Commercial Legal Issues - Case Study Example

Commercial Law What kind of contract did Icebox have with Furniture World? A sales contract is usually an agreement between a seller and a buyer that covers the sales and goods delivery. The seller agrees to give the buyer the goods or services needed upon the agreed money value. Upon reflecting on Icebox Terry and Furniture world scenario, it is evident that there exists a sales contract between them as more sales contract elements are exhibited in the scenario. A sales contract must identify the contracting parties and specify who the buyer and the seller are (Klass, 2010). From the scenario, it is clear that Icebox Terry is a buyer of a mahogany desk and a chair that can support his 380-lbs. Kurt, the owner of the Furniture World Company is the seller who seeks to sell Icebox with a mahogany desk and a chair that can support his weight. In a sales contract, there is also the description of the goods to be bought, the price and the terms of payment. The goods to be bought by Icebox are a mahogany desk which costs $3,500 and a chair that supports his weight which upon which they both agree that Icebox will pay $5,000. The terms and conditions are Kurt promises that include the delivery of goods meeting the specification within 10 days at a price of $5,000 which is given to him in form of check (Worthington, 2003). 2. Will Furniture World have to pay the expenses claimed by Icebox’s attorney? Event though Kurt, the seller at Furniture World delivered the desk and chair on time as specified, he delivered the chair without the specified requirement. The chair failed to support Icebox Terry and immediately he sat on it, it collapsed causing him some serious injury. According to the 1952 Uniform Commercial Code that governs the sale of goods on contract, a person breaches a contract if he delivers non-conforming goods without a note of accommodation that states that the seller or buyer can only partially perform. In this case, the accommodation should be specified in form of writing by the seller and the buyer might choose to accept or reject the non-conforming goods (Chen-Wishart, 2007). From the scenario, it is clear that even though Icebox had specified that he needed a chair that could support his 380-lbs; he unknowingly received a chair that did not support his weight and therefore caused him injuries. Kurt also failed to observe the elements of good faith in the contract by waiver of the contract provisions. Even though Kurt knows too well that he cannot find a chair that meets Icebox’s requirements, he fails to inform him because he does not want to loose the contract. He also fails to inform Icebox that he intends to get the chair from another supplier (Worthington, 2003). The UCC also points out that there is a breach of contract if there are reasonable grounds that the contract has caused or is likely to cause insecurity. In this case, the goods delivered to Icebox posed a threat of injury and non-performance which were beyond par. Kurt also failed to observe the express warranties that require him to stick to any statement that involves factual promise. Kurt promises Icebox Terry that he will deliver a heavy duty chair that will sustain Icebox’s weight. However, contrary to the promise, the chair delivered to Icebox lacks the capacity to sustain Icebox’s weight as Kurt promised. Typically, judicial remedy that is implicated on persons who cause the breach of contract is usually calculated in form of monetary damages. The UCC law requires that any person breaching the contract pay for the damages caused and in this case, Furniture World on behalf of the contract breach caused by Kurt will have to pay for the damages that it has caused to Icebox Terry (Worthington, 2003). 3. What are consequential damages and what will Icebox attorney have to prove to collect these damages in a court of law? The consequential damages will be paid under the breach of the sales contract. As put across under ECC Article 2 Section 712, the buyer has the right to recover damages caused to him which are usually calculated by finding the difference found between the COG (cost of goods) in substitution for the goods due from the seller together with the contract price and any consequential or incidental damages caused by the breach of contract. Under UCC Article 2 Section 713, damages caused can be measured as the difference between market price at the time the breach occurred and the price of the contract coupled with incidental damages that occurred. As Worthington (2003) puts across , the objective of the sales contract law is to grant relief to the inflicted by making sure that the aggrieved is made whole or rather is placed back in the position that he would be had it not been for the contract breach. Under Article 2 Section 715, Icebox will therefore be able to recover consequential and incidental damages caused to him by Kurt. This is because Article 2 Section 715 allows the compensation of incidental damages that result from seller’s breach of contract in form of expenses incurred in receipting or any commercial charges coupled with any other reasonable incident caused by the contract breach. In this case, the amount $120,000 was as a result of medical bills caused by the breach of contract (delivery of a chair that couldn’t support Icebox’s weight) and should therefore be paid. However, under Restatement Article 2 (353), the law states that in whichever form, no damages compensations should be awarded for emotional trauma or mental distress caused as a result of mental distress or emotional trauma. In this case, $80,000 compensation demand for suffering and pain (considered as emotional distress or trauma) should not be awarded to Icebox. In this case, only the previous $120,000 will be warded to Icebox in form of compensation. The UCC under article 2, the law requires that any sales contract exceeding $500 be in writing for it to be enforceable .Otherwise, oral agreement can also act as a binding contract. This implies that the UCC law does not require the formal sales contract. However, there must be sufficient proof to show that a contract existed. In this case, Icebox attorney has to produce the check Icebox wrote to Kurt to act as a written memorandum for the sales contract as required by the UCC. As put across by Klass, (2010), if the plaintiff can prove that his actions were in accordance with the contract, then, the plaintiff takes a positive step in proving that there was a breach of contract. Icebox will also have to prove that he abided by the contract terms and condition by showing that he had issued a check to Kurt and he in return expected Kurt to adhered to the agreed - upon action (deliver a seat to sustain Icebox’s 380 lbs). Chen-Wishart (2007) also notes that a person should also prove that the defendant failed to meet the terms of contract and that there were damages sustained. In this case, Icebox will have to present ground evidence such as the collapsed seat and medical records to prove that the collapse of the seat was the result of the serious injuries caused to him. Icebox’s attorney will also have to prove that Icebox followed the rules of perfect tender in the event of contact breach. This will help icebox use the perfect tender rule in his regal proceedings to enable him get compensation. The rule of the perfect tender implies that the buyer has a right to accept, reject or accept all or partial goods within the reasonable time after the goods delivery but must also notify the seller about the rejection. The perfect tender also implies that the buyer must give a specific defect (reason) failure to which he cannot rely on the legal proceedings. Icebox’s attorney will have to prove that there was the cancellation of the check payment and that he, on behalf of Icebox, informed Kurt about the specific defect on time (Worthington, 2003). References Klass, G. (2010) Contract Law in USA. Texas: Kluwer Law International. Chen-Wishart, M. (2007). Contract Law. Oxford: Oxford University Press Worthington, S. (2003). Commercial law and commercial practice. New York: Hart publishing Read More