The Grounds upon Which Steve Can Refuse the Goods - Assignment Example

Question 1 and Question 2 Name Institutional Affiliation Date Table of Contents Question Two 3 Overview of the Case 3 Facts of the Case 3 The grounds upon which Steve can refuse the goods 3 The possibility of Steve retaining his pay of $100,000 4 The rights enjoyed by Steve in this case dealing 5 Question Two 6 Overview of the Case 6 Does Maya have any claim against Ralph? 7 Determination as to whether Ralph is liable for the loses suffered 8 References 10 Question Two Overview of the Case Steve is a successful business person in Darwin. He travels and orders large quantities of furniture on a yearly basis. This year, Steve inspects some impressive furniture from Vincent Furniture Ltd, who is a wholesaler in Melbourne. On July 15, Steve placed an oral order for supply of 200 beds for an agreed pay of $100,000. The consignment is delivered to Steve’s warehouse on 15th August and he accepts and pays full amount for the goods. However, upon opening the boxes, he realizes that several beds were defective and cannot be assembled. This disappoints him. Facts of the Case This case entails the contract that exists between the buyer and the seller. The contract has become binding because the seller (Vincent) has supplied the furniture and Steve has paid for those furniture. However, the furniture supplied under this contract are defective and do not meet the test as outlined under the implied terms in Australian Consumer Law 2013 Act (ACL), as to merchantability and fitness of purpose. Therefore, the legal issue here is to establish the grounds upon which Steve, the complainant, can refuse the defective goods and recover the cost incurred in buying the defective furniture. The grounds upon which Steve can refuse the goods Tendering defective furniture to Steve constitutes a fundamental breach because had Steve the knowledge that the furniture would not be assembled and were defective, he would not have entered into the agreement to buy. Steve can base his claim on Australian Consumer Law(ACL) that can into effect on 1st Jan 2011, and treat the contract as repudiated on grounds that the furniture are not merchantable in the first place and in the second place, not fit for purpose. The same applied with the case of: Alpine Beef Pty Ltd vs Trycill Pty Ltd[2010]FCA 136 This case highlights the true implications of merchantable quality and fitness for purpose law obligations. His Honours took into consideration issues related to fitness for purposes and also merchantability as implied by section 19 of Sale of Goods Act 1923(NSW) and by the parties conduct. The judge concluded the luxury yacht did not have merchantable quality and therefore,, Trycill Ltd (Boatspeed) breached the conditions implied under the Goods Act. His Honours noted that Alpine Beef would not have accepted delivery had he known the defect or he would have demanded for rectification of the defects before delivery. Although it was not expected for the vessel to be in a “perfect” condition, it was at least not merchantable. Therefore, the judge came to a conclusion that the applicant was entitled to recover for damages. This precedent will help in reasoning Steve’s case in the sense that defective goods are not fit for purpose and are not merchantable. The possibility of Steve retaining his pay of $100,000 If we base the argument on Australian Consumer Law(ACL), Steve has a high possibility of recovering his $100,000. Section 260 (c) &(d) hold that when a product is not fit for purpose as a result of being defective, it constitutes a “major” failure if not remedied easily and within the reasonable time. However, Steve’s purchase constitutes a large number of beds, 200 beds, several of which are defective. This means that remedying them may only require replacement and if the owner does not have substitutes, then Steve will be entitled with a right for a refund. In some cases, minor problems in defective goods may be overlooked by this principle, in situation where fixing a minor problem leads to sufficient inconvenience that, if a reasonable consumer had known in advance, would not have purchased the product (Coron, 2013). Therefore, if Steve brings into the case sufficient proof that the defect in the furniture can obviously inconvenience him to unbearable extent, then the entire contract will be repudiated and Steve be issued with a refund. The term “condition” forms a major stipulation in a case of contract, and according to Common Law of England, when a condition is broken, it runs to the root of the contract and the affected party may affirm the contract and claim damages or repudiate the contract and sue for damages. In the case of Poussard v Spiers & Pond, the term conditions is elaborated that it has a lot of importance such that had the aggrieved party know of its breach, he would not have accepted to enter the contract. Under the Sale of Goods Act and Australian Consumer Law Act 2013, the terms on merchantability and fitness for purpose have been implied as conditions, a breach of which is considered a fundamental breach. The rights enjoyed by Steve in this case dealing According to general law of contract, you enter a contract when you buy services or goods and a contract refers to set of terms that are enforceable under law. Under Sale of Goods Act 1923 (NSW)(Goods Act), the terms as to merchantability and fitness for purpose are inherent, and therefore, deliver of defective goods is considered a fundamental breach of condition where Steve can claim for: (i) replacement of defective goods, (ii) direct loses as a result of those goods, or (iii) a refund to be made for purchasing the defective furniture. Question Two Overview of the Case Maya is a restaurant manager in Darwin. While working for many years, she has managed to save $100,000 for her own restaurant. On 1st June 2014, Maya approaches Ralph, an accountant, for advice about profitability and financial position about a restaurant business called Mughal Mahal. She informed Ralph that she required that information because of her intention to invest in the company. Ralph provide a report on 20th June 2014 that the company was secure, safe and profitable for investment and offered Maya a financial report that did not include information about the large volume of unpaid creditor, large aged debtors, and there were no provisions for bad debts. However, Ralph charged $1000 for this expert advice. Relying on this advice, Maya went ahead to invest $100,000 on 1st July 2014 - buying the company with aim of making high profits. However, on 15 August, the company was in great financial crisis and had to close down. Maya lost her money. Does Maya have any claim against Ralph? In order to understand whether Maya can claim for damages suffered as a result of Ralph’s advice, this case will focus on professional negligence. The breach of duty of care that exists between a professional and his/her client is what constitutes professional negligence. Further, there are three fundamental elements of negligence that should be observed in this case and they include the duty of care, the breach of duty of care and the subsequent damages due to that breach. Maya expected some level of professionalism from the accountant and that constitutes the reason for seeking advice from him. She funds the advice with $1000. It should also be noted that the professional did not produce the most important information about the large volume of unpaid debtors and there were no provisions for bad debts. Ralph went ahead to assure Maya that it was safe to invest. This can be considered malice and negligence. Duty of Care & Negligence Under common law, negligence is a tort and is considered as failure by one party to do the reasonable and prudent thing or commission of a given act that is not expected of such a person, and that commission or omission of which leads to loss or damage on the other party. Therefore, negligence law requires a person to be entitled to damages suffered as a result of breach of another person’s duty of care. Further, duty of care exists due to the relationship between the two persons or parties. This dispute is based on negligence and duty of care. Negligence results in the sense that the accountant (Ralph) owes Maya the duty of care which is actually to act as per the reasonable standard of care required of him but does contrary to that, thus making Maya to suffer substantial loses. Maya paid and relied on the accountant’s advice to invest, and this alone becomes supportive evidence. What is more, the standard of care expected under the duty of care, varies from one person or situation to another. For example, the professional advice from an untrained friend for a person to invest can be considered of low standard compared to advice expected from a professional accountant with regard to investment. For Maya to win this negligence case, she must prove to the court that the account owed him the duty of care, that the accountant did something or omitted to do something that was prudent for him to do, and that the financial loss suffered was a result of what the accountant did or did not do. Therefore, in order to prove all these, it would require the application of earlier decisions made by other courts with regard to same issue, examining the professional standards expected of accountants and the applicability of state legislations in connection to the matter. Determination as to whether Ralph is liable for the loses suffered Professionals’ liability for actions of negligence precedes from decision of Donohue v Stevenson, a landmark case from which the law on both negligence and foreseeability has been emblazoned. In the case of Nocturn v Ashburton, a client recovered the loses suffered as a result of negligent misstatement from his solicitor. In the case of Hedley Byrne & Company Limited v Heller and Partners Limited, the plaintiff’s banker was held liable for the negligent reference he gave with regard to one of their customer, knowing well it would be depended. The bank became liable for economic loss suffered by the client. Further, Wrongs & Other Act 2003 (Vic) (“Law of Negligence Act”), clearly defines a professional as an individual practicing a profession. This covers on accountants, lawyers, engineers, among others (s. 57). In section 58, the act states that the standard of care expected of such a person will be determined in respect to what is reasonably expected out of a person of such skill relative to the circumstances at the time of negligence and not later dates. In the case of Hedley V Heller 1964, the Lord Morris illustrates that the duty of care can arise when a person who has special skills undertakes the application of that skill for assisting another person who then relies on that skill (Stevens, 1964). In other words, it is not every negligent action is actionable except in situations where the inquirer relies on the information. This concurs with the facts of Maya’s dispute because she also relied on the accountant’s information to invest but made losses as a consequence of the accountant concealing some information. In the case of professional negligence, pure economic loss can be recovered. For example, in the case of Donogue V Stevenson, the plaintiff could recover medical expenses and lost earnings as a result of the defendant’s negligence. Therefore, in purview of Maya’s case, she can recover damages due to the expense incurred in seeking for consultation. Further, it is required of Maya to prove the existence of casual relationship between her and the defendant in order to establish her claim. In other words, she must establish that she would not have suffered the loss were it not for the advice she got. In situations where the defendant is found negligent but the loss would have occurred even without the defendant’s intervention, then such loss is not recoverable. References Alpine Beef Pty Ltd vs Trycill Pty Ltd[2010]FCA 136. Australian Consumer Law 2013 Act (ACL). CORONES, STEPHEN G. (2013). The Australian Consumer Law (2nd ed.). Thomson Reuters, Lawbook Co. http://eprints.qut.edu.au/56735/. Sale of Goods Act 1923 (NSW)(Goods Act. STEVENS, R. (1964). Hedley Byrne v Heller: Judicial Creativity and Doctrinal Possibility. The Modern Law Review. 27, 121-166. Wrongs & Other Act 2003 (Vic) (“Law of Negligence Act. Read More