplied to consumers by suppliers. The law states that the goods or products must be of an acceptable quality, that is, they must be safe, long- lasting and with no faults. Therefore, even if the products come from a different manufacturer, it is the duty of the supplier to ensure that the goods delivered meet the statutory consumer guarantee.
When a good delivered by a certain supplier fails to meet a statutory guarantee, then the consumer can seek remedies through several channels provided by the law. The law states that one can claim a remedy from the product’s retailer if the product does not one or more of the provided consumer guarantees. The remedies that can be sought include replacement, repair, refund and sometimes compensation for loss and damages. Under the Australian Consumer Law, the retailer should not refuse to help a consumer by sending him to the manufacturer or the importer.
This is exactly what happened with Jodee, who was sent away to the manufacturer by his supplier. The supplier claimed that the only warranty available to him was the one that had been provided by the manufacturer.
Part 5-4 of the Australian consumer law is very clear on action to be taken against suppliers. In this section, the law states what should be done in the case of rejected goods. In section 265 that talks about the termination of a contract for the supply of services connected with rejected goods, the law states that if the consumer notifies the supplier about the rejection of a good because of a defect or a fault, then the supplier is required by law to give a refund to the consumer. The law goes on to state that if a person supplies through commerce or trade services to a consumer that are connected with a rejected good, then the consumer has the right to terminate the contract for the supply of these services and therefore not pay for these services anymore. This can be found in Subsection c of Part 5-4 Division 1, section 265 of the Australian Consumer Law. In the case of Jodee, the rejected good is the defective mobile phone that he refused, and the contract that he signed with Right Phone is for the supply of network connection services whose costs is $20 per month. In this case, therefore, Jodee has the right to terminate the contract that he has with Right Phone and therefore not pay any previously agreed amounts. He is essentially not obliged to pay anything more under the initial contact.
In Subsection 6 of Part 5-4 Division 1, section 263, of the Australian Consumer Law, a further clause is inserted. It is stated that if the property in the goods rejected had already passed to the consumer before he notified the suppliers, the property in those goods reverts to the supplier once he has been notified of the rejection meaning that a contract can, therefore, be terminated the moment a consumer notices a defect as it happened with Jodee.
According to the Australian Consume Law, consumer guarantee does have specific expiry dates and can be applicable even after the expiry of warranties that were given by the supplier or the manufacturer. Therefore, even if the warranty in Jodee’s case had expired, the supplier still failed to meet the statutory consumer guarantee by supplying a defective device whose defects only came to light in the 13th month of use. Therefore, Jodee is still entitled to remedies from the suppliers as asserted in the Australian Consumer Law.
Regarding damages. Jodee can only sue for damages from the manufacturer of the good. In Part 5-4, Division 2, Section 271, Subsection 3 of the Australian Consumer Law, it is stated that if through commerce and trade, goods by description are supplied to a consumer and the description is applied to the goods on behalf of the goods’ manufacturer with his or her consent, the affected individual in relation to the provided goods can through action against the goods manufacturer recover damages.
In this case, therefore, Jodee is entitled to a remedy from Right Phone, which may include a refund, replacement or repair. He is also free to terminate the contract and therefore not pay any further amounts to Right Phone. However, when it comes to damages, he can only recover them by taking action against the manufacturer.
The importer of the phone that was sold to Jodee is Viking Pty Limited. It is not mentioned what the name of the actual manufacturer is but in the current circumstances, there does not seem to be much difference between Viking Pty Limited and the actual manufacturer. In fact, Viking Pty Limited can be said to be the manufacturer. This is provided for by the Australian Consumer Law, which gives several definitions of a manufacturer. According to this law, one of the meanings of a manufacturer is someone who imports goods into Australia when the person is not the manufacturer of the goods and when at the time of importing the goods, the actual manufacturer does not have a physical place of business in the country.
Therefore, under the definition of a manufacturer provided by the Australian Consumer Law, Jodie has several rights against Viking Pty Limited. Under Part 3-5 of the Australian Consumer Law, Jodie is entitled to compensation from the company because of injuries suffered due to the safety defects of the product. Jodee accumulated injuries that resulted into his hospitalization. The law states that if an individual suffers injuries because of a safety defect of product, then the manufacturer has to compensate. Also, Jodee is entitled to further compensation for the destruction or damage of other goods. In the same Part 3-5 of the Australian Consumer Law, if a manufacturer provides goods that have a safety defect and that therefore destroy or damage other goods mainly used for domestic or household consumption, then this manufacturer is liable for these damages and must pay the consumer. In the case of Jodee, trying to recharge his phone resulted in an electric shock that damaged several kitchen appliances that were plugged into the same point of power as the phone, and the manufacture of the phone is, therefore, liable for these damages. In Division 2 of the same part of the Australian Consumer Law, it is stated that a defective goods action can be taken within three years after the time an individual becomes aware of the alleged damage or loss, the safety defect in a good and the identity of the manufacturer. Therefore, Jodee is well within the time frame for filing a defective goods action, and once he files this action, then Viking Pty must pay for all the damages described above.
Tentative Conclusion
In light of the facts present in this case and the provisions of the law, the most likely conclusion is that Right Phone breached its statutory guarantee by providing a defective phone under Australian Consumer Law and therefore, Jodee is not obliged to pay anything more under the initial contract. Right Phone should therefore provide him with a remedy which may include a replacement, refund or repair of the defective device. In addition, Viking Pty Limited should take blame as the manufacturer and Jodee can therefore sue the company for damages
Bibliography
Jeannie Marie Paterson, "The new consumer guarantee law and the reasons for replacing the regime of statutory implied terms in consumer transactions." (2011) 35 Melbourne University Law Review.
L. D Griggs, "Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010”, 2010.
Michael Tilbury and Harold Luntz. "Punitive Damages in Australian Law" (1994) 17 Loyola of Los Angeles International & Comparative Law Journal 769.
S.G Corones, The Australian Consumer Law. (Rozelle, N.S.W: Thomson Reuters Australia, 2011).
