Analysis of Commercial Law - Case Study Example

Commercial Law Introduction The legal issues in this case is to determine whether Sir Markus has the ability to recover his Rolls Royce car from Joe Deely or the equivalent amount realized from the sale. The other issue is to determine whether Charlie can recover his £450,000. Besides this paper will determine the rights of JJ Butt over the sold car as well as the rights of Rutherford Motors who is a reputable car dealer. The law to be applied in this case is the sale of goods Act 1979 of the United Kingdom. The specific provisions to be taken into in this exercise include misrepresentation, the implied terms in connection to title and the ascertainment of value of a given property of commodity under the Sale Act agreement. Obligations and liability between Sir Markus and Joe Deely Joe Deely is not well conversant with selling high performance cars such as Rolls Royce Car even though he is bestowed with the responsibility of finding a buyer for the car by Markus. It is clear that Markus gave Deely full authority to sell the car even though no specifics about the intended actual value he wished to sell the car. Deely sold the car which was worth £500,000 for £350,000. Deely acts an implied agent to Markus hence he has a duty to hold; he should sell the commodity at the price list stated by the principal. The unpaid sellers in this case have their rights. Marcus is the only unpaid seller. Marcus has rights against the car being unpaid seller to retain the ownership of the car until the contract price is paid to him (lien)1. Marcus has also stoppage in transit rights where the car is the hands of an autonomous carrier. In this case, it implies from the time when the car is handed to the carrier to the moment when the buyer assumes delivery of the car. However, this does not apply in this case. The unpaid seller (Marcus) has a right over the resell of the goods in this case provided that the buyer did not pay or provide the actual price of the car within a reasonable time. Therefore he is granted the rights to resale the car under the agreement. The seller has also the right to repossess the car under the Romalpa Clause Note that a Romalpa clause which applies against specific goods2. These rights also applies to Deely on the ground that Hinchcliffe issued a useless check for the car. Therefore Deely in this case is the unpaid seller who is entitled to these rights. The legal right develops a value that can be registered over the asset3. In Bond Worth Ltd, Re 4 where a similar decision was noted in Clough Mill Ltd v Martin5 in which the judge ruled that the repercussions of failing to register relies on the law, even though in any case it will be void over the liquidator or the trustee under insolvency. A mere clause does not establish a charge or grant a security interest that calls for registration. In addition, since Deely acted in good faith on behalf of Marcus he cannot take the liability but the liability will be the burden of Hinchcliffe. For example in Northern Railway v Swaffield6 the jury established that the agent Mr. Swaffield acted in good faith under necessity due to financial difficulties being experienced. Therefore Marcus cannot deny the authority Claims against the Revenues The unpaid seller has also the right to trace further into the earnings of the disposal of the car which under the common law is an equitable privilege that is exercisable7. In common Law, it relies on the goods that are being identified and the earnings being realized and distinct from other buyer’s assets. Under the rule of equity, where the earnings are blended with other proceeds they have to be traced even though this depends on the fiduciary association between the seller the buyer8. A fiduciary connection was established in the Romalpa case on the basis that the buyer was reselling the goods as a representative of the seller and was hence under an obligation to make an account for the earnings from the resale. In Len Vidgen Ski & Leisure Ltd v Timaru Marine Supplies (1982) Ltd[1986] 1 NZLR 349 it was found to exist an express stipulation that the earnings from any resale was to be part of the sellers’ property and the court depended on this clause to establish a fiduciary connection in spite of the credit arrangement of the buyer. Therefore, Marcus has a right to the earnings from the sale of the car given that he is still the owner of the car and that he is not yet paid inn connection to the reasonable value of the car. The liability of Hinchcliffe to both Rutherford Motors and Deely Hinchcliffe has a liability to Deely on the basis of intentional misrepresentation through fraud. The check that was handed to Deely as payments was deemed to be useless hence Deely was not fully paid for the value of the car. Since Baroness represented Hinchcliffe the latter is liable for the breach of contract. Since the car was taken away from JJ Butt who had bought the car from LA Rutherford Motors a trusted car dealer, there is loss of image on the part of LA Rutherford which has been caused by Hinchcliffe. Hence LA Rutherford has the obligation to sue for damages in connection to loss of image and for the value of the car paid to Baroness. It is the obligation of Hinchcliffe to refund the value of the car to both Rutherford and Deely. It is the duty and obligation of the buyer to pay for the goods sold to him by the seller9. Failure to pay for the goods by the buyer is a breach of contract where he or she can be sued for the full cost of the goods and possible damages in terms of loss of profit in the event of fraud. Where there has been fraudulent misrepresentation, the innocent parties in this case (Marcus, Deely, La Rutherford Motors and JJ Butt) have a right to retract from the agreement and claim for the damages on the property. The damages that will be awarded to the parties will not depend on the contractual rules however, they will be based on the damages in relation to tort of deceiving the parties involved. The main party who was deceived in this case is Deely an Gent to Marcus hence the rest are merely victims of the fraud. It should be noted that there is no clause that the damages in this case were foreseeable. Since all the buyers had a right to enjoy the ownership of the car upon buying it.   The liability of LA Rutherford Motors to JJ Butt The recovery of the car from JJ Butt is valid since due process was not followed by LA Rutherford in the acquisition of the car. LA Rutherford had a duty to ascertain the authenticity of ownership prior to purchasing of the car. However, all said and done, JJ Butt has a right to claim for full cost of the car from LA Rutherford and depending on the relationship between the parties can agree on how the refund can be made in connection to the failed deal. This is because in any Sale of goods agreement the seller as stated earlier has a duty to produce and deliver the goods and the buyer has a duty to accept and pay for the goods. Without the goods (Roll Royce Car), there is no agreement hence the buyer has to recover the full value of the goods10. In Doyle v Olby (Ironmongers) Ltd 11 Lord Denning MR hiked the damages to £5500. The grounds for doing this was that the plaintiffs claim for all the damage coming directly from the fraudulent act which was not taken as too remote by the conduct of the plaintiff. Regardless of whether the defendant would have predicted the significant loss. The position of the plaintiff prior to the deceitful must be put to comparison with his status at the conclusion of the transaction. He claimed that the damages for deceit and intent are assessed differently from the damages for the infringement of the contract. In this case the liable party Hinchcliffe will be made to pay for the damages of fraud and breach of contract, but the car will have to be taken back to the owner Mr. Marcus for his proposed sale to Charlie for £ 450,00012 Read More