Contract Law at Hillingdon Electricals Ltd - Coursework Example

?Hillingdon Electricals Ltd (A Case Study) Table of Contents Case Overview 3 Scenario A (Tony and Ursula) 3 Scenario 2 (Vondra and HEL) 6 Scenario 3 (Wayne and Saeed) 9 References 13 Case Overview Hillingdon Electricals Ltd (HEL) has been involved in retail business mainly dealing with the sales of various kinds of household electrical goods comprising washing machines, home entertainment systems and iPads among others. The company operates in the South East region of UK with its expanded network of retail shops. Observably, the company advertises its products through leaflets, newspapers and via internet to reach to the ultimate customers. In the ten years tenure of its operations, the company has grown rapidly, which can be fundamentally related with its policy of providing products at quite a lower price. This has eventually helped the company in building an appreciative reputation for itself in the market. However, in the recent years, the company has failed to deliver its services as per expectations, which resulted in its declining market share further affecting its competitive advantage. Contextually, the top level management of the company has decided that each of its stores situated all over the UK market needs to have a particular sales target for its various categories of goods. The scenarios highlighted and discussed below therefore deals with certain situations that the company is dealing with, post its approach of enhancing its performance. Scenario A (Tony and Ursula) In this scenario, it has been noted that due to a manual error, price of certain products of the company were advertised in websites and newspaper at a much lesser price in comparison to the present market price for the same. Subsequently, a customer named Tony bought the same product from the company website in a usual procedure as per the advertised price. However, in the following day, the customer received a mail from the company stating that the website was in total error which depicted a false price of the product and hence, the product can only be sold at its original market price. However, the company offered certain discount as an effort to maintain goodwill with the customer. In this regard, Tony denied to pay the present market price and demanded the product at the committed price in website advertisement. Correspondingly in another case, Ursula went on to buy a product from a retail shop of the company in accordance to the price advertised in the newspaper. However, similar to the condition of Tony, the store manager her that the actual price of the product was more than the price disclosed in the advertisement in the newspaper. Ursula too refused to pay the extra amount and demanded the product in the advertised price. It is apparent from the above scenario that human error is mainly responsible for the false advertisement of the company, which can be assumed to be unintended on the grounds of good faith. Despite of such considerations, the case can be considered as breach of the UK tort law. A tort is a crime that involves the use of unfair means in conducting activities that harms or results in loss of others. The harm or injury, as per law is not limited to physical injuries; rather, it covers emotional and reputational injurious as well (Findlaw, 2012). Correspondingly, the approach of the company, despite of the fact that it was owing to human error can be considered as a tort against the customers and competitors. It can therefore be classified as a clear case of negligence of the company in its advertising, which is illegal under and punishable under the tort law (Lawskool, n.d.). Conceptually, the tort law in the UK is applicable for several activities, which primarily includes activities related to negligence and duty of care. In simple terms, negligence can be regarded as carelessness of people in their work, which results in unfavourable impacts on others. According to the tort law, individuals or a body of individuals (companies or organisations or associations) should not depict negligence attitude towards their activities that directly or indirectly impact people one way or the other ([1] E-lawresources, n.d.). Contextually, the aspect of duty of care comes into contention. In law, duty of care is the legal obligation that requires an individual or a body of individual to assure reasonable care while performing their activities that elsewhere might harm others. In the given scenario, the company can be argued to have deciphered as degree of lack in serving with duty of care in its approach to product price advertising. In precise, HEL showed negligence while advertising its products, which resulted into misconception among the customers and perplexities within the market. Apparently, the company can be charged for breach of duty of care, which further makes it liable to pay compensation to the parties who had suffered due to the action as was considered in the case of Donoghue v Stevenson [1932] UKHL 100 and Nettleship v Weston [1971] 2 QB 691 ([2] E-lawresources, n.d.). Consequently, both Tony and Ursula should be treated as victims of false representations of price of the product in the advertisements. They were not aware of the fact that the advertisement was vague and erroneous and contextually, they developed an idea about buying the product on the advertised amount. Although it is apparent that the customers were not physically harmed by the breach of duty of care by the company, there is a certain psychological and emotional distress identifiable, which they need to deal with. Hence, both the customers, i.e. Tony and Ursula, will be liable to obtain compensation from the company. Furthermore, as per the tort law of the UK, the company apart from being involved in the breach of duty of care and negligence might also be treated as a fraud. It has been noted that low price always attracts customers to buy any particular product (Lawskool, n.d.). Correspondingly, the company’s approach can be seen as fraudulent, if the good faith that the error was committed unintentionally, in order to attract the customers towards the products but denying the same later to sell it on the same price mentioned. These charges against the company will make it liable to pay compensation to Tony and Ursula for their emotional distress and wastage of their precious time ([1] E-lawresources, n.d.). The marketing and advertising law might also be applicable in this case. According to the law, manufacturer or seller of a product must always provide an accurate representation of the product and its features to the customers in the most truthful, legal and honest manner. The law further depicts that companies must describe accurate price of the product while advertising. For example, the law assumes that customers will pay only the amount that are being stated in the advertisement, as it is the advertisement and the price and feature mentioned in it that has attract customers to buy the products. In this particular scenario, Tony and Ursula are clear victims of false advertisements. Both of them were attracted to buy the products only after seeing the advertisement, which stated low price for the same. Subsequently, companies that are involved in such breaches of the advertising law will be held liable to pay heavy fines or to deal with other punitive outcomes (Practical Law, 2013; [1] Crown, n.d.). Scenario 2 (Vondra and HEL) In this particular scenario, a customer named Vondra visited one of the HEL stores but became quite fussed to know the fact that her preferred Tablet was actually priced ?190 that no resemblance with the advertised price. However, in order to maintain goodwill with the customer, the manager of the store offered the product to Vondra at a considerable discounted price of ?150. The only condition kept in this regard was that HEL will provide no guarantee for the product. Contextually, Vondra signed an order form with certain clauses, which apparently mentioned that HEL will not be liable for any damage of the product and hence, customers will only get the warranty or guaranteed benefits that are provided by the manufacturer of the item. Furthermore, in this similar regard, HEL was also not liable to get any guarantee or compensation for any fault or malfunctioning of the product from the manufacturer, i.e. Samsum, as the products were bought in discounted rates and under certain specific contractual terms, which depicted that Samsum will not compensate for any malfunctioning in the product. Subsequently, both the HEL store as well as Vondra becomes victim following the malfunctioning of the product in the succeeding months for which both of them seek refund from the company. In this context, it is clear that the product offered by Samsum was of low quality, as many customers including Vondra complained about its malfunction. As a result, HEL had to pay refund to many people excluding Vondra who had a contract with the store mandating no guarantee for the product as it was purchased in a discounted rate. However, Vondra was liable to get guarantee and the refund for the product from the company, but only if she returned it directly to the company in Malaysia at her own expense. Correspondingly, the losses experienced by HEL from the entire scenario were also non-refundable owing to the contract signed between the two. The clause of the contract stated that the goods purchased by ELKHEL H dlkfdkzlvlzdfksaskflasdlkfjdslkfjdsaflklskvnlksdfvlfkdvns;ldfvszdl;;LSK;SDKF;FDK HEL from the company was in bulk and at a discounted rate for which, Samsum was not bound to pay any guarantee or compensation for any malfunctioning of the product to HEL. According to the law, a contract is a mutual agreement between two parties whereby one party commit a set a promises to other and vice versa, which is to be fulfilled as per the legal statutes relevant to the promise made. The promises or commitments made on contract are further essential to be on the basis of mutual understanding (Allen & Overy, n.d.). Correspondingly, in the contract between Samsum and HEL, the clauses and commitment made by the two parties to each other are bound to be fulfilled as per the regulatory norms. Observably, the contract between the company and HEL apparently mentioned that the company will not be liable to pay any compensation with regard to malfunctions of the goods. Hence, in such scenario, HEL is not in a position to claim reimbursement from Samsum as it will violate the law of contract. Correspondingly, Vondra, who was also a victim of the malfunction will also, not be able to claim for any compensation from HEL owing to the contract she signed with the store. Hence, as per the contract law both HEL and Vondra will not be able to get compensation for their loss. However, the Sales of Goods Act might be deemed as appropriate in this scenario. The Sale of Goods Act 1979 of UK offers certain remedies and rights to the customers when they buy their goods. According to this act, when a company sales product to the customers, there is an agreement of sales between the two parties, which provides certain rights to the customers about the quality and fit for use of the product. Observably, the law states that companies will not have the liability to sell faulty goods to customers at any given scenario. It can be noted in this context that the products sold by Samsum to HEL were not fit for use as it was of low standards. The customers who bought the product complained about its malfunctioning to HEL who paid refund for the same. Accordingly, HEL, as a customer of the company can charge Samsum on the same grounds as per the Sales of Goods Act for selling faulty products (Office of Fair Trading, 2011). Similarly, Vondra can also charge HEL for compensation or refund of the product as per the Sales of Goods Act. Furthermore, both HEL and Vondra will also be liable to get the assistance of consumer rights as per the Consumer Protection laws in the UK. According to this law stature, consumers have rights to get compensation from companies when they receive faulty goods, poor services and/or unfit goods that affect their interests and causes damage. In this case, both HEL and Vondra are victims of unfit goods for which Samsum can be held responsible upto a large extent. Contextually, both the parties can justifiably demand for compensations or refunds for the products as per the consumer rights in the UK ([2] Crown, n.d.). Scenario 3 (Wayne and Saeed) The case scenario depicts that in regard to the false price advertisement that affected the reputation of HEL, Saeed, the director of E-Commerce of the company was called by Yolanda, the Human Resources Director (HRD) of the company. This is done by Yolanda with the intention to obtain the rudimental first-hand information from Saeed regarding the occurrence of the entire issue and the role of the E commerce department in the entire case of advertising error. Contextually, Yolanda became quite annoyed with Saeed and demoted him for a period of six months. Furthermore, he was told to shift from director’s office into the general office with other members. An angry Saeed stated this treatment as unfair and resigned from work accordingly. In another similar scenario, the manager of the Hayes branch in HEL, Mr. Wayne received a three months notice of discharge on grounds of lack of competence that resulted in decline in the monthly sales of the store. Wayne, similar to Saeed, considers this to be unfair. In this scenario, the employment law of the UK will play a crucial. The employment law of the UK signifies the legal rights of both employers and employees in the workplace. As per this law, an employee and an employer form an agreement between themselves with certain commitments to be fulfilled by both the parties (Geldards, 2007). Accordingly, both Saeed and Wayne must have been in a contract with HEL where they had certain implied conditions related to their approaches towards each other, which in any case must be followed. These aspects mainly include some of the duties of the employee(s) and employer towards each other as per the common law. The contract between the two parties involved in a contract of employment also needs to involve certain express agreements, which are mostly set through one-sided bargaining. This means that in most of the cases, employer sets the standards and approach of the work to be conducted by the employees in the workplace. Moreover, following these express terms, both the parties involved in the contract needs to depict their expectations from each other so that any sort of misunderstanding could be avoided in the future context. Thus, it can be argued that both Wayne and Saeed should have been aware of their responsibilities in the workplace and also regarding the organisation’s expectations from them. The contract between the employer and the employees also states certain duties that both the parties should execute. In this regard, the duties of the employer majorly include paying fair salary to the employees for their work, valuing their work and duty to maintain trust and confidence on the employees among others. Correspondingly, the duties of the employee include obeying reasonable orders of the employer, maintaining loyalty and ensuring fulfilment of the organisational goals as the major (Geldards, 2007). Contextually, in the given scenario, HEL, which is also the employer, can be considered to be partially just in its approach. This was particularly due to the fact that Wayne and Saeed were accused to have failed to meet the expectation of their employer, directly in case of Saeed and indirectly in the case of Wayne. Saeed, as a director of the E-commerce department, was entitled with the duty to ensure that his approach does not harm the interests of the company and its stakeholders. But owing to the erroneous and callous behaviour observed in the e-commerce department, the reputation of the company has undergone a considerable damage. This shows that Saeed was unable to ensure his part effectively as the director in E-commerce and hence, the company has every right to take appropriate actions against him. Contextually, the company demoted Saeed from his present position for a six months period. This can be justified as a fair practice by the company, as accordingly to law employer has the right to demote employees on grounds of act of misconduct or underperformance for a considerable period of time (Hardiman, 2012). In the subsequent case, it has been observed that Saeed has resigned from his job on grounds of Constructive dismissal after being demoted from his current post. In this context, Saeed’s approach can be questioned owing to the fact that his demotion was decided on the basis of certain appropriate reasons and cannot be considered constructive ([3] Crown, n.d.). Hence, it can be stated that Saeed’s approach of resigning from his job is not justified. Again, the scenario of Wayne was somewhat similar to that of Saeed. It is evident that the company has certain expectations from him, which might also be included as expressed terms in the employment contract. Owing to the contractual terms, Wayne has the duty and has the responsibility to fulfil the expectations of the company. It has been observed that the sales of the company have fallen quite considerably in the recent years owing to which it needed to take certain measures. Subsequently, the company provided certain sales targets to Wayne, who was the manager of the Hayes branch of the company. However, the company viewed that he was unable to meet the targets on a continuous basis which further depicts his lack of competence. Contextually, the company served him a notice which stated that he will be sacked from his job within three months. Moreover, prior to this, the company also served an oral warning letter to Wayne, six months ago, which apparently stated that it was a formal written warning against Wayne and any further decline in performance of his branch will lead to severest of results. In this regard, it can be said that the company has every right to dismiss Wayne from his job. Notably, the employment law of UK states that companies can dismiss an employee who is working for more than 1 month by serving a considerable notice period with certain concrete grounds ([3] Crown, n.d.). HEL completely complies with the law and served a considerable notice period to Wayne, which justifies the decision of terminating him on grounds of lack of performance. Hence, in this case, the approach of the company cannot be considered as unfair or illegal or against the terms of the contract and indeed it is completely justified from their end. Therefore, Wayne needs to comply with the decision of the company, which was quite fair considering his performance. References Allen & Overy, No Date. Basic Principles of English Contract Law. Advocates for International Development, pp. 1-14. [1] Crown, No Date. Marketing and Advertising: The law. Home. [Online] Available at: https://www.gov.uk/marketing-advertising-law/advertising-codes-of-practice [Accessed November 28, 2013]. [2] Crown, No date. Consumer Rights. Home. [Online] Available at: https://www.gov.uk/consumer-protection-rights [Accessed November 28, 2013]. [3] Crown, No Date. Dismissal: Your Rights. Home. [Online] Available at: https://www.gov.uk/dismissal/unfair-and-constructive-dismissal [Accessed November 28, 2013]. [1] E-lawresources, No Date. Tort Law. Home. [Online] Available at: http://www.e-lawresources.co.uk/Tort-law.php [Accessed November 28, 2013]. [2] E-lawresources, No Date. Donoghue v Stevenson [1932] AC 562 House of Lords. Home. [Online] Available at: http://www.e-lawresources.co.uk/Donoghue-v-Stevenson.php [Accessed November 28, 2013]. Findlaw, 2012. What is tort law? Home. [Online] Available at: http://www.findlaw.co.uk/law/government/constitutional_law/500400.html [Accessed November 28, 2013]. Geldards, 2007. Employment Law. Home. [Online] Available at: http://www.gliding.co.uk/bgainfo/clubmanagement/policies/hr/EMPLOYMENT%20LAW%20-%20OVERVIEW.pdf [Accessed November 28, 2013]. Hardiman, M., 2012. Demoting employees: fair game? Shoosmiths. [Online] Available at: http://www.shoosmiths.co.uk/client-resources/legal-updates/Demoting-employees-fair-game-1558.aspx [Accessed November 28, 2013]. Lawskool, No Date. Tort Law Summary. Home. [Online] Available at: http://lawskool.co.uk/content/uk_tort_law_sample_2011.pdf [Accessed November 28, 2013]. Office of Fair Trading, 2011. Sales of Goods Act Explained. Home. [Online] Available at: http://www.oft.gov.uk/shared_oft/738369/738375/OFT002_SOGA_explained.pdf [Accessed November 28, 2013]. Practical Law, 2013. Advertising Law: A Quick Guide. Home. [Online] Available at: http://uk.practicallaw.com/0-382-7494 [Accessed November 28, 2013]. Read More