Flavio and Marco and Business Law - Case Study Example

Case Scenario I Issue: Flavio & Marco were not happy when they realised that the construction work had not been completed and they maintain the viewthat Nuriya has not fulfilled her part of the deal. In other words, has Nuriya satisfied her part of the agreement made? Rule: The relevant law is the Unfair Contract Terms Act (1977), which is entitled “Liability Arising in a Contract.” In this particular case, one of the contracting parties deal with the anothers written standard terms of business (s.3(1)). Notice the quote below with respect to liability: “(2) As against that party, the other cannot by reference to any contract term— (a) when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or (b) claim to be entitled— (i) to render a contractual performance substantially different from that which was reasonably expected of him” (UCT Act 1977 s.3). It should be understood that the agreement between the two parties particularly pertains to subsection (i) of this reading. The other party (Nuriya) cannot perform work that is significantly different than what is expected. Concerning the Act mentioned above, but in section 17 of Part II, applies to this situation and will be specially applied to this case as well. Throughout most of this remaining piece the Unfair Contract Terms will be abbreviated as “UCT” for convenience. Application of Each Element: It may appear that Nuriya did not conduct work that was unexpected of Flavio and Marco because they read the contract and made a payment that all agreed upon at that time was pertaining to the contract mentioned. Both Flavio and Marco did in fact “insist” on differences before agreement of the contract was made and those two made it clear that Nuriya should make these changes, the reasonable individual(s) would have known that Nuriya did not want to make such changes. The reason this is so is because Nuriya had added the clause “The agreement will be carried out under the conditions set up on Nuriyas previous communication.” The addition of this clause undoubtedly changes the conditions of the contract and if the other parties knowingly reads and made payment to this particular change then any payments to Nuriya would likely imply an understanding of the contract by Flavio and Marco. The other party (Nuriya) has not performed differently than what is expected. As per Schedule Two of the UCT Act (1977) “whether the customer knew or ought reasonably to have known of the existence and the extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties) is relevant here. More plainly, the contract possessed new language, and quite arguably Flavio and Marco should have known the new conditions written, and that signing the contract and additionally making a first payment to Nuriya after signing the contract would make the agreement seem reasonable and that Flavio and Marco had fully consented with the terms written. It can be said, when giving attention to the case of Parker v South Eastern Railway (1877) that the customer cannot renege on the contract by failing to read it, that if the document contains conditions, and that person receiving it believes it contains conditions then they are subject under those obligations. But the party relying on the exclusion must take reasonable approaches to bring it to the other party’s attention. If proven or under some circumstance the conditions are not noticeable and/or the new clause was included with wrongful intentions of the other party, then Flavio and Marco may prove Nuriya responsible. That is just an additional aspect to cover. It is in the best interests that Flavio and Marco should make reference to the Act, section 17 of Part II, which addresses unreasonable exemptions in consumer or standard form contracts. In more layman terms, in paraphrasing the Act, another party should not be exempt from liability when the other makes a breach in the contract by rendering an act that is “significantly different than what is reasonably expected of the contract; if it was not fair and reasonable to incorporate the term in the contract” (UCT 1977 s.17, 1(b)). Given that Nuriya has changed some part or added to what is more likely a distortion from what the contract was initially written, the contract could be considered unfair and void. Nuriya may have unreasonably breached what is expected as her part of the original contract. A reasonable person who signs a contract should not anticipate a change in the agreement, without prior notice, by the other party writing a reversing clause in the already written contract; presumably a contract that was created by the customer. First ask yourself, should a business contractor make very significant changes to a contract already signed without further notice to the customer? Second, knowing these changes have been made should the contractor still accept payment before the work has begun, or any payment considering the facts given? Third, should any work have started at all? The answer to these, by a reasonable person, should more than likely be answered with a yes. A reasonable person would not have made such actions considering the gravity of the work presented. Taking into account prior court cases would help justify this situation. The case of Thornton v Shoe Lane Parking Ltd (1971) shows that a party cannot incorporate a new clause after completion of the contract without giving a reasonable notice beforehand. In this case an individual was injured in a car park before entering his car. The car park claimed a notice stating that the park is not to be held liable for injury was printed on the plaintiff’s entry ticket and due to this they should not be held responsible. However, it was ruled in that case that the more onerous the clause in a contract (the more unfavourable the obligations), the more notice needs to be given. The company should have given a more reachable warning to the customer, a more obvious condition. Now apply that same case with the case at hand concerning Flavio, Marco, and Nuriya. Along with this importance, other statutes and the UCT Act of 1977 have and may in deed override case laws. Conclusion: Thus, Nuriya has seemingly breached the expectations of Flavio and Marco and taking into account the onerous situation she should have given a substantial notification about her inclusion of the clause and actions. Case Scenario II Issue: Remi had spent two weeks off work in order to recover from an accident at Flavio and Marco’s business and discovered that his watch (which was damaged) cannot be repaired. Remi has contacted Flavio & Marco to inform them that he expects some sort of compensation for the accident. Flavio & Marco have the opinion that the hotel has no liability for the accident because the notice behind the reception counter excluded this type of liability. Rule: Following the statutory terms of the UCT Act (1977) an individual cannot, by giving reference to any contract or conditions (such as displaying a notice as Flavio and Marco has done), to exempt oneself from liability of loss or damage except in the case that the conditions pass the need of reasonableness (section 2(2)). Additionally, under the Act a person cannot exclude him or her self from liability of personal injury or death resulting from negligence (s.2(1)). This section does not state any terms needing to specifically satisfy the reasonableness requirement as in section 2(2). Application of Each Element: Even though the implementation of a notice that gives warning to others seems to be a good approach to avoid liability, it does so unsoundly in this case. The UCT of 1977 prevents Flavio and Marco from taking advantage of the situation by putting more potential responsibility on them than some would think. This may cause an unfavourable outcome for the business owners. A posting of a sign or explicitly in this case a “notice” would probably not excuse the party from all liability, especially in the case Remi’s personal injuries. The statute clearly explains that even the posting of such notices as the one behind the counter in the establishment does necessarily exclude someone from being held liable in the case of negligence. It is said that the boxes of champagne was not only left carelessly on the floor by the bar, but the advertisement of the bar not being responsible for negligence just seems rather absurd and may seem to be an attempt to make a “crutch” for any irresponsibleness establishment. A co-ownership notice as such cannot be expected to override the UK legal system statutory laws. Even though this may be true, it can also be argued that the frequency of Remi’s visits and the relationship between Remi and the hotel as a customer shows that under the UCT Act (1977) he “knew or ought reasonably to have known of the existence and the extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties)” (Schedule 2 “Guidelines” for Application of Reasonableness Test). But even that been said, it is more probable that Flavio and Marco would be held liable for the personal injuries sustained if it is deemed that even the most reasonable person would of fallen victim in such cases. Because the reasonable person’s property is damaged due to the negligent nature of the incident, in this case leaving the champagne boxes exposed in such a manner, will probably require damages paid to the plaintiff. Conclusion: Remi may be warranted to some compensation for his injuries and loss of pay from employment, if any. Although it can be argued quite differently, Flavio and Marco may be liable for the loss of Remi’s watch. Case Scenario III Issue: Claude, while intoxicated, purchased a set of home entertainment speakers intending to install them in his vehicle. The next day he realised his mistake but could not return them for a refund because the store policy says the following: “no refunds or exchanges on speakers.” He soon tries to install the speakers in his car. Afterwards, Claude installs the speakers in his home and after one week of use the speakers burst. Claude has spoken with a friend who told him that he has the right to get a refund for the speakers that had burst. Rule: The Sale of Goods Act (1979) or the “SOG” for the purpose of this piece says that an individual who is intoxicated must pay a reasonable price for the goods sold. What deems a reasonable price is “a question of fact dependent on the circumstances of each individual case” (SOG Act 1979, s.8 “Ascertainment of Price”). In addition, Section 14 “Implied Terms about Quality and Fitness” applies to the current circumstance. The law says the goods should be what a reasonable person would deem as satisfactory quality, and more specifically in this case free from minor defects (SOG Act 1979). Application of Each Element: To start, given the situation and information, there is no indication as to what is judged as a reasonable price in this scenario. There is mention that Claude was intoxicated during the purchase but no mention of any unreasonable price paid. The customer merely pays an amount to the seller for the speakers. As per the SOG Act (1979) Claude would be entitled to an exchange, damages, or a refund because the speakers present an obvious defect and are no longer functioning properly after only one week of purchase. This contract between seller and buyer does not appear to be non-severable (s.11(3) &(4)). Even though Claude attempted to install the home speakers in his vehicle, the time lapse between attempting the initial installation and the functioning of the product therein would not bring the cause of the defect. The Act mentions explicitly that “For the purposes of this Act, goods are satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking into account of any description of the goods, the price (if relevant) and all other relevant circumstances” (SOG Act 1979, s14 (2A)). It is blatant that the quality of the speakers, considering its short time lapse after purchase before the showing of a defect, would be considered unsatisfactory. Claude was not made known of any specifics about the store’s “no refund and exchange policy” at the time of purchase. In addition, Claude was not informed of any defects relating to the speakers that could be argued against in this case. By referring to the Act a person should note whether this situation specifically applies to a full refund of the speakers, which is the main question in the matter; or whether repairing the speakers would be permissible. Either practice would be appropriate since the contract between the two parties, at the time of purchase, does not specify stipulations. Please read the following: “Whether a stipulation in a contract of sale is a condition, the breach of which may give rise to a right to treat the contract as repudiated, or a warranty, the breach of which may give rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract; and a stipulation may be a condition, though called a warranty in the contract” (SOG Act 1979, s.11(3)). In other words, unless otherwise the two parties agree to certain conditions upon creating the contract, the buyer has a right to receive damages, repairs, or a refund. There is no mention of posting an advertised notice of that particular product’s non-returnable policy or other conditions. Even if posted, it cannot be reasonably expected of the store to supersede such extensive terms as the SOG Act of 1979. Additionally, if referring to the UCT of 1977 the business owner should expect that “liability for the loss or damage cannot be excluded or restricted by reference to any contract term or notice contained in or operating by reference to a guarantee of the goods” (s.1). Thus, even the telling (arguably a notice) of no refunds or exchanges by the store should not hold up as an excuse not to do so. It would simply be unfair and unreasonable. Conclusion: Claude is entitled to a refund for the speakers. Summary Taking into account all the significant problems, I would advise Flavio and Marco to examine all areas that have been covered and become better more aware of what statutes are applied to every possible legal scenario. There are numerous statutes that apply when dealing with contracts between parties and those statutes tend to regulate and dictate what will more likely be permissible in most disputes. Many times it seems that affecting Acts, such as the ones mentioned, will override a typical business policy that is under sole discretion of the party operating an establishment or something of that nature. It is very important to mention that these pending conflicts are motives to consider contractual agreements with new and more satisfying partners. Sufficient communication between those partners is essential to carry out fulfilling contracted work. Also, it is pertinent to make sure that all peoples employed with the establishment are familiar with applicable laws and are able to make prudent decisions when doing business with customers. This practice will help prevent potential problems that may arise due to specific store policies and what to do when customers insist on returning store items. Knowing what matters are considered negligent is of great importance when safety is an issue. What to avoid and implement is key to establishing a safe work environment that may lessen the possibility of liability dilemmas. Reference List Law Teacher, 1970 Exclusion Clause Cases: Parker v South Eastern Railway (1877), [Online] (Updated 16 July 2010) Available at: http://www.lawteacher.net/contractlaw/cases/exclusion-clauses-cases.php [Accessed 21 July 2010]. Moles, R., 2005 Networked Knowledge-Contract Casenotes: Thorton v Shoe Lane Parking Ltd [Online] (Updated 21 July 2010) http://netk.net.au/contract/thornton.asp [Accessed 21 July 2010]. Office of Public Sector Information, 2010 Sale of Goods Act 1979 (c. 54), [Online] (Updated 22 June 2010) Available at: http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1979/cukpga_19790054_en_1 [Accessed 21 July 2010]. Office of Public Sector Information, 2010 Unfair Contract Terms 1977 (c.50) [Online] (Updated 22 June 2010) Available at: http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1977/cukpga_19770050_en_1 [Accessed 21 July 2010]. Read More