Legal Environment: Cartridge Heaven Ltd - Case Study Example

LEGAL ENVIRONMENT Name Code + Course Title Tutor School Date Legal Environment Cartridge Heaven Ltd supplies and refills printer cartridges to various local businesses. While it has employed three employees at their store, they also contract Raymond to perform some duties including the delivery and installation of printer cartridges. He is paid the same amount of money as the other permanent employees of the store. However, he does not get a holiday pay. In the UK, contracts for employment are reflected in two main aspects: a contract of service and a contract for services. A contract between an employer and an employee is usually deemed to be a contract of service. The relationship between a contractor and a client is defined as a contract for services. There are specific responsibilities and rights of the parties (Marson, 2014). Permanent employees operate under a contract of service. The requirements of the employee status obligated by a contract of service include the performance of tasks in line with the instructions of the manager. The job description is also another determinant of the specifications for the employee. In a contract of service, the worker is expected to work within a specific time frame during the week (Marson, 2014). The worker is not required to send someone else to work on his/her behalf. A distinguishing feature is that a contract of service employee is entitled to sick pay, holiday pay as well as maternity and paternity rights. They also have statutory rights to redundancy payments (Smith & Baker, 2015). The employees employed by Cartridge Heaven Ltd are entitled to these benefits. However, Raymond was employed as a contractor. A contract for service is a specifically organized business-to-business contract between two firms. In this context, an employment relationship does not exist. A contractor can enter into such an agreement with another organization and has a different set of described rights and obligations. The contractor has the obligation to supply services in accordance with the specified schedule (Elliott & Quinn, 2015). In a contract for service, the contractor also has the right to be paid the agreed rate in the contract if the services offered were in accordance with the contract. In essence, the contractor has a degree of autonomy from its client (Sargeant & Lewis, 2012). However, Raymond’s situation shows that he is not an independent contractor. One way of looking at the structure of his operations at Cartridge Heaven Ltd is the degree by which the company controls his behaviours and activities. In this case, the company controls his day to day activities including the manner in which the work should be done. Raymond does not have the option of choosing the way he should operate. The manager controls his movements and is seen in the way in which Raymond has to report to the manager of his activities throughout the day (Sargeant & Lewis, 2012). Regarding the financial aspects, the company has determined the pay that Raymond earns. In a contract for service, the contractor can negotiate for contract terms and remuneration. These conditions have not been met in this situation. It should also be noted that it is the company that supplies the tools and the equipment needed for the work. In a contract for service situation, the contractor usually has the required tools and equipment needed for effective service (Sargeant & Lewis, 2012). For this reason, Raymond cannot be said to be operating as an independent contractor but as an employee. Cartridge Heaven Ltd should take the necessary measures to ensure that Raymond gets the holiday pay that he deserves. It is also an implication arising out of the contractual relationship. Customs demand that the rest of the employees be paid the holiday pay (Smith & Baker, 2015). Cartridge Heaven Ltd.’s notice is valid since the essential elements in the formation of a contraction include agreement (Elliott & Quinn, 2015). In the formation of a contract, there is an offer and acceptance. It usually requires two parties for a contract to be considered and come into effect. An offer has to be made on the condition that none of the parties involved is under duress. In essence, an offer is an expression that communicates the intention to contract. The expectation is that the agreement shall be binding on the parties concerned (Elliott & Quinn, 2015). The contract takes effect as soon as the offeree accepts it. In this case, Cartridge Heaven Ltd displayed a notice that the liability of the company for negligent personal injury is limited to only 100 pounds. Jeffry accepts this fact by purchasing the product. The invitation to treat principle applies at this juncture. However, it should be noted that the events that happened after Jeffry purchased the cartridges invalidate the notice. The invitation to treat principle can only stand if some positions are attained. The person that sells the goods must have the right to do so. In addition to this, the quality of the goods must be satisfactory. The standard of the goods should be such that a reasonable person would regard them to be satisfactory. As such the product can be declared to be fit for the purpose for which it was designed to do. Quality also has implications for safety and durability (Legislation.gov.uk, 2016). The use of the product exposed Jeffry to serious injuries and losses. Jeffry is a reasonable man and as such, he would expect that the shop would exercise a duty of care in its operations. Clearly, Jeffry does not expect to be sold some defective gadgets which would lead to harm. As such he has the right to claim for damages beyond the stated price. Through the causation principle, Jeffrey can claim that Cartridge Heaven Ltd was negligent in their transactions as they sold a defective product. Causation refers to the enquiry made in the effort to find out whether a defendant is liable for damage or harm caused. In the case, Jeffry can apply the factual causation principle through the “but for” test. In essence, the defendant will have to prove that his actions were not directly responsible for the manifested results (Fafinski & Finch, 2015). If the result would have transpired in any event, then the defendant cannot be held to be liable. In looking at Barnett v Chelsea and Kensington HMC, the death of the patient was not deemed to be as a result of the inefficient care received at the hospital. The test used to assess remoteness in negligence the foreseeability test. The law pertaining to negligence applies foreseeability about the duty of care and relation to remoteness. Cartridge Heaven Ltd had a duty of care to make sure that the cartridges sold to Jeffry were of a high quality and safe. However, this was not to be and Jeffry, unfortunately, had to suffer harm and incur damages (Fafinski & Finch, 2015). Bearing this in mind, Jeffry should take the necessary steps to claim damages for his injury. Although the company had explicitly indicated that the damages could only be compensated up to a certain level, the same does not apply to the situation presented. Jeffry, a reasonable man, expected that Cartridge Heaven Ltd would sell him a product of high quality and one that was safe. The cartridges did not fit the purposes for which they were intended to achieve. The necessary steps should, for this reason, for compensation from the organization. Cartridge Heaven Ltd is expected to exercise a duty of care by trading gadgets that are not defective and may thus cause harm to those who may purchase them. In the conduct of business, a contract binds two or more parties to a set of requirements that ensure that objectives are met. In this case, Cartridge Heaven Ltd contracted Repair Depo Ltd to offer repair services to their clients. However, inefficiencies arose on the part of Repair Depo Ltd, which resulted in losses for Cartridge Heaven Ltd. Cartridge Heaven believed that there were some requirements that had not been met. Common law bestows the right for a party to wilfully terminate a contract under three main circumstances. Firstly, if there is a breach of an essential term. Secondly, if there occurs a sufficiently serious breach of a non-essential term, or in the event of renunciation or repudiation of the contract (Elliott & Quinn, 2015). In the breach of an essential term, it points to a situation whereby a specified condition or fundamental term was not met. The “essential” element is an issue of construction in that it is dependent upon the collective intention of those concerned as expressed in the details of the contract. Parties to an agreement can agree that a specific term or condition can assume an essential status, such that its breach warrants the immediate termination. One of the most common aspects of essentiality is that of time. Time can be described to be of the essence, and its breach is considered to cause significant harm to the concerned party (Kühnel-Fitchen & Hough, 2014). In case there is a serious breach of a non-essential term, the innocent party is usually substantially deprived of the benefit of the contract. A non-essential term is usually described as “intermediate” in nature. If the non-essential term or condition escalates to become a sufficiently serious breach, it usually implies that matter has affected the root of the contract. The Koompahtoo High Court Decision presents a suitable scenario to analyse a serious breach of non-essential condition. The Koompahtoo local Aboriginal land council was involved in a joint venture with Sanpine Pty Ltd. However, Sanpine’s actions led to the venture incurring huge liabilities that were later on secured by mortgages on the same piece of land. Although development on the land continued, the mortgagee also went ahead to possess the land. In addition to this, the land council was placed into administration. The bone of contention was whether it was appropriate to terminate the joint venture agreement on the basis that Sanpine had breached its obligation. The High Court was convinced that the obligation to maintain balance the books in a responsible and transparent manner was of basic importance. It was also upheld that the decision by Sanpine not to mismanage the books of account and financial records of the joint venture breached the agreement and, for this reason, went to the root of the contract (Elliott & Quinn, 2015). In this case, there were major violations of the contract by Repair Depo Ltd. In terminating a contract, Cartridge Heaven must find sufficient reasons and cause for ending their relationship with Repair Depo. The grounds for termination must find a sufficiently serious problem with a critical area of the contract (Kühnel-Fitchen & Hough, 2014). Secondly, Cartridge Heaven must ascertain that the problem is explicitly caused by Repair Depo. The aggrieved party must also ensure that they have not done anything that might be taken as an encouragement to malpractice on the part of Repair Depo. It is also crucial for Cartridge Heaven to give Repair Depo sufficient warning in order that the problem may be fixed. If the decision to end the contract with Repair Depo is final, Cartridge Heaven should present a written notice to the company. The notice should indicate its aim and the reason for ending the contract. A reference to a relevant paragraph in the contract is necessary as well. In this case, it would be inadvisable for Cartridge Heaven to end the contract as there is no evidence that Repair Depo was given sufficient time to explain their position. Indeed, the breach was an essential one in nature that dishonoured the time factor. References List Elliott, C. and Quinn, F. (2015). Contract law. Pearson. Fafinski, S. and Finch, E. (2015). Contract law. Harlow-Pearson. Kühnel-Fitchen, K. and Hough, T. (2014). Optimize contract law. Routledge. Legislation.gov.uk. (2016). Consumer Rights Act 2015. [online] Available at: http://www.legislation.gov.uk/ukpga/2015/15/section/9/enacted [Accessed 10 Mar. 2016]. Sargeant, M. and Lewis, D. (2012). Employment law. Harlow: Pearson Education. Smith, I. and Baker, A. (2015). Smith et Wood's employment law. Oxford: Oxford Univ. Press. Read More