Solving Business Law Issues - Essay Example

? Section A a) The passenger being a consumer is covered under Consumer Protection Act 1987, UK, Road Traffic Act, 1988, UK and Insurance Act (legislation.gov.uk). The transport company is a service provider who is bound by the rules and regulations stipulated by the authorities and the law of the land. A person who drives a mechanically propelled vehicle dangerously on a road or other public place is guilty of an offence. The section F12 of Road Traffic Act (1988) defines Dangerous driving as ‘A person who drives a mechanically propelled vehicle dangerously on a road or other public place is guilty of an offence’ (legislation.gov.uk). F12A (Meaning of dangerous driving) further states ‘For the purposes of sections 1 and 2 above a person is to be regarded as driving dangerously if (and, subject to subsection (2) below, only if) — (a) the way he drives falls far below what would be expected of a competent and careful driver, and (b) it would be obvious to a competent and careful driver that driving in that way would be dangerous’ (legislation.gov.uk). Moreover, section 131A (Compensation in respect of suspension) of the Road Traffic Act (1988) states ‘The Secretary of State must by regulations make a scheme for the making of payments by the Secretary of State to persons’ (legislation.gov.uk). He is offering service for a cost to prospective clients which is a contract implied and this comes under the purview of Consumer Protection Act. The Transport Company has the obligation of taking care of the passenger safety. Persons driving any type of vehicle are to have to be insured under Road Traffic Act 1988, UK (legislation.gov.uk). Though the driver applied brakes to avoid hitting a lorry, it was the duty of the driver to notice the lorry well in advance and bring the vehicle under control, which could have averted applying brakes instantly. The passengers can make their claim against the driver’s insurance company. If the driver of the vehicle is not insured, the passenger can claim under Passenger Compensation Claim and also with Bus Accident Compensation Claim with the Motor Insurers Bureau, UK (www.hmrc.gov.uk). Since the passengers are also at fault of not wearing a seat belt during a journey, though the claim will be allowed, the compensation awarded will be reduced. The passengers also have their responsibility of not violating the instructions during a journey and insist that the children should be restrained to the seats with adequate safety measures (Williams and Zador: 69). This can be applied here also. 1. b) 17 Hastings L.J. 165 (1965-1966) Enterprise Liability: Some Exploratory Comments; Steffen, Roscoe opines that the action of the employer is responsible for the employee action or the product. The proof of a defective service provided by any service provider to the consumer, is sufficient to claim compensation. Hence, in this case the Lancung Transport shall also become liable for the action of the driver. According to the ‘Owner Liability’ Law this can be grouped under ‘vicarious liability (hse.gov.uk). Annex to Paper HSC/04/131 of the Health and Safety Executive UK, part 13, states ‘ In summary, the Health and Safety Commission has not therefore achieved aim of denying all third parties the right to bring civil claims for a breach of duty imposed by health and safety regulations. Further, and for the reasons out below, employers could be vicariously liable to third parties for an employee’s breach of statutory duty under regulation 14’ (hse.gov.uk). The Transport company can be held liable for the action of the driver, who is an employee working for the principal. The company or the employer is liable for the mistakes committed by its employees. The company can be held responsible either jointly or severally for the negligent act of the employee who is on their employment chart, under the doctrine of "respondeat superior" (Larson). As per this doctrine, an employer shall become responsible for the actions of the employee within the purview of their employment and this is called ‘Master Servant Rule’ 1.c) The transport company makes a defense on the grounds that: 1) The brakes were applied to avert a major accident which would have cost the life of the passengers, resulting in more disastrous effect. The action of the driver in applying the brakes is prudent and saved the life of passengers, though some injuries did get inflicted, which are bearable compared to the loss of life. (Baumgartner v. State Farm Mut. Auto. Ins. Co. 356 So. 2d 400 - La: Supreme Court, 1978)  2) That the passengers have not complied with their obligation of being seated and using a seat belt, as this is essential while travelling ( Bentzler v. Braun 34 Wis. 2d 362, 149 NW 2d 626 - Wis: Supreme Court, 1967) 3) Griffin (1953) states that the ‘mere happening of an accident does not establish liability’, which goes to say that just because the accident has happened, the driver is not at fault. Based on this ground the transport company can argue that the brakes were applied by the driver to avert a major accident and not because of his negligence. The act of the driver has averted a major accident. 2. a) The hotel industry is covered by Hospitality Law UK (Barth and David K), which addresses the issues relating to the hotel industry and issues arising there from. Mr. Gan is also protected by Consumer Protection Act (CPA), UK. Part 7 (Prohibition on exclusions from liability) of CPA states ‘The liability of a person by virtue of this Part to a person who has suffered damage caused wholly or partly by a defect in a product, or to a dependant or relative of such a person, shall not be limited or excluded by any contract term, by any notice or by any other provision’ (legislation.gov.uk). Since the Restaurant captain agreed to provide seating to Mr. Gan, a contract has been entered into. So the restaurant is obligated to provide the service or make an alternative arrangement to accommodate Mr. Gan, that is, they can make a ‘counter offer’ (Dorton v. Collins & Aikman Corporation 453 F. 2d 1161 - Court of Appeals, 6th Circuit, 1972). A counter offer is an offer made in lieu of the original offer, which nullifies the original offer. A counter offer is made more attractive than the original offer; moreover, the counter offer makes the original offer void. The Consumer Protection Act, UK (legislation.gov.uk) also entitles the consumer for the refund of the amount paid, if any. Mr. Gan could also argue that the restaurant captain could have called him to find out the confirmation, which she failed to do. Mr. Gan can also argue that he was entitled for the information before allotting his reservation to other person. On the other hand, since Mr. Gan has not made any payment for the reservation, his stand as a consumer is questionable. The word consumer is defined as ‘any person who buys a service or a product’ and buying involves payment of money or financial transaction. According to Consumer Protection Act, 1987 (legislation.gov.uk), any person buying a product or service for his personal use is a consumer. Here, Mr. Gan has not yet purchased the service by paying, hence his status as a consumer remains ambiguous. 2. b) The advertisement on the website or a poster is to make the consumers aware of the products or service available. There is no contract entered between the consumer and the hotel. Mr. Jom is not yet a consumer here and he will not fit into the definition of consumer yet. Hence, he cannot make any claim as a consumer and the hotel is not obligated to serve the advertised dish legally. The breach of contract is also not applicable as there is not contract made yet between Mr. Jom and the Makan Paradise in terms with the ‘Contract Act, UK’ (Barth & Ninemeier, 1976). Part 41 (Civil proceedings) of CPA states ‘An obligation imposed by safety regulations shall be a duty owed to any person who may be affected by a contravention of the obligation and, subject to any provision to the contrary in the regulations and to the defenses and other incidents applying to actions for breach of statutory duty, a contravention of any such obligation shall be actionable accordingly’ (legislation.gov.uk). A contract comes into existence only on accepting to provide the service for a consideration. Here the restaurant has not yet accepted to serve the desired food or there is no confirmation made by the restaurant in any manner. Hence the breach of the contract is not applicable here. Section B 1. a) A business run by two or more persons by each investing in the business is called a partnership business. Any partnership business is covered under Limited Partnership Act, 1907 (www.hmrc.gov.uk). Since Nert and Wom have contributed an equal share in the business at the same period of time, they can be considered as limited partners. Since both Nert and Wom have contributed equally, it is advantageous for them to remain as limited partners as this would limit their liability to the extent of their contribution. According to BIM72101 (Partnerships: Limited partnership: overview): ‘A limited partnership is one in which at least one of the partners restricts their liability for the debts and obligations of the firm to a pre-determined sum, instead of bearing unlimited liability as a partner normally does.’ (www.hmrc.gov.uk). In case of business failure, both the partners should share equal liability. The loss will also be recoverable from the personal assets of the partners. Furthermore, BIM72105 (Partnerships: Limited partnership: restriction of relief for limited partners) states ‘Following the decision in the case of Reed v Young [1986] 59TC196, legislation was introduced (which is now at ITA07/S104 and ICTA88/S118) which imposes restrictions on the amount of relief against other income available to limited partners in respect of losses, capital allowances and interest sustained or paid in connection with a trade carried on by a limited partnership.’ (www.hmrc.gov.uk). The liability will be unlimited and hence the partnership is always intimidating for the partners. Also the interests of the partners are not transferable or in other words, the interest of the partner cannot be liquidated. The management of the account of a partnership firm is much easier compared to Private limited company. 1. b) The conversion of business into a private limited company which gets covered under Limited Liability Partnerships Act 2000 (legislation.gov.uk) offers to combine business advantages of a corporation along with the income tax advantages of a partnership firm. Some of the advantages available with the conversion of firm into a private limited company are: 1) It offers limited liability for the directors and shareholders. The assets of the company face the threat of being confiscated and not the personal assets of the director, in case of insolvency. 2) A private limited company is un-attached to the directors. The status of the private limited company is much better than that of a partnership firm. 3) Nert and Wom can receive profits in multiple forms with the conversion of the firm into a private limited company. 4) The company’s borrowing capacity gets increased. 5) The personal assets and the assets of the company remain as separate entities 6) Private limited companies have many tax benefits. 7) In the general business terms, a private limited company gets more recognition than a partnership firm. 2. The CPA 1987 in Chapter 43 is defined as ‘An Act to make provision with respect to the liability of persons for damage caused by defective products; to consolidate with amendments the Consumer Safety Act 1978 and the Consumer Safety (Amendment) Act 1986; to make provision with respect to the giving of price indications; to amend Part I of the Health and Safety at Work etc. Act 1974 and sections 31 and 80 of the Explosives Act 1875; to repeal the Trade Descriptions Act 1972 and the Fabrics (Misdescription) Act 1913; and for connected purposes.’ Boon Chit can sue the Garden of Kashmir under the Consumer Protection Act, 1987, UK. He will be eligible to claim the medical costs, damages for the sufferings, loss in any form incurred and the bill amount would be refunded by the Garden of Kashmir if he has already paid it. Apart from that, he can also claim compensation for the pain and agony undergone under the consumer protection act. According to O’Connell (1968), the claim can include an unspecified amount for out of pocket expenses and for the pain and suffering in terms of the ‘money’ it is worth. (Grimsby v. Samson 530 P. 2d 291, 85 Wash. 2d 52 - Wash: Supreme Court, 1975) and (Furman v. Georgia, 408 US 238, 92 S. Ct. 2726, 33 L. Ed. 2d 346 - Supreme Court, 1972). The cost of legal expenses incurred can also be claimed. The Garden of Kashmir can be sued for defective service it has rendered resulting in pain, agony and hardship to the consumer. Here the case of Mexicali Rose v. Superior Court, wherein the California Supreme Court held that the presence of foreign objects in food can give rise to action in strict liability, implied warranty and negligence of duty on the part of the restaurant. The Garden of Kashmir will also become liable for the defective service under the purview of ‘foreign natural’ test, (Mix v. Ingersoll Candy Co. 6 Cal. 2d 674, 59 P. 2d 144, 59 P. 144 - Cal: Supreme Court, 1936) wherein a foreign body other than that allowed in the food has caused injuries. The case of Gaddy v. Eyler 1992 can be cited as an example here wherein the injured party has claimed for the injuries and also for the damages caused and loss incurred due to being rendered to non-working condition because of "serious injury" within the meaning of Insurance Law. The loss of income for client which is due to the negligent act of the Restaurant can also be claimed. 3. a) Jolok is an agent who is ordering a service on behalf of the principal which comes under commercial law and is bound by Contract Act UK (1999). As an agent, Jolok has the liability to accomplish the duties within the specified frame and cannot extend his duties by himself without authorization. He cannot work independent of his employer and can work only as an agent. He also has the duty to work in the best interest of his principal as an agent and he cannot indulge in self dealing (Brimlow 1997). When an unethical act is committed it is difficult to determine who should own up the responsibility whether the management or the employee engaged in the activity. He opined that the manager should be made responsible for any unethical activity taking place. 3. b) The agency authority is created by a contract entered into between the agent and the principal, who should be in accordance with the Contract Act UK (1999), wherein the principal authorizes the agent to perform the duties specified and authorized. Part 1 of Contract Act UK (1999), which is ‘Right of third party to enforce contractual term, states ‘Subject to the provisions of this Act, a person who is not a party to a contract (a “third party”) may in his own right enforce a term of the contract if—(a) the contract expressly provides that he may, or (b) subject to subsection (2), the term purports to confer a benefit on him’ (legislation.gov.uk). The agent is obligated to perform the duties that he is authorized to do, for and on behalf of the employer and not as an independent person. He is not eligible to get any personal favors or benefits from his acts. A contract becomes enforceable only when it is documented in a proper way and following all the legal requirements. 3. c) The firm is liable to pay the full amount as they have authorized the agent to make the transactions without specifying any limits which comes under ‘vicarious liability’ (Booth, 2007) of the Contract Act. The principal has authorized the agent i.e. Jolok to perform certain duties on their behalf. It is for the principal to keep a guard on their employees and the supplier is at no fault. The contract entered between the principal and the agent, obligates the principal to be liable for the charges created by the agent. The law of ‘Agency by Estoppels’ or ‘Doctrine of Holding Out’ becomes applicable in this case. According to this, the powers granted by the principal to the agent, cannot be denied by the principal. This is irrespective of whether the agent acts within the limits of the power granted or not, which comes under the purview of ‘Principles of Natural Justice’ (Whetstone Candy Co., Inc. v. Kraft Foods, Inc. 351 F. 3d 1067 - Court of Appeals, 11th Circuit, 2003). Hence the firm becomes liable to pay the entire bill amount irrespective of whether the order was made in excess or not. The extra amount which is used by Mr. Jolok for his personal benefits may be recovered from the agent by the Principal and suitable action can be initiated against the employee as he has committed a fraud by using his powers for personal gain. References 1. Barth, Stephen C., Hayes,. David K. & Ninemeier, Jack D. “Restaurant Law Basics: Wiley Restaurant Basics Series”, New York: Wiley. 1976. 2. Booth, Joseph W. “An Update on Vicarious Liability for Certified Nurse-Midwives/Certified Midwives”, Journal of Midwifery; Women's Health, Volume 52, Issue 2, pages 153-157. 2007 3. Brimlow, R.W. “Just Do It: Deniability and Renegades” Journal Of Business Ethics, Volume 16, Number 1, 1997 4. Griffin, L. E. “What Is My Injury Claim Worth” , Web. 19 July 2012. < http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/inslj15&div=122&id=&page=>. 1953 5. Health and Safety Executive. Web. 19 July 2012 6. HM Revenue & Customs. Web. 19 July 2012 7. Larson, Aaron. “Employer Liability Resulting from Motor Vehicle Accidents”. Web. 20 July 2012. 8. Rutledge, Thomas E and Booth, Lady E. “The Limited Liability Company Act: Understanding Kentucky's New Organizational Option” Kentucky College of Law Kentucky Law Journal, 1955 9. Motor Insurers' Bureau. Web. 20 July, 2012 10. O’Connell, Jeffery “The Road Ahead: For Automobile Insurance”. Connecticut Law Review 1:22-32, 1968 11. UK Legislation. Web. 18 July 2012 12. Williams, Allan F &  Zador, Paul. “Injuries To Children In Automobiles In Relation To Seating Location And Restraint Use” Accident Analysis & Prevention Volume 9, Issue 1, pages 69–76. 1977 Read More