Commercial Law - Circumstances and Contentions Faced by the Buyers - Report Example

Contents Contents Commercial Law 2 Introduction 2 Davids Case 2 Jonathans Case 4 Mathews Case 5 Johns Case 7 Bibliography 9 Table of Cases 9 Table of Legislation: UK 9 References 9 Commercial Law Introduction This paper lays out various situations that talk about commercial law on the topics of Contract and The Sale of Goods Act. David, Jonathan, Mathew and John are faced with contractual situations that call for remedies. Since all their actions regard different ways of purchases of the product, the paper lays out the circumstances, and contentions faced by the four buyers. The Sale of Goods Act is a critical chapter that defines the laws which help to remedy purchase and sales problems to do with stolen good, description of goods, quality satisfaction, inter alia (Sale of Goods Acts, 1979). Davids Case In this case David buys a Land Rover that has been advertised by his neighbor at a particular price and later finds claims that it had been stolen. By implied terms, David assumes to have bought the car from the real owner without asking or confirming. According to the English Sale of Goods Act 1979, a buyer like David is protected from unfair deals (caveat emptor). The provisions in the act do not require buyers to ask questions that look mutually embarrassing (Sale of Goods Acts, 1979). However, the neighbor has the right to sell as stated in the Act (S.14). The section contains an implied condition that allows the seller to pass property at the time. If Toms claim to be the real owner of the car is true, then David needs legal protection for unknowingly purchasing a stolen car. Tom also needs to claim refund plus any damages from the seller, the neighbor. According to a similar case in Rowland v Divall (1923) a plaintiff purchased a car from the defendants and later found out to have been stolen. This was after four months since the plaintiff bought the car. The plaintiff had to give up the car to the rightful owner. Subsequently, the plaintiff sued the defendant in order to recover the cash he used purchase the car (Swarb, 2003). As such David will have to surrender the Land Rover first to the rightful owner following confirmation that the seller had no ‘good title to transfer ownership. In the case, Rowland v Divall (1923) the defendant came in contention that the plaintiff had used the car for four months, and his remedy is supposed to be claims for damages as stipulated in S36 (Sale of Goods Acts, 1979). These damages are to be set by the court about benefits the plaintiff received in the four months he used the vehicle. As illustrated by Patrick, Adams & MacQueen (2005), these arguments by defendant were rejected as stated in Atkin, L. J: "The buyer has not received any part of that which he contracted to receive namely, the property and right to possession and, that being so; there has been total failure of consideration." The plaintiff, who was the purchaser, has the right to recover the full purchase amount from the defendant, the seller. Based on the above argument I advise David to surrender the vehicle to Tom, the rightful owner (case Rowland v Divall 1923). This is because he is illegally holding on to stolen property. As a matter of fact, he cannot acquire any better title than the seller had "nemo dat quod non habet". This is illustrated in the case Cundy v Lindsay & Co. during which the common law courts came up with this maxim to protect the true owner of a good (Bridge, 1997). Thereafter, David should claim for the full refund (with or without damages) from the seller, the neighbor as expressed in Rowland v Divall case (Radevsky, & Greenish, 2014). This should be done through a court since the court has the right to set the damages and decide the case in this situation. Jonathans Case The problem in this case is whether Jonathan should accept or reject the car on its delivery. This case is based on the implied condition that goods description should correspond with the ultimate goods delivered (Sallon, 1963). Jonathan orders for a Jaguar Land Rover that has the latest soft top model but instead receives a car without the soft top on delivery. Since Jonathan relied on the description of the car as per the advertisement, in this case the seller fails to meet sale by description (Section 15) (Sale of Goods Act, 1979). Therefore, Jonathan is presented with a legal approach to handle the situation. Jonathan can refuse to accept the Jaguar Land Rover on grounds that it does not correspond with the description as advertised by the car dealer. Williston (1988) explains a similar case in Varley v Whipp where the defendant rejected purchase of a second hand repairing machine on grounds that it did not correspond with the description. The plaintiff had explained to the defendant that the machine was new since it had been bought the previous year and had hardly been used. The court agreed that the machine was never in line with the description. As such, the defendant was not liable to make payment for the machine. The judge stated inter alia, "sale by description" must apply to "all cases where the purchaser has not seen the goods but relies on the description alone". I will advise Jonathan to exercise his right and reject the Jaguar Land Rover since it does not correspond to the description. Jonathan is entitled not to accept the car as illustrated in the case Nichol v Godts (1854). In this case the plaintiff sold some oil to the defendant labeled ‘foreign refined rape oil. Although the plaintiff delivered the oil of equivalent quality, the oil was not "foreign refined rape oil" as described in the label. The court held that the defendant (buyer) had the right to reject the goods (Newbolt, 1893). Therefore, Jonathan is also entitled to reject the car. Mathews Case The legal principle pertinent in this problem is ‘merchantable quality condition. The main problem is the quality of the car bought ‘as is where is basis. The buyer realizes that the car brakes are faulty after three days making him question the car’s ability to serve its purpose satisfactorily. The Sale and Supply of Goods Act 1994 section 14 (2) provides a list of satisfactory quality which includes: fitness for all the purposes for which goods of the kind in question are commonly supplied, freedom from minor defects and safety inter alia. It is quite clear that the Land Rover bought by Mathew has faulty brakes putting its ‘merchantable quality condition to question. Subsequently, presenting legal actions Mathews can pursue to remedy the situation. The ‘merchantable quality is generally referred to as a good that is reasonably fit for the purposes bought to serve. Mathew purchases a car and realizes it has faulty brakes, which makes it unsafe or unfit for driving, thus not of merchantable quality. A similar decided case is Wren v Holt where an alcoholic drink contained an abnormal quantity of arsenic acid and was considered not fit for drinking. The alcoholic drink was not of merchantable quality to be generally used as beer since the plaintiff got ill after drinking (Atiyah, Adams, & Hector, 2010). Mathews has a right to reject the car and claim refund (with or without damages) or claim damages based on the cost of repairing the car (Sale of Goods Acts, 1979). This is because the seller is in breach of merchantable quality condition. As illustrated in the case of Mash and Murrel v Emmanuel the plaintiff supplied potatoes. They arrived when rotten. It was determined that the plaintiffs were in breach the implied condition (Kluwer Law International, 2004). The contention is liability for the breach of merchantable quality as illustrated in the case of Godley v Perry where the plaintiff, a boy aged six years old, bought a plastic catapult from the defendant, a stationer. Although the child used the catapult as is expected it broke in the process and part of it hurt his eye. This evidence indicates that the catapult was not safe for use as it had some undiscovered defects during reasonable examination (Gilles, 2004). The court held that the defendants were liable because (Stone, & Devenney, 2013): "The catapult was not reasonably fit for the purpose for which it had been bought; and the catapult was not of merchantable quality and the defect of the goods could not be discovered by a reasonable examination of the sample." The judge clarified that the buyer is not anticipated to do every test that may seem practicable. The statutory measure is "not extreme ingenuity but reasonable" Based on this argument I advise Mathews to reject the car and claim full refund (with or without damages). Mathews can also claim damages that may be based on the cost of repairing the car. This is because the seller is in breach of contract as the good failed to perform strictly as expected (Verlag, 1930). Therefore, as provided in the Sales of Goods Acts s.13, Mathews will have to sue for damages due to breach of contract. Johns Case The problem in this case is whether John should accept or reject the car as delivered. This case is based on the implied condition that goods description should correspond with the goods delivered. John receives a Land Rover with different features as compared to the one he had examined. The one he receives has a manual gear box, and the seats are made of half leather and half plastic upholstery. The car he had agreed to buy had an automatic gear box and leather seats. In this case the seller failed to meet sale by description (Sale of Goods Acts, 1979, Section 15). Therefore, John is presented with a legal approach to handling the situation. John can reject the Land Rover on grounds that it did not fit the description of the car under the sale agreement. A similar case is provided in Varley v Whipp where the defendant rejected purchase of a second hand repairing machine on grounds that it did not correspond to the description. The plaintiff had explained to the defendant that the machine was new since it had been bought the previous year and had hardly been used. The court agreed that the machine was never in line with the description. The defendant was not liable to make payment (Hugh, 2003). The judge stated, inter alia, "sale by description" has to apply to "all cases where the purchaser has not seen the goods, but is relying on the description alone". However, section 13 (1) of the Sales Act provides that a buyer may waive a breach of condition by the seller, or elect to treat it as a breach of warranty (Sale of Goods Acts, 1979). Nonetheless, section 13 (3) of the same Act, a buyer must treat a breach of condition as a breach of warranty where the contract is not severable, and he has accepted the good (Sale of Goods Acts, 1979). The contention in this case is on the implied condition vis-à-vis express exclusion of liability where the seller was not bound to deliver the car as it was during the examination. This is explained by Baldry v Marshall where a clause that discharged the defendant from liability for breach of whichever "guarantee or warranty, statutory or otherwise". The court held that such liability does not exonerate the seller from liability for breach of implied condition. The goods were reasonably fit for a particular purpose (McKendrick, 2012). Therefore, my advice to John is not to accept the Land Rover following the above argument that he is entitled to receive a he had examined with its exact features. He has a right to reject the car as illustrated in the case Baldry v Marshall. Bibliography Table of Cases Rowland v Divall (1923) Rowland v Divall 1923 Cundy v Lindsay & Co Varley v Whipp Nichol v Godts (1854) Mash and Murrel v Emmanuel Varley v Whipp Baldry v Marshall Table of Legislation: UK The Sale of Goods Acts 1979 References Atiyah, P., Adams, J. and Hector L., 2010. Atiyahs Sale of Goods. London: Perason. Bridge, M., 1997. The Sale of Goods. New York: Oxford University Press. Gilles, P., 2004. Business Law. London: Federation Press. Hugh, C., 2003. The Law of Contract, Law in context, Law in context: Butterworths. Cambridge University Press. Kluwer Law International., 2004. Review of the Convention of Contracts for the International Sale of Goods 2002-2003. The Hague: Kluwer Law International. McKendrick, E., 2012. Contract Law: Text, Cases, and Materials. Oxford University Press. Newbolt, F., 1893. The Sale of Goods Act, 1893 with notes and the decisions under the Act to May 1897. 2nd ed. NY: Sweet & Maxwell. Patrick, S., Adams, J. and MacQueen, H., 2005. The Sale of Goods. 11th ed. London: Pearson Higher Education. Radevsky, A. and Greenish, D., 2014. Hague on Leasehold Enfranchisement. 6th ed. London: Sweet & Maxwell Ltd. Sale of Goods Acts., 1979. The Sale of Goods Acts 1979. Available through UK legislation website < http://www.legislation.gov.uk/ukpga/1979/54> [Accessed 13 August 2014] Sallon, R., 1963. The Right Hon. Viscount Kilmuir. UK: Butterworth & Co. Stone, R & Devenney, J., 2013. The Modern Law of Contract. London: Routledge. Swarb, 2003. Rowland -v- Divall; CA 1923. Available through e-lawresources website [Accessed 13 August 2014] Verlag, G, 1930. The Sale of Goods Act, 1930. London: Sage publishers. Williston, S. 1988. The Law Governing Sales of Goods at Common Law and Under the Uniform Sales Act. New York: F.B. Rothman. Read More