Commercial Law - Case Study Example

Commercial Law + It is the responsibility of every government to provide a conducive environment for the business community. On the other hand, business owners are expected to ensure their products meet the expected standards in order to meet the consumers’ needs. To ensure fairness, governments draft and enact laws stipulating how disputes that may arise between consumers and sellers ought to be resolved. In some cases, the seller has to bear a liability especially where goods sold are found to be defective. Similarly, a consumer is expected to bear liability especially when a product is destroyed after purchase so long as it was not originally defective. The United Kingdom (UK) is one of the countries with the most effective laws on Consumer protection. The purpose of this paper is to analyse the cases highlighted concerning relevant Acts. The first scenario involves Simon and Rosie where the former was offered a job on commission by the latter to sell some art-related materials. After some months with only two sales, Simon’s contract with Rosie was terminated. Surprisingly, Rosie informed that Simon was to refrain from working for any other artist. In addition, Simon had not received the commissions for the two sales made after the contract. In this case, the law has some interesting stipulations, and ones that Simon could exploit to have the rights observed. First, Commercial Agents Regulations Section 8 clause a state that upon termination of a contract, a commercial agent, in this case Simon shall be entitled to a commission on the transactions made after the termination1. Worth noting is that the Act defines who an agent is, and in this case Simon fits the description hence confirming all the relevant entitlement resulting from the contract. For instance, the Act states that an agent is a person considered and empowered to engage in and enter into commitments on behalf of another firm or own. In the scenario described above, Rosie who proceeded to avail an agreement authorising the former to act as an Agent approached Simon. Thus, Simon is legally recognised as an agent meaning there rights protecting him against anything deemed to be illegal. By using an agreement where both parties signed, Rosie was essentially giving Simon a legal backing since the law recognises written agreements2. In light of the above, several things can be seen in the case of Simon with the first being that there was a sale, in fact sales, made during the engagement. For that reason, Simon is fairly entitled to the commission as per the stipulations. While the Agency, Rosie, has not expressly stated an intention not to pay, the fact that the commission is yet to be remitted is in itself suspicious, though not a contravention yet. The stipulations further states that the agent’s commission shall honoured especially if the transaction is significantly attributable to their effort3. Clearly, Simon’s sales were directly a result of own efforts thus fulfilling the requirements in this section. Also, while the Agency has not indicated their refusal to pay the commission, Simon could exploit the provisions in the Act especially the last part of clause a. it states that the commission ought to be paid once the termination of the contract has occurred. In the scenario, Rosie terminated the contract meaning there was supposed to be a communication on the issue of commission. Since Rosie remains noncommittal on the payments, Simon could take a legal action against the Agency for failure to pay. Again, while Rosie has not stated or indicated any sign of not paying the commission, since there is no mention of the opposite, Simon can seek legal redress. To ensure there is a strong argument in case the process goes on to be a lawsuit, it is imperative for Simon to have all the details on his part. One important thing to note for Simon is that there are duties he is expected to have met prior to demanding a commission. First, the Act states that one of the duties of a commercial agent is to make efforts in negotiations3. Because Simon already made a sales albeit after a longer period than Rosie expected, it is evident there were negotiations made on behalf of the Agency. Another requirement is that an agent ought to communicate with the agency besides complying with all the reasonable instructions availed by the principal. Also, an agent is expected to prioritise the principal’s interests and always act in good faith and dutifully4. From the above requirements, the scenario confirms that Simon had fulfilled his part of the law evidenced by a couple of things. One, the termination letter by Rosie does not cite any contravention of the agreement by Simon as the reason behind the termination. Instead, the main reason is evidently the low sales Simon made for the period engaged. The law does not stipulate the speed at which a sale has to be made thus giving Simon an upper hand. Besides, there is no mention of the same in the agreement Rosie signed with Simon. Two, there is no concrete evidence to prove that Simon did not prioritise the principal’s interests. While the period it took to make the sales is in itself suspicious, there lacks, a strong evidence to suggest there was apathy or malice in the slow sale. While it might also be impossible to confirm that Simon acted in good faith during the agreement owing to the low sales, there is, again, no clear evidence to the contrary. Instead, Simon has a ground to show that there was dutifulness on his part since there were two sales made. In short, as far as the legal requirements are concerned, Simon has satisfied almost all of them. Consequently, Simon can file a legal suit against Rosie for a contravention of the stated clauses. These assertions are informed by the fact that one’s commissions ought to be availed as soon as the termination of any contract is issued4. In this case, Rosie has neither paid nor communicated on the same, meaning it could be interpreted as a contravention. In fact, a commission, “shall be paid not later than on the last day of the month following the quarter in which it became due” Concerning the requirement by Rosie that Simon should not engage in offering similar services to another agent is void. This conclusion is voided by section 14 that details the conversion of a contract after expiry. The section states that if the two parties continue with their engagement even after the expiry, it shall be deemed to have been converted5. Rosie’s directive to Simon seems to hedge on this provision, but it is erroneous. Firstly, the contract has already been terminate by Rosie meaning it is over, thus cannot continue whilst terminated. Secondly, there was no such a provision in the agreement, meaning Rosie has legal grounds to restrain Simon from extending similar services to other competitors. Thus, Simon ought to continue offering such services to any other artist, as there will be no contravention of any section of this Act or a breach of the contract with Rosie. Scenario 2 In the second scenario where a painting falls off the wall shortly after purchase, there are several important observations to make. In the Sale of Goods Act of 1979, it is stated that all items purchased have to be fit for the purpose, which it is bought, descriptions have to correspond and the item has to be of satisfactory quality6. In this case, Mary-Alice purchases a painting that turns out to be a fraud meaning the item does not fulfil the Act’s requirements. The painting bought by Mary-Alice failed to meet the requirements, and can claim on the item being fraud and painting falling off the wall. In the second pack that Mary bought with the item, there were at least three fixings, but she used only two in fixing the painting on the wall. When the painting fell, this occurrence was catalysed by Mary’s decision to use the three pins as explained by 2n on the packaging. It was clearly stated that the fixing could hold up to 6kgs implying all three had to be used, but there was no clarity on the same. While purchasing the painting, Mary was informed on the weight of the painting, and with the fixing clearly indicating the maximum weight, there was no negligence on her part. The scenario here could have an intense legal tussle for a number issues arising from the incident. First, when Mary bought the painting, the pack had indicated the fixings were capable of holding up to 6kgs. However, there was no clarity as to how many fixings were needed. While Mary could argue the firm indicated fixings could handle such weight, the firm did not specify the number of fixings required until the incident occurred. Secondly, 2n could contest that since there was prior information on the maximum weight the fixings could hold, the buyer in this case Mary damaged the goods. Moreover, the company could argue that Mary should have sought clarity on the issue before the incident if there was doubt as to the number of fixings required for such a painting. It is not just the buyer’s rights that are protected, but the seller’s too. It is stipulated that a buyer cannot make a claim when the damage on goods has occurred as a result of own responsibility7. In this case, Mary might not successfully win this case, if there is a decision to file a suit against the 2n. Nonetheless, when it comes to the fraud of the item Mary will be successful if the firm, Arted PLC, does not comply with the request for claim. When an item fails to meet the aforementioned purposes- that is, quality, fitting description and corresponding purpose- a buyer can make several claims. These include a repair when the item is not beyond repair and replacement when the same is feasible. In addition, a buyer can demand part of or full money back, and as long as the failure is in the seller’s side, these have to be adhered to7. Mary bought this item, but later discovered it to be a fraud, and this meets the threshold of the law. That is to say, Mary could demand a refund or a replacement of the painting because it was initially a fraud. The Act further states expressly that a buyer can only lose the right to claim if the trader did point out the defect at the point of purchase. In such a scenario, the buyer cannot claim any damage as it is assumed they were aware of the condition8. However, the store from which Mary made the purchase never mentioned the painting’s quality or any defect. For that reason, Mary can lodge this claim against the seller, especially if the latter disputes. It is not always that a case has to go through litigation; the seller in this case can resolve the issue by exploiting any of the provisions. In other words, a refund or a replacement, since repair is not an option in this case, could be offered to Mary. Product liability provision can allow Mary to seek further claims because there was much more damage caused by the painting than just the loss of money. As reported, glass frame and the floor incurred some damages courtesy of the painting. Before the amendment of this Act, only the supplier incurred the loss resulting from this part. However, all the involved parties including the manufacturer, importer and suppliers have bear liability8. Therefore, if Mary opts to file for damages, the aforementioned will be held liable for the loss. In the end, Mary will have the glass frame replaced or compensated as will the floor, besides having another painting or a refund of the same. However, the floor damage need to cost more than £275 as the Act does not require compensation for a property damage that valued under this amount. Even though Pierre was neither the buyer nor is he related to Mary, the seller of the painting will be required to pay for the injury caused. In the Consumer Protection Act 1987 under the second section, clause 1, the phrase used is ‘any damage8. The implication is that anybody who suffers damage is entitled to compensation irrespective of the relationship with the seller or the buyer. Therefore, the company that sold the painting will incur more than just the cost of replacing the painting. In fact, a lot more contraventions could be filed against the seller and the importer or manufacturer because the product contravened almost every section of both the Sale of good Act and Consumer protection Act. To sum it up, the first scenario is fully addressed by the Commercial Agents Regulations 1993, and the bottom-line is that Simon is covered by the Act. Because Rosie failed to include restricting Simon from working for another artist prior to the termination of the contract, the directive is void. In addition, Simon can take a legal action against Rosie for a contravention of the regulations. The reason is that the regulations expressly states the duration within which a commission has to be repaid. Concerning the second case, Mary unknowingly purchased a faulty item which also caused injury and damage. In this case, both Acts stated will see Mary and Pierre get compensated respectively. Bibliography Baskind E, Commercial Law Concentrate Cardwell K and Clark A, The Consumer Protection Act 1987 Dashwood A and Arnull A, A Constitutional Order Of States? (Hart Pub 2011) Grassie G, Commercial Practices Directive: Draft UK Regulations Published (2007) 2 Journal of Intellectual Property Law & Practice Mak V, Missing Bearings – Information Duties Of The Seller Under Section 35 Of The Sale Of Goods Act 1979 (2007) 70 Modern Law Review Marson J, Business Law Concentrate (Oxford University Press 2013) Munday R, Agency (New York 2010) Mehta S, Professionals And Consumer Protection Act, 1986 SSRN Journal Read More