Legal Rights of the Client - Case Study Example

Introduction: In the below discussion we are going to deal with the legal issues particularly legal rights of the client mentioned in the proposed question. We will also provide a response to the concerned legal issues as well. To analyses the proposition, FIRAC process, which is, Facts, Issues, Rules, Analysis and Conclusion is being adopted. FIRAC is widely applicable in analysis of legal cases.1 (David Guenther, 2009) Facts of the case need not to be reproduced; however, legal provisions which are relevant in this proposition would be Contract Act, Sale of Goods Act 1979 (as amended), exclusions and breaches. In this regard following issues can be framed: 1- whether there was any legal contract between Big Deal Ltd and Slump Ltd on one hand and Big Deal and Ms. Market on the other, or not? 2- Were these Concept of Implied conditions or not? 3- Concept of Implied conditions 4- Is any exclusion clause permissible in sales of goods? If yes, then what should be the criteria to define the same? 5- If the exclusion narrated as ‘NO REFUNDS GIVEN ON FAULTY GOODS’ is a legal one? 6- Was there any misrepresentation by sales person? If yes, what are legal consequences for the same? 7- Rights of Slump Ltd and Ms Market. Analysis: Analysis of issues given above is as under: 1. Whether there was any legal contract between Big Deal Ltd and Slump Ltd. On one hand and Big Deal and Ms. Market on the other? In legal sense Contract is defined as “an agreement enforceable at Law” where as every promise and every set of promises, forming the consideration for each other, is an agreement. And each promise is a combination of an offer by one person and acceptance of that offer by an other person. 2(The Indian Contract Act, 1872) The basic components of this agreement are: a) Offer b) Acceptance c) Legal consideration In case of deal with Slump Ltd through Mr. Boom offer was made by Mr. Boom to purchase the cars for use on basis of advice rendered by Mr. Smooth; a salesperson employed by Big Deal Ltd. Mr. Smooth accepted the offer by acting in accordance with the offer for price tag which forms the consideration of 20,000/- each. Similar is the case of deal with Ms. Market. Hence, in both case there were legal contracts between the parties on the ground that all the three components i.e. offer, acceptance and lawful consideration were present. 2. Were these contracts of sales of Goods? A contract of sale of goods is a specific type of contract. I contract maybe a legal one but still not constitute a sale of goods contract. In order to do so a contract should correspond to Sec: 2(1) of the Sale of Goods Act 19793, which provides that, “A contract whereby the seller transfers or agree to transfer ownership in goods to the buyer in return for a money consideration called the price.” Both the deals under discussion in the current debate qualify to be a contract of sales of goods where ownerships was transferred to buyers for a price tog of 20,000/- and 5,000/- in case of slump Ltd and Mr. Market respectively. Cars purchased were legal consideration in this regard. 3. Concept of Implied conditions: Certain professions carry certain implied conditions attached to their products and services. However, law describes the implied conditions in general too. Section 14 of Sales of Goods Act, 1971, speaks about these implied conditions. This section defines that goods to be sold shall be of satisfactory quality, whereas, the satisfactory quality is one which a reasonable person regard as satisfactory. These implies conditions are safety, durability, appearances and finish; freedom from miner defects and fitness to purpose. In the concerned question, in both the deals, cars purchased by the buyers were required to be durable and fit for driving along with safety by terms of implied conditions mentioned above. An important point in this regard is appearance and communication of any defect as to these implied conditions in time. In our scenarios, fault was apparent in few days of purchase of cars and the same was communicated to the seller soon after its discovery. Had there been a long delay in communication of such information to seller he would have had the opportunity to claim that faults developed after execution of contract but this was not the case. 4- Is any exclusion clause permissible in sales of goods? If yes, then what should be the criteria to define the same? In normal course of contracts, exclusion clauses are made part of a contract to exclude parties from liability of breach; however, these exclusions are under certain laws and scrutiny of court. The Unfair Contract Terms Act 19774 is one which regulates these exclusions. The criterion of this exclusion is conformity with implied conditions. Court has often refused to accept exclusion terms which are against these implied conditions.5 (R & B Custom Brokers Co. Ltd. v United Dominions Trust Ltd) 5- If exclusion narrated as ‘NO REFUNDS GIVEN ON FAULTY GOODS’ is a legal one? In case of Big Deal, display of board containing “NO REFUNDS GIVEN ON FAULTY GOODS” was meant to create an exclusion to avoid liability of refund and damages. Implied conditions stated above provide that goods shall be fit to use. The buyers had purchased vehicles to drive and any vehicle so purchased shall be drivable without any major or minor defect. Mere placement of such board does not create any exception in itself. It is pertinent to note here that any requirement which constitutes the very basis of a contract can not be overruled by explicit warnings or placing of boards. 6- Was there any misrepresentation by sales person? If yes, what are legal consequences for the same? Now comes the question of misrepresentation. Misrepresentation may be defined a false statement of fact made by one party to another party. 6(Gordon v Selico, 1986) Sales person of Big Deal stated that cars were ‘Sundat GR2’ model, where4as these happened to be Sundat GR1 model. Similarly, that sales person also told Ms Market that second hand car given to her was driven only 24000 miles, while mechanic on inspection found out that odometer reading of the vehicle was ‘clocked’. It is normal to expect lesser quality in case of second hand purchases as in case of Ms Market’s deal. Here it is of less importance that the car so purchased was actually second hand but the condition narrated by seller about car’s running was fraudulent. She mentioned it clearly and any thing misrepresented in this regard results in legal repercussions. In both the cases sales person was in active misrepresentation of facts in order to deceive his clients. Misrepresentation as made in these cases is fraudulent and in any contract renders it avoidable but not void. 7(Derry v Peek, 1889) meaning the buyer has the right to either accept the contract as valid or seek to get it declated void. 8- Rights of Slump Ltd and Ms Market: Analysis given above clearly established the fact that Big Deal Ltd has acted in wrong manner and misrepresentation on part of sales representative is there. Goods provided were of low guilty and were not in accordance with the implied conditions mentioned in law. Introduction of exclusion clause in form of display board does not qualify for a legal exclusion being in contradiction with Unfair Contract Terms Act, 1977. All these situations provide Slump Ltd and Ms Market a right to rescind the contract and to claim damages from the seller. By rescinding the contract, both the parties can claim the price back. Damages however, depends on the calculation of court as to damage incurred because of this breach. It is therefore advised to both the parties to sue for breach of contract with the prayer to rescind the same and claim damages in this regard. Bibliography David Guenther, FIRAC: An elementary Approach to Legal Reasonin, 2009 Central Michigan University retrieved on 27/12/2009 from http://www.100megsfree3.com/wordsmith/firacintro.html Derry v Peek, 1889 14 App. Cas. 337 Gordon v Selico 1986 18 HLR 21 R & B Custom Brokers Co. Ltd. v United Dominions Trust Ltd, 1988] 1 All ER 847 Sale of Goods Act 1979 The Indian Contract Act, 1872, Act No. 9 of 1872 Unfair Contract Terms Act, 1977 Read More