Analysis of Problem Solving - Case Study Example

The case is quite complicated since there are certain violations of the law that have been committed. Also, there are three sets of advice that must be given to the ff. parties : Joshua ( supplier),Abraham ( shipper ) and the carrier. However, before such matters would be discussed, it is important to emphasize the significance of some documents. An example of such important document is the Bill of Lading. The bill of lading, which is a contract between the carrier and the shipper, is a document of fundamental importance for it embodies the terms and conditions of the contract of carriage. Besides being the contract, it serves as a receipt issued to the shipper by the carrier to acknowledge that the carrier has received the goods. Also, in the case of a negotiable Bill of Lading, the document is evidence of title to the goods, and is transferable from one party to another when properly endorsed. As a negotiable instrument, it is a prerequisite to financing and credit. The first problem that is seen in this case is Joshua’s act of erasing the “ 1” from the the Bill of Lading. Although it is supposed that Joshua sent a better version of computers, still, that set of computers was not the one originally expected by Abraham. Abraham , as a buyer, may have certain set of expectations from the model “ Dell Studio Mark 1.1” that is why he ordered such model. When Joshua deliberately erased the “1” from the Bill, he was intentionally committing a fraud or misrepresentation of the product. Even though Dell Studio Mark 1.11 computers are more recent version than that of what is being ordered which is the 1.1 version, still the obligation is not satisfied and an intention to defraud which is criminal in nature. In order to complete our understanding of this case, it is appropriate to define the term ” misrepresentation. Misrepresentation is often defined as “Fraudulent, negligent, or innocent misstatement, or an incomplete statement, of a material fact ” ( businessdictionary.com). When one party is induced to enter a contract , legal consequences are possible for the party causing the misrepresentation. However, there are still many types of misrepresentations such as negligent, fraudulent and innocent. In relation to this case, the misrepresentation can be classified as fraudulent. The Gillhams website defined this type of misrepresentation as: .. fraudulent misrepresentation is a statement of fact made without belief in its truth either recklessly, knowingly or without caring whether it is true or false with the intention that it should be acted on and it is in fact acted upon ( Term: misrepresentations, gillhams.com, p.1) Joshua was very much aware that he was sending the wrong type of goods that is why he erased the “1” from the Bill of Lading. He neglected the fact that the Bill of Lading by itself is a contract that legally bound the two parties. Another helpful advice regarding misrepresentation is stated from Commodities and Trade Law : 2006 under Validity of a Contact or Sale which asserts that : The English Misrepresentation Act 1967 affords a party to a contract a statutory action for damages against a counter party who makes a false representation, unless the counterparty demonstrates that he had reasonable grounds to believe and did, in fact, believe that the facts represented to the other party were true ( p.63) Therefore, it is implied that the validity of a sale is heavily affected by misrepresentation. This situation could have been avoided if Joshua, as a supplier, followed the guidelines stated in the Consumer Protection Regulations 2000. The Consumer Protection Regulations 2000 specifically qualifies the actions that a supplier must undertake in cases where he/she may not be able to meet the demands of the buyer. Thus , according to Consumer Protection Regulations 2000 No.2334, Sec. 7 .1. ( b., c.) before a contract is concluded the supplier must : (b) inform the consumer if he proposes, in the event of the goods or services ordered by the consumer being unavailable, to provide substitute goods or services (as the case may be) of equivalent quality and price; and (c) inform the consumer that the cost of returning any such substitute goods to the supplier in the event of cancellation by the consumer would be met by the supplier. Therefore, Joshua acted in bad faith since he could have informed Abraham well ahead of time that 1) he did not have the model Del Mark. 1.1 available ; 2) he could provide a substitute which is Dell Mark 1.11. If he had done that, then he cannot be liable for misrepresentation. I would also say that the termination of such contract would be valid for such irregularity or lack of fulfillment in such obligation has been done, specifically a criminal action involving fraud by falsification of such documents. In any business transaction, both parties must be ethical in the conduct of their business. Advice to Abraham: I would advice Abraham to claim for the damage and loss of goods during the voyage to the shipper. Carriage of Goods by Sea Act ( COGSA Public Act No.521) , Sec. 3.5 states that : (5)  The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity, and weight, as furnished by him; and the shipper shall indemnify the carrier against all loss, damages, and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person other than the shipper. This clause is also stated in Article 17.1 of the Hamburg Rules. Even if the goods became wet during the transit, still, the shipper made a mistake of not accurately identifying the goods. Even the loss of the goods unloaded at the destination is still under the liability of the shipper is a costly thing due to the inaccuracies made by the shipper. On the other hand, such details must still be considered especially with regards to the stipulation on the contract and the regulations on the Sale of Goods Act 1979 in the United Kingdom. They should assure that there are no contrary agreements inserted in the contract to make it a valid one in such regulations imposed by the UK. Advice to Joshua : I would advise Joshua in the other hand to speak of other remedies such as replacements or repairs as provided in the Supply of Goods and Services Act 1982 instead of termination of the contract. The main objective of the Supply of Goods and Services Act 1982 is to make sure that consumers are protected from goods that have poor workmanship. Indeed, settlement would be a great option for him caused by the breach on the contract. As much as possible, it would be wise for Joshua to persuade Abraham in this matter, such as giving discounts on the price or additional item just for him to minimize the loss that HE had been done. One of the Key Facts in this Act according to berr.gov.uk: If a supplier of a service breaches the conditions of a contract (for example by failing to carry out the work ordered) the consumer has a choice either to affirm the contract (treat it as still in existence) and claim compensation from the trader for his failure to carry out what was agreed or rescind (cancel) the contract.( Supply of Goods and Services Act 1982 Fact Sheet,2010,p.1) But if Abraham is really determined to end the contract, it is but Joshua’s right to charge Abraham an amount not exceeding the direct costs of recovering any goods supplied under the contract, where a term of the contract provides that the consumer must return any goods supplied if he cancels the contract under regulation 10 (Right to Cancel) but the consumer does not comply with this provision or returns the goods at the expense of the supplier, as stated in Title 14, paragraph 5 of the said Act. Advice for the carrier Like Abraham, the carrier can rely on Carriage of Goods by Sea Act ( COGSA Public Act No.521) , Sec. 3.5 states that : (5)  The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity, and weight, as furnished by him; and the shipper shall indemnify the carrier against all loss, damages, and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person other than the shipper. The carrier can be indemnified by the shipper since inaccuracy in the marks of shipment had occurred. It is up to the carrier to negotiate with the shipper for the losses, damages and expenses that resulted from the inaccuracies. Bibliography: Businessdictionary.com. [ Internet] Available from :< http://www.businessdictionary.com/ definition misrepresentation.html> [Accessed 13 Jan 2010] COGSA (Carriage of Goods Sec Act ). Public Act. No.521. Consumer Protection Regulations 2000. No.2334, Sec. 7 .1. ( b,c) Key Fact Sheet. Supply of Goods and Services Act of 1982. 2010.[ Internet] Available from : < http://www.berr.gov.uk/whatwedo/consumers/fact-sheets/page38337.html> [ Accessed 9 Jan 2010]. Misrepresentations. Gillham Solicitors llp. [ Internet] Available from : [Accessed 10 Jan 2010 ] Supply of Goods and Services Act of 1982. Title 14.5 The Hamburg Rules .UNITED NATIONS CONVENTION ON THE CARRIAGE OF GOODS BY SEA, 1978. The International Comparative Legal Guide to : Commodities and Trade Law 2006. Global Legal Group Ltd. London. [ Internet] Available from : [Accessed 7 Jan 2010] Read More