Sale of Goods Act as inserted by the 1994 Act - Case Study Example

Problem Question In this problem, the legal issues to be addressed are, whether Stuart has any legal remedy to recover damages for the loss caused tohim, due to the burning of the electric blanket and consequent injury to his legs; and also whether the Blanket Company can rely on exclusion clause for evading liability. In this endeavour, Stuart has to establish that company cannot rely on the exemption clause in the standard terms of the contract, and that as a consequence they are liable for breach of contract. The Contracts (Rights of Third Parties) Act 1999, bestows contractual rights upon third parties, under certain circumstances. These are where the contract specifically makes provision for such bestowal, or the terms of the contract grant an advantage to the third party. The electric blanket had been purchased by Stuart’s grandsons. Hence, Stuart is a third party to this sale. Nevertheless, the blanket was purchased for his specific use; as such, this contract confers a benefit upon Stuart. Consequently, he derives contractual rights against the Blanket Company. It is essential to determine, whether Stuart is a consumer. This is due to the fact that consumers possess certain rights against breach of contract. The extant statute states that a consumer is a person who acts for reasons or consequences that are beyond the scope of his business, profession or trade1 As such, It is essential to determine whether a purchaser of goods is a consumer. The latter is any individual whose trade, business or profession is unrelated to the purchase made by him. Now, Stuart is a 90 year old man, who does not deal in the business of purchasing or selling electric blankets. Consequently, he is a consumer. The blanket was purchased for his personal use. Section 14(2) (B) of the Sale of Goods Act 1979 requires goods to be fit for the purpose for which they are manufactured and sold. In addition, section 13 of this Act declares that in sale of goods by description, there is an implied term that the goods have to correspond with their description; otherwise, they can be rejected; provided the buyer had relied upon such description. Goods sold in the due course of business, to a buyer, incorporate an implied term, which requires these goods to be suitable for the purpose that has been made known to the seller.2 If the buyer does not rely on the sellers skill or judgment, then the seller is not liable. In addition, the goods sold should be reasonably suitable for the purpose, for which they had been purchased. Moreover, these goods should conform to the description by which they had been supplied. These requirements provide a number of important benefits to a purchaser of goods. Furthermore, these stipulations render the supplier, liable for the goods supplied. As such, the fundamental requirement that goods sold must be of satisfactory quality, transpires of its own accord, whenever goods are sold in the due course of business3. Moreover, if the goods sold, can be utilized only for a single specific purpose, then there is no necessity for the purchaser to query the seller about the suitability of those goods for his purpose4. The term quality of goods, implies the state of these goods, condition and “fitness for all the purposes for which goods of the kind in question are commonly supplied; appearance and finish; freedom from minor defects; safety; durability.5” Section 15 B (2) of the Sale of Goods Act states that “in a consumer contract breach of an implied term relating to satisfactory quality, fitness for purpose, description, or conformance with sample is always a material breach.” A buyer who is made to undergo a loss, on account of poor workmanship, is offered protection by the Supply of Goods and Services Act 1982. This Act applies to every contract, wherein the supplier had provided some service, in the due course of his business. Sections 13 and 15 of the Supply of Goods and Services Act 1982 deal with implied terms, in respect of the service offered. Section 13 of the Supply of Goods and Services Act 1982 states that an implied term exists, which requires the supplier to ensure adequate skill and care, while providing the specified service6. In our problem, no skill and care were exercised, even though the user was an old man of 90 years. Moreover, the provisions of the Sale of Goods Act, state that whenever a purchase is made, in which it has been either stated explicitly or implicitly that goods for a particular purpose are required, then such goods should conform to such requirement and moreover, these goods should be such that any rational person would consider them to be adequate for that purpose. Since, implied terms are enforced by statute, their breach violates legislation. Hence, the buyer can reject such goods and claim a full refund. In Godley v Perry it was held that a defect in the goods violates an implied term under the Sale of Goods Act.7 In addition, the seller has to inform a buyer of goods for some specific purpose, whether those goods are suitable for such use8. In the present problem, Stuart’s grand children wanted to present him a fully guaranteed blanket as gift for his 90th birthday. As such, they should have disclosed their intention to the seller. Assuming that they had revealed their intention and purpose to the seller of the electric blanket, the latter was under an obligation to comply with their requirements. The fire was caused due to the faulty wiring in the blanket. This discloses the negligent attitude of the seller towards his customers. Since the seller had infringed the implied terms, which have been deemed to be indispensable, in accordance with section 14(2) of the Sale of Goods Act 1979; he is liable to fully refund the cost of the blanket, if it is rejected by Stuart. The manufacturers of goods have to ensure that the goods produced by them reach the consumer in the same form and with the same quality. The former have to realise that negligently manufactured products can result in injuries to consumers, or cause damage to their interests. The crux of the matter is that a manufacturer owes a duty of care towards his consumers. This rule applies even if the manufacturer is not aware of the dangerous character of the product, and there is no contractual relationship with the consumer9. In addition, implied terms in a contract require the goods sold to match their description, to be of acceptable quality and to serve the purpose of the buyer by all reasonable norms. This requirement has great significance to a consumer who desires to commence litigation for breach of contract. The upshot of this piece of legislation is to make the supplier of the goods liable. Fundamentally, satisfactory quality has to be inherent in the goods sold or supplied10. Since the Blanket Company had violated the implied terms of the contract, which had been deemed to be mandatory by the extant legislation; and specifically by the provisions of Section 14(2) of the Sale of Goods Act 1979, the Blanket Company is liable to make a full refund of the cost of the blanket to Stuart. In addition, Stuart can repeal the contract; and claim a refund for the damage caused to his furniture, when the blanket went up in flames. As the blanket caught fire, within a short period, of its purchase, it can be construed that the defect had existed in the blanket from the time of its purchase. Consequently, Stuart can choose a repair, replacement or refund under the provisions the Sale and Supply of Goods to Consumers Regulations 2002. The remedies for breach of contract of sale are repair; replacement; partial refund; rejection and full refund. If a defect occurs within six months of the sale then the defect is construed to have been present at the time of sale.11 Moreover the goods sold in the normal course of business should be of satisfactory quality12. Hence, the Sale of Goods Act implies a contractual term, which requires goods sold in the due course of business to be of satisfactory quality. Moreover, Stuart can rescind the contract, and in addition claim compensation for the personal injuries caused to him and the damage caused to his bed. As such, the blanket sold by the company was not of satisfactory quality. Hence, the Blanket Company is liable for the physical injury and monetary loss caused to Stuart. It is to be examined, whether the Blanket Company can exclude their liability, by resorting to exclusion clauses stating that their warnings regarding the blanket’s usage would exclude them from liabilities. Exemption clauses in contracts, aim to exclude liability. However, they cannot exclude or limit liability, in cases involving negligence that resulted in injury or death. Moreover, in case of other loss or damage, liability cannot be excluded or limited; if the term of notice is unreasonable13. The Statute sets out that no contractual term can exclude or limit liability, in any way for negligently causing death or injury.14 In Stevenson v. Rogers the court gave a wider interpretation to the term in the course of a business.15 In Thornton v Shoe Lane Parking, the court held that the contract was formed when the plaintiff entered the parking place, which was prior to the issue of the ticket; hence the defendant was held liable for the injury caused to the plaintiff.16 In LEstrange v. Graucob Ltd, the supplier of the cigarette vending machine had included an exclusion clause in the agreement, whereby he disclaimed any responsibility for the quality of the machine. This type of commercial behaviour by the dominant party is disallowed by the consumer protection legislation.17 In Slater v Finning Ltd the court held that a claim, in respect of use for an abnormal purpose that had not been disclosed to the seller, would fail under section 14(3) of the Sale of Goods Act.18 A product that is defective is also substandard; this was the ruling in Godley v. Perry.19 Therefore Stuart is entitled to obtain a full refund. As there was a defect in the workmanship, namely the electrical wiring of the blanket, Stuart can obtain redressal under the provisions of the Sale and Supply of Goods to Consumers Regulations 2002 and also under the provisions of the Supply of Goods and Services Act 1982. Under these provisions Stuart can claim monetary compensation, repair or replacement Hence, the Blanket Company is liable for breach of an implied term regarding the quality of the blanket by selling an electric blanket that had defective wiring. Moreover, Stuart was in the habit of keeping the electric blanket at its highest setting, only while reading. However, the fire occurred, while he was just about to go to sleep, and not at the time of reading. Therefore, it can be surmised that the blanket caught fire, solely due to the defective electrical wiring, and not due to using it at the maximum setting. The remedies available for breach of contract of sale are repair, replacement, partial refund, rejection and full refund. Moreover, if a defect occurs within six months of sale then such defect is deemed to have been present at the time of sale.20Hence Stuart can either reject the contract or claim a full refund, in addition to a claim for damages. Bibliography Contracts (Rights of Third Parties) Act 1999 Donoghue (or McAlister) v Stevenson (1932) All ER Rep 1 Godley v Perry (1960) 1 WLR 9 Kelly, David, Holmes, Ann, & Hayward, Ruth, Business Law, 5th Edition, 2005, Cavendish Publishing LEstrange v Graucob Ltd, (1934) 2 KB 394 Preist v Last (1903) 2 KB148 Sale of Goods Act 1979 Sale of Goods Act as inserted by the 1994 Act Unfair Contract Terms Act 1977 Unfair Terms in Consumer Contracts Regulations 1999 Slater v Finning Ltd (1996) 3 WLR 190 Stevenson v Rogers (1999) 1 All ER 613 Thornton v Shoe Lane Parking (1971) 1 All ER 686 Read More