Principles of Commercial Law - Essay Example

Sale of Goods Contracts Any issue involving different parties could be termed as a contract. This means thatcontracts are marked with agreements towards a certain goal. However, due to teh diversity and requirements in dealing with contracts, statistics prove that approximately 20% of all contracts do not succeed. In publishing his book, Principles of commercial law, Ian (2001) argued that contract involving sale of land like any other contract focus on creating a legal obligation through writing, but one of the most complex contracts. The common law defines a sale of goods contract as conformity to transfer the possession of goods or assets at an agreed price or contemplation, from the seller to the buyer, who becomes the new owner of the goods (Ian, 2001:78). Money is the commonly used consideration in exchange of goods world over as the medium upon which the price of commodities is set after negotiations by the parties involved. Sale of goods contracts do not necessarily require formal documentation for them to be binding. The parties can make contracts expressly by word of mouth, put in writing, partly in writing and partly by word of mouth or the parties can imply them in their conduct. Under the sale of goods contract, the price of goods is determined through several ways including; a joint decision by the parties, adoption of a course reached under the contract, have a fixed price in the contract or have the buyer incur a rational cost for the goods. The goods in question can be either existent or prospect goods that the seller will obtain or produce after entering the sale contract. The buyer may also determine specific details in the goods before completing the sale, or may not give the specific details in the event of general goods or in cases where the goods are a part of already determined goods (Jennifer & Donald, 2007:136). The capacity to enter into a sale contract in most legal systems across the globe depends on the prevailing rules pertaining to the capability of the buyer to bear liability for their actions. The seller has to be conscious of the age of the buyer, their mental sanity and sobriety at the time of sale in order to ensure that they are legally liable for their actions.   Although the sale contract must not be in writing for it to be binding, it is prudent that the it be in writing in order to avert any cases of vagueness and changes in the terms of sale agreed upon. Issues such as delays in delivery, changes in market prices, changes in the quality of goods agreed, the need to return goods owing to alteration in descriptions or whether the goods can be returned can only be effectively resolved if there is a written agreement upon which reference can be made (Sally, 2004:34). Such contracts put in writing may include such aspects of implied terms as: 1. The right of the seller to offer the goods for sale and that they are not subject to any security interests and that the buyer can quietly enjoy the goods. 2. In the event of sales made based on description, the good have to adhere to the descriptions or according to samples agreed upon by the parties. 3. The quality of the goods is satisfactory as agreed unless the buyer gets a notice of any alterations prior to completing the sale. 4. The seller will maintain the fitness of the goods at a reasonable level for the purpose implied or expressed by the buyer. Legal systems in the United Kingdom, like in most of other European countries, recognise both the expressly stated and implied sale contracts, although it gives more credit to the written agreements over the oral contracts. For the written contracts, both parties have to append their signatures on the contract in order for them to be legally binding. Generally, such contracts are final although there can be modification to the original contract if the buyer and the seller come to an agreement to that effect. In the event that any of the parties disagrees, the sale pact should remain as it was in the commencement of the transaction. Business experts do warn that the parties need to seek for legal advice before they enter in to the contract in order to be articulate, clear in the terms governing their agreement, and avoid dealing with alterations to the document (Ole & Hugh, 2003:215). In a normal contract, the seller has the duty to do timely deliveries of the ordered goods while the buyer is obliged to pay for the goods after their acceptance in reference to the agreed contract terms. In a free market situation, the seller of the goods has a duty to, out of free will; relinquish custody of the goods to the buyer who is obliged to make payments of the price agreed for the goods. Both parties cannot allege a violation of the contract if they are not willing to do their part of the bargain. The buyer, for instance, may choose to reject the goods or entirely terminate the contract if there is a sufficient breach of the terms agreed upon in the contract. This may range from failure on the part of the seller to deliver the right quality agreed upon by the parties to the delivery of incorrect quantities and quality in poor time. The other reason that may prompt the buyer to reject the goods delivered is in case the seller delivers in instalments contrary to the agreement for a wholesome delivery (Fisher & Fisher, 2008:72). However, it is important for the buyer to realise that this right to reject goods or terminate the contract owing to anomalies in delivery may be lost if he/she receives the goods without corroboration in the first place. This may happen if the buyer acts in a manner that breaches the contract or maintains ownership of the goods for a sensibly lengthy period devoid of indication to the seller of the denial to accept the goods. Both the seller and the buyer have an inherent right to reject the goods if they feel that the other party has contravened their express or implied rights in the sale contract. For instance, the seller may terminate the contract or seek for compensation if the buyer fails to honour or neglects the terms of payment agreed upon in the contract. The same case applies in the event of payments for undelivered goods as long as there was a set date for payments. In such cases, the failure to accept and make payments for goods delivered may make the buyer liable to cater for damages caused to the seller if the actions are in breach of the contract. On the other hand, the buyer rightfully takes on the seller legally in the event that he fails to deliver or neglects conditions laid down in the sale of goods agreement. Many European economies set rules guarding the buyer and allowing them to seek compensation if the seller neglects requirements implied when entering into a sale agreement. These rules protect the consumers against violation by the seller based on the consideration that the seller has a good knowledge of the goods than the buyer and may feign the quality of the goods, their value or their advantages, originality and producer in order to make a sale (Stephen, et. al. 2011:124). The contract binds both parties not to cancel the order unless they issue a notice in writing in advance, and be ready to meet a compensation fee to the other party for damages caused as discussed earlier in this paper. In conclusion, the contract entered into by the seller with the buyer binds them regardless of whether the expectations of the buyer were expressly registered or implied. Many sellers tend to shy away from honouring their commitment to the sale of goods agreements in cases where they fail to meet the expectations of the buyer that were not expressly registered (Busch & Schelhaas, 2006:32). However, the law governing trade in the United Kingdom does recognise the place of implied expectations in entering in to a contract. This provision of the law aims at safeguarding the buyer from breach of contract by the seller in the pretext of lack of clarity in the sale of goods contract. The buyer can therefore seek for redress from the courts on the matter, or form basis for rejection to accept the goods or make any payments for the goods so delivered. Therefore, the seller cannot escape responsibility even though the conditions were implied. The same way, the buyer as discussed earlier in this paper, cannot run away from responsibility in the event of failure to pay or accept good delivered to them. Bibliography Busch, D. & Schelhaas, H. N. 2006. The principles of European contract law (Part III) and Dutch law: a commentary II, Volume 2. The Hague: Kluwer Law International. Fisher, S. & Fisher, D. 2008: Export best practice: commercial and legal aspects. Federation Press, print Ian T. 2001. Principles of commercial law, London: Routledge. Jennifer C. C. & Donald E. P. 2007. Introduction to South Pacific law, London: Routledge. Ole Lando, & Hugh B. 2003. Principles of European Contract Law, The Hague: Kluwer Law International. Sally, R. D. 2004; Legal and Regulatory Framework: For Business in the UK. Bloomington: iUniverse. Stephen, T. et. al. 2011. Contract Law in New Zealand. The Hague: Kluwer Law International. Read More