Cases

Question 1

Grant v Australian Knitting Mills

Answer 1

Grant purchases a pair of woolen underwear which, unbeknownst to him, contained sulphites due to negligent manufacturing. These sulfites caused him dermatitis for many years. He brought an action against both Australian Knitting Mills, the manufacturer, and the retailer John Martin.
Held: the retailers were in breach of contract under S14 of the Sales of goods act where they recommended Grant buy this underwear when he made known to them what he needed.
Held: the manufacturers owed a duty of care to produce a good safe for its purpose ( S 14) and didn’t, and therefore was liable in tort (negligence).

this case took place in the australian supreme court

Question 2

Donoghue v Stevenson

Answer 2

This case established that the duty of care could exist between manufacturer and consumer even without contract between them. Also established the “neighbor principle”, in which you should be held liable for your action if its outcome was foreseeable, and the “proximity” principle, in which the damage is directly caused by the neglect.

Facts:
D’s friend gave her a bottle of ginger beer produced by S which contained a snail. She suffered shock and gastritis.

Held:
1. that “love thy neighbor” = don’t injure your neighbor, your neighbor being anyone whom your actions can affect.
that there is a duty to take care in the case of proximity, ie if your actions could forseebly cause damage to someone then you owe a duty of care.

2. That a manufacturer of goods that could potentially harm a consumer owes a duty of care to the consumer to create a safe good even if there is not a contract between the two.

Under these principles, D successfully sued S.

This was in 1932, before the Sales of Goods Act.

Question 3

Smith v Bank of England

Answer 3

Good faith

S suing the bank for not disclosing proper information before she used her half of the house to secure her husband’s loan

held that the bank should have disclosed information/guided her.

Question 4

Bank of East Asia v Scottish Enterprise

Answer 4

Retention-

three parties:
Scottish enterprise hired construction workers who borrowed money from Bank of East Asia.

Construction workers negligently constructed, which was going to cost Scottish Enterprise. SE decided to sue for damages as per the contract, and withhold the payment of the balance that it would have owed the construction workers who in turn owed it to the Bank.

The bank sued, SE appealed but lost.

The court held that
1. it’s not because party A breached the contract that A can necessarily no longer enforce any of B’s obligations

2. mutuality is contextual: when deciding if obligation A is the mutual obligation to B, which has been breached, must be looked at within the context.

Scottish Enterprise lost the appeal, the court ruled it could not retain payment.

Question 5

Graham v Utd Turkey Red

Answer 5

Graham was selling other people’s goods as well as Turkey’s which was in breach of contract. Graham terminated the contract and the court ruled that Turkey still had to pay Graham for all the goods Graham had sold before breaching the contract.

rescission is a self help remedy that applies to future obligations, not past ones.

Question 6

MacLeod v Kerr

Answer 6

A sold a car to B, B bought the car using a stolen cheque, B sold the car to C in good faith.

Court held that the car belonged to C because it was sold to C before the contract between A and B was actually vioded. A voidable contract is valid until voided