Sale of Goods Act 1979 - Assignment Example

SALE OF GOODS ACT –AN ANALYSIS Answer to Question The SGA 1979” was amended by “the SSGA 1994” and “the SGA (Amendment) Act 1995.” It is to be noted that the general law of contract will be given due consideration if it impacts the special contract of sales. Section 8 (1) of the SGA states that parties of a contract are at their liberty to fix the price in a sale contract. Thus, this section states that the price can be fixed in a manner mutually agreed between parties or may be ascertained from the course of transaction between the parties. S6 of “The Unfair Contract Terms Act 1999” provides an exemption clause making out to restrict or keep out liability for infringement of any of the statutory implied terms under SGA .S6 UCTA concerns with oblique terms regarding sellers privilege to sell, in agreement with any fitness, description for reason and satisfactory quality in hire purchase or sales contracts. In Hoadly v. M’Laine1, in a damage action, the buyer was held liable to pay reasonable value of the carriage which was specially manufactured according to the buyer’s specification or special order. For the courts, the customary approach is to strive for the enforcement of agreements on the footing that a transaction meant to be binding should as far as possible should be upheld. (Bridge 1998:18) Section 8(2) stipulates that the buyer should tender a fair and reasonable price where the price could not be deduced as per the above subsection (1) of section 8. Thus, section 8(2) is applicable where contract fails to establish the price or where the price has been indirectly quoted in terms of a future or current standard. If the offer has a condition annexed while acceptance by the buyer then it will tantamount to no acceptance.For instance, an offer is made for a product at some price and at four months credit and the buyer accepts on condition that the credit is to be prolonged to six months; in such scenario, the seller is not bound, as this is not a valid acceptance and demands either a new offer has to be made in line with customer’s wish or to seller has to accept the terms imposed by the buyer. Suppose, if a seller sends his price list through post or email to the buyer and if buyer accepts the same through post or through email, then there is a valid contract and the both parties are bound by the terms of contract entered between. Business frequently employ standard terms namely boiler contracts to govern their business contracts. For instance, if Apex Fashions Ltd place orders of fabric from Superior Fabrics Ltd on its own standard from which stipulates the Apex’s standard term of purchase? Superior accepts the order with a form which said to contain its own standard terms of sale which differ from Apex’s conditions. As Superior has made a counter-offer to Apex offer and there exists no contract at this stage. This has been laid down in Butter Machine Tools Co Ltd v Ex-Cell-O Corp2. In scenarios like this, the battle is succeeded by the party who has fired the last shot. If Superior has supplied the fabrics and Apex used it without any objection to Superior’s terms, it would be construed that Apex accepted Superior’s counter-offer by conduct. However, if Apex makes a reply to Superior by drawing its attention about its purchase terms and Superior accedes terms of Apex by manufacturing and supplying fabrics to Apex, then it is assumed that Superior has accepted the terms imposed by the Apex. Some parties to avoid such disputes will add standard business terms often contain a provision which reads as follows so as to not to lose the battle of forms. “The terms and stipulations of this order are to be regularised any contract between Buyer and the Seller and shall prevail over any conditions invoked by the Seller.” (Bradgate & White :25). In this case, NGC demands an additional price of 50% for express delivery. Normally, companies charge about 10 to 20 % extra for express delivery to cover up the additional cost involved in mailing the same through overnight couriers. Here, NGC demands 50% of the cost as additional price for express delivery which is too high on the industry standard. Gerda has the following option: She can repudiate the contract. She may bargain with the NGC to reduce the additional cost to the level of 10 to 20% for express delivery She can purchase the same elsewhere where the price is cheap. If she is willing to pay extra cost as demanded by the NGC, she can accept the offer from NGC. Answer to Question 2: Under UCTA, some limitation or exemption clauses are automatically invalid and unenforceable whereas in some cases, it may be implemented only if they conform to the reasonableness test. Further, the impact of UCTA differs depending upon whether the contract is between a consumer and a business or between a business to a different business. Under UCTA, exception clauses are one which contain terms of the contract that try to restrict or exclude the liability of one party to the other party in a contract. Exception clause usage has been controlled by the following three ways: Incorporation: If improper exemption clause has been incorporated, it will not be legally binding on the parties. Construction: If proper exemption clause has been incorporated, the courts will scrutinise the wording in total, extending the following rules: The requirement for unambiguous and clear wording. This has been stressed in the following case: Casson v Ostely PJ Ltd (2001). The farm of the Casson was destroyed by the fire which seemed to have been stimulated by Ostely, a firm of builders who had been contracted to perform some repairing work of the farm building. In the Ostley’s standard contract, under the heading ‘insurance’, there was a clause explaining that all unfixed materials and present structures shall be at the sole risk of the client in respect of damage or loss caused by fire due to the negligence of Ostely and the client shall hold a proper fire insurance policy against that risk thereby covering their risk adequately. It was argued by Ostely that this clause exonerated them from being held liable, even where the fire was due to their own negligence. Drafting of several of these terms by Ostely was severely criticised by the Court of Appeals. It held that clause appearing in the heading “insurance” was misleading and confusing. Court observed that the insurance clause was connoting that it concerned only with insurance matters but in disguise, it was an effort to exclude liability. Court observed that it should have been put under “Liability or Limitations and exclusions”. The court of appeals was of opinion that the term was quiet harsh as it exonerated Ostely from accountability for fire which was caused by its own negligence. The Court of Appeal observed that Ostely failed to explicitly state that it was not responsible for any damages caused due to fire caused in the client’s premises due to its own negligence. Since there is no explicit clause, Ostely was held liable for damages caused to Casson. (Rush & Ottley 2006:86) In contract construction, contra-proferentem rule is applicable which means that exemption clause should be construed narrowly so as to give benefit to the party who try to rely on them. Legislation: “The UCTA 1977 permits parties to repudiate some types of exemption clause on the basis that they are too rigorous. A buyer who wants to repudiate an exemption clause can also the use the provisions of the” Unfair Terms in Consumer Contracts Regulations 1999” which is also known as UTCCR. It is to be noted that UCTA is only applicable where a business is attempting to restrict or prohibit its liability. Provisions of UCTA will not be applicable to sales made by individuals in their private capacity. As regards to delay in delivering the product, driver has trouble finding Hari’s house so they arrived after the time arranged for delivery. Hence, damages for such delay cannot be claimed by Hari due to remoteness of damage. In Hadley v Baxendale3, it was held transporters could not be held liable since the loss was considered to be too remote. If Hari claims damages to the glass, the seller has the responsibility to reimburse the same. Irrespective of the question of strict liability, the seller would be responsible for damages to the buyer’s property during the delivery of the product. If the seller has arranged any transit insurance, then it might be paid by the seller by making claim to the insurance company. He cannot restrict his liability by inserting unfair clause restricting his liability in the sales contract. In this particular case, a small greenhouse was delivered by NGC to Hari in contrast to item what he ordered. There was unusual delay and while unloading, Hari’s house glass was damaged. The clause that NGC would not accept any responsibility for type of goods supplied is too harsh. Applying the decision held in Casson v Ostely PJ Ltd (2001), the above term shall not exonerate the NSG from its accountability for supply of wrong product in lieu of ordered one. Hence NSG is liable to supply correct product ordered by Hari. Hence, in this case, in view of the above provisions, NGC should take it back and replace it with the correct greenhouse to Hari. Answer to Question No 3: Under distance selling regulations, a buyer can return any products for whatsoever the reason may be within 7 days on receipt of the same. NGC has to state this in the terms and conditions of their order stating that “Returns Policy”. NGC may insist in case Fred wants to return, it should be in the original packing along with the original delivery note. NGC may insist that all products returned should be in resalable state else no refund may be given. ( www.igmaynard.co.uk). Under “SGA”, a seller is liable for supply of faulty or defective goods. Further, products received which are not one in line with its description by the seller can be returned within 28 days from the date of purchase. A seller has the right to replace the product or a full refund has to be made if replacement is not possible. In case , if Fred wants to return both the hedge trimmer and the lawn mower , then has to return the same along with the original delivery note .Fred should see that products to be returned should be in resalable condition otherwise NGC may refuse to make refund. Whatever the original payment made by Fred either by paypal, cheque credit / debit card, the NGC may use the same system for refunding also. S14(3) states that, where the buyer asks for the goods for a particular purpose, the goods as sold must be suitable for that principle even if it is not one for which the goods are normally used. A seller has to refund the money on defective product supplied if: If the customer is able to demonstrate that he has not derived any benefit at all from the product. If the business is proved to be negligent. In this case, the lawn mower is not delivered until seven days later, by which time Fred has had his lawn mowed by someone else, at a cost of £100. Since, NGC acted in negligence, Fred can even claim £100the additional cost spent by him by hiring another Lawn mover with necessary documentary proof. Fred can substantiate that that he could have bought a more up-to-date version of that product much cheaper from another retailer. In view of the above, if Fred has satisfied the return policy of NGC, then NGC cannot refuse to take back both the hedge trimmer and the lawn mower. Bibliography Bridge Michael, The Sale of Goods, Oxford University Press Gilly Ford & Helen Stewart, Hairdressing. Heinemann Rush Jon & Ottley Michael, Business Law, Cengage Learning. EMEA. Terms of sale retrieved from http://www.igmaynard.co.uk/bongo/merchandise.htm (2035words less bibiliography 33 words = 2002 words ) Read More