Consumer law, warranties and conditions - Essay Example

?Introduction: This paper deals with certain scenarios presented in the form of questions. These scenarios involve various characters, and answers tothe questions give an insight to the practical implementation of various concepts related to consumer law, warranties and conditions. Generally, the situations are related to terms of contract. Essentially, the scenarios pose many questions, including applicability of exclusion clauses, warranties and conditions being the primary question. Furthermore, questions of law arise in relation to seller’s duties, liability to pay damages in case of non delivery of goods, the tort of negligence and the fitness and quality of goods sold for specific purpose. Discussion: The first situation is relating to the terms of the contract. The subject of terms is governed by the Unfair Contract Terms Act (UCTA) 1977. Prior to the Sales of Goods Act 1893, the distinction between a condition and a warranty was treated subjectively according to the merits of each case and contracts were governed in matters of conditions and warranties on basis of mutual understandings of both the parties to perform their obligations. English law draws out an important distinction between conditions and warranties in a contract. A condition is a major term in a contract and a warranty is a minor term in a contract. A condition is of such importance that any breach of it is considered to go to the root of the contract so as to entitle the innocent party to treat the contract as discharged. However, a warranty, on the other hand, is a minor term, collateral to the main purpose of the contract, for breach of which the innocent party has a right to damages while remaining bound to perform his obligation under the contract (Day et. al. 2004). The main issue is that how can one distinguish between a condition and a warranty as there stands no general rule for distinguishing them (Grant, 2010). Usually the court seems to take the subjective approach and looks to the intention of the parties and the surrounding circumstances to judge whether a stipulation is a condition or warranty (Rustad, 2008). The most suitable test to distinguish among two terms is that if the stipulation is such that its breach would be fatal to the rights of the aggrieved party, then such a stipulation is a condition and where it is not so, the stipulation is only a warranty (Marsh, 1999). In addition, an action for damages can also be brought by the plaintiff for non delivery of goods (Miller’s Machinery Co. Ltd. (1934) (ABA, 1997). In other words , a warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives the aggrieved party a right to sue for damages only and not to void the contract (Whaley, 2009). It is also noteworthy that a breach of a condition may be treated as a breach of warranty but a breach of warranty is not a breach of a condition (Keichel, 2010) and (Mitchell, et. al. 2003). From this we can deduce that a condition forms the very basis of a contract but a warranty is only of secondary importance (Ghemawat, 2010). After the Sales of Good Act (SGA) 1979, the distinction between sale by description and sale of specific goods was removed. Now the seller is in much of a precarious position than it used to be under the operation of common law. The Unfair Contract Terms Act (UCTA) 1977, s.3, does not allow any seller to exclude liability in such a manner as Harry’s has attempted to do. From the events it turns out that Stubley Ltd. is a consumer in this case as their primary business is not buying cars for their directors and hence, this particular transaction will not be dealt with in the scope of business. Furthermore, under Section 12-15 of the Sales of Good Act there are seven implied terms in favor of the buyer and five of these have been ranked as conditions and two are regarded as warranties. The five statutory implied terms which are labeled as conditions are 1) title, 2) correspondence with description, 3) quality, 4) fitness for purpose and 5) correspondence with sample. The breach of these entitles the buyer to reject the goods and rescind the contract. The impact of non performance of an implied condition varies on the choice of the buyer to reject the goods. It is very clear in this case that Jonathan wishes to reject the car. If he carries on with his decision then the situation is one of non delivery of goods. Under this situation, unless the seller makes a fresh tender which conforms to the original contract or is accepted by the buyer, the seller is completely exposed to an action for damages for non delivery under s. 51 of SGA or, in exceptional cases, a claim for specific performance under s. 52 of SGA. The one advantage that Jonathan can take is that after the SGA’s enactment, the doctrine of Caveat emptor (let the buyer beware) has now become a rule rather than the exception. So, if Harry’s raises it as s defense, it will be rendered useless for them under current law. For Pete, the situation is a somewhat more uncertain as he has bought the car from Stubley Ltd. We will have to see whether it is a business transaction or a consumer contract. Stubley Ltd. is a chemical research company and hence, one can clearly say that trading in cars in not their normal area of business activity, therefore, the contract will be treated as a consumer contract. Unlike s.14 of Sales of Goods Act (SGA) 1979, which extends only to business transactions, the statutory implied terms labeled as conditions mentioned in s. 12 as to quality and fitness are not confined to a seller selling in the ordinary course of business but also to private sellers to which Stubbley is at the moment. There is no mention of exclusion of liability by Stubbley Ltd. Therefore, it will be much easier for Pete to prove that the damages should be paid by Stubbley Ltd. This will happen only if he does not reject the car. In case of no rejection, he is only able to recover damages from Stubbley under s.53 of SGA. If he chooses to reject the car, then he’ll be entitled to rescind the contract as the situation will become that of no delivery. Under this situation, Pete can have Stubbley provide him with a car which matches the description and is fit for his purpose which he would have wanted in the first place. If such a demand is met and Pete accepts the freshly brought upon transaction then he cannot claim damages. If not, then Stubbley will most probably face a suit for damages for non delivery of goods However, there seems only one problem; the defense of Caveat Emptor applies more strongly in this case than it did in the latter. One cannot ignore the doctrine as it has been in play for centuries until the SGA was enacted. In detail of the doctrine, one finds that the if buyer fails to make all the relevant inquiries about the goods he’s buying being fit for his purpose, the seller is not under a duty to disclose any defects therein. Therefore, Pete has a 50/50 chance at recovering his loss. But if one looks the change in law brought upon by SGA, one would find that now this doctrine is much more of an exception rather than the rule. It applies more strongly against Stubbley than it would have to Pete, were it a Common law reign. Since the car is second hand, Stubbley had to be more accurate in describing any faults at the time of the sale. If they had not brought all the mechanical faults known in the description then they had a duty to get them fixed and make the car conform to the description rendered by them for selling it. If one looks at the situation from a point of law and convenience to the aggrieved party i.e. Pete, one would suggest that the degree of damages should be looked upon and accordingly Pete should chose to elect or reject the car and claim the remedy. The third situation is related partly to law of contract and partly to law of tort. The chain of events can be split into two halves. The first half is when the damage to the caravan takes place. The second half is where Stewie is injured during the fall. The former is to be dealt under law of contract and the latter will be dealt under law of tort. We have to see here if it is a business transaction or not. Clearly, as Penworth is conducting business with Jane as its customer, so, s. 12 for private seller will not come into play but instead s. 14 will apply for business transaction. Jane’s caravan being defected falls under S. 12-15 of the Sales of Goods Act (SGA) 1979 seven implied terms, five of which are labeled as conditions, in favor of the buyer . Jane’s situation will not be taken aback by the Caveat Emptor doctrine, for it is the quality of the good being supplied and its fitness for purpose which is being put to test in the incumbent case. These attributes are to be checked and tested and maintained by the manufacturer before the goods are sold. Now that the damage has been done, the situation will be dealt under as damaged goods and now it is for Jane to decide whether to invoke s.51, s. 52 or s.53. In case where she decides to reject the car, she can sue for damages for non delivery of goods unless Penworth provides her with a new contract which conforms to the original quality and fitness for purpose clause under s.12 and Jane accepts this contract. In case where she elects to keep the car then she can only sue for damages for repair of the caravan. Jane’s son being injured by the fall is related to the tort of negligence in taking reasonable care (Donoghue v. Stevenson) and will be dealt with under S.2 (1) of the UCTA 1977. This section states that liability cannot be excluded for negligence causing personal injury or death. Hence any exclusion clause for any condition or warranty excluding Penworth Mobile’s liability will be deemed Void Ab Initio. Hence, Jane can sue them for the damage caused to the caravan. This also means that Jane can sue the caravan company for damages and recover the hospital bills as they were a direct result of the negligence on part of the company and hence her son got injured. The causation test will also be applicable here to check and verify the chain of events. Jane can also sue for psychiatric damage caused to her by her son’s fall by bringing it to the knowledge of the court that just because of this fall the whole family had to cut short its quality time together, away from their daily problems on their vacation. Contracts for Sales of Goods are everyday occurrences. Parties, however give little thought to the terms of their contract. To give effect to their reasonable expectations, certain terms are implied in the contract by the statute of Sales of Goods Act 1979. The relevant provision for our purpose is section 14 of the Sales of Goods Act 1979 which makes it clear that goods sold by a seller in the course of business shall be of satisfactory quality not merchantable quality. The buyer’s right to reject goods is restricted by s. 4(1) of the Sales and Supply of Goods 1994 Act where the buyer is not a consumer or the breach is so slight that it would be unreasonable to reject. A purchaser of a good will typically rely upon the description given by an expert seller in the field as seen in Esso Petroleum ltd. v. Mardon. A purchaser is also highly likely to rely upon the statement of a seller where the seller has knowledge of matters which the purchaser is highly unlikely to possess. As far as the dress with defects goes, that situation depends on the question of jurisdiction and whether Jane can sue in Germany or not. Apparently Germany falls in Europe and so does England and hence, every citizen of a European country holds a dual citizenship of Europe too. Therefore, Jane can sue in Germany being a European Citizen and recover damages and also ask for rescission of the contract because the clothes were bought from a specialist shop and yet they were not fit for the purpose sold. Any condition or warranty excluding the liability will be unaccounted for as Jane will be dealt as a consumer in this case because of the nature of her operation in this matter. She neither made the contract nor posed her own terms (s.12 UCTA 1977). In this case SGA’s s. 12 to 15 will be applicable where the implied terms in the contract are mentioned in favor of the buyer. Five of these implied terms are labeled as conditions, the breach of which go to the root of the contract and give the innocent party a right to sue the seller for non delivery of goods as already referred above. Since, the dress is full of defects; Jane is left with no choice but to reject it. In case of rejection, if the clothing shop does not provide Jane with a new dress which is according to the fitness and quality demanded by Jane in the first place then Jane can sue them for damages for non delivery of goods under s.51 SGA or ask for specific performance under s.52 SGA. Again the defense of Caveat Emptor will come in play. The clothing shop may give a strong argument about how Jane failed to check the dress to her satisfaction. But one would rebut that argument by stating the fact that people come to specialist clothing shops to buy clothes which are specialized for them and are accordingly without any unwanted defects and also by raising the statutory defense under s. 12-15 of Sales of Goods Act 1979. Hence the defense will be rendered inapplicable. Conclusion: Liability of a car company while selling a car cannot be removed from the contact through a contractual clause. There are certain rules of game that are to be followed in case a seller want to remove liability from the deal. The Unfair Contract Terms Act (UCTA) 1977, s.3, does not allow any seller to exclude liability in such a manner (Spanogle, et. al. 2007). Therefore, Jonathan can reject the car and ask for a new one and also if he wishes to recover any money spent on repairs on behalf of Stubley Ltd. The only defense they’ll face is that of the principal Caveat Emptor (let the buyer be aware). This entails that if the buyer himself does not check for the defects than the seller is not bound to pay in case of any breach. In different scenarios, situations are different. The important case is to determine whether a transaction is a business transaction or it is a business contract. For Pete, the situation is a little different as he has bought the car from Stubley Ltd. Stubley Ltd. is a chemical research company and hence, one can clearly say that trading in cars in not their normal area of business activity, therefore, the contract will be treated as a consumer contract. There is no mention of exclusion of liability by Stubley Ltd. Therefore, it will be much easier for Pete to prove that the damages should be paid by Stubley Ltd. The Caveat Emptor has become the exception rather than the rule, therefore, now Pete has a high chance of recovering the damages. S.2 (1) of the UCTA 1977 states that liability cannot be excluded for negligence causing personal injury or death. Hence any exclusion clause for any condition or warranty excluding Penworth Mobile’s liability will be deemed Void Ab Initio. Hence, Jane can sue them for the damage caused to the caravan. The causation test will also be applicable here to check and verify the chain of events. As far as the dress with defects goes, that situation depends on the question of jurisdiction and whether Jane can sue in Germany or not. Germany is located in Europe and England is located in Europe as well. Being a European citizen, she can sue in Germany too. Jane will be treated as a customer in this case. The contract was not made by her, and the terms were also not proposed by her. Jane failed to check the dress before buying, but this cannot go against her as people visit specialist shops for dresses as they claim to offer defect less dresses. Hence, the defense will be rendered inapplicable (Whaley, 2009). References: Abrams, R. (2003) The Successful Business Plan: Secrets and Strategies, The Planning Shop, Palo Alto, CA. Pp. 186-189 American Bar Association (1997) The ABA Guide to Consumer Law: Everything You Need to Know About Buying, Selling, Contracts, and Guarantees. Three Rivers Press. Day, G. S. and Reibestein, D. J. 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