The Role of Commercial Law in Protecting the Rights of Consumers and Sellers - Case Study Example

?Commercial Law Essay Table of Contents Table of Contents 2 Introduction 3 Discussion 3 Conclusion 6 References 8 Introduction As exhibited in the case scenario, AW Ltd purchased a computer from Shah Ltd. The transaction was invoiced with specific terms and was also bound by certain legal contractual conditions in print attached at the back of the invoice. In the invoice, it was specified that Shah Ltd will be liable for any damage or defect only for the first twelve months of the transaction and that too, if informed within seven days from the identification of the defect by the client. Unfortunately, the computer purchased by AW Ltd had an electrical fault after two weeks of purchase, which damaged many important business documents of AW Ltd. However, AW Ltd made a claim of refund as well compensation for the damaged caused after ten days, which at the onset, releases Shah Ltd from bearing any obligation to compensate the losses incurred by AW Ltd. The case needs assessment as per the provisions of Commercial law in order to conclude whether Shah Ltd can be exempted from refunding AW Ltd and also compensating for the losses occurred and whether the case would have been treated separately if AW Ltd has bought the computer for personal use partly. Discussion In this case, to resolve the issue, the Sale of Goods Act 1979 (SOGA) can be applied. The SOGA signifies that rights, risks as well as ownership of a good purchased is passed from the seller to the buyer in consideration for a price (International Private Law, 2001). Correspondingly, there are certain factors under which the consumers are unable to have any refund, replacement as well as repair such as if goods and/or services are damaged accidentally, if misuse of products and/or services has caused a fault, if repair of products and/or services by consumers themselves or by others have caused the defect in accordance with provision mentioned in Part 5A subsection 48B [R & B Customs Brokers Ltd v United Dominions Trusts Ltd; Saunders Abbott Ltd (Third Party)] (The Law Society Gazette, 2013) and if buyers have intentionally consume faulty products and/or services (Crown, 2013; Bradgate & White, 2007). As was inferred from the case of Clegg v Andersson (trading as Nordic Marine) [2003] EWCA Civ 320; [2003] 1 All ER (Comm) 721, on the basis of section 13 and section 14 (2) of the SOGA (1979), the goods delivered should be of satisfactory quality and in accordance with prescribed description to be considered as chargeable for refund or compensation by the seller (Office of Fair Trading, 2012). However, the referral case does not disclose any fact to comply with these mentioned criteria and hence, it can be presumed that Shah Ltd, as the seller is liable to compensate AW Ltd for its damages. The provisions mentioned under Part 5 A and section 14 of the SOGA also imply that a consumer has legal rights for a period of six years to claim for the damages incurred through the transaction, which makes the exemption clause as mentioned in the invoice void. That is, from the date of purchasing any product and/or service till six years, a consumer can approach a retailer for repair, replacement as well as recovery [P & O Nedlloyd BV v Arab Metals Co & Ors [2005] EWHC 1276 (Comm)] (Bailii, 2005). The six year period signify that even after the expiry of the guarantee period, consumers still possess legal rights in case of faults or damages suffered by the client (Office of Fair Trading, 2008). Therefore, as the provisions mentioned under SOGA PART 5A subsection (1) (b), for the first six months from the date of purchase, AW Ltd is entitled to have repair or replacement services from its retailer, i.e. Shah Ltd. However, provided it is proved that nothing was wrong with the computer when purchased, Shah Ltd can be considered as exempted from paying refund to AW Ltd [Darren Egan vs. Motor Services (Bath) Ltd (18 October 2007)] (NADR, 2007). Subsequently, after six months, in order to obtain repair or replacement service, AW Ltd is to prove that there is an electrical fault in the computer purchased and that it has resulted in the loss of important business documents of the entity (Crown, 2013; BBC, 2009). It is worth mentioning in this context that the liability of Shah Ltd, in respect to compensation for damages and payment of the refund, owing to electrical defect in the computer system, must be dealt with separately. To be precise, Shah Ltd might be considered as liable to pay compensation for the damages incurred by AW Ltd, as per the provisions of section 14 of SOGA 1979 (Legislation.gov.uk, n.d.). However, section 2 of the Consumer Protection Act (CPA) 1987 postulates otherwise, i.e. because the product has been identified as faulty, Shah Ltd shall be deemed as liable to pay both compensation as well as refund (if demanded by AW Ltd). As per section 2 of the CPA 1987 affirms legal liabilities owned by the sellers for faulty products and/or services. In accordance with this act, sellers should be accountable for any damage or harm caused by faulty products. In this concern, consumers are offered with legal rights to have a compensation, refund or repair services [Balding v Lew Ways Ltd (1995] (Victor Smith, 2009). It signifies that consumers are to be provided with safe products and in accordance with this case, the electrical, fault has led to loss of important documents for AW Ltd. In this context, AW Ltd is only required to ascertain that the product i.e. computer purchased was defective and that the electrical fault of the computer has led to the loss of important documents. However, this particular stature also dictates that if it is proved that the product and/or service was not faulty at the time of purchase, Shah Ltd might be exempted from its liability to pay compensation to AW Ltd in lieu to its damages incurred from the electrical fault [St Albans City and District Council v ICL [1996] EWCA Civ 1296] (Bailii, 1996). Accordingly, on determining the fault of the computer, Shah Ltd is to be legally responsible to pay the compensation for the loss of important documents of AW Ltd. Shah Ltd would additionally be liable to offer with repair, replacement of refund services under such circumstances (Pinsent Masons LLP, 2011). Therefore, with reference to the SOGA provisions, mainly that of section 14 and Part 5A subsection (1)(b) and section 2 of the CPA 1987, it can be affirmed that Shah Ltd bears legal responsibilities to pay for the compensation demanded by AW Ltd, irrespective of the exemption clauses mentioned in the invoice. It must also be noted in this regard that equal privileges would have been rendered to AW Ltd, even if it had purchased the computer for personal use partly, as per the mentioned legal provisions. Conclusion In accordance with the case scenario and the aforementioned discussions, it can be comprehended that commercial law plays a significant role in protecting the rights of consumers and sellers. In this case, Part 5 A and section 14 of SOGA and section 2 of the CPA law have been applied, which aims to protect the rights of consumers against the purchase of faulty products as well as damages caused on their usage, hampering the interests of the buyers. Accordingly, Shah Ltd is under legal responsibility to offer AW Ltd with compensation amounts or refunds as per demanded. Moreover, the computer used whether for private or business use, AW Ltd is entitled to have a repair, replacement or refund service for defects and damages. References BBC, 2009. Five Consumer Laws You Really Ought To Know. Magazine. [Online] Available at: http://news.bbc.co.uk/2/hi/uk_news/magazine/8253915.stm [Accessed July 28, 2013]. Bailii, 1996. St Albans City and District Council v ICL [1996] EWCA Civ 1296 (26 July 1996). England and Wales Court of Appeal (Civil Division) Decisions. [Online] Available at: http://www.bailii.org/ew/cases/EWCA/Civ/1996/1296.html [Accessed July 28, 2013]. Bailii, 2005. P & O Nedlloyd BV v Arab Metals Co & Ors [2005] EWHC 1276 (Comm) (22 June 2005). England and Wales Court of Appeal (Civil Division) Decisions. [Online] Available at: http://www.bailii.org/ew/cases/EWHC/Comm/2005/1276.html [Accessed July 28, 2013]. Bradgate, R., & White, F., 2007. Commercial Law. Oxford University Press. Crown, 2013. Additional Rights Of Buyer In Consumer Cases. Part 5A. [Online] Available at: http://www.legislation.gov.uk/ukpga/1979/54/part/5A [Accessed July 28, 2013]. International Private Law, 2001. Sale of Goods - The Passing of Title and Risk - A Resume. Chapter 7. [Online] Available at: http://www.internationalprivatelaw.com/files/Property_and_Risk.pdf [Accessed July 28, 2013]. Legislation.gov.uk, No Date. Sale of Goods Act 1979. Whole Act. [Online] Available at: http://www.legislation.gov.uk/ukpga/1979/54 [Accessed July 28, 2013]. Legislation.gov.uk, No Date. Consumer Protection Act 1987. Section 2. [Online] Available at: http://www.legislation.gov.uk/ukpga/1987/43/section/2 [Accessed July 28, 2013]. NADR, 2007. Egan v Motor Services (Bath) Ltd [2007] ADR.L.R. 10/18. Articles. [Online] Available at: http://www.nadr.co.uk/articles/published/AdrLRep/Egan%20v%20MS%202007.pdf [Accessed July 28, 2013]. Office of Fair Trading, 2008. Sale of Goods Act Explained. Shared. [Online] Available at: http://www.oft.gov.uk/shared_oft/738369/738375/OFT002_SOGA_explained.pdf [Accessed July 28, 2013]. Office of Fair Trading, 2012. Clegg v Olle Andersson. Sale of Goods Act in Practice. [Online] Available at: http://www.oft.gov.uk/shared_oft/738369/738384/738456/clegg-v-olle-andersson/3_Clegg_v_Olle_Andersson_051.pdf [Accessed July 28, 2013]. Pinsent Masons LLP, 2011. Product liability under the Consumer Protection Act. Commercial. [Online] Available at: http://www.out-law.com/en/topics/commercial/supply-of-goods-and-services/product-liability-under-the-consumer-protection-act/ [Accessed July 28, 2013]. The Law Society Gazette, 2013. Contract; Sale of goods -- R & B Customs Brokers Ltd v United Dominions Trusts Ltd; Saunders Abbott Ltd (Third Party). News. [Online] Available at: http://www.lawgazette.co.uk/news/contract-sale-goods-r-amp-b-customs-brokers-ltd-v-united-dominions-trusts-ltd-saunders-abbott-l [Accessed July 28, 2013]. Victor Smith, 2009. Effective Diligence (Reliance on Certificates of Compliance). Cases. [Online] Available at: http://www.consumercrime.co.uk/site.aspx?i=ar3343 [Accessed July 28, 2013]. Read More