Major Consumer Law Cases - Case Study Example

Question One Helen’s liability for the damages sustained by virtue of the computer imported into the EU and sold to Imran falls under both contract and tort. To start with, the Sale of Goods Act 1979 provides consumers or purchasers in general with a remedy for defective products under a contract for the sale of goods.1 Courts have taken the position that the Sale of Goods Act 1979 imposes upon the vendor of goods and products a duty to ensure that the goods and products sold under a contract for the sale of goods correspond with its sale’s description.2 Even more so, goods and products sold in the course of business operations are required to be of merchantable quality.3 Put another way, goods should be satisfactory so that they fit for the purposes for which they are purchased and the consumer is at liberty to anticipate that goods purchased are satisfactory and fit for the purposes for which they are sold and purchased.4 Based on the Sale of Goods Act 1979, Irman has a direct claim against Helen for the damages sustained to his studies. This is so because, the computer had a defect and therefore was not of merchantable quality. Even so, Helen’s liability also falls under the Consumer Protection Act 1987 which incorporates Council Directive 85/374/EEC, 1985.5 The Directive’s position with respect to manufacturers’ and distributors’ is aligned to strict liability.6 Under the directive a defective product is defined as a product which: “...does ‘not provide the safety which a person is entitled to expect.’”7 Under Section 2 of the Consumer Protection Act 1987, the French company importing the customer is liable to both Imran and his friend. This is so because under Section 2 when a product is manufactured outside of the EU, the person or party importing the defective product into the EU is strictly liable for any damages resulting from any defect in that product.8 While Imran, the purchaser of the defective computer, by virtue of the doctrine of privity of contract may pursue a claim in damages for breach of contract under the Sale of Goods Act 1979 against Helen, the vendor of the goods, Imran’s friend has a problem in contract. Imran’s friend does not have a contract with Helen, the vendor. His claim will fall under the law of tort. Under the common law principles following the decision in Donoghue v Stevenson the neighbour principle imposes a duty on the manufacturers and/or distributors of goods not to injure or to prevent injury to all persons that an individual ought to have in his or her contemplation.9 Under the Consumer Protection Act 1987 together with the neighbour principle in Donoghue v Stevenson, Imran’s friend may proceed against the French company for damages arising out of the personal injuries suffered as a result of the computer’s defective wiring. In order for both Imran and his friend to succeed in tort and contract, it will be necessary to prove under Section 2(1) of the Consumer Protection Act 1987 the that the damages suffered were a direct result of the defective product and not contributed or caused by some wholly independent factor.10 On the facts of the case the faulty circuit obviously originated from the manufacturer. It therefore follows that Imran and his friend have a case against Helen and the French company respectively. Helen in turn can third party the French company who may in turn third party the Vietnamese manufacturer. Question Two The main question with respect to liability under the contract for the sale of the computers to Queenie, Rob and Phil depends on whether or not the risks passed from Helen to each of the parties contracting to purchase the computer. Section 18 of the Sale of Goods Act 1979 provides the law governing the passing of risks upon a contract for the sale of goods.11 The Sale of Goods Act 1979 attempts to promote elements of certainty and fairness with respect to the transfer of goods especially in circumstances where the parties fail to express their intentions12. Section 16 of the Sale of Goods Act 1979 makes provision for the goods to be ascertained in order for property to pass.13 There is obviously no difficulty with ascertaining the computer sold to Phil since he entered the store and in a face-to-face negotiation selected a computer, paid a deposit on it and Helen placed it aside fully expecting that Phil would take possession of it the following day. Queenie’s situation is little more complicated since she only agreed to purchase a Minim computer and did not specifically choose one, nor did she bind herself to a contract by part performance or consideration. It is therefore difficult to ascertain goods specifically chosen by Queenie. Of each of the three contracts, Rob’s is more certain since he not only chose a computer but requested specific modifications. It does not matter that the computers had not been fully paid for. By virtue of Rule 1 of Section 18 of the Sale of Goods Act 1979: “where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed.”14 According to Dennant v Skinner & Collom [1948] 2 KB 164 once the contract has been completed the parties are not at liberty to make the sale conditional upon any event.15 According to the ruling in Underwood Ltd v Burgh Castle Brick and Cement Syndicate [1922] 1 KB 343, goods under a contract for the sale of goods are in a ‘deliverable state’ once the vendor has completed that which is required to bring the contract to a conclusion.16 Section 61(5) of the Sale of Goods Act 1979 goes further to mandate that goods are in ‘deliverable state’ when they are in: “such a state that the buyer would, under the contract, be bound to take delivery of them.”17 The question is now whether or not Helen has completed all that is necessary to bring the sales’ contract in each case to a conclusion. Certainly, in Queenie’s case, a mere telephone call from an interested purchaser without more could not compel Helen to set a computer aside for the caller. There was no consideration and nothing of substance which went beyond a mere telephone inquiry. It therefore follows that Queenie was under no obligation to complete the purchase and Helen was merely taking a risk in setting the computer aside based on a verbal, telephone promise. In Rob and Phil’s case Section 18(1) of the 1979 Act arises so that the property passes whether or not Helen continues to keep them in the store so that the risk of damages and loss as a result of the break in passes to Phil and Rob. The law evolves to that when all that has to occur is the completion of the contract, the property passers from the vendor to the purchaser even if the latter has yet to complete payment for them. By virtue of Section 18 Rule 2 of the Sale of Goods Act 1979 goods are not in a deliverable state: “Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, property does not pass until the thing is done and the buyer has notice that it has been done (emphasis supplied).”18 Section 18r2 is obviously applicable to Rob who requested an upgrade, paid a deposit and left fully intending to complete the purchase the following day. Likewise, Section 18 r3 will function to vest ownership and risk of loss or damages in Rob. By virtue of Section 18r3 of the Sale of Goods Act 1979 goods are in a deliverable state when some evaluation or modification is requested and the property will only pass once the purchaser has receives notice that the evaluation has been carried out. Helen left a message on Rob’s phone and it can be assumed that he received notice that the modifications were complete. The position has been fortified by the ruling in Carlos Federspiel SA v Charles Twigg & Co. Ltd [1957] 1 Lloyds Rep 240. It was held in this case that once the vendor meets the condition of sale the property will pass since the goods have been modified to a specified form and are typically of no use for the purpose of resale to another.19 As such the goods have been ‘unconditionally appropriated’ by the Rob.20 Question Three The question for Helen in this particular case is whether or not she can repudiate the contract for the sale of the computers on the basis of anticipatory breach. Based on the doctrine of anticipatory breach Helen may not have any recourse. The doctrine is such that anticipatory breach must be such that Ben clearly does not intend to complete performance of the contract. In order for Helen to repudiate the contract based on information that Ben has financial difficulties Helen will be required to establish “beyond a reasonable doubt”21 that Ben absolutely refuses “to perform his part of the contract.”22 Helen will therefore have to demonstrate that Ben’s conduct or manifest intentions are such that he does not intend to make the final instalment on the computer purchases.23 Such an intention is assessed by virtue of an objective test by ascertaining what any reasonable person in Helen’s position might conclude within the “factual matrix” of the contract and all the relevant circumstances.24 In other words, can Helen reasonably interpret Ben’s financial difficulties tantamount to eminent repudiation. Given that Ben has financial difficulties and purchased four computers by virtue of part payment, it is certainly not unreasonable to assume that he has no intention to complete the payment. However, the doctrine of anticipatory breach requires that the intention to repudiate be “clear” and “unequivocal.”25 The fact that Ben is experiencing financial difficulties does not provide clear and unequivocal evidence that he does not intend to complete the purchase of the computers. The extent to which he is suffering financial difficulties is unknown and may not be such that he cannot complete the purchases of the computers. To this end, it is unlikely that Helen can repudiate the contract based on the doctrine of anticipatory breach. She will have to proceed with the contract and wait for a missed or late payment to fortify the belief that Ben intends to breach the contract for the purchase of the computers. The law requires clear evidence of an intention to renounce the terms of the contract in order to endorse repudiation by the innocent party.26 Bibliography Aswan Engineering Establishment v Lipdine Co [1987] 1WLR 1. Bradgate, Robert. Sale of Goods. (Oxford University Press, 2000). Carlos Federspiel SA v Charles Twigg & Co. Ltd [1957] 1 Lloyds Rep 240. Christopher Hill v Ltd v Ashton Piggeries [1972] AC 441. Consumer Protection Act 1987. Council Directive 85/374/EEC. Dennant v Skinner & Collom [1948] 2 KB 164. Donoghue v Stevenson [1932] AC 562. Fairgreive, Duncan. (ed) Product Liability in Comparative Perspective. (Cambridge: Cambridge University Press, 1st Edition, 2005). Forsling v Becheley-Crundall [1922] SLT 496. Freeth v Barr [1874] LR 9 CP, 208. Richards, Paul. Law of Contract. (Wildy and Sons, 8th ed, 2007). Sale of Goods Act 1979. Underwood Ltd v Burgh Castle Brick and Cement Syndicate [1922] 1 KB 343. Woodar v Wimpey [1980] 1 WLR 277. Read More