The Transaction between Computers-R-U and Cabinetmakers - Case Study Example

To: Larry Lawless, Senior Partner From: Student Re: Cabinetmakers Pty Ltd v Sam Date: April 28, 2010 Facts 1. David found some tin containing five thousand dollars in the course of carrying out his duties as an employee of Bill and Bob and handed the tin over to police indicating that if no one claims the money, he will be the real owner of the money. 2. Sam entered into a contract which he would sell his business and land to Cabinet makers Pty Ltd (Cabinetmakers) but he removed the kitchen cabinet and mahogany display cabinet from the wall before Bob and Bill took over the premises although Sam had agreed to sell the land and the fixtures to them. 3. Tim, who is a friend to Sam had left a chipboard of large quantity in Sam’s shed temporally for him to store it and Sam forgot to remove it as he was vacating from the premises and when Cabinetmakers’ employees found it, they made use of it by constructing a bookcase for a customer and painted it and later transported the book case to the customer and it was paid by the customer. Tim has decided to sue cabinetmakers for using his chipboard. 4. Computers-R-U supplied Cabinetmakers with computers worthy thirty thousand Dollars which Bill and Bob feel they are very expensive and they decided not to take them because they had not ratified the supply as they decided that all the contracts will be signed by both bill and Bob but this was signed by Charles only, who is the sales manager. Charles had written to Computers-R-U telling them that their quotation for the supply of the computers had been accepted with a letter head of Cabinetmakers Pty Ltd and signed by Charles, the sales manager. The computers-R-U has threatened to sue Cabinetmakers for the price of thirty thousand Dollars. 5. Cabinetmakers contracted Happy results Pty Ltd to transport a large desk made of oak to a store located in Mackay who in their terms of contract indicated that they will not be responsible for any damages which may be sustained by the goods as they are being transported. As they were transporting the desk, the road was impassible and the driver decided to stop temporally on the way so that he can safeguard the desk from being destroyed due to rain and stored it at a cost of one thousand dollars. The desk also got damaged because of carelessness of the employees of Happy Results as they were offloading it from the truck. Issues The following questions arise from the case analyzed: 1. Who is the person supposed to retain the tin which contained the money if no one comes out to claim the tin was his? Is it David who discovered it in the process of extending the premises of Bill and Bob or it is the owners of the premise; Bill and Bob? 2. Was Sam right to remove the kitchen cabinet and the mahogany display cabinet from the wall as he was vacating the premises and is it possible for the new occupiers of the premises to recover them? 3. Was Cabinetmakers wrong in the decision to use the chipboard belonging to Tim and is there a way for the recovery of the chipboards by Tim from the Cabinetmakers? 4. Is the transaction between the Computers-R-U and Cabinetmakers valid? Will Cabinetmakers be liable for the mistakes which have occurred as a result of their employee not following the correct procedure? 5. Is Cabinetmakers having the full liability over the damage of desk and storage charges in the process of transport by Happy Results? Executive Summary In the case of who is to retain the tin containing the money, it is the owners of the premises who are also the employer of David who discovered the tin. Therefore if the tin is not claimed by anyone, Bill and Bob, the owners of Cabinetmakers are the ones to possess the tin with the money until its owner is known. This is because David found the tin in the process of carrying out his duties which he had been assigned by the employer. Sam was not right to remove the cabinet displays on wall. This is because in the contract, the agreement which was signed had the property having all the cabinet displays on the wall and therefore Bob and Bill entered into the contract with the knowledge that the displays were part of the money which they were to pay. Therefore, Sam should return the cabinets to new occupier of the premises, the Cabinetmakers which is owned by Bob and Bill. The transaction between Computers-R-U and Cabinetmakers is in one way valid and in another way not valid. It is valid in that the letter which was for the acceptance of the quotation of the company to supply Cabinetmakers with computers had the letter head of Cabinetmakers and signed by an employee of Cabinetmakers and therefore valid. On the other hand, the agent who entered in to the contract with the Computers-R-U did not follow the mandate which has been placed on him and therefore the contract not a valid one since all the contracts were supposed to be signed by Bill and Bob. Cabinetmakers are liable for the losses incurred as a result to the damage of the desk because of carelessness of the employees of the bailee as they offloaded it. This is because the Happy Results had indicated in their contract terms that they are not responsible for any losses which might occur as they transport the goods. On the other hand, the cost of storing of the desk is may be taken care of by either of the two. This is because, in one way, the Bailor is supposed to take care of all the expenses which result from the handling of the property. On the other hand, the Bailee is responsible for all the results of the product since he has been entrusted with the property. Analysis and Synthesis Custody of the Money Bill and Bob are the ones supposed to keep the custody of the money, five thousand United States Dollars. If an employee finds goods as they are doing their duties of employment, the principle which is generally applied is that the things which have been found belong to the person who is his employer. This principle holds unless there is prove that the employment was not what caused or made the employee to discover that property. In this case, David had been engaged by Bob and Bill to enlarge the shade. He discovered the tin which contained the money as he was excavating for the foundations of the shade. This is proves that he discovered the money in the course of his duty which he had been assigned by the employer, who is Tim and Bill. This therefore means that David was not right in writing the letter which read that the box belongs to him if it is not claimed by anyone. If the real owner of property is not available, the employer reserves all the ownership rights of the property until the real owner claims it. The real owner does not lose his possession of the property. In the future, the real owner may claim that tin with the money and still be handed over to him. In the case of City of London verses Appleyard1, The employees of the builder found a safe which was build on the wall as they were preparing the foundations of the building. The safe contained banknotes. The finder was an employee and he found goods in the course of his employed as he was carrying out his employment responsibilities. In this case, the employer has a better right of the goods than the employee and therefore the finder must surrender the goods to the employer. Bill and Bob, the owners of the Cabinetmakers are guilty of conversion of chipboard belonging to Tim. Tim had not acted in any manner to prove that he has allowed Bill and Bob to reduce the Chipboard to be their personal possession. If the situation surrounding the leaving of the Chipboard in the shade was not an intention of Tim to abandon the Chipboard is sufficient to prove that the board was not abandoned. According to the Limitation of Actions Act of 19742, if the property has been left for more than six years, it will not be possible to bring competent plaintiff and a defendant or bring about every part of the action which has occurred. The owner of the chipboard had not stayed for six months without going for it. It was therefore wrong for the cabinetmakers to use the chipboard to make goods for customers. Cabinetmakers cannot reject the goods which have been delivered by Computers-R-U. This is because Cabinet makers have already written in writing that they have accepted the quotation of Computers-R-U to supply them with the computers worthy thirty thousand dollars. According to s14 (3)3, the buyer is excluded from the right to reject goods if one of the following has happened. First, if the goods have passed to the buyer and secondly, if the buyer has already accepted the goods. The Sales manager, although without consultations with the managing director accepted the quotation for the supply of computers from Computers-R-U and therefore the Cabinetmakers lost their right to reject these goods. As a result, Cabinetmakers have to take the computers. The indications that the buyer has accepted the goods include the buyer intimating to the seller that he or she has accepted the goods or when the goods have already been delivered to the buyer and he or she has acted in a manner to suggest that the goods are under his possession. Lastly the failure of buyer to indicate after a reasonable time he or she does not want the goods. An example is the case of Taylor v Combined buyers limited.4 If a buyer does not accept goods wrongfully, the seller can sue the buyer for damages under article s51(1)5. This means that Computers-R-U can sue Cabinetmakers for their failure to accept the goods which have been delivered to them. The seller is supposed to measure all the damages which have occurred and the loss which is expected to be realized from the act of the buyer failing to receive the goods and therefore the breach of the contract6. In this case, Computers-R-U will definitely sue the Cabinetmakers for all the expenses which have resulted due to the delivery of goods, storage of the goods and the negotiations. In that case of refusal of the goods by the buyer, the seller can sell the goods to another buyer and the difference in the price of the contract and that which is prevailing in the market at the time of refusal is covered by the buyer. 7. If Computers-R-U decide to sell the computers to another buyer, then they can sell it at a price which is cheaper than they had agreed with Cabinetmakers and after selling, they can sue Cabinetmakers so that they cover the difference between the amount they would have received from selling the goods to the cabinet makers and the amount they received from selling to a different customer. When Cabinetmakers contracted Happy Results to transport for them the desk, the Happy Results automatically became the bailee and the Cabinetmakers became the Bailor. If a person takes goods from another without being forced to do so or on a voluntary basis, he or she becomes automatically the bailee of the owner of the goods. Since the Happy results took the goods to transport them without being forced, it was legally regarded as the bailee of the desk. If the receiving of the goods is under a contract, then the terms of bailment will be defined by the contract. In this case, Cabinetmakers and Happy Results had entered in to a contract in which was written that the goods were transported at the risk of the owner. As a result, the damages which will arise as a result of neglect or irresponsibility of the transporter will be catered for by the bailer, who is the Cabinetmakers. This means that the goods which are on transit will be catered for any damages by the Bailor since the contract had defined so. The problem was that Cabinetmakers did not read the conditions of the contract. They should have gone through the contract before signing and therefore avoid them engaging in a contract which is risk. It is clear that if there is any damage or loss of goods, the cost will be on the bailer. This means that the damage to goods which were being transported was supposed to be addressed by the bailer. They had agreed to enter into contract with Happy Results when such condition was in the contract. The Happy Results therefore cannot be told to pay for the losses due to the inability of the Cabinet makers to read the terms of contract. If the contract had not been indicated that the goods will be transported at the risk of the owner, then the general terms of bailment would apply. This would include for the compensation of the goods which have been damaged. The Happy Results would be supposed to cater for the charges which have resulted from the repair of the desk. This would mean that the goods have been under the carrier’s risk. Writing in the contract that the goods will be carried at owner’s risks makes the owner free of any costs which may arise from the handling of the goods or their storage in the process of transport. On the other hand, the additional costs which have been realized like the storage costs are to be paid by the Happy Results. In the contract, the terms were that the damages which occur in the process of transportation of the goods as a result of were on the owner’s risk. It did not define what would happen if there is a natural calamity which would lead to delay of goods and therefore their transport. Although the storage of the goods on the way was in the best interest of the Cabinetmakers since it was to protect the goods from getting destroyed by the rain, the Happy Results will cover for those goods. The agreement was that Happy results will carry the desk from the main shade of the Cabinetmakers and then store them at another different store. It was not to stop on the way and then continue with the journey. As a result, Happy Results are liable for any extra costs which have been incurred in the process of transporting the goods. When a bailee takes the goods voluntarily, he or she becomes liable fully for the goods which he or she has taken. It is his role to ensure that the goods do not get destroyed or to not incur extra expenses, unless he or she has indicated in the contract that he or she does not take responsibility over any of the damages to the goods being transported. This is different from an agency in that the agency is not an entity of possession of goods but merely acts as a representative of the real owner of the property. If there is any cost which has resulted from handling of the goods he or she is in possession of, the real owner who has given the agent his property retains all the responsibility. If the goods were being handled by an agent of the Cabinetmakers, then all the costs from the repair of the desk which has been damaged and the storage cost due to the bad whether are in the hands of the owner. This is as opposed to the situation here where the bailee bears all the responsibilities arising from the transport of the goods unless the contract of the agreement to transport the goods has stipulated otherwise. When the contract has specified the terms of contract, then the terms of contract take the day in the determination of who is to bear the responsibility. On a different note, the Happy Results may argue that the Bailor has the right to reimburse the bailee for costs which have been incurred on a basis which is reasonable. For example, a ship which is carrying wheat from United States of America to India gets stranded on the way. The workers offload it and therefore incurring extra costs which were not part of the contract. The court held that the bailee has to recover the expenses since he has to look after the wheat. The association between the Cabinetmakers and Charles is that of an owner of a property and an agent. An agent can be defined as a person who enter into a transaction or conduct a transaction as a representative or on behalf of another person. The person usually has the authority to create relationships which are legal between the owner of a property and another person. He performs duties as has been conferred to him or her by another person who can be termed as the principle. He or she is able to affect duties and rights between him and the third party. The ability of an agent to create some legal relationship between his or her principle is purely determined by the arrangement between him and the principle. A principle is liable for any careless conduct of his agent which has resulted in damage to another party. In this case, the principle will be liable if the agent was carrying out the task for the benefit of the principle. The agent has the capacity to do all what the principle can do as the owner of the property. The agent does not need to have the legal authority to perform a certain function. He or she can be a child who does not have the identification documents. However, the principle is only liable to those acts which are within the mandate of the Agent. In the case of the Computers-R-U, the principles agent, Charles committed the Cabinetmakers to buying of computers from the Computers-R-U. According to the procedures of entering into contracts, all the contracts are supposed to be signed by both of the owners of the business, Mr. Bill and Mr. Bob. In this regard, Charles did not follow the appropriate procedure in to enter into that contract. In their defense, Cabinetmakers can argue that the person who entered in to contract of supply of the computers was not acting within his mandate. This is because only Bill and Bob are allowed to sign and they must sign both of them for the contract to be valid. This means that in one direction, the third party, who is the Computers-R-U, suffered a loss because of the agent performing duties which were not within his mandate. They therefore can sue the Agent for that loss for him to compensate the computer suppliers. On a different note, the Cabinetmakers can accept the goods and then sue the agent for committing the business into a contract which was not within his mandate which resulted in the organization buying goods which were very expensive and therefore cover the expenses which have been realized. This means that the agent will take care of the expenses and damages as a result of committing cabinetmakers to a deal which has cost them a lot of money. This is because the agent did not have any permission to sign for the acceptance of the computers’ quotation from the Computers-R-U since it was very clear that the business could only enter into contracts which have been signed by both the two owners of the business, Bill and Bob. The sale of goods act8 applies when a property passes from one person to another in exchange of money. It advocates for identification of the goods to be sold and ascertaining of the goods after the contract. The property will pass from the seller to the buyer when the contract of sale between those two parties has been made9. The goods must be the same as described in the contract and at the time of entering into a contract. If the goods are not the same, then the buyer has the right to decline the possession of the goods. The buyer can decline the goods after inspection after the goods have been delivered. When he notices that there is a difference between what was ordered in the contract and what has been delivered, and then the buyer can reject the goods. In addition, the buyer can discover that the goods have a problem in the process of using the goods and launch a complaint. For example in the case of Smith Goldsborough Mort Ltd verses McBride, a bull was seen and then selected as a bull for breeding although they came to realize that the bull was not fertile and it was held that there was breach of contract. Considering this, the situation of the shade which Sam was using was that it had the cabinet displays and therefore as Bill and Bob were entering into contract, the cabinet displays were part of the property they were negotiating. Therefore, the terms of sale included the cabinet displays. This means that Sam was not right in removing of the displays pinned on the wall and he was breaching the contract. Cabinetmakers can argue that the contract entailed both the housing and all the fixtures including the wall cabinets and demand for the return of the cabinets. On the other hand, Sam can claim that by the fact that Cabinetmakers started using the premises, it meant that they were satisfied about it. Read More