Consumer Law: Analyzing Harry's Problems - Essay Example

Consumer Law: Analyzing Harry's Problems Ans 1: In Harry’s case, all the three problems that have arisen are in the context of his dismissal for redundancy and the reason behind this is the closure of his former employer’s business. The Redundancy Payments Acts, 1967-2003 spell out the provisions for redundancy payments and in Harry’s case, although a redundancy payment has been made to him, it is inadequate in terms of compensation. (a) Harry has already paid two years of the car loan and only a one year schedule of payments is left to be paid. Therefore, the question that may be explored in Harry’s case is whether the redundancy payment that has been made by his former employer satisfies the “statutory redundancy entitlement”.1 This is an amount determined by Harry’s length of service and his weekly earnings. Possibly, Harry has received less than the statutory entitlement, especially since his employer has gone out of business and may have been unable to pay the mandatory entitlement. Therefore Harry could consider filling up Form RP50 at the Department of Enterprise, Trade and Employment in order to recover the full amount due to him, since the Department will be able to recover it from the employer later and Harry can make the payments on the car. Alternatively, Harry can also whether there are grounds for unfair dismissal on the basis of which damages can be claimed. Section 195(1)2 spells out the fact that dismissals due to redundancy are categorized as being “for a reason not related to the individual concerned.” The requirement to consult arises especially in a case where more than 20 employees are involved within a 90 day period, as was laid out in the case of GMB v Man Tuck & Bus UK3. In the event that an employer fails to consult and inform employees about proposed dismissals on redundancy grounds, then this could hold them liable for claims of unfair dismissal, and this is what occurred in the case of Mugford v Milford Bank plc.4 Harry also has a right to not be dismissed unfairly5. However, despite the rights he has, he has not been consulted as per the requirements and he has been dismissed without the minimum period of notice6, so he has good grounds for unfair dismissal and can claim compensation from his employer. (b) Harry can seek compensation for the damages that have been caused to his clothes through the sue of a defective product and he can file a suit under the provisions of Section 4(2) of the Supply of Goods and Services Act of 1982. The Unfair Contract terms Act of 1977. Contract is governed by the will theory or the basic principle that the parties have freedom to contract and all terms of the contract, including exclusion clauses, are governed by the free will agreement of the parties. Thus, under common law, courts are barred from adopting an interventionist doctrine in contract. However although the freedom of contract exists under common law, rigorous examination about how it is constructed and the doctrine of fundamental breach of contract7 are options available to deal with unfair aspects in a contract.8 The basic premise upon which the UCTA is based is that in a sale, the consumer is placed in an unequal bargaining position and therefore there are more grounds available to an ordinary consumer to contest a contract as being unfair and thereby a consumer can demand compensation under its provisions. The Sale of Goods Act makes it clear that even when no definite warranties are made about the condition of a product that is sold, there is a general implication that the product sold is of a satisfactory quality9. There is also a general duty of care that will be ascribed to Equip Stores since it is in the business of selling products such as washing machines and therefore there is an implied condition that the goods being supplied are of “satisfactory quality”10 in terms of safety, durability and freedom from defects. Even in the case of a cheaper product, Dixon X proposed the “relevance of the price” test for a product as being one where a buyer “fully acquainted with the facts and therefore knowing what hidden defects exist…would buy them without abatement in the price…..” 11 Therefore, there are recoveries available to a consumer for the supply of a defective product, even when he purchases it at a reduced price. In Harry’s case, since he has purchased it at a higher price, he is even more entitled to damages for supply of defective goods. There is a reasonable duty of care that is expected from D-I-Y, based on the principle laid out in Donaghue v Stevenson12 that reasonable care must be taken to avoid injury to other persons. According to Lord Dunedin in the case of Dominion Natural gas Co Ltd v Collins and Perkins13 , when a dangerous product is involved, there is “a peculiar duty to take precaution imposed upon those who send forth or install such articles when it is necessarily the case that other parties will come within their proximity.”14 Since the washing machine could be a dangerous product, the manufacturer therefore had a duty of care to ensure that it was a satisfactory product and satisfied all the requirements of safety and durability. The washing machine sold by Equip stores is a defective product – the kind of defect that could have been prevented with reasonable care by manufacturer of the machine. Manufacturers have been held liable for defective products when the defect arises due to the lack of care of the manufacturer15 or supplier of the product. Therefore, in this case, the fact that equip Stores has gone out of business need not be a bar for Harry to file a suit for damages, he can still sue the store and more importantly, the manufacturer of the washing machine for breach of its duty of care in supplying a defective product. In this way, he can seek and claim compensation for his damaged clothes. In the case of his credit card payments however, he may have to make the payment until the matter has been resolved by the Courts. He is likely to recover the sum that has been paid and additional damages. Alternatively he can also apply to the Courts seeking a restraining order for collection of the amount of 700 pounds and any interest charges by the credit card company in view of the crisis that has occurred through the supply of a defective product. With such a preliminary order from the Court, Harry can stop payment on the credit card bill. (c) The chances of Harry’s being able to end the loan agreement do not appear good, unless he is prepared to return in full, the principal amount that has been out into his bank. Since he has already spent 500 pounds out of that, he will be obliged to reimburse that amount and return the entire amount to the bank, seeking a cancellation of the loan that he has sought. It is possible that there may be some penalties associated with the early cancellation of the loan, however since the actual payment terms and monthly payments have not yet been entered into the agreement that Harry signed, he can seek a waiver on the penalty on the grounds that he has not agreed in writing to the period and terms of the loan. The ground sin Harry’s favor are the fact that he has just put in his application form and the terms have also not been fully included in the agreement, although the money has been deposited. Therefore, he can try to avoid the contract with the bank since it is still early on in the loan process. The fact that he has been dismissed from his job and is no longer in a position to pay the bank the monthly payments may also serve as good grounds to contest his loan and avoid the contract altogether. However, what is most important is for Harry to immediately return the 500 pounds that he has already used and allow the bank to pull back its entire loan amount, in which case, he may be charged some minimal interest fee for the use of the funds for a short period. However, in the event he has not or is unable to return the 500 pounds, he can re-negotiate his contract with the bank and reduce the amount of the loan to only 500 pounds and enter the new monthly payments, so that he becomes liable only for the amount that he has already used. Q2. (a) The Supply of Goods and Services Act of 1982 makes it clear that while there is no general warranty about the quality of a product, when a sale is made and a seller transfers the goods in the course of his business, there is an implied condition that the goods that have been supplied are of satisfactory quality16. However, the crack that existed on the computer indicates that the goods were not satisfactory, as Ben later found out that it had been dropped by a careless employee. Moreover, Ari has warranted that the crack is only a superficial one, whereas in reality the defect is much more serious and therefore there is a case of misrepresentation17 in the sales contract that arises. In the case of Reardon Smith v Hansen Tangen18, Lord Diplock clearly highlighted grounds that could exist for breach of contract through lack of identification of the goods being purchased: “Ultimately the test is whether the buyer could fairly and reasonably refuse to accept the physical goods proferred to him on the ground that their failure to correspond with that part of what was said about them in the contract makes them goods of a different kind from those he had agreed to buy.”19 The grounds for breach of contract through misrepresentation are further supported in the fact that what Ari claimed was a Mark III computer is in reality only a Mark II Model. The statutory test to determine the merchantable quality of goods is that they are fit for the purpose that they are to be used20. Ben has clearly specified his requirements to Ari and by supplying an inferior model, Ari has not provided Ben goods suitable for the purpose they were meant to be used, while misrepresenting facts in his presentation and stating that they would suit the purpose.21 The major factor standing in the way of Ben’s recoveries in this case is the exclusion clause on the sales contract, which clearly specifies that if goods are defective, they will only be repaired and limiting the extent of its liability. However in this context, statutory provisions exist that relate to exclusion clauses and their validity.22 If the exclusion clause limiting liability to repairs of defective products is to be deemed to be invalid for any reason, it will be because it is unreasonable in its terms and conditions23. A contract that is deemed to be unfair due to the inclusion of an unreasonable exclusion clause will not be binding upon a customer24 and the limitation on liability will not be valid. The UCTA generally provides more scope for an ordinary customer to contest a contract as being unfair, especially in terms of its exclusion Clauses, since an ordinary customer will be deemed to be in an inferior bargaining position as compared to the supplier, who will also be deemed to possess greater knowledge and therefore redress will be offered to compensate for the unequal bargaining position25. For example, the UCTA clearly defines an unfair contract as one which has the effect of “excluding or limiting the legal liability of a seller or supplier in the event of ….. personal injury to the latter resulting from an act or omission of that seller or supplier.”26 In Ben’s case, although there has been no direct physical injury caused, nevertheless the serious losses in his business have been caused through the use of a defective product. Ben has a good case to contest his contract with Ari and claim a breach under the UCTA in which case the exclusion clause will not be valid, however working against Ben is the policy of “Buyer beware” (caveat emptor) which governs free will contract and this may limit Ben’s recoveries, since he chose to accept a product without checking it out thoroughly and continued to use it although it did not deliver everything that Ari had promised. (b) This is a case that involves a conflict of laws, because the question that arises is which country’s laws will serve to adjudicate this case, since Taiwan, France and the UK are involved in this issue. The choice of law in terms of contract, which is the issue in this case, will be governed by the principles established through the Rome Convention, which have been given effect through the Contracts (Applicable Law) Act 1990.27 While the principles of contract are largely governed by common law, the conflicts arise especially in those instances where no law has been expressly chosen by the parties, since it gives rise to uncertainties28. There is choice and flexibility allowed to the contracting parties to choose the applicable law..29 however when most of the elements of the contract pertain to a particular country or jurisdiction then it is likely that the rules of that particular country will apply in resolving contractual issues that may arise. When there is no clear and mandatory indication of which Court is equipped to handle the case, therefore the general test that will be used would be as specified in the Act30, i.e, that the contract shall be governed by the law of the country to which it is most closely connected. The major party to be sued will therefore be the Company in Taiwan that makes the product. This conflict of laws has been spelt out by Dicey and Morris in their discussion on Rule 17, whereby matters of procedure will generally be adjudicated in accordance with the domestic law of the country where the suit for action is brought (lex fori)31. However, all matters of substance that are raised in a suit will be governed by the relevant law that applies to the cause of action that has been brought (the lex causae). When the matter is procedural, it may be governed by the laws of the country where the matter is brought but where the issue is a substantive one, it will be lex loci that will be the governing factor. For substantive issues, such as those involving personal injuries and thereby the violation of individual rights as spelt out under European law, there will be no bar for recoveries. Since Martin has suffered personal injuries, the French firm that imports the product may be held liable for damages caused by their negligence in dealing in harmful goods, because individual rights have established precedence in English law through the Human Rights Act of 1998, while also establishing precedence in Community law, under the European Convention of Human Rights. Therefore, the resolution of conflict of laws in Martin’s case will be by employing lex causae, making the Taiwanese and French company liable for damages caused, and the decision of the English Court will be supreme. Since the damaging effects have occurred in English jurisdiction, it may be appropriate for Martin to file suit in an English Court. However, Damages for recovery of non pecuniary losses of any kind are expressly allowed under European law.32 Thus, Martin can also recover damages for suffering and tension caused to him, however English law does not permit such recoveries.33 therefore the issue of conflict of laws will have to be determined through the procedural approach applying the principle of forum non conviens and the determination of which law will best serve the interests of the injured party. The process of making a determination as to what procedure to apply is referred to as characterization or classification. In the case of Laconian Maritime Enterprises Ltd v Agromar Lineas Ltd.34 Booysen J was of the opinion that the first step that must be taken by a Court in the resolution of international disputes such as the one that has arisen in the case of Martin is to characterize or classify the relevant rules, which generally takes place in accordance with lex fori. Since a party who is filing the suit is limited to certain jurisdictions depending upon his/her location of domicile, it is likely that the Court where the suit will be filed will be most likely the location of the person’s domicile, in Martin’s case - England. However lex causae must also be considered, and Booysen J concluded that “characterization is part of the process of interpretation and all interpretation, unless regulated by rules of construction….is always that of the interpreter, the forum.”35 Therefore, classification is generally done according to lex fori. Martin’s case could therefore best be filed in an English Court invoking the provisions of the Human Rights Act of 1988, against Buscom and Electronique, citing the Taiwanese Company as a party in the suit. He will then have recourse under European law and English law, to recover damages, which may not be possible if he files a suit against the Taiwanese Company, which could be deemed to be best fit for the Taiwanese jurisdiction. (c) The issue that arises in this case is the aspect of offer and acceptance. A contract is deemed to be valid only when there is a definite offer that ahs been made and that offer has been definitely accepted. In the case of Ben and Chiperac’s Furniture store, there is a contract in place. Since Ben has made a conditional offer the contract between him and Chipperac will be valid only if those terms are satisfied. Although Chipperac has made the modifications requested by Ben and sent out a letter indicating satisfaction of the conditions, a valid acceptance and thereby existence of a contract can occur only when the letter is received. The Courts have held that acceptance is complete when posted36. However this will still be subject to the general rule regarding acceptance, which is the requirement of actual communication37. No legal commitment will be deemed to exist until the acceptance of the offer is communicated to the offerer and up to that point, either party is free to change their minds.38 Since the letter had not yet been delivered to Ben at the time the fire broke out, Ben’s acceptance cannot be deemed to be valid and therefore he is still at liberty to change his mind about his offer. Hence a valid contract may not exist in this case. The Courts may also take into consideration the fact that the goods can never be delivered to Ben because they had been destroyed in the fire. The exchange between two parties is based upon the principle of “consideration” which Stone defines as “what one party to an agreement is giving, or promising in exchange for what is being given or promised from the other side.”39 Chipperac will not be able to hand over the goods in return for the consideration Ben pays, therefore this may not be deemed to be a valid contract. Hence, Ben may not be held liable to make any payment for the goods that he had expressed an interest in buying but which have been irrevocably destroyed in the fire. References: Addis v Gramaphone Co (1909) AC 488 A lay person’s brief guide to redundancy payments scheme [online] available at: http://www.entemp.ie/employment/redundancy/guide.htm Contracts (Applicable Law) Act of 1990 Dicey & Morris, Conflict of Laws, Volume 1, 13th edition, Sweet & Maxwell Limited, London, 2000, Dominion Natural gas Co Ltd v Collins and Perkins (1909) 640 Donaghue v Stevenson [1932] AC 562 Employment Rights Act of 1996 GMB v Man Truck and Bus UK (2001) IRLR 636 EAT Grant v Australian Knitting Mills [1936] AC 100 Household Fire Insurance v Grant (1879) Holwell Securities v Hughes (1974) Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 Keeley v Guy McDonaldLtd [1984] NLJ 134 Kirby v Burke (1944) IR 207 Laconian Maritime Enterprises Ltd v Agromar Lineas Ltd (1986) 3 SA 509 (D) Lloyds Bank v Bundy (1975) QB 326 Mugford v Midland Bank plc (1997) IRLR 203 EAT McKendrick, Ewan, 2000. Contract Law 4th edition, Palmgrave Law masters at pp 360 Minimum Notice and terms of Employment Acts, 1973 to 2001 Oscar Chess v Williams [1957] 1 WLR 370 Offord v Davies (1862) Photo Production Securicor Ltd (1980) AC 827 Principles of European Contract law 1998 Article 9:501(2) [online] available at: http://www.storme.be/PECL2en9.html Reardon Smith v Hansen Tangen (1976) 1 WLR 989 HL Stone, R. Modern law of Contract, 5th edn. Cavendish Publishing: 74. Supply of Goods and Services Act of 1982 Trade Union and labor Relations Consultation Act (1992) Thal, SA, 1998. The inequality of bargaining power doctrine: The problem of defining contractual fairness 8 Oxford Journal of legal Studies 17 Unfair Contract terms Act of 1977 Read More