Internet Sales Law - Essay Example

? Internet Sales Law By Due This document discusses the concepts of breach of condition and warranty under the Sale of Goods Act 1979 through a case study. It also explains the application of Sale of Goods Act 1979 in the cases of sales made through the internet. It explains the remedies available to a buyer if he receives faulty goods. Keywords: Implied Condition, Faulty Goods, Sale by Description, Course of Business, Remedies, Rejection of Goods. Auction is a process in which an item is presented to a number of parties and sold to the party that makes the highest bid. When a bid is made, the bidder is said to have made an offer. When the auctioneer strikes a hammer thrice or says words like ‘Going, Going, Gone’, the offer is accepted and a contract of sale is made. These days, a wide variety of goods are presented for auction online. The seller does not need to meet face-to-face with the buyer or the bidder. The person who makes the highest bid wins the auction and the goods are sold to him. In the given case, Chris won an auction online and bought an artifact for ?50. He believed it to worth ?500 if it was free of chips. Otherwise, it was worth ?50 only. He saw an image of the artifact online and found no flaw in it. The seller had a feedback rating of 50 transactions. The seller had written in caption, “Old pot ornament, in good condition for its age. I know nothing about these items, but it looks old to me.” Also, in seller’s information, he had written, “all goods are sold as seen.” When the item was delivered, Chris found out that it was not free of chips. S.14(1) of Sale of Goods, 1979 provides that there are no implied terms as to the condition or warranty about the quality or fitness of goods. In this case, the parties had no direct interaction. The buyer had a look at a photograph of the item online and bought it. There are no implied terms as to the warranty or condition. But S.14(2) states that, “Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition- (a) as regards defects specifically drawn to the buyer's attention before the contract is made ; or (b) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal.” According to the given facts, the seller had a feedback of 50 transactions. The given facts also quote the seller, “Old pot ornament, in good condition for its age. I know nothing about these items, but it looks old to me.” The online trading system often produces a dilemma whether the seller acted in the course of business or not. The former of the two facts reveals that the seller had been trading online for quite some time. This means that the seller had acted in the course of business. However, during his run in online trading, he did not sell the same type of goods every time. The later of the two facts shows that the seller did not act in the course of business because he had vividly expressed that he had no knowledge of the ornament. This puts him somewhere in the middle of the two types of actions. Taylor and Willet (2005) call such a seller a Hybrid Seller. The law is silent about this type of seller. There was no concept of such a seller until the emergence of online trading system. The most important factor in determining the rights and remedies of the buyer is the ascertainment of the fact whether it was a sale by description and whether the consumer relied on such description. Chris saw the picture and decided to purchase the ornament thinking that it would be a good investment if the ornament was free of chips. The picture in question shows that the item was a clean piece. Chris depended on the depiction by the picture and decided to purchase the item. Consumer’s reliance is pivotal in the cases of sale by description. S.13(1) of Sale of Goods Act 1979, states that, “Where there is a contract for the sale of goods by description, there is an implied condition that the goods will correspond with the description.” The seller expressly mentioned that he did not know about the subtleties of the ornament. He might look to use this statement in his defense. But in this case, the picture shown by him serves the purpose of description. It is also very important to determine whether the ornament in this case qualifies for the category of faulty goods under Sale of Goods Act, 1979. Non-conformity with the description is a breach of an implied condition and goods automatically fulfill the criteria set for faulty goods. The chips in the item are defects in appearance. Seller also said that it was in a good condition. Chris can also be expected to base his decision on this piece of information. According to the seller’s statement, the ornament was old. There is a great possibility that an old ornament would contain chips. Although it is far-fetched but the principle of Caveat Emptor seems to be applicable in some capacity. Normal wear and tear can bring a lot of chips in an old ornament. Also, according to facts, Chris knew that the ornament, without chips, would worth about ?500. It can be construed from this fact that Chris is an expert and can easily be expected to be aware of the rigors of normal wear and tear on such ornaments. But the point is of reliance and he did not get a chance to check the ornament before the sale. The online transactions are of a nature in which the consumers have to rely on what the seller speaks of the good and how the goods look in their pictures. Consumers have little protection in online trading if the goods do not conform to the description. In Harlingdon & Leinster v Christopher Hull Fine Art Ltd, the seller of a painting mentioned to the buyer that he believed it to be by a German painter, Munter. Being a specialist in British contemporary art, he made it clear to the buyer that he was not an expert on German paintings. The buyer examined the painting himself and purchased it. It turned out to be a forgery later and buyer decided to rescind the contract and have his money refunded. It was held that as the buyer did not rely on seller’s description – having examined it himself, the sale was not a sale by description. Therefore, the buyer was not entitled to rescind the contract. In this case, Chris did not have an opportunity to examine the good himself before sale as it was not possible. If the buyer had relied on seller’s statement in Harlingdon & Leinster v Christopher Hull Fine Art Ltd, the courts would have given them a right to reject the painting and have his money refunded. Even if Chris is an expert, he believed that the item had no chips because there were no chips visible in the picture. The seller did not present a fair picture. If there are peanuts and almonds in a jar and one is asked to present a sample of what is in a jar, the person should take out some peanuts and some almonds also. If he picks peanuts only and not any of the almonds, the sample would not be a fair sample. It is a trait of Common Law that it looks for novel circumstances and incorporates new legislations to deal with such circumstances. Sale of Goods Act, 1979 was reformed in 2002 and now it gives rights to consumers in two tiers. Buyer is given a right to get the faulty good repaired or replaced as a primary right. However, the seller has the right to decide whether he would get the goods repaired or replaced. If it is possible for the seller to get the goods either repaired or replaced, he must carry out the request within a reasonable time and without significant inconvenience to the buyer. According to S. 48D of Sale of Goods Act, 1979, the buyer must also provide the seller with a reasonable time to repair or replace the good. If the seller repairs the goods successfully, by the application of J & H Ritchie Limited v Lloyd Limited, he is bound to inform the buyer about the type of repairs carried out. If both reparation and replacement are impossible, then the seller must offer the second tier of rights to the buyer. From the facts of this case, it seems quite improbable that the seller could get the ornament repaired or replaced. Therefore, Chris can rely on the second tier of rights which is rescission and reduction in price. If Chris rescinds the contract, it would end in the same way as it is ended in the case of rejection of goods. However, in rescission, he would have to pay value of use of the ornament to the seller. The law is silent as to how this should be calculated. If he accepts reduction in price, the ornament would stay with him. “It seems that the proper approach is to ask how much a consumer would have paid for the goods in their defective state.” (LAW COM No 317, 2009) If reduction in price is calculated in this way, then there would be no reduction in price because according to the given facts, in Chris’ opinion, the ornament would have ?50 if it was not free of chips. He paid the same amount as the price of the ornament. If replacement or reparation is impossible, Chris has a right to reject the goods. If Chris decides to reject the item, he must do so within a reasonable time. He just needs to notify it to the seller that he has declined to accept the item. When a buyer rejects the goods, the notification of the fact to the seller is sufficient. It does not matter that the goods are still in the possession of the buyer. However, if the buyer fails to give such notification within a reasonable time, he is deemed to have accepted the goods. After that, if he has not paid the seller yet, he would be bound to pay the price of the goods to the seller. There is a question as to what exactly is the reasonable time. These days, the reasonable time is generally taken as a period of thirty (30) days. The determination of reasonable time also depends upon the type of goods. Reasonable time for acceptance of perishable goods would be smaller. In this case, the ornament is a long lasting good. Therefore, a period of thirty days can be construed as reasonable time for its rejection. Chris may be entitled to recover some damages. “The measure of damages is the contractual one of seeking to put the consumer into the position they would have occupied had the contract been properly performed.” (LAW COM No 317, 2009) In this case, if he rejects the item, he might be able to recover the broker’s fee from the seller. Damages may be payable even if Chris accepts the item. If the buyer has obtained some benefit from the good before rejecting it, he has to remit it to the seller too. In this case, the nature of the ornament is such that Chris could not have obtained any benefit from it. Therefore, he has to remit nothing to the seller. According to S. 48A(3) of Sale of Goods Act, 1979, the buyer has an advantage of reverse burden of proof. If the fault arises within the six months of sale, it is deemed to have been at the time of sale too unless the seller can prove otherwise. In this case, Chris would have no difficulty in proving that the item was defective at the time of sale. From the facts, it looks to be very difficult for the seller to prove otherwise. Therefore, Chris would be granted his rights as explained above. References 1. Harlingdon & Leinster v Christopher Hull Fine Art Ltd [1990] 1 All ER 737. 2. J & H Ritchie Limited v Lloyd Limited [2007] UKHL 9. 3. Morgan-Taylor, M, and Chris Willett (2005) ‘The quality obligation and online market places’, Law Journals, vol. 21, no. 04?00276, p.3. 4. Sale of Goods Act, 1979. (UK) s 14 (1). 5. Sale of Goods Act, 1979. (UK) s 14 (2). 6. Sale of Goods Act, 1979. (UK) s 13 (1). 7. Sale of Goods Act, 1979. (UK) s 48D. 8. Sale of Goods Act, 1979. (UK) s 48A (3). 9. The Law Commission and The Scottish Law Commission (2009) ‘Consumer remedies for faulty goods’, LAW COM No 317 & SCOT LAW COM No 216, Cm 7725, p.12. 10. The Law Commission and The Scottish Law Commission (2009) ‘Consumer remedies for faulty goods’, LAW COM No 317 & SCOT LAW COM No 216, Cm 7725, p.15. 11. The Law Commission and The Scottish Law Commission (2009) ‘Consumer remedies for faulty goods’, LAW COM No 317 & SCOT LAW COM No 216, Cm 7725, p.35. Read More

 

Read More