International Business Law - Essay Example

? of Your Paper of Problem a. Areas of Law There are a number of legal points that need to be discussed in order to determine as to whether or not a passing of the property occurred before Franz, the seller, was declared bankrupt. First, there is a need to determine if a valid contract exists between Joe, the buyer, and Franz, the seller. Second, if a valid contract exists between the buyer and the seller, there is a need to determine when the reckoning date for the said contract is. To answer the legal questions at hand, let us look into the different principles of law involved in this case. b. Legal Principles Before we can determine as to whether or not there was a passing of property between the seller and the buyer, we need to establish first the existence of the contract. According to Section 3 of the Sale of Goods Act 1895, a contract of sale can be “made in writing…. or by word of mount, or partly in writing and partly by word of mouth…” There are three important elements needed to make a valid contract, namely, a valid cause or object offered, acceptance of the offer and consider. According to the court in the case of Grainger & Sons v Gough1, an offer must be made with the intention of entering into contract with the buyer and not merely an invitation to treat. When it comes to acceptance of the offer, the court ruled in the case of Entores Ltd v Miles Far East Corporation2 the acceptance must be communicated to the seller in order for the acceptance to be bidding upon the seller. The acceptance of the offer may be made in writing or through word of mouth. According to Denning LJ in this case, the acceptance must be made unequivocally and such unequivocal acceptance must be communicated clearly to the seller. For instance, if the acceptance was made through telephone, the buyer should see to it that the seller heard the acceptance. Acceptance and counter offer are two different things so it is important to determine as to whether or not what was communicated to the seller is an acceptance of the offer or merely a counter-offer. Note that acceptance give rise to a contract while a counter-offer does not. Also, in acceptance, the buyer accedes to the terms of the seller while in counter-offer; the buyer proposes different terms to the seller. When a counter-offer is accepted by the seller, such acceptance will be binding upon the parties. In international transactions, the place of acceptance is very important as this will determine the law applicable to the contract. In the case of Entores Ltd v Miles Far East Corporation3, the court ruled that the place of acceptance is the place where such acceptance is communicated. This means that if the offer was made in UK and the acceptance was made in Australia, the laws of Australia shall govern the transaction since the acceptance of the offer was made in Australia. Acceptance is not absolute in the sense that the parties can revoke the acceptance when the terms agreed upon are not met. According to the court in the case of Grainger & Sons v Gough4, the buyer may withdraw his or her acceptance anytime before or after the contract has been perfected. If the buyer withdraws his or her acceptance before the contract has been perfected, there contract is deemed inexistent. An accepted offer needs to be accompanied by valuable consideration in order for a valid contract to materialize. According to the court in the case of Currie v Misa5, consideration is not limited to money but also include rights, interest, profits and the like. As stated by the court in the case of Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd6, the valuable consideration can be a “benefit to the promisor or a detriment to the promisee”. The intentions of the parties control the perfection and execution of the contract. According to the court in the case of Rose & Frank Co v Crompton (JR) & Bros Ltd7, the intentions of the parties govern the relationship of the parties. As it is, whatever the agreements between the buyer and the seller, such agreement shall be binding upon them subject to the provisions of the Sale of Goods Act 1895. Note that on Section 17 thereof which stipulates that the property passes from the seller to the buyer upon the time agreement by both parties or through the conduct of both the parties. Note that where both parties do not expressly stipulates when the contract is deemed perfected and executed the actions of the parties and circumstances surrounding the transaction shall be used to determine the intentions of the parties (Sale of Goods Act 1895, Section 17). The kind of goods that is subject to the contract affects the passing of the ownership of these goods. In the case of unascertained goods, the court ruled in the case of Wardar’s (Import & Export) Co Ltd v Norwood & Sons Ltd8 the ownership of the goods passes from the seller to the buyer at the time when the goods become certain. Section 18 of the Sale of Goods Act 1895 provides for means of ascertaining the goods subject to the contract. There are five rules that govern the passing of the ownership of the property from the seller to the buyer. Rule 1 provides that in an unconditional contract of sale involving specific goods that is already in its deliverable state, the properly passes from the seller to the buyer at the time when the contract was made. The exact date of delivery is immaterial in this case so even if the delivery of the goods is delayed, such delay does not affect the passing of ownership. Rule 2, on the other hand states that if the seller need to do something to the goods to being it to its deliverable state, the ownership of such goods does not pass to the buyer until such time when the goods are in its deliverable state. As for rule 3, this rule so states that if the good subject to the contract need to be weighed, measured or tested to determine the price thereof, the ownership of the goods does not pass to the buyer until these necessary acts have been performed and the results of these acts are communicated to the buyer. Good that need to be approved by the buyer is governed by rule 4. This rule states that the ownership of the goods passes to the buyer only after the buyer approve or accept the goods. As for future goods, these are governed by rule 5 which states that where goods corresponding to the description given in the contract are unconditionally appropriated either by the seller with the consent of the buyer or by the buyer with the consent of the seller, the ownership of such property passes to the buyer. The delivery of the goods may be done through a carrier and depending on the stipulations of the contract; a delivery to the carrier can be construed as delivery to the seller. According to Section 32 of the Sale of Goods Act 1895, where the parties agree that the goods bought be delivered through carrier, the delivery of such goods to the carrier is deemed delivery to the buyer. Technically, this means that once the goods are delivered to the carrier, whether named or unnamed in the contract, such delivery is deemed a delivery to the buyer so the rights over the goods in transit now passes from the seller to the buyer. c. Application of laws and principles to the case In applying the legal principles to the bar of Joe and Franz, we start by examining the content of the contract. According to the facts of the case, Joe and Franz entered into a written contract whereby Joe bought sausages, Brie cheese, electric cheese slicer and six wooden barrels. Assuming that there was a valid contract between the parties, we now apply the rules set under Section 17 and Section 18. Under section 17, the intentions of the parties govern the delivery of the goods so if the parties agreed in writing as to the date and the manner of delivery of the goods, such agreement is binding to the whole world. In the case of Joe and Franz, if the parties stipulated in writing the exact date or the circumstances that lead to the passing of the ownership of the goods subject to the contract, then the intentions of the parties shall govern the manner and the time of the transfer of ownership. On the other hand, if we apply the rules set in Section 18, we will need to look into the kind of goods that are subject to the contract. First, we will apply rule 1 on the cheese slicer which was advertised BFCS’ web site. The slicer is a certain object that is already in its deliverable state so its ownership passes to the buyer when the contract was perfected. With regards to the sausages and Brie cheese, these objects need to be counted and weighed to determine their price so the ownership of these objects only passes to the seller after they have been weighed and counted and the information is regarding their number and their weight is passed to the buyer. Thus, if these objects have been weighed and counted before they were turned over the courier and the buyer was duly informed about the number of sausages and the weight of the cheese, then, the ownership of these goods have legally passed on to the buyer. As for the six wooden barrels, these fall under rule 2 since the seller may need to do something to bring these good to their deliverable state. Once the goods are in their deliverable state, the ownership thereof passes to the buyer. In the case of the six wooded barrels, the license to import which the buyer needs to received the goods was issued in December so since this condition have been met, the wooden barrels are now in their deliverable state as described under Section 18. Aside from the provisions of Section 18, the provisions of Section 32 of the Sale of Goods Act 1895 also govern the transaction. Note that under Section 32, delivery to the carrier is deemed delivery to the buyer so once the goods are delivered to the carrier, whether named or unnamed by the parties, the ownership of the goods passes from the seller to the buyer. In the case of the goods bought by Joe from Franz, the goods have been delivered to the carrier and are already on its way to Fremantle port which is the port of destination. As it is, the ownership of the goods has passed from the Franz to Joe. d. Conclusion Following the facts of the case, Franz became bankrupt in January 20, 2011 while the contract of sale was entered into by the parties sometime in 2010. Based on the provisions of the Sale of Goods Act 1895, the ownership of the goods has already passed from the seller to the buyer long before the seller was declared bankrupt. Since the ownership of the goods has already passed to the buyer, the goods can no longer be seized by the creditors of the seller in the event of bankruptcy. Problem 2: March 29, 2011 Mr. Joe Fremantle delicatessen shop Sir: It has come to our attention that you are having some problems with defective goods from your suppliers. As per your letter to us, you mentioned that one of your costumers have to be hospitalized for six weeks after consuming adulterated salami bought from your store. To determine who is liable for the damages and injuries sustained by the consumer, let us look at the provisions of the Trade Practices Act 1974 (Cth)/Competition and Consumer Act 2010 (Cth). 1. According to Section 74A of the Trade Practices Act 1974 (Cth)/Competition and Consumer Act 2010 (Cth), the company that manufactures the goods are considered as the original source of the goods. A foreign company that does not have an office in the country but supply goods to local resellers is considered as the manufacture of the goods sold by the resellers and shall be held liable for inherent defects in the goods. The principle here is that the original manufacturer of the goods has the control over the goods therefore, it is considered as liable for the quality of the goods supplied to the reseller. In the case of the adulterated salami, these goods came from an Italian supplier so that supplier is considered as the manufacturer of the goods. Since you are not the original manufacturer of the adulterated salami and just bough the aforementioned products for re-sale/re-supply from your supplier, you may not be held liable for the damages and injuries sustained by the consumer after consuming the adulterated salami. Note that Section 74A(4) so states that goods that are imported into the country by a company or a corporation that is not the manufacturer of the goods, such goods imported by the company or corporation shall be deemed to be the products of the foreign company. Since you (Joe) imported the salami from your supplier, you are not considered as the manufacturer of the adulterated goods so you cannot be held directly liable for the defective goods, unless you tampered with the goods and caused the goods to be unfit for human consumption. Note that according to Section 74D (2)(i), the liability on the adulterated goods passes from the manufacturer to the seller if the damage on the goods occurred due to an act of default of any person who is not a employee or an agent of the company or corporation that manufactured the goods. In other words, if such damage to the goods occurred while the goods were in transit and in the hands of the agent of the manufacturer, the manufacturer shall be liable for such damage. Note that under these provisions, the carrier is considered as the agent of the manufacturer and thus the goods does not pass to the reseller until such goods were delivered and accepted by the reseller. Once the goods passed on to the hands of the seller, the reseller now has the obligation to exercise due diligence to protect the goods from damages so if the goods were damaged while in the hands of the re-seller due to the negligence of the re-seller, then the re-seller is now liable for such damage. If you (Joe) can prove to the court that you exercised due diligence in preserve the integrity of the goods while they were in your store, then you cannot be held liable for the damages and injuries sustained by the client. As it is, it is very important that you prove to the court that you stored the goods according to manufacturer’s specifications. By showing to the court that you are not negligent in storing the goods received from the manufacturer, you exonerate yourself from liability for the defective goods. 2. Recovery for damages and injuries suffered through the acts of the manufacturer of the adulterated salami can be done through a court action. In the case of the consumer, the consumer can lodge a complaint is a competent court in Australia since the incident happened on Australian soils. According to the law, complaints for damages sustained by consumers due to the defective goods sold by the manufacturer is an actionable wrong and a formal complaint for recovery of actual, nominal and punitive damages can be files against the manufacturer in a court of competent jurisdiction. For the action for recovery of damages for injuries suffered, it must be files within the statutory limitation period. According Section 75AO, any person who wants to recover compensation for damages under the Trade Practices Act must file the action within 3 years from the time when the buyer become aware of the defect or the economic loss he or she suffered due to the defective goods. Thank you. Bibliography Competition and Consumer Act 2010 (Cth) (27 March 2011). Currie v Misa (1875) LR 10 Ex 153. Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915) AC 847. Entores Ltd v Miles Far East Corporation (1955) 2 QB 327. Grainger & Sons v Gough (1896) AC 325. Rose & Frank Co v Crompton (JR) & Bros Ltd (1925) AC 445. Sale of Goods Act 1895 (27 March 2011). Trade Practices Act 1974 (Cth) (28 March 2011). Wardar’s (Import & Export) Co Ltd v Norwood & Sons Ltd (1968) 2 All ER 602. Read More