Case name & citation: Grant v Australian Knitting Mills Ltd. (1936) A.C. 85
Plaintiff: Dr. Grant
Defendant: Australian Knitting Mills Ltd.
Jurisdiction: The Privy Council
What is the case about?
This case is a landmark case that throws light on contractual and tortious liability. An action for negligence can lie in tort if any duty of care cast upon the manufacturing company to the plaintiff, independent of any contract between them, is breached.
Facts of the case (Grant v Australian Knitting Mills)
The given case draws its principles from Donoghue v Stevenson.
The concepts of Donoghue v Stevenson (1932) were further extended in the Grant v Australian Knitting Mills case.
The plaintiff, Dr. Grant, bought a set of woollen underpants made by the defendants from a retail store. He developed a serious case of dermatitis as soon as he started wearing the garments. The improper scouring of the suit after bleaching, which left the yarn still laced with toxic sulphites, was what had caused the disease of dermatitis.
In simple words, the manufacturers in this case failed to remove a chemical irritant from their woollen underwear. And Dr. Grant developed dermatitis while wearing his underpants.
Although the defendants’ method for removing the sulphites from the yarn was often effective, it was determined that some of its employees had been careless on this particular occasion.
The plaintiff then filed a lawsuit against Australian Knitting Mills (AKM) for monetary damages.
He filed lawsuits in tort against the manufacturers (AKM) as well as for breach of contract against the retailers.
The precedent cases
If X and Y have entered into a contract and a wrongful act on the part of X results in a breach of contract with Y and also a commission of tort against Z, a stranger, it was thought that just like Y, Z also has to show privity of the contract before any action can lie in tort. The introduction of this “privity of contract fallacy” into the law was done by Winterbottom v Wright case (1842).
However, in the case of Donoghue v Stevenson (1932), it was found that an action in tort is independent of a contract and the rule that the privity of a contract is needed to make an action in tort is unjust and irrelevant. Therefore, a consumer can bring an action against a manufacturer even though there is no contract or agreement between the consumer and the manufacturer.
A manufacturer owes his duty to the ultimate user or consumer. This duty has originated from the law of tort and not the law of contract. Therefore, even if the contract is only between the manufacturer and the retailer, there is still a duty on the part of the manufacturer to the consumer.
In Donoghue v Stevenson, Donoghue and a friend stopped at a café for a drink. The beverages were ordered and paid for by the friend. The ginger beer was served in a dark, opaque bottle. Donoghue drank some of the contents of her glass. As she emptied the remaining contents of the bottle into the glass, a partially decayed snail dropped out of the bottle. Donoghue became extremely unwell, experiencing nausea, gastroenteritis, and shock. She filed a lawsuit of negligence against the manufacturer.
A new rule of law was applied to this case, i.e., “The duty of care”.
The law imposed a direct duty of care on the manufacturer towards the customer, not just the purchaser, but the ultimate consumer – the person for whom the goods are meant. Third parties could now sue if it was breached.
Contentions of the parties in Grant v Australian Knitting Mills
The plaintiff contended that the manufacturer had been negligent and should pay him for the discomfort he had to undergo as a result of that carelessness.
The Australian Knitting Mills contended, among other things, that there was no Australian law requiring them to be held accountable in such circumstances. In Australia, it was the responsibility of the purchaser of commodities to inspect the goods for any defects before purchasing them.
Judgement of the Court in Grant v Australian Knitting Mills
Donoghue v Stevenson was adopted as a convincing precedent by the Court, and the legal concepts established in Donoghue v Stevenson were expanded to cover all manufacturers.
The Courts further stated that in order for an action for negligence to be successful, it must be demonstrated that:
- The defendant owed a duty of care to the plaintiff.
- There was a breach of the duty owed, and
- The breach resulted in damage suffered by the plaintiff.
Each of the three elements must be proved before a claim for negligence can be successful. The duty of care must be owed to the consumer (i.e., the ultimate user), the defendant (the manufacturer) must breach or fail to observe that duty in some way, and damage must occur (which may be to the person or to the person’s property).
The Privy Council held that Dr. Grant was entitled to compensation since the manufacturer did not exercise reasonable care in the production of the underpants, and as a result, the plaintiff was injured. This was the first time this legal principle, known as negligence, had been invoked in Australia. The ratio decidendi of this case had become a binding precedent to be followed by all lower courts in the Australian legal system.
Thus, the manufacturers were held liable for damages as they failed to perform their duty to take care. It was irrelevant that there was no privity of contract between the manufacturer and the ultimate consumer.
Hence, Dr. Grant was entitled to compensation for negligence.
Applying the Law of negligence
Once the law of negligence was established, it could be interpreted to cover any type of goods/products. The law of negligence could also be expanded to apply to a wide range of additional scenarios.
For example, it could be applied to the provision of negligent advice that is relied on in the ordinary course of business as in the case of L Shaddock & Associates Pty Ltd v Parramatta City Council (1981).
From the above, the case of Grant v Australian Knitting Mills Ltd. can be summarized as follows:
“A” had purchased woollen garments from the retailer “B” which were originally manufactured by M & Co. After wearing the garments, A suffered from dermatitis. It was held that A can claim damages from M & Co. even though no contract existed between the manufacturer and the consumer. He cannot claim damages from the retailer, i.e., B. (The names are fictitious and only for the purpose of understanding.)
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