Business Law Individual : Question and Resolution - Case Study Example

 Business Law Individual Case Study and Question 1. A in May 30, 2008 will be the delivery of the goods to the C then to B, but due to the negligence of C made the mistake to sent goods to other guests C got to get back from the guests of the goods and then get back to the B, in 2008 before June 2 will be delivered the goods to B. Please give details of legal advice to the A, B, C. EXCTARCTS FROM RELEVANT PROVISIONS OF LAW: Subject-matter of contract (Sec 7 of the Sales of Goods Ordinance) (1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured or acquired by the seller after the making of the contract of sale, in this Ordinance called "future goods". (2) There may be a contract for the sale of goods, the acquisition of which by the seller depends upon a contingency which may or may not happen. (3) Where by a contract of sale the seller purports to affect a present sale of future goods, the contract operates as an agreement to sell the goods. (4) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured or acquired by the seller after the making of the contract of sale, in this Ordinance called "future goods". Interpretation: In the given circumstances the goods are existing goods which have been transferred to B by A through the carrier i.e. C. Stipulations as to time (Sec 12 of the Sale of Goods Ordinance) (1) Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract. (2) In a contract of sale, "month" (月) means prima facie calendar month. "month" (月) Interpretation: Sec 12 of the Sale of Goods Ordinance does not consider late delivery of goods as breach of contract until time is the essence of the contract. The given conditions does not show that time is the essence of the contract. Transfer of property as between seller and buyer (Sec 18 of the Sale of Goods Ordinance – Part II) Where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods are ascertained. Interpretation: The goods have been ascertained before the contract of sale of goods and therefore after ascertaining the goods, they have been transferred by A to B through C. Transfer of property of goods (Sec 19 of the Sale of Goods Ordinance) (1) Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Interpretation: So, here in the given case, the parties intended to transfer the property in the goods and the transfer completes as soon as B received the goods. Risk prima facie passes with property (Sec 22 of the Sale of Goods Ordinance) Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer the goods are at the buyer’s risk, whether delivery has been made or not: Provided that where delivery has been delayed through the fault of either seller or buyer, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault: Provided, also, that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party. Delivery to carrier (Sec 24 of the Sale of Goods Ordinance) (1) Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named but the buyer or not, for the purpose of transmission to the buyer is prima facie deemed to be a delivery of the goods to the buyer. (2) Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may reasonable having regard to the nature of the goods and the other circumstances of the case. If the seller omits to do so, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold the seller responsible in damages. Interpretation: Sec 24 (2) above applies here and it is assumed that the seller has made a reasonable care while making a contract with the carrier i.e. C. Therefore the risk must have been transferred to B, but the email dated May 05, 2008 from A to B shows that A accepted the risk and responsibility of the shipment along with the risks involved. Therefore A would assume the risk. After discussing the provisions given above, legal advices to the parties have been given below after assuming some information as per the circumstances. These advices base upon the laws prevailing in Hong Kong along with the amendments, if any made after it’s application in the country. So, please have alook on the Assumptions and then legal advices below. Assumptions: a) Email on May 6, 2008 from A to B: A asked to deposit HKD$ 200,000. b) Email on May 7, 2008: it has been assumed that B sent an email and informed A about the payment B made amounting HKD$ 200,000. LEGAL ADVICE TO A It has been assumed that A has taken reasonable care while making a contract with the carrier i.e. C. So, Sec 24(2) releases A from being holding responsible for the negligence while delivering the goods to wholesaler i.e. B. But the delay took place due to the negligence of the carrier i.e. C. Therefore A can file a suit against C for recovery of the loss, if any and the damages due to late delivery of the goods. But if A did not inform B about the carrier and did not take reasonable care while making the contract, A is guilty of negligence and will be held responsible under Sub Section 2 of Section 24 of the Sale of Goods Ordinance. Still there is another section which considers the contract vide. As per Sec 12 of the Sale of Goods Ordinance: (1) Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract. (2) In a contract of sale, "month" (月) means prima facie calendar month. "month" (月) So, A cannot be held liable for the reason that time does not seem to be the essence of the contract. LEGAL ADVICE TO B In case A did not inform B about the carrier and he did not take reasonable care while making a contract with the carrier i.e. C, A is guilty of negligence and will be held responsible under Sub Section 2 of Section 24 of the sale of Goods Ordinance. Therefore B can file a suit against A and recover the damages he had to bear due to delivery of the goods after the date (late delivery). Sec 12 of the Sale of Goods Ordinance allows B to file a suit against A if time would have been the essence of the contract. As per Sec 12 of the Sale of Goods Ordinance: (1) Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract. (2) In a contract of sale, "month" (月) means prima facie calendar month. "month" (月) The given circumstances does not show that time is the essence of the contract so B does not have right to file a suit against A. LEGAL ADVICE TO C The delay in the delivery of goods within the specified time may be due to some reason not under control of the carrier i.e. C therefore if there is any such circumstances, and the reasons can be proved in the court then C can release himself from any liability raised by A. As per Paragraph 2 of Article IV of the Carriage of Goods by Sea Order, 1985 "Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from- (a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship. (b) Fire, unless caused by the actual fault or privity of the carrier. (c) Perils, dangers and accidents of the sea or other navigable waters. (d) Act of God. (e) Act of war. (f) Act of public enemies. (g) Arrest or restraint of princes, rulers or people, or seizure under legal process. (h) Quarantine restrictions. (i) Act or omission of the shipper or owner of the goods, his agent or representative. (j) Strikes or lockouts or stoppage or restraint of labour from whatever cause, whether partial or general. (k) Riots and civil commotions. (l) Saving or attempting to save life or property at sea. (m) Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods. (n) Insufficiency of packing. (o) Insufficiency or inadequacy of marks. (p) Latent defects not discoverable by due diligence. (q) Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage." But in case there is no such situation (and it seems so from the given circumstances) and the delay is due to C’s own negligence, then C can be held liable for the damages and the recovery of the same. 2. A time delivery, B will then sell the goods, toys and one of D. D will be sold to his son playing toys, their son is a gifted painter, only 10 years old, childhood blindness (1 eye) due to an accident, he still get the International Painting Competition award prizes, however when his son play up the pop-up toys there is toys bomb accessories, that bomb to D’s son eye become blind (2 eyes). In addition the sale of the Customs and Excise Department found that the B the toys bomb accessories is a replica of the burst. Please give details of the legal advice to B and D. EXCTRACTS FROM RELEVANT PROVISIONS OF LAW : Implied undertakings as to quality or fitness (Sec 16 of the Sale of Goods Ordinance) (1) This section provides for the circumstances in which, and the extent to which, there is any implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. (2) Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition – (a) as regards defects specifically drawn to the buyer’s attention before the contract is made; or (b) if the buyer examines the goods before the contract is mad, as regards defects which that examination ought to reveal; or (c) if the contract is a contract for sale by sample, as regards defects which would have been apparent on a reasonable examination of the sample. (Added 85 of 1994 s. 4) (3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller's skill or judgment. (4) An implied condition or warranty as to quality or fitness for a particular purpose may be annexed to a contract of sale by usage. (5) Subsections (1), (2), (3) and (4) apply to a sale by a person who in the course of a business is acting as agent for another as they apply to a sale by a principal in the course of a business, except where that other is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made. (6) In the application of subsection (3) to an agreement for the sale of goods under which the purchase price or part of it is payable by installments any reference to the seller shall include a reference to the person by whom any antecedent negotiations are conducted. (7) In subsection (6) "antecedent negotiations" (事先商議) means any negotiations or arrangements with the buyer whereby he was induced to make the agreement or which otherwise promoted the transaction to which the agreement relates. (8) Except as provided by this section and section 17, and subject to the provisions of any other enactment, there is no implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. (Added 85 of 1994 s. 4) Interpretation : Sec 16(2) of the Sale of Goods Ordinance requires that the goods must be of merchantable quality. The term 'merchantable quality' has been described by Sub Section 5 of Section 2 of the Sale of Goods Ordinance as, "(5) Goods of any kind are of merchantable quality within the meaning of this Ordinance if they are- (a) as fit for the purpose or purposes for which goods of that kind are commonly bought; (b) of such standard of appearance and finish; (c) as free from defects (including minor defects); (d) as safe; and (e) as durable, as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances; and any reference in this Ordinance to unmerchantable goods shall be construed accordingly." LEGAL ADVICE TO B There might be two possibilities: (a) there is a detailed description of the toy along with the precautions about using the toy and the kid played with the toy with proper usage. (b) there is a general understanding about using the toy but the kid played against these understandings In case of (a) there might be some negligence on part of D’s kid and therefore B will not be responsible for the loss of eyesight of D’ kid. Further, taking into account the viewpoint of Customs and Excise Department, the toy being a replica of the burst then B is guilty of selling the wrong quality of goods. LEGAL ADVICE TO D In case the toy was not of merchantable quality, D can file a suit against B for supplying the goods (toy) which was not of merchantable quality. But if the toy was of merchantable quality and the kid lost his eyesight due to his own negligence, then D cannot file suit against B. As per Sec 13 of the Sale Goods Ordinance : (1) Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of such condition as a breach of warranty, and not as a ground for treating the contract as repudiated. (2) 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 a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract. (3) Where a contract of sale is not severable, and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect. (Amended 47 of 1969 s.5) (4) Nothing in this section shall affect the case of any condition or warranty, fulfillment of which is excused by law by reason of impossibility or otherwise. “ So, keeping in view the above reference, D can file a suit against B if D has obtained the goods with some conditions to be fulfilled, and if the conditions have not been met then there is breach of contract and B is guilty of violating Law. References: http://www.legislation.gov.hk http://www.judiciary.gov.hk/tc/index/index.htm http://www.judiciary.gov.hk/tc/legal_ref/judgments.htm http://www.legco.gov.hk/ http://info.gov.hk http://www.info.gov.hk/chorgdex.htm http://www.doj.gov.hk/ http://info.gov.hk/lad/services/ http://www.info.gov.hk/cr/ http://www.info.gov.hk/basic_law/c-flash.html http://www.eoc.org.hk/CC/home_cc.htm http://www.hkba.org http://www.hklawsoc.org.hk http://www.hkreform.gov.hk/ http://www.hklii.org/   Read More