Introduction to Business Law - Coursework Example

?Introduction to Business Law Question Adele was extremely upset by the telephone call from Eddie cancelling the order of wild boar piglets. Adele believes that Eddie had made a legally binding contract with her that he could not break. Eddie has argued that he was within his rights to make an agreement with whoever he pleased and owes nothing to Adele. With regard to the law of contract, advise Eddie whether there was a legally binding contract between Eddie (Eagle Pub) and Adele (Fresh Food Fast Ltd), and if so, when the contract became binding and why. You must refer to relevant cases to support your advice. The English Law of contract is clear on the fact that any agreement that is enforceable in a court of law is considered a contract. Offer and acceptance are some of the most important features of a contract (Collins, 2003). In this particular case, one party makes an offer for a certain arrangement, and the other party accepts the terms of the arrangement. Neither offer nor acceptance has to be made through writing or through making oral statements. This type of contract is referred to as an implied contract in which certain terms are not expressed or explained in words (National Archives, 2010). This seems to be the kind of agreement that Eddie had with Adele. Once he ordered for his piglets, Adele expected him to accept and pay for the services rendered. Adele has every right to demand for compensation from Eddie, who had made it clear in his communication that he would get the piglets for Eddie. In the Smith v. Hughes 1871 LR 6 QB 597 case, one cannot go against a contract at will (Young, 2010). Before Eddie met his second supplier, he had intended to honour his agreement with Adele because it was a business agreement. However, just because he found a cheap alternative, he disregarded his earlier agreement with Adele. It could be reasoned that his action was justified since by the time he agreed to buy the piglets from the second supplier, he had not received any communication from Adele about her new terms. However this argument is not admissible in a court of law since Adele had not in fact failed to communicate, it was Eddie who did not see the fax on time. Therefore, by agreeing to buy piglets from another supplier when he had already agreed to buy them from someone else can be considered to be a breach of contract and Eddie might be required by a court of law to pay Adele in damages. Adele had spent a lot of money getting the piglets and she had already sent the driver on the way to Eddie’s shop to drop the order, but she had to cancel at the last minute after she got the call from Eddie. The lack of timely communication in this case further complicates matters for both parties, because each one of them was assuming the other was acting in a certain way. In Merritt v. Merritt 1970 1 WLR 121, the courts regarded Mr. and Mrs. Merritt to have entered an agreement with the intention of creating legal requirements (Young, 2010). When Eddie was requesting for the piglets from Adele, he knew that he wanted to agree to the terms that Adele would set. In Brogden v Metropolitan Railway Company 1877 2 AC 666, the company never wrote to Brogdan formalizing their business arrangement. However, for two years, Metropolitan had conducted itself in a manner that showed that the business arrangement was formal and Brogdan was bound to honour the agreement (Poole, 2006). This means that if Eddie and Adele had been conducting business together for a long time, then any agreement they made in the course of business would have been considered binding for both of them. Edie has argued that it was his right to make an agreement with whomever he pleased, therefore, he does not consider to be indebted to Adele for failing to honour his part of the agreement. However, Adele may have a strong case if the courts decide that the agreement is enforceable. In Hillas & Co Ltd v Arcos Ltd 1932 UKHL 2, the House of Lords ruled that the terms of the agreement were enforceable when consider dint he context of the previous agreements entered between the two parties (Burrows, 2009). If Adele and Eddie have had a long business relation in which agreements have been made and honoured, the courts might decide to rule in favour of Adele and Eddie will have to part with the required compensation. Question 2 Adele spent two weeks away from work in order to recover from her injuries. Her bag (?4,500) was ruined and cannot be repaired and the Patek Philip watch (?15,000) cannot be fixed. Adele has contacted Bambi Stores and informed them that she expects some sort of compensation for the accident. Bambi replied that they have no liability for the accident due to the notice behind the cash desk excluding liability. Explain to Adele the relevant clauses in a contract which seek to exclude liability and whether in this particular case, Bambi could be held liable. Explain with reference to the Unfair Contract Terms Act 1977. Schedule 2, paragraph 1(a) and (b) of the Unfair Contract Terms Act 1977 lays out exclusion and limitation clauses as follows: a) excluding or limiting the legal liability of a seller or supplier in the event of the death of a consumer or personal injury to the latter resulting from an act or omission of that seller or supplier, and b) inappropriately excluding or limiting the legal rights of the consumer vis-a-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations (Atiyah, 2000) The Act limits the applicability of negligence clauses and any other clauses that try to limit liability and at the same time breaching a contract. The provisions of the Unfair Contract Terms Act disregard the exclusion of liability of death or injury caused inside a business premise, even though the aim of the businessperson is something else, such as trying to avoid court suits for losses caused by the consumers’ carelessness (Lawson, 2005). In Aaron v. Terry 2009 UKHL 34, the judge decided that Aaron had to pay Terry damages for injuries caused on his body (Poole, 2006). Adele has a right to ask for compensation from Bambi who can be held liable for the injuries she suffered and the damage caused on her watch and bag. Both the watch and bag were of considerable value, and since she had not seen the sign posted on the reception, she is entitled to full compensation from Bambi. In Director General of Fair Trading v. First National Bank plc 2001 UKHL 52, the Unfair Contract Terms Act also embodies good faith which is characterized by “principle of fair and open dealing” (Burrows, 2009). This means that the terms should be fully expressed in a clear and legible manner. This requirement is important for the consumer to be able to make an informed decision. Furthermore, taking into account the issue of fairness and transparency, consumers need to be given adequate time to read and understand terms before they become bound by them (Thomson, 1978). In the case of Adele and her unfortunate accident at Bambi, it can be considered that the company did give clear notice of its intention of not being liable for any injuries that would occur to persons inside its business premises. However, UTCA considers it unfair for consumers to be deprived of their due compensation by suppliers who are seeking to avoid liability of any kind of injury to the person and his property (National Archives, 2010). In this case, it does not matter that Bambi had put up a notice warning everyone that the company was not liable for any damages the consumers incurred inside the business premises. What matters is that Adele did not intentionally get hit by a fork lift truck inside Bambi. Bambi could face negligence charges because they went against Health and Safety Policies which demand that it is the employer’s and manager’s duty to ensure that everyone within the organization is safe and secure at all times. This negligence of duty is in itself a punishable offence by law (National Archives, 2010). The warning also stated that the company would not be liable for any damages caused to the consumer’s person even if the damage was caused by the organization’s management. This is a clear contravention of S.2(b) of the Unfair Contract Terms Act which makes it wrong for one to be denied compensation after an inadequate performance or mal-performance from one party (Poole, 2006). Question 3 Sam is devastated about the death of Petski III and blames Beryl for selling him the wrong and contaminated type of meat. Beryl has informed Eddie and Jane who believe that legally Beryl did nothing wrong. They also believe that if she was in the wrong, they will not be liable as her employers. Advise Beryl as to whether the Eagle shop have breached any statutory rights set out in the Sale of Goods Act 1979 (as amended). You should refer to case law and relevant sections of the statute in your advice. The Sale of Goods Act 1979 (SGA) is the legislation that offers buyers the right to demand for compensation when there is a defect in the goods they buy. The Act defines a contract of sale of goods as the one “by which the seller transfers or agrees to transfer the property in goods to the buyer” (Sale of Goods Act 1979). S.14 (2) of the SGA 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. The clause makes an exception if the buyer is made aware of the defects of the product or service before the contract is made. It also makes an exception for a situation where the buyer examines the goods and identifies defects before the contract is made (Burrows, 2009). S.14(3) states that there is implied condition of the goods being sold under the contract are reasonably fit where the seller sells goods in the course of a business and the buyer, expressly or by implication makes known to the seller the purpose of the goods. Subsection 4 of the same section states that any warranty about the fitness of a good for a particular purpose can be annexed, through usage, to a contract of sale (McKendrick, 2005). The provisions in this section are applicable only to the seller who is selling goods in the course of business and one who has been notified by the buyer the purpose for which the purchase is being made. Fitness for purpose is an aspect of the sale contract which is well articulated in S.14 (3) if the SGA. The section is clear on the fact that the seller is responsible for ensuring that the goods he sells to his customers is fit for the purpose for which the buyers wanted them (McKendrick, 2005). The sales people at Eagles had the responsibility of ensuring that what they sold to their customers fitted their descriptions, were fit for their purpose and were of satisfactory quality. In Beryl’s case, she sold the organic meat believing that if it was fit for human consumption, then it was fit for poodles. She contravened the provisions of S.14 of the Sale of Goods Act because she did not sell the product as per the buyer’s specification regarding purpose and description (Poole, 2006). She should have sold him poodle meat and not human meat. It is clear that she was no expert in matters dog food. Instead of making an assumption that later turned fatal, she should have referred the buyer to a shop that specializes in dog and in particular, poodle food. This provision is provided for in Godley v. Perry 1960 1 WLR 9 (Burrows, 2009). It is clear that the meat sold by Eagle shop was not of merchantable condition as the section 14, subsection 2 of the SGA requires. Although the meat would have been fit for human consumption, it was not fit for poodle consumption. The product, though thought to be of very high quality, does not really have satisfactory quality (Thomas and Great Britain, 1980) . A test on the dead poodle revealed that some bacteria from the meat caused its death. This means that it is not very clear what the same product would do to human beings after consumption. In Bernstein v. Pamson Motors Ltd. 1987 2 All ER 220, the judges determined that a product was not satisfactory even though it had a higher expectation (Atiyah, 2000). The expectation placed on a product for a certain purpose does not mean that it has the same expectation when used for a different purpose. It is clear that the Eagle shop has contravened the provisions as set out in the Sale of Goods Act. The seller under whose watch this contravention happened was Beryl, but she was acting on the presumption that something that had been certified to be of the highest standard for human consumption could not possibly harm a poodle. However, the facts remain that Samir explicitly stated the purpose for which he was making his purchase and Beryl failed to offer the product that matched the purpose for which Samir wanted. Samir also had no idea that the product he bought would harm his poodle; therefore his actions are justifiable (Burrows, 2009). However, Beryl was only acting on behalf of the business owners, who are Eddie and Jane. Therefore, if Samir goes to court, the business will have to compensate him. This means that Eddie and Jane cannot put all the blame on Beryl, who was acting in the course of their business when she sold Samir the faulty meat. References Atiyah, P.S. 2000. An Introduction to the Law of Contract. Oxford, Clarendon. Burrows, A. 2009. A Casebook on Contract. Oxford: Hart Collins, H. 2003. The Law of Contract. London: Routledge. Lawson, R. 2005. Exclusion Clauses and Unfair Contract Terms. London: Routledge McKendrick, E. 2005. Contract Law – Text, Cases and Materials. Oxford: Oxford University Press. National Archives. 2010. Unfair Contract Terms Act 1977. Accessed 05 May, 2011: http://www.legislation.gov.uk/ukpga/1977/50 Poole, J. 2006. Casebook on Contract Law. Oxford: Oxford University Press Thomson, P.K. 1978. Unfair Contract Terms Act 1977. Oxford: Oxford University Press Thomas, W.L. and Great Britain. 1980. The Sale of Goods Act 1979: With Annotations. London: Sweet & Maxwell Young, M. 2010. Contract Law: The Basics. Oxford: Routledge-Cavendish Read More