Pavarotti Fashions Brand - Case Study Example

The case between Pavarotti Fashions Ltd Pavarotti a company based in London selling clothing articles through their mail order catalogue, with Amanda, Rajeev, and Rosalie, each of whom individually purchased different articles of clothing from the company, illustrates the complex web of civil rights and obligations between consumers and merchants where consumers stand at a disadvantage in terms of economic power1 and knowledge of their rights2 vis--vis merchants within society.3 Given that the relationship between consumers and merchants, in protecting consumer welfare, involve civil rights and obligations; this essay will therefore advise Amanda, Rajeev, and Rosalie of their civil rights within contract, tort, and restitution laws.4 In the first case, Amanda ordered a pair of jeans from Pavarotti's mail order catalogue on the 5th of December. She received a notice on the 12th of December that the jeans are no longer available for the advertised price, but for the revised price of J300, introduced on the 8th of December. While Pavarotti offered a complete refund, Amanda refused the offer and insists that Pavarotti sell the merchandise for J250, as advertised. The relevant issue therefore is whether Amanda's rights were violated as a result of Pavarotti's refusal to sell her the merchandise based on the advertised price; and whether she can compel Pavarotti to sell her the merchandise based on the advertised price. In determining whether Amanda's rights were violated, one must assess her rights as Pavarotti's customer, in particular and as a consumer, in general. As Pavarotti's customer, Amanda's rights depend on her contractual relationship with Pavarotti, such that a contract binding the two to specific performance must first exist. However, the courts may find that a contract does not exist. Looking unto Partridge v Crittendon5, Pavarotti's advertisements in the catalogue can be treated as an "invitation to treat" as opposed to an offer. By ordering, Amanda is simply making an offer. However, in introducing the revised price, Pavarotti makes a counter-offer, which is tantamount to a rejection of Amanda's offer, ending the current negotiations and beginning a new one.6 Since Amanda rejected Pavarotti's new offer of either a complete refund or a sale based on the revised prices, no contract exists between the two. While Carlill v. Carbolic Smoke Ball Co7 illustrates a contrary situation, where if applied to Amanda's case leads to a valid contract and existing obligations between the two parties8, this application is unlikely. Unlike in Carlill, Pavarotti, through the mail order catalogue did not illustrate a willingness to be bound by the advertisements, such that the company was merely supplying information to prospective customers. The lack of contractual intent on Pavarotti's part makes his advertisements merely an invitation to treat, as opposed to an offer. Furthermore, looking at the nature of Pavarotti's business where the merchandise is always subject to the availability of stock9 and the fact that mail order catalogues are already dated once released, such that it does not reflect price changes made within the company's physical office days after the release; Amanda cannot rely on the catalogue's certainty. Thus, the lack of contractual intent on the part of Pavarotti, and the lack of certainty, as illustrated in the facts given regarding the mail order catalogue, illustrates that no binding contract was formed, such that Amanda cannot hold Pavarotti to sell her the merchandise based on the advertised price because no contractual relationship or obligation exists between the parties. Insofar as contractual obligations are concerned, Amanda therefore has no claim against Pavarotti. However, as a consumer, she can claim that Pavarotti's action violates her civil rights. Based on the Trade Descriptions Act 1968 and the Consumer Protection Act 1987, Pavarotti can be subject to criminal liabilities. Amanda can argue that even though there is no contractual obligation between her and Pavarotti, the latter's refusal to sell her the merchandise for the advertised price, when it is clear that her order was posted before the change in price occurred making it valid regardless if it is an acceptance an offer itself10, illustrates unfair trade practices. However in this line of argument, regardless if Amanda wins in court or not; she cannot demand specific performance. As illustrated in Braddon Towers Ltd. v. International Stores Ltd., courts have refrained from mandatory injunctions compelling persons to conduct on business.11 Furthermore, as Lord Browne-Wilkinson states in Co-operative Insurance Society Ltd v. Argyll Stores, "the exercise of the discretion as to whether or not to grant specific performance starts from the fact that the covenant has been broken"12 - a fact, which did not take place since Amanda did not have a contractual relationship with Pavarotti, such that her rights are only those of a general consumer. Thus, in Amanda's case, her best course of action would be to accept the refund or pay the additional J50, because courts will not grant her specific performance, even if she wins. Specific performance is an exceptional remedy in English law. Had a contractual relationship existed between the parties, specific performance would have been available, but still not guaranteed. She may still sue the company on grounds of unfair trade practices. However she should understand that compensation for damages is the most likely result of her legal actions. In the case between Rajeev and Pavarotti, Rajeev, ordered a black leather jacket from the mail order catalogue advertised as "using only natural fabrics hand-made in the European Community". Unlike Amanda's case, a contractual relationship exists between the parties as evidenced by Rajeev receiving his jacket on the 13th of December. However, upon inspection, Rajeev found the jacket to be made in Vietnam, leading him to believe that he was mislead into entering their contract. Thus, the relevant issues are whether Rajeev, given his contractual relationship with Pavarotti, can claim for breach of contract; and if not whether an alternative misrepresentation claim can be made, instead. Despite the contractual relationship between the two parties, a breach of contract suit is not possible. First, based on the facts, the condition that the final product is made in a country other than Vietnam is neither an expressed nor implied term in their transaction. Looking at the nature of clothing retail, while retailers usually tell their customers the origin of their merchandise, there is no expressed requirement for them to do so. Thus, there was no breach. In this respect, Rajeev would have to depend on misrepresentation claims against Pavarotti. To determine whether there was misrepresentation, one must identify the false statement, which induced Rajeev to enter their transaction. Since Pavarotti did not make claims regarding the origin of his final products, but only those of his products' raw materials, the alleged misrepresentation is not a false statement of the facts, but nondisclosure of the fact that the particular jacket was made in Vietnam. However, as illustrated by Keates v.Cadogan13, English law recognises no duty of good faith, such that liabilities are not imposed on a seller's nondisclosure of the facts, regardless if they were aware of the buyer's ignorance or mistake even on material aspects of their transaction. Thus, no actionable misrepresentation exists. However, unlike in Keates, Pavarotti was not completely silent, such that the company made a statement about the origin of the merchandise's raw materials. Hence, misrepresentation is still possible if Rajeev can illustrate that Pavarotti, in claiming his products as "using only natural fabrics hand-made in the European Community", gives the implication to the unsuspecting consumer that the merchandise was indeed manufactured in some place other than Vietnam, in this case the European Community.14 This misrepresentation will therefore be actionable because as stated, Rajeev relied on the statement such that he would not have bought the merchandise had he known its origin. Nevertheless, assuming that the two party's contact was limited to Pavarotti sending the catalogues and Rajeev ordering from it and receiving his jacket; the misrepresentation is neither fraudulent nor negligent, but innocent.15 Aside from the fact that there was no false statement made, Pavarotti could not have known about Rajeev's mistaken assumption nor have the opportunity to correct it. However, since the case of an innocent misrepresentation under common law limits the complainant's remedies to indemnity and restitution under rescission, Rajeev's best course of action would be to make a misrepresentation claim under section 2.1 of the Misrepresentation Act 1967; where as a result of the distinction between innocent and "purely innocent" misrepresentation, the possibility of damages, aside from indemnity and restitution, is still available. In this respect, the burden of proof will be transferred to Pavarotti, such that it will be more difficult for the company to relieve itself from liability; while at the same time making it easier for Rajeev to make his claims for misrepresentation. In the last case, Rosalie, believing that the products sold by the Company is of high quality, bought a mink coat, which upon wearing was damaged when the stitching connecting one of the sleeves unravelled causing it to drop off. Like Rajeev's case, a contractual relationship also exists between Pavarotti and Rosalie. However, unlike the case of Rajeev, Pavarotti made a statement regarding the quality of his products as "items of the highest quality". The relevant issue therefore is whether Rosalie can make a claim against Pavarotti regarding her defective product; and if she can, under what heading. Rosalie has two possible courses of action against Pavarotti. First, unlike Rajeev's case, she can claim for breach of contract. Under the Sale and Supply of Goods Act 1994, contracts contain an implied condition of quality such that as stated by section 14.2 of the said act, companies such as Pavarotti is required to sell goods that illustrate "freedom from minor defects" and "durability". In this respect, it is clear that the merchandise was both defective and not durable. Thus, regardless if Pavarotti made an expressed guarantee about the quality of their products or not a guarantee is implied by the Sale and Supply of Goods Act 1994. Moreover, Rosalie can also make a claim under misrepresentation. Pavarotti made a clear representation through his catalogue that their merchandise is "of the highest quality." In an ordinary sale, claiming that a product is "of the highest quality" gives an express warranty of the product's quality and durability, which a reasonable person can rely on upon entering into a transaction. Thus, an actionable misrepresentation is also present, which in this case can either be fraudulent, if Pavarotti was aware of the condition of their product when it was shipped to Rosalie; or negligent, if Pavarotti merely failed to check the quality of their product prior to its shipment. In this respect, Rosalie can claim against Pavarotti both for breach and misrepresentation damages. On one hand, as previously stated, specific performance is a remedy available only to breaches in contract. Thus, if Rosalie's objective is to demand Pavarotti to perform his end of the bargain and replace her mink coat, then a claim under breach of contract is imperative. On the other hand, if Rosalie illustrates that Pavarotti's misrepresentation is fraudulent, and consequently an unfair trade practice, then damages under the Misrepresentation Act 1967 is in order. As this essay has illustrated, consumers like Amanda, Rajeev, and Rosalie are all disadvantaged against companies like Pavarotti Fashions Ltd, where they stand victims to various unjust practices, whether intended or not. Given a consumer's disadvantage in the course of such transactions, business law has developed to encompass a wide spectrum of civil rights based on each party's expected behaviour in the course of a transaction, where the failure to perform can bring forth remedies for the afflicted party, usually the consumer. Thus, the relationship between consumers and merchants in the course of their transaction encompasses a complex web of civil rights and obligations arising from both the contractual relationships the parties are accountable to, as well as the greater social responsibility of protecting consumer welfare. References: Primary Legislation: Trade Descriptions Act 1968 Consumer Protection Act 1987 Misrepresentation Act 1967 Sale and Supply of Goods Act 1994 Cases Cited: Benincasa v Dentalkit (Case C-269/95) [1998] All E.R. (E.C.) 135. Shearson Lehman Hutton v TVB [1993] ECR I-139. Partridge v. Crittenden [1968] 1 W.L.R. 1204. Livingstone v. Evans [1925] 4 D.L.R. 769. Carlill v. Carbolic Smoke Ball Co [1893] 1 QB 256; CA 1892. Henthorn v. Fraser [1892] 2 Ch. 27 (C.A. 1892). Braddon Towers Ltd. v. International Stores Ltd [1987] 1 E.G.L.R. 209, 213. Co-operative Insurance Society Ltd v. Argyll Stores [1997] UKHL 17; [1998] AC 1; [1997] All ER 297; [1997] 2 WLR 898 (21st May, 1997). Keates v.Cadogan [1851] 10 CB 591. Hedley Byrne & Co. Ltd. [1964] A.C. 465. Secondary Sources: Adams, A. (2003). Law for business students. (3rd. Ed.) Harlow: Longman. Macintyre, E. (2001). Business law. Harlow: Longman. Read More