Commercial law - Essay Example

Commercial Law At the outset, it is clear that none of the goods in question, which were ordered by either of the three parties would fulfil the required conditions of merchantability under the sale of Goods Act, due to the fire which has taken place. These implied terms are set out under Section 141, which states that the goods must be (a) of satisfactory quality, i.e, they should be reasonably reliable (b) fit for the purpose they are intended for and (c) as described under the sale description. In the event that the goods purchased do not adhere to the above requirements, the remedies provided under the Act allow a purchaser to return the goods and to demand a refund and repudiate the contract entirely. In Matthew’s case, the terms of the order were that the product, i.e., the DVD player, was to be delivered on 9th March and that it would be paid for at the time of delivery. In this instance, it may be noted that since the fire occurred at the department store on the 8th March and all the goods contained in it were destroyed, the DVD player would also have been destroyed and therefore impossible to deliver. It may be noted that an oral contract was in place between Judas and Matthew, but it conforms to the format of an agreement to sell, as set out under Part II, Section 2(5) and (6)2 rather than an outright sale, because the transfer of the goods is to take place at a future time and date, and this applies to all the three contracts for sale which Judas has agreed to. Part II, Section 7 of the sale of Goods Act of 19793 would apply in reference to the fire in Matthew’s case, because this provision states that “where there is an agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided”. Since the fire has occurred after the tentative agreement between Matthew and Judas, without any fault on the part of either of them, the contract may be avoided.   Moreover, since no “consideration” has yet been paid because the payment of such consideration is dependent upon the delivery of the product, the contract would not be legally enforceable in the courts. In the case of Stilk v Myrick, it was held that an agreement was “void for want of consideration”. 4 This would apply in the case of any contractual obligation between Judas and Matthew; since Matthew has not yet paid anything for the DVD player, the contract would automatically be repudiated when the goods were not delivered and he would not be obliged to make a payment. It appears unlikely that Judas would be held liable for payment of any remedy to Matthew, since payment of consideration was dependent on delivery of goods; since said goods have not been delivered, the contract is automatically repudiated. In the case of Matthew therefore, no damages would be payable at all and Matthew may be unable to claim anything from Judas on the basis of his failure to deliver the DVD. In the cases of Luke and John however, consideration has been paid, therefore a legal contract is in place which is also legally enforceable. The question to be considered is whether Part II, Section 7 of the Sale of Goods Act of 1979 can be successfully applied in this case as well. The fire has broken out without it being the fault of either Luke or John or James, therefore the contract between them can be avoided. A breach of contract has occurred which is legally enforceable, however specific responsibility for damages cannot be pinned on to either one of the parties because the failure to deliver the goods has not occurred due to the fault of Judas the seller. The Sale of Goods Act of 1979 provides for remedies in the case of goods which cannot be delivered due to unforeseen causes. Since in the case of both Luke and John, certain amounts have been paid but the goods have not been delivered, they can claim damages, i.e., both the repayment of the actual cost of the goods they have paid out for, as well as additional damages which have arisen out of a failure to deliver the goods. When a bargain is made and the price paid, but goods are not delivered, then the buyer would be entitled to recover the price paid, plus interest, as set out in the case of Millars machinery Co v David Way5. This has been set out under Section 51 of the Sale of Goods Act 1979, which entitles a buyer to claim damages. However, the important aspect is that this clause states that this provision to collect damages would apply when the Seller “wrongfully neglects or refuses to deliver the goods to the buyer”6. In this case, Judas’ failure to deliver has arisen out of special losses, i.e, the fire, for which the Seller cannot be held fully responsible because it has not arisen out of his wilful action and intent to not deliver the goods. In view of the circumstances under which the respective deliveries to John and Like will not be made at the stipulated time, they may be entitled only to a repayment of the amounts they have paid. In John’s case, the specific object of performance of the contract was the birdseed, which was destroyed in the fire. In the case of Taylor v Caldwell7, a music hall was to be let for a performance to the buyer, but it was destroyed by a fire and hence the performance of the contract became impossible to fulfil. Since the contract was frustrated in this manner, the buyer was only entitled to a refund of amounts paid. In Luke’s case, he has specifically requested a different colour for the goods. Applying the SOGA, if Judas had supplied the goods according to the model and not made the necessary corrections requested by buyer, he could have been liable under a breach of Section 14(2) of the Act. The fire has occurred on 8th March; in the event that Judas is still able to provide the furniture on 10th March because they are being manufactured at some other venue than his shop, then it is vital that the furniture conform to the terms stipulated in the contract. In the case of Re Moore v Landauer8 a buyer was entitled to reject goods which did not conform to description, i.e., they were not packed according to specifications. It is likely that the contract between Judas and Luke could be rescinded if the goods ordered were being manufactured in the store, otherwise Judas would have to take pains to deliver the product at the time and in the specific form required, to avoid payment of additional damages. References: Sale of Goods Act 1979 Case law: Millar’s Machinery Co v David Way (1935) 40 Com Re Moore v Landaeur (1921) 2 KB 519 Stilk v Myrick (1809) EWHC KB J58 Taylor v Caldwell (1863) 3 B&S 826 Read More