Advise the English National Operetta Company as to its Legal Rights - Case Study Example

Advise the English National Operetta Company as to its Legal Rights This problem is concerned with the contracts under the Sale of Goods Act, the Supply of Goods and Services Act 1982, doctrine of frustration and exclusion clauses. A contract for the sale and services of goods is governed by the Sale of Goods Act 1979 (As amended by the Sale and Supply of Goods Act 1994 ) , The Supply of Goods and Services Act 1982, The Sale and Supply of Goods to Consumers Regulations 2002. A contract for the sale of goods is described under section 2(1) of the Sale of Goods Act 1979 (As amended by the Sale and Supply of Goods Act 1994), as a contract, in which, ownership in the goods is either transferred by the seller or the latter agrees to do so, for a monetary consideration that is termed the price (Sale of Goods Act 1979 (As amended by the Sale and Supply of Goods Act 1994)). For advising the English National Operetta Company, regarding its remedies against Costumes URs, it is to be examined whether the latter can evade its contractual obligations by invoking the doctrine of frustration. The doctrine of frustration is significant in rescinding contracts in English law. Unforeseen circumstances that transpire, after the formation of the contract may make it impossible to perform the contractual obligations. These circumstances may drastically transform the obligation to perform, in comparison to the original obligation that had been accepted at the time of forming the contract. This concept is employed to reduce the overriding impact of absolute contracts, wherein the altered situation may prevent the performance of the contract, and where the involved parties are not responsible for the changed condition (Dzhazoyan ). In accordance with the Law Reform (Frustrated Contracts) Act 1943, any sum of money paid before the occurrence of the frustrating event, can be recovered. Furthermore, money that is due, but has not been paid, is not payable. Nevertheless, if a party had gained some valuable benefit under the contract, then that party is required to reasonably compensate the other party (Law Reform (Frustrated Contracts) Act 1943). In Davis Contractors Ltd v Fareham UDC, Lord Radcliffe declared that a contract was frustrated, if it was not possible to fulfil a contractual obligation, due to the development of circumstances that rendered it impossible to perform the obligation (Davis Contractors Ltd v Fareham UDC). Neither of the parties would be liable, if the circumstances had rendered the performance of the contract radically different from what had been agreed upon during the formation of the contract (Macintyre 239). In Krell v Henry the court established the doctrine of frustration of purpose. The defendant, Henry, had entered into a contract with Krell, in order to rent a flat. The purpose for which the defendant had rented the flat was to observe the coronation procession of the King. However, on the designated day, the ceremony was cancelled. As such, the purpose of the contract was not fulfilled (Krell v Henry ). The court ruled that the contract had been frustrated, as the cancellation of coronation procession, had radically altered the performance of the contract, In Taylor v Caldwell, the subject matter of the contract had been destroyed, subsequent to the formation of the contract. This made it impossible to perform the contract. In this instance, the contract related to the use of a hall and gardens for giving a musical concert. The hall had been destroyed by fire, and as the concert could not be performed in the absence of the hall, the latter was deemed to be the primary element of the contract (Taylor v Caldwell ). It was held by the court that the destruction of the hall constituted sufficient grounds to frustrate the contract. In our problem, the premises of Costumes URs were razed to the ground, due to a fire started by some children, who were playing outside the premises. Costumes URs should have taken proper precautions to avoid this mishap. Moreover, it had sufficient time to complete its contractual obligations. Hence, Costumes RUs cannot rely on the defence of frustration of contract. It is not impossible to make an alternate arrangement, so as to fulfil its contractual obligation. As per the case law, the courts favour a completion of contracts. Consequently, Costumes RUs will be held to be in breach of its contractual obligations, and will be required to compensate English National Operetta Company. In respect of the contract with Pristine Printers Ltd and Prompt Printing Ltd, it is to be assessed whether any breach of contract has transpired, under the provisions of the Supply of Goods and Services Act 1982 and the Sale of Goods Act 1979 (As amended by the Sale and Supply of Goods Act 1994). In our problem, Pristine Printers Ltd, failed to deliver the theatre programmes, as agreed upon with the English National Operetta Company. In the contract between these parties, time was the essence of the contract; and constituted a condition of the contract. As per Section 10(2) of the Sale of Goods Act, if time is of the essence of the contract, then delay will permit repudiation of the contract. Hence, the English National Operetta Company can repudiate the contract and claim damages for breach of contract, against Pristine Printers Ltd. On the other hand, the Prompt Printing Ltd supplied the theatre programmes on substandard paper. Due to this, the English National Operetta Company had to make a refund to the audience. Goods supplied in the course of business, have to be of satisfactory quality, in accordance with the provisions of the Sale of Goods Act. According to the provisions of Section 14(2) of the Sale of Goods Act, goods sold must be of satisfactory quality. This is an implied term under this Act. As such, the goods sold by a seller in the course of business should be fit for the purpose and of satisfactory quality. The latter term implies the normal standards that a reasonable person would consider as satisfactory (Sale of Goods Act 1979 (As amended by the Sale and Supply of Goods Act 1994)). In addition, Section 14(3) of the Sale of Goods Act 1979 declares that goods sold must be reasonably fit for the purpose for which they have been purchased. This purpose is intimated, either explicitly or implicitly, by the buyer to the seller. This is an implied term, and the buyer must have relied upon the skill and judgment of the seller. This requirement is inapplicable to contracts where the buyer did not rely on the skill of the seller (Sale of Goods Act 1979 (As amended by the Sale and Supply of Goods Act 1994)). Section 13 of the Supply of Goods and Services Act 1982, requires a service provider to employ reasonable care and to have the requisite expertise, while providing services to consumers. In addition, Section 14 of the very same act stipulates that the provision of the service has to be completed within reasonable time (Supply of Goods and Services Act 1982).Since, the Prompt Printing Ltd have infringed these statutory provisions, they are liable for breach of contract, under the provisions of the Sale of Goods Act and the Supply of Goods and Services Act. In the context of a buyer of goods who is a consumer, Section 6 of the Unfair Contract Terms Act 1977 invalidates any exclusion clause that attempts to exclude liability for infringement of sections 12, 13 and 14 of the Sale of Goods Act 1979. Furthermore, a buyer under Section 48(A)(2)(b)(ii) of the Sale of Goods Act 1979, can repudiate a contract, in which a contractual condition has been breached by the seller. If the buyer purchases goods for their usual or obvious purpose, then these goods should be fit for that purpose, otherwise the buyer can claim damages under section 14(3) of the SGA. In such instances, it is not necessary for the purchaser to inform the seller about the use that he will make of these goods (Godley v Perry ). However, if a purchaser fails to inform the seller about some condition of usage, regarding the goods purchased, which are peculiar to that buyer, then no damages can be claimed for injury from the seller (Griffiths v Conway Ltd ). Moreover, section 13 of the Sale of Goods Act 1979 includes an implied term with regard to the sale of goods by description. Under this term, the goods sold must correspond to their description (Beale v Taylor ). The Sale and Supply of Goods to Consumers Regulations 2002 provides a number of alternative remedies for breach of sections 13 and 14 of the Sale of Goods Act 1979. The consumer can seek repair or replacement of damaged goods, and any defect found in the goods, within six months of their purchase, are deemed to be defects present at the time of purchase (Sale and Supply of Goods to Consumers Regulations 2002). Under Section 48(A)(2)(b)(ii) of the Sale of Goods Act 1979, the buyer can reject the contract if the seller breaches a contractual condition. Section 48 (A)(3) of this Act states that if the goods sold do not conform to their description at the time of sale, within 6 months of the sale, they such goods will be deemed to have failed to conform to their description at the time of the sale (Kelly, Holmes and Hayward 208). In our problem, an exclusion clause was printed on the reverse of the invoice, which was supplied at the time of supplying the theatre programmes to the English National Operetta Company, by the Prompt Printing Ltd. The mere existence of an exclusion clause does not guarantee its effectiveness, under all circumstances. The law is seized with protecting vulnerable parties from exclusion clauses in contracts. Section 11 of the Unfair Contract Terms Act 1977 establishes a reasonableness test, which determines whether the inclusion of a term in the contract is reasonable, on the basis of what was known to the parties. It also determines whether the term is reasonable, on the basis of what the parties could have reasonably been expected to know, at the time of forming the contract (Unfair Contract Terms Act 1977). In Thompson v LMS Railway, the court held that she was bound by the clause, since any reasonable person in the same circumstances, would have noticed it (Thompson v LMS Railway). However, there are certain elements that are applied, while assessing reasonableness. Some of these are, the presence of an exclusion clause in the contract should be brought to the notice of the other party, prior to or at the time of entering into the contract (Olley v. Marlborough Court Hotel). This was the ruling in Olley v Marlborough Court. As was held in Thompson v LMS Railway, the party who includes the exclusion clause must give notice that is reasonably sufficient, to other party (Thompson v LMS Railway). An exclusion clause is ineffective, unless the other party has knowledge of its terms. Consequently, the party must be given adequate notice about the inclusion of the exclusion clause in the contract, which should exist at the time of making the contract (Macintyre 148). Reasonableness is determined by the circumstances and situation of the parties to the contract. In Thornton v Shoe Lane Parking, the court ruled that the exclusion clause had to be in clearly visible text that was to be printed on the obverse of the document, delivered to the plaintiff (Thornton v Shoe Lane Parking ). In our problem, no prior notice of the exclusion clause was given to English National Operetta Company. Since it was printed on the reverse of the invoice and was supplied at the time of delivery of goods, this exclusion clause cannot be deemed as having been incorporated into the contract. Hence, it is invalid and Prompt Printing Ltd cannot evade liability, on the basis of this exclusion clause. Works Cited Sale and Supply of Goods to Consumers Regulations 2002. n.d. Unfair Contract Terms Act 1977. n.d. Sale of Goods Act 1979 (As amended by the Sale and Supply of Goods Act 1994). n.d. Law Reform (Frustrated Contracts) Act 1943. n.d. Supply of Goods and Services Act 1982. n.d. Beale v Taylor . No. 3 All ER 253. 1963. Davis Contractors Ltd v Fareham UDC. No. AC 696. 1956. Dzhazoyan , E. "The doctrine of frustration in English law ." 10 November 2009. 10 January 2011 < http://www.lexology.com/library/detail.aspx?g=bd78a422-d7c3-4214-95f5-031b91438a21>. Godley v Perry . No. 1 WLR 9. 1960. Griffiths v Conway Ltd . No. 1 All ER 685. 1939. Kelly, David, Ann Holmes and Ruth Hayward. Business Law. Cavendish Publishing, 2005. Krell v Henry . No. 2 KB 740. 1903. Macintyre , Ewan. Business Law. Pearson Education, 2010. Olley v. Marlborough Court Hotel. No. 1 KB 532. 1949. Taylor v Caldwell . No. 3 B & S 826. 1863. Thompson v LMS Railway. No. 1 KB 41. 1930. Thornton v Shoe Lane Parking . No. 1 All ER 686. 1971. Read More