Commercial Transactions Assignment 1 Oliver Johnson

Page 1 of 7

0A, E;TENSION COMMITTEE

T!e U"iver#it* < S*$"e* #t %ames Cam'"s, (e el ), 1*+,1*- .hilli' #treet #/&01/ 0#2 2000

OFFICE USE ON0 &3T1 41C1I51&

Compulsory Assignment Coversheet

SUBJECT CODE 08 ASSIGNMENT NUMBER 8.1 SUBJECT NAME Commercial Transactions NAME & ADDRESS FOR RETURN OF ASSIGNMENT Full Name: Oliver Patrick J !"# " A$$re## %: %&'( Cra)"e* R$ A$$re## (: Su+ur+ State P #tc $e: Nu"$le NS, ('-.

/ P0EASE DO NOT USE 1OUR STUDENT NUMBER TO IDENTIF1 1OURSE0F ,2EN SUBMITTING 1OUR ASSIGNMENT3 1OUR NUMBE S2OU0D NOT BE INC0UDED ON T2E CO4ERS2EET5 IN A 2EADER OR FOOTER5 OR IN T2E BOD1 OF T2E ASSIGNMENT3

Stu$e"t $eclarati " 6mu#t +e #i7"e$ +* all #tu$e"t#8: I acknowledge that: 1. Unless otherwise indicated by way of footnote or reference, this assignment is entirely my own work. 2. I ha e read the statements in the Course Information Handbook and the Subject Guide regarding the re!"irements for the s"bmission of assignmen

#igned:

$li er %ohnson

&ate:

9/7/2013

MAR9ERS USE ON01 MAR9

MAR9ERS COMMENTS

Commercial Transactions Assignment 1 Oliver Johnson

Page 2 of 7

1. The harmed patients or their estates will be able to claim against the hospital under the Competition and Consumer Act 2010 (Cth) chedule 2 (hence!orth "the AC#$) %art 3&2' The patients were harmed b( a product pro)ided b( the hospital* the radiation* but the harm can ultimatel( be lin+ed to a ser)ice* the administration o! incorrect doses o! the radiation' This answer will e,amine the nature o! the transaction and whether it !alls under the AC#* whether the in-uries b( the patient are reco)erable against the hospital and the t(pe o! damages that ma( be reco)ered under the AC#' Although the !acts are silent on the agreement between the patients and the hospital* it should be noted that the guarantees discussed below cannot be e,cluded b( contract. AC# /0'

The patients ha)e ac1uired goods or ser)ices !rom the hospital as consumers under the AC# because medical treatment is ordinaril( ac1uired !or personal consumption. AC# ' 3(1)(b)* 3(3)(b)' 2nder the AC# '2* ser)ices are de!ined broadl( and medical treatment* as wor+ o! a pro!essional nature and rights to !acilities con!erred in trade or commerce seems to !it the de!inition' The test !or a trade or commerce is the same as the test in 31(,,) o! the Australian Constitution (AC# '2)' The !act that t tephens is a pri)ate hospital suggests that it !ul!ils the acti)ities test set out in Adamson4s Case1 b( per!orming pro!essional ser)ices !or reward' o long as the trading acti)ities are not insigni!icant* t tephens can be deemed to be engaged in trade or commerce* despite also recei)ing donations2' 2nder ' /0 o! the AC#* the hospital has a non&e,cludable dut( to pro)ide ser)ices with due care and s+ill' 5ecause there is a real ris+ o! in-ur( or death* the appropriate le)el o! care and s+ill is )er( high. 6a(nes ) 6arwood3 and to be determined b( the trier o! !act* gi)ing due weight to the preponderance o! medical opinion and the e,pectations o! a reasonable person. Rogers v Whitaker 4. The hos ital kne! that the ro"#ct !as ver$ ne!% #nteste" in the fiel" an"% &ase" on their clinical kno!le"ge% ha" the otential to
1

R v Federal Court of Australia; Ex parte WA National Football League ("Western Australia Football case") 719798 6CA / 2 E v Australian Red Cross ociet! (1991) 9CA 20* at 303 3 719338 1 :5 10/ 0 719928 173 C#; 079

Commercial Transactions Assignment 1 Oliver Johnson

Page 3 of 7

ca#se in'#r$ or "eath. (t ma$ &e reasona&le% therefore% to e) ect them to "o their o!n testing &e$on" a "emonstration of fo#r "oses at a sales itch in !hich the machine itself an" a s#rviving rat !ere claime" to rove that the "osages !ere correct. *iven the ease !ith !hich the im rom t# "emonstration !as erforme" an" the severe "amage that co#l" &e ca#se" &$ a malf#nctioning #nit% it ma$ &e reasona&le for the hos ital to have erforme" their o!n tests &efore #sing the machine on their atients. Alternativel$% it ma$ have &een reasona&le to closel$ meas#re the "oses of ra"iation &eing "elivere" to the atient "#ring the thera e#tic rocess #sing a *eiger "etector or similar "evice. +inall$% "#e care an" skill ma$ have re,#ire" the hos ital to "iscontin#e #sing the ro"#ct as soon as the harm &ecame a arent in the first atient% tho#gh this ass#mes that the harm e)hi&ite" itself fairl$ imme"iatel$ an" all the harme" atients !ere not &eing treate" conc#rrentl$ The hos ital ma$ also &e lia&le #n"er -. .1 of the AC/ &eca#se the ra"iation treatment !as not fit for the e) ress #r ose of treating the atients0 con"ition nor the im licit #r ose of "oing no f#rther harm to the lie" &$ the hos ital% &$ its nat#re% !as atient. The atients0 #r ose in receiving treatment !as to make them more health$ an" the service s# not fit for this #r ose &eca#se it nee"lessl$ harme" the atient. When a atient receives me"ical treatment% it is im lie" that the treating facilit$ !ill act #n"er the central tenet of primum non nocere or non&mali!ecence* and the hospital !ailed to abide b( this implied purpose b( harming the patients' <er( speculati)el(* it ma( also be argued that the patients were harmed b( highl( charged particles ripping through their bod(' These particles ma( be de!ecti)e goods under ' 30(2)(d) because the( were unsa!e' This assertion ma( be displaced b( a warning gi)en b( the hospital '30(0)(b) and the !act that beams o! highl( charged particles are* b( their nature* )er( dangerous. ' 30(3)(b)' =! a breach o! a statutor( guarantee is !ound* the hospital is liable !or a ma-or !ailure AC# because. ' 2/> (a) a reasonable patient would not ha)e undergone the

Commercial Transactions Assignment 1 Oliver Johnson

Page 4 of 7

treatment i! the( had been aware that the machine was mal!unctioning? ' 2/> (b) the machine administering the treatment was substantiall( un!it !or the purpose and the harm has alread( occurred? and ' 2/> (e) the treatment produced an unsa!e situation !rom which serious in-ur( and death were the result' @i)en that there has been a ma-or !ailure in the ser)ices* under 2/7 (0) the patients

or their estates can reco)er damages !or the in-uries sustained' Although the hospital did not actuall( !oresee that the damage would occur be!ore the treatment was administered because the( were unaware that their machine was mal!unctioning* the damage that did occur was reasonabl( !oreseeable* gi)en the inherent danger o! the treatment' =t is not necessar( that the hospital did !oresee the actual damage* onl( that some damage was reasonabl( !oreseeable because o! an( act o! carelessness on the part o! the hospital. Annetts ) Australian tations %t( #td 1' 2. The hospital ma( reco)er against Amega %harmaceuticals or B=A so!tware in a number o! di!!erent wa(s* depending on how the transaction is de!ined' The sale o! the CT;B2 machine ma( be a consumer transaction and* there!ore conse1uent damages to third parties are actionable under the AC# or it ma( be a business to business transaction and actionable under the each as well as the se)erable liabilit( o! B=A' The purchase o! the CT;B2 machine will !all under the AC# i! it cost less than E00*000 and it can be established that it should not be included in the e,ceptions under ' 3' The !acts are silent on the cost o! the machine' The e,ceptions present di!!iculties' The hospital held itsel! out as using the machine to pro)ide a ser)ice in the course o! trade or commerce' 6owe)er* this ma( not !it the ' 3(2)(b) e,ception because it was not used up in the manu!acture o! particles but to energise them and direct them towards the patient' Cor could it be said to be used in repairing or treating other goods unless something as tin( and inconcei)able as particles are goods and the machines treats them b( charging them with energ( and shooting them at patients'
3

ale o! @oods Act 1923 (C D)

( A@A)' This answer will discuss and both possibilities and the possible de!ences to

(2002) 211 C#; 317

Commercial Transactions Assignment 1 Oliver Johnson

Page 1 of 7

hould the CT;B2 machine be !ound to be consumer goods under the AC#* it will breach '30' The CT;B2 machine is not o! acceptable 1ualit( because it is not !it !or the purpose o! administering radiation therap(. therap( purchase. '30(2)(a)* nor !ree !rom de!ects '30(2)(b) nor sa!e. '30(2)(d) nor !it !or the e,press or implied purpose o! radiation '33' These statutor( guarantees cannot be e,cluded b( the words o! 30(7)' The CT;B2 machine contains a ma-or !ailure o! a statutor( limitation in the parts onl( warrant( ( '/0) nor the inspection b( the hospital prior to guarantee in that it is unsa!e '2/0(e) and un!it !or the disclosed purpose '2/0(d) so* under '239(0)* the hospital ma( reco)er an( losses su!!ered as a result o! a success!ul suit b( the patients' The onus o! pro)ing the sale was not a consumer sale is on Amega' =n the e)ent that Amega is success!ul in pro)ing the sale o! the CT;B2 was not a consumer sale* the transaction will be co)ered b( A@A' A@A '19 implies a condition into non&consumer sales that the goods will be reasonabl( !it !or the implied purpose the purchaser wishes to put them to in cases where the bu(er relies on the seller4s s+ill' The !act that Amega +new the CT;B2 machine was to be used to heal patients and described CT;B2 as "therapeutic$* it seems that the purpose o! correctl( administering care!ul doses o! radiation could be implied and that the CT;B2 machine has not met this condition' Although Carmel is a radiographer* there is no suggestion that she is an e,pert in medical e1uipment or so!tware engineering or the testing o! same* which would in turn suggest that the hospital relied on Amega4s s+ill' The !acts are unclear as to whether the CT;B2 machine was sold under its trade name but* e)en i! it were* the !act that the CT;B2 had not been traded be!ore means that it would not gi)e an( indication to the bu(er as to its !itness and the bu(er is le!t to rel( on the s+ill and representations o! the seller to determine whether the machine is !it !or the therapeutic purpose' =t should be noted that the onus is on the hospital to pro)e it relied on Amega4s s+ill' 2nder '20 o! the A@A there is an implied contractual condition that the goods must compl( with the sample' =n this case* the sample CT;B2 machine wor+ed correctl( during the sales presentation while the CT;B2 machine recei)ed b( the hospital did not' =! it is !ound that the machine did match the sample and onl( mal!unctioned under certain untested circumstances* the CT;B2 machine did not match 5radle(4s

Commercial Transactions Assignment 1 Oliver Johnson

Page . of 7

description o! administering "accurate doses$ and there!ore contra)enes the implied contractual condition in A@A 1>. Cichol )' @odts/' A@A allows the seller to e,plicitl( e,clude implied contractual conditions. '37 but it is unclear whether the words o! limitation in the "parts onl( warrant($ are su!!icientl( e,plicit to do so' =n Awners trata %lan /2930 )' :ell F ;igb( %t( #td 7 BcGougal H held the words. "in respect o! the er)ices* whether under the law o! contract* tort or otherwise$ wide enough to contract out o! implied conditions but ga)e weight to the speci!icit( o! the e,cluding words as well as the e1ual +nowledge o! the part( and ruled that such e,clusions must be gi)en their natural and ordinar( meaning and read in the conte,t o! the contract as a whole and against the part( asserting the e,clusion' Ta+ing the words in isolation and assuming that the hospital and its representati)es are e,perienced at bu(ing medical e1uipment and a#are of t$e ris%s involved it &a! see& t$at t$e #ords "parts onl!' are sufficient to exclude i&plied statutor! conditions( )nder ( *+, t$e "parts onl!' #arrant! &a! be said to be inconsistent #it$ t$e -ualit! or fitness condition, on t$e ot$er $and, ( ./ re-uires express agree&ent to exclude suc$ conditions and it &a! be said t$at "parts onl!' &erel! i&plies t$e exclusion of statutor! conditions( =! it is !ound that the implied conditions are e,cluded* the hospital cannot claim !or damages paid to the patients' =! the conditions are not e,cluded* ( .0(1) allo#s t$e $ospital to clai& for da&ages "naturall! resulting in t$e ordinar! course of events'( 2$is see&s #ide enoug$ to include da&ages paid to patients for t$eir in3uries because 4&ega %ne# t$at t$e $ospital #as in t$e business of using &edical e-uip&ent on patients and t$at t$e possibilit! of $ar&ing patients because of a defect in t$eir product #as in t$eir conte&plation at t$e ti&e of t$e sale > or was a Ireal danger4 or a Iserious possibilit(49' 4&ega5s %no#ledge of t$e $ospital5s business distinguis$es t$e case fro& 5ostoc+ and Co ) Cicholson and ons (1900) in that Omega
kne! the #se to !hich the hos ital !o#l" #t the machine an" the "anger of harm to the thir" ersons.

/ 7

13/ J; 010 (2009) C D C 1302 > The 6eron == 719/98 1 AC 330 9 6 %arsons (#i)estoc+) #td ) 2ttle( =ngham F Co #td 7197>8 K5 791 per #ord 2p-ohn

Commercial Transactions Assignment 1 Oliver Johnson 2i&liogra h$ Corones* * 2$e Australian Consu&er La#, Thomson ;euters* 2011 #atimer* %* Australian 6usiness La#* 30th ed' CC6* 2011 #e)(* # 5* 5ell

Page 7 of 7

L oft#are 7roduct Liabilit!8 )nderstanding and 9ini&i:ing t$e

Ris%s 5er+le( Technolog( #aw Hournal <ol 3 1990 ingh* H? :aur* @ Australian Consu&er La# <olume 0* #ambert Academic %ublishing* 2011 teinwall* ;* 5utterworths Annotated Competition and Consumer Act 2011* #e,isCe,is 5utterworths* 2011 weene(* 5? A4;eill(* H* La# in Co&&erce* 0th ed' #e,isCe,is* 2010 <ermeesch* ; 5? #indgren* : J 6usiness La# of Australia* 12th ed' #e,isCe,is* 2011