A Contract of Sale Agreement - Essay Example

Business Law Contract of sale. An agreement of sale is a consensual contract The meaning of that covenant ification is that a contract of sale is perfected upon the consent of the parties.2 It is to be understood therefore that when there is already a meeting of the minds between the buyer and the seller, sale as a contract is perfected at once.3 To illustrate, A tells B that the former is offering to sell his Austin car to the latter for ten thousand pounds. B says yes. At that point, the sale between A and B has been perfected because the parties by then have intended or agreed to have the goods transferred to the buyer.4 B becomes the owner of the Austin car and he is now under obligation to pay to A the ten thousand pounds, the amount of the cause or consideration or the selling price of the chattel. The point of perfection in a contract of sale has to be distinguished from the point of perfection in other contracts. For instance, in a pawn or pledge, the owner of the thing has to deliver the personal property to be pawned or pledged as is commonly understood even in layman terms.5 Hence, if X tells Y that the former wants to borrow money from the latter with a pawn or pledge of a gold ring as security, the contract of pawn or pledge is perfected when X physically brings the gold ring to Y. Going back to sale, since it is a consensual contract, any loss of, or damage caused unto, the thing or object is to be borne by the buyer after the perfection of the contract. In the illustration given above, let it be presumed that it was Monday when A makes the offer to sell and when B accepts it. On Tuesday, C steals the car. Under that circumstance, the legal implications will be that B suffers the loss and his recourse is not against A but against C whom he (B) can run after for the car-napping or theft. For further ramification, let it be supposed that B asks A to deliver the car to him (B) and A thus drives the car from his (A's) house to the place designated by B. While on the way, the car is hit by a lightning. In that case, B still shoulders the loss. What if, on the way, A bumps a tree because of his negligence and the car is destroyed Who suffers the loss In that case, A suffers the loss. The reason for the latter does not have any bearing anymore as to whether or not the contract of sale was perfected. Instead, A shoulders the loss because of his negligence in delivering the car to B and A's liability is founded on the principles of common law on torts and damages. In the case at bar, Toys4U Ltd became the owner of the merchandise when Megastores accepted the order. Under the general rule, therefore, Toys4U Ltd should be the one to shoulder the loss of all the three damaged toys. In the present situation, it is not so. Megastores is liable for the loss of the two toys which were damaged by the fork lift truck operator while still in the custody of Megastores. This liability is anchored on the fact that the damage was caused by the negligence or imprudence of the fork lift truck operator of Megastores. Under the legal precept of respondeat superior, the liability of the servant is the liability of the master. That is the universal rule on one who acts through another.6 Stated in another way, the responsibility of the employee is the responsibility of the employer. As to the third toy which was damaged in transit, Megastores is not liable for the same. As mentioned earlier, Toys4U Ltd became the owner of the goods when it placed the order for the toys and accepted by Megastores. From thence, Toys4U Ltd shoulders any loss or damage. As mentioned above, it has to be noted that the general rule is that the buyer shoulders the loss if the same is sustained after the perfection of the contract. There can however be conditions which the parties may agree on. For example, John offers to sell his gun to Henry. Henry accepts the offer on the condition that John delivers the specific pistol on Monday evening at his (Henry's) residence and that upon receipt of the firearm, he (Henry) pays John. While John is proceeding to Henry's place purportedly to personally bring the gun, brigands robbed the firearm from John. In that situation, Henry does not shoulder the loss even if the sale has already been perfected. This is so because the parties have agreed on a condition which has to be fulfilled before Henry pays the price. To recapitulate, Toys4U Ltd is liable to pay Megastores only the price for the eight Polaris Missile toys. This answer is not to be connected or related to the answer to the next question. Product liability. Toys4U Ltd is correct in claiming that Megastores can be held liable for the damage caused by the Polaris Missile toy which injured the scalp of Pritam. However, it has to be noted that Toys4U Ltd can also be held liable by Pritam and/or his mother, Mrs. Sharma. Under the common law on product liability, the sellers and distributors and the makers or the manufacturers are jointly and severally liable for any damage or injury that results from the use of the product resultant of any defect or deficiency in it. In case of damage or injury caused in whole or in part by a defect or deficiency in the product, the producer or the supplier or both are liable. If two or more persons are answerable for the damage or injury, their liability is joint and several.7 The latter statutory stipulation means that the person entitled to the payment for damages may sue either the producer or the supplier or both. In the case at bar, Megastores is liable and so is Toys4U Ltd. Hence, Pritam and/or his mother, Mrs. Sharma, may sue either Megastores or Toys4U Ltd or both. Even the Chinese manufacturer can be sued albeit it is very clear that taking legal actions extra-territorially will be difficult and will be procedurally cumbersome owing to the fact that the toy maker is situated in China, a foreign country at quite a distance. As discussed in the books of Alix Adams and Keenan & Riches, organizations can be made responsible for their people and their products within the realm of the business legal environment.8 The sale between Megastores and Toys4U Ltd may be construed as one of sample because there are eight pieces of the toy item. After one was bought by Mrs. Sharma for Pritam and it was found out to be defectively harmful, that particular Polaris Missile is deemed a representative of the total number. It is stipulated under the law that the bulk shall correspond with the sample. Each unit is implied to be free from any defect or deficiency that will render it or the whole bulk not saleable. Such deficiency or defect may not be apparent when the goods are examined in a usual, reasonable or ordinary manner.9 Since the toy which was given to Pritam is defective, it follows that all the other remaining seven toys are also defective. Accordingly, Toys4U Ltd is entitled to return the goods and to seek reimbursement from Megastores of the price or consideration it (Tous4U Ltd) previously paid to the latter (Megastores). Naturally, Megastores has also its legal options as far as concerning the Chinese manufacturer, Chen Organisation. There is a defect in the Polaris Missile toy within the purview of the law because it is not safe as generally expected by persons. By the safety of the product is meant that it is safe and will not be a cause of harm within the context of dangers or hazards that can result into damage to property and/or that can result into personal injury or death.10 Evidently, considering the injury sustained by Pritam, the toy is not a safe product at all. It poses risk or danger to cause physical injury or possibly even death. Amanda's application for employment. It is the right and prerogative of the employer whether or not to accept an application for a job vacancy. In the case of Amanda, since it is resolved by the management of Toys4U Ltd that her qualifications are not sufficient for the advertised position as she does not have the right attributes for it, the company (Toys4U Ltd) has not incurred any legal responsibility. Toys4U Ltd cannot be compelled to hire or engage the services of Amanda as employee even if she is not qualified according to the just and fair standards of Toys4U Ltd. However, if the reason for rejecting Amanda is founded on discrimination due to race, gender, religious orientation or political leanings, among others, she (Amanda) can sue Toys4U Ltd. The three old laws in the United Kingdom have been consolidated into one, that is, the Equality Act 2006. The said three laws are the Sex Discrimination Act 1975, the Race Relations Act 1976, and the Disability Discrimination Act 1995. Established under the novel legislation is a commission generally tasked, among others, to support and encourage people to achieve their potentials without these being limited by reasons of prejudice or discrimination. It is also mandated to foster the participation of each person in society under the concept that all individuals have equal opportunities. Furthermore, it must advance or promote respect mutually between sectors of society on the basis of understanding and by giving importance to diversity within the ambit of the principles which respect the general view that all men are equal and have equal rights. Included among its specific duties, the said commission shall encourage equal opportunities and that necessarily includes employment.11 To further illustrate the case of Amanda, let it be supposed that she has applied for the position together with Mitchell. Both of them have the same educational attainment and both have the same set of skills needed for the position of sales assistant. Amanda is Asian-European while Mitchell is pure English. Mitchell is hired. If it can be established that the reason for rejecting Amanda is her racial origin or ethnicity, she can surely sue Toys4U Ltd for having discriminated against Amanda in view her race. Or, for instance, Amanda is the only female applicant among the candidates for the position and there are five others who are all male and only Amanda is not considered for the next schedule for interview, that can be a ground against Toys4U Ltd if Amanda can show that she is being rejected by reason of her gender or sex. Or, for example, Amanda has some physical disabilities apparently from infantile poliomyelitis. There are two other candidates who are both females. All the three of them have almost the same academic credentials and marketing expertise required of the sales assistant job. Amanda is eased out early on and does not stand a chance to be considered for the advertised job. If it can be proven that Amanda's application has been rejected due to her physical inadequacy, she has every right to take legal action against Toys4U Ltd which can be held accountable for discrimination due to disability. Change of name. A company can have its name changed. There are processes provided for by law to effect such change of name. The purpose, of course, must be legitimate or legal and not intended to defraud or to conceal or hide a crime or any form of irregularity. Since there are three directors, a majority or only two of them may be necessary to approve a special resolution for the said change of name. Edwardo, who seems to be against the idea, can be out-voted by Don and Francesca. When a company is formed, it has to file its memorandum of association together with its application for registration. Among other information, the proposed name of the company must be stated therein. Once the application for registration is approved, together with the submitted memorandum of association and its articles, the registrar of companies issues what is called the certificate of incorporation where the company name and company number are stated.12 Hence, the proposed name becomes the official name of the company. There are instances that company names are changed for some legitimate reasons. It is up to its officers to affect that amendment. The code provisions regarding a change of name of a company are set forth in Chapter 5 of the Companies Act 2006, the new law governing companies in the United Kingdom. A company name may be changed either by a special resolution as provided for in Section 78 of the said Companies Act 2006. It may also be changed in accordance with the other means or procedures as stipulated in the company articles pursuant to Section 79 of the said law. Another situation that may cause the change of name of the company is when it is in compliance with a relevant directive or order issued by the Secretary of State and the directors of the company have to adopt a resolution to that effect. There are three other conditions under which the name of a company may be changed. These are (a) by an adjudicator, (b) upon a court order, or (c) when the name is restored to the register.13 In the case of Toys4U Ltd, there being no showing of any data from the company articles or memorandum of association regarding declared steps for a change of name, it has to be done via a special resolution. A notice must be given to the registrar of companies. The said notice must be accompanied by a copy of the resolution approving the said change of name. There are instances when the desired new name is approved by a special resolution but is subject to the condition that an event occurs. In that case, the notice to the registrar must indicate that the application for a change of name is conditional. The notice must further state whether the event has occurred or not. In the latter situation, the registrar of companies is not bound to act on the matter. Once the event occurs, the company must notify the registrar about the happening of the condition. Thereafter, the registrar may resolve the application for the new name accordingly. For example, X Ltd desires to change its name to Lunar Ltd subject to the condition that a lunar eclipse happens within two weeks as reported in the newspapers; so, X Ltd files or submits the requisite papers for the name change which is subject to the happening of the said event. If indeed the lunar eclipse takes place in two weeks, X Ltd must inform the registrar about the said occurrence in order that the changing of the name from X Ltd to the name Lunar Ltd can then procedurally follow, that is, by the resolution of the registrar. In all the types of process for changing of company name, after the registrar of companies is satisfied that the requirements have been properly complied with, a new name must be entered on the register in lieu of the old name. Accordingly, the registrar must likewise issue a certificate of incorporation pursuant to the change of name. The rights and obligations of the company are not affected by the change of the company name. If legal proceedings have been instituted against the company under the old name, those actions may be continued against it in its new name. In the same manner that if it has filed a suit against a third party, that litigation may proceed under its new name with proper notice duly served upon its adversary and the court. References BM206 Business and Company Law. Map and Descriptor Archive. University of Gloucestershire. [internet] Accessed March 17, 2010. Available at: CHANGE OF NAME [CHAPTER 5]. Companies Act 2006. UK Public Acts. OPSI Office of Public Sector Information. [internet] Accessed March 14, 2010. Available at: Company formation. [General]. Companies Act 2006. UK Public Acts. OPSI Office of Public Sector Information. [internet] Accessed March 14, 2010. Available at: Consensual contract. THE FREE DICTIONARY BY FARLEX. [internet] Accessed March 14, 2010. Available at: (LAW COM No 215) (SCOT LAW COM No 145). [internet]. Accessed March 14, 2010. Available at: Liability for defective products. PRODUCT LIABILITY. PART II. Statutory Instrument 1987 No. 2049 (N.I. 20). The Consumer Protection(Northern Ireland) Order 1987. [internet]. Accessed March 14, 2010. Available at: meeting of minds. BusinessDictionary.com. [internet] Accessed March 14, 2010. Available at: Part I Product Liability 1 Purpose and construction of Part I Consumer Protection Act 1987. [internet] Accessed March 14, 2010. Available at: < http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1987/cukpga_19870043_en_2> PLEDGE. Novelguide.com. [internet] Accessed March 14, 2010. Available at: respondeat superior. ENCYCOPAEDIA BRITANNICA. (UK) Ltd. [internet] Accessed March 14, 2010. Available at: Sale by Sample. [Section 15]. Sale of Goods Act, 1893. [internet]. Accessed March 14, 2010. Available at: Sale of Goods. Classic Encyclopedia. [internet] Accessed March 14, 2010. Available at: The Commission for Equality and Human Rights [Part 1]. The Commission. Equality Act 2006. UK Public Acts OPSI. Office of Public Sector Information. [internet] Accessed March 14, 2010. Available at: The Sale of Goods Act1979 Part II The Present Law. 2.3 page 5. SALE OF GOODS FORMING PART OF A BULK. citing Section 17 (1) of the Sales of Goods Act. The Law Commission and The Scottish Law Commission (LAW COM No 215) (SCOT LAW COM No 145). [internet]. Accessed March 14, 2010. Available at: Read More