The Sale of Goods Act and the Restrictions of Contractual Relationships - Research Paper Example

Answer to Question No 1 Common law though has different connotations in different contexts, it always refers to the following; English case law or precedents made by the royal courts and does not include statutory laws. The entirety of the Anglo-American Legal family. The concept of law as opposed to the doctrine of law. (EBSCOhost 2009) Common laws refer to judgments pronounced by judges in the court. Though , U.K doesn’t have a written constitution , the sources for its unwritten constitution lie in case laws, which are commonly known as ‘precedents’ , common law , Acts of Parliament , historical documents like Magna Carta and European legislation. Thus, U.K’s constitution is not set out in one single document. It is a mixture of judicial decisions and Acts of Parliament. Thus, in U.K, governance depends upon democratic and political principles rather than a steadfast system that relies on legal safeguards and rules. According to Straw, “the U.K’s constitution presents in minds and hearts and habits as much it presents in law.” (EBSCOhost 2009) Along with the British parliament, English common law is perhaps the most challenging aspect of UK’s unwritten constitution. Around the world, English common law is the fundamental and basis of the legal system. The fundamental notion of English common law is that verdict is given on the basis of verdicts given by the peers earlier. In general, a distinct legal system will have both common law and civil law. In contrast to continental systems, which are footed on civil law, the English legal system is based on common law. So as to establish a single legal system throughout the UK, common law system is being employed in UK. Later, Equity was developed to mitigate the formal severity of the common law. In the earlier period, the majority of the English law is footed on English local custom where such principles are applied in local courts. Later, when the centralised Royal Courts have attained significance, their decisions functioned as the basis of a national law that slowly surpassed the local law. Thus, the national law has become common to whole of the England and thereafter is being called as the “common law.” When Britain founded colonies all over the globe, the English settlers had introduced English law in the colonies so established. Thus, in the majority of English colonies all over the world, including USA, the common law of England has stayed as the fundamental legal system of that country. Thus , the phrase “ common law “ is being employed in the widest international sense , assigns a nation whose legal system is footed on the common law of England. Common law can be termed as the creation of English judges by ruling written judgments while disposing of cases before them. The common law makes sure that the law stays “common” all through UK. As far as criminal matters are concerned, it is the Court of Appeal (Criminal branch) and the House of Lords, which establish the legal precedent as regards to criminal issues in UK. Thus, in criminal matters, the verdict given by the above courts will be binding upon the subordinate courts. The common law system of UK is having much flexibility as there are some instances that can be considered to be novel in the annals of the common law and the English courts has often cited the verdicts given by some commonwealth courts so as to seek guidance or direction from such courts. For instances, a case decided in Australian or Canada may be cited by an English court for want of any precedent decided earlier t in an English court. This type of cross references facilitates not only some flexibility but also some degree of stability. Statute laws and Common Laws Though, the common law acts as a foundation for the English legal system, one cannot construe that statute law are of less significance. For instance, statute law offers codification of some rules but the common law offers clarifications and interpretations when details of instant cases are employed to the codified law. Thus, the statute law and the common law harmonise or complement each other too. The statute law is being kept in an updated form due to the common law and thus keeping updated with the modern solutions and issues as well as establishing precedent where there is the non-availability of statutory codification. However, in statutory interpretation, courts still use the doctrine of the common law. Thus, the introduction of a large number of statues has, in fact, restricted the usage of the common law but has not ended judicial supremacy of the common law. (EBSCOhost 2009) Answer to question no 2 A contract is an agreement but an agreement may not necessarily be a contract. Critically discuss this statement. An agreement is a promise or a band of promises with adequate and lawful consideration for a lawful object which can create a legal relationship or commitment between two or more parties. (Meiners, Ringleb, & Edwards, 2006). A legally bonding relationship or agreement between two or more individuals to execute or to not to do certain acts is called as a contract. A legally bonding exchanging of promises between two or more persons, which will recognise the contractual relationship can be called as the contract. The essential elements of contracts are offer, acceptance, capacity to contract, lawful consideration, with a goal of creating legal relationship on a lawful subject matter. An agreement can be termed as an outline of cross reference between various parties which may be verbal, written and depends upon the nobility of the parties for its accomplishments instead of enforceable in any way. For English law of contract, agreement is the pivotal one. In the majority of cases which are decided by the English courts will consider themselves as giving effect to an agreement already reached between the parties. Thus, the question of whether there is such a meeting of mind or existence of such agreement is a critical one. An agreement between parties can be deduced by the deed used by the parties or where a statute needs formality as regards to a specific type of contract. The English courts will decide whether an agreement has been arrived at or not by initiating an “ objective “ approach counting upon what parties have done or said as indicators, whether they meant for concluding an agreement. It is to be noted that all contracts can be termed as agreements since there has been mutual understanding between two or more individuals for a valid contract to be existing. For a valid contract, all the parties involved should adhere and consent to the conditions and terms of an offer. A hire purchase agreement for the purchase of a machine can be termed as a specialty contract where parties have an agreement about the monthly installment payments within denoted phases of time. There are avoidable contracts, wherein one party to contract can rescind from the contract if he so desires. If an agreement is entered with the undue influence or incapacity of contracting parties like lunatic, minor, then such contracts can be avoided by the other parties. In such case, the agreement entered will not mature in order to contract as there is the absence of free consent or capacity to contract. Thus, incapacity makes an agreement mature into a contract. English courts will look into whether there is a matching “offer “and “acceptance “in any agreement. The most common style followed by the English courts is to identify the matching offer and acceptance to find out whether there is an existence of an agreement or not. An offer must be differentiated from an invitation to treat and acceptance from a counter offer. In case of unilateral contracts, an offer may be made to reward a party for the return of property, which has been lost .Thus, unilateral contract differs from a bilateral contract and in such cases, an offer can be made to the whole world and acceptance may take the guise of return of property by performing an action towards that offer. In cases, where each party attempts to make a contract on their own standard terms and if this is not consistent, then court will decide which would prevail. Further, in the case of contract performed by fax, letter, internet or email, special rules will be applicable to the delivered acceptance as contrasted to those replied by electronically or by telephones. Further, the courts will demand an agreement to be specific or certain and will not implement an agreement to agree. (Stone 2009:36). The content of a contract must be lawful, it must not infringe the provisions of the common law and should not be opposed to public policy. For a valid contract, there should be a valid contractual capacity .Both parties need contractual capacity to enter into a contract. Reasons for lacking the capacity of a valid contract is that any party should not be intoxicated, mentally handicapped, be a minor of should not suffer from other limiting situations. The contracting party claiming the incapacity must prove that the other one exist (Meiners, Ringleb, & Edwards, 2006). For making a valid contract, the agreement between parties must be adequately complete and certain and parties to the contract must have an objective to enter into a legal relation. If the meaning of an agreement is too uncertain and vague, then such agreement may fail. However, certain obvious vagueness may be surmounted when put in the circumstance of the other dealings between the parties or may even be ignored on the whole. Misleading or lying can void genuine consent and the contract. (Meiners, Ringleb, & Edwards, 2006) In Samuel v Ouston (1941), a lorry was purchased on hire purchase terms over the two-year period by a buyer. The question centered on the definition of the phrase “hire purchase terms.” It was held by the House of Lords, that the agreement was uncertain and hence the contract is void. In Hillas v Arcos (1932) , it was held that agreement was not enforceable as the terms of contract were too vague.(Taylor & Taylor2007 :59). In “Krell v Henry[1903] 2KB 740” , a room was booked under a contract mainly to see the King’s investiture procession was ruled to be disturbed when the investiture was itself postponed. The room had been publicised for lease with an single objective of watching the investiture procession. It was made unambiguous that such arrangement would only be accessible during the investiture day for that specific objective. "English law applies the principle [of frustration] not only to cases where the performance of the contract becomes impossible by the cessation of the existence of the thing which is the subject matter of the contract, but also to cases where the event which renders the contract incapable of performance is the cessation or non-existence of an express condition or state of things going to the root of the contract or essential to its performance.” “In Allied Marine Transport Ltd v Vale de Rio Doce Navergacao SA, The Leonidis D [1985] 2 796,” it was ruled that an agreement cannot be assumed if there exists a mere silence. An alleged agreement may fail if it is not complete in all respect. In “Sudbrook Trading Estate v Eggleton,” the price for the preference of choice to buy was to be decided by two valuers. One party failed to nominate a Valuer and refuted that contract was void. The House of Lords not accepted the contention and held that the contract was not undecided in that if offered a clear room by which the price was to be decided. Thus, a contract will not be held be as incomplete if it offers a mechanism for solving the issue which has been left ambiguous or uncertain. (Stone 2009:101). For a valid contract, there should be a clear legal intention to create a contract. Where a “subject to contract” is meant chiefly to postpone the phase at which legal commitments will arise, it is also probable to offer that an agreement is to have no legal impact to form a legal relation. It should be clearly defined in the terms of contract, if there is no intention to have a legal impact. In Kleinwort Benson v Malaysian Mining Corp (1989), a letter of comfort was issued to plaintiff by the defendant company in respect of its subsidiary company namely MMC Metals. However, the defendant failed to make good of its debts to the plaintiffs when MMC Metals went into liquidation. It was held on appeal that in such commercial transactions, the letter of comfort did not tantamount to an offer. Thus, it was held that it was just mere a statement of intention, which could not attach the defendants contractually. Hence, the defendants, namely MMC was held not legally liable for the debts of its subsidiaries. (Kelly & Holmes 2002:141). Answer to Question No 3 Under CISG, a nondisclosure of facts is deemed to be a deceit which the promisor taken it genuine business transaction. Article 3.8 of international sale of goods Act deals with fraud. If a party to a contract may avoid a contract when it has been found that the contract is entered into due to by the promisee’s fraudulent representation which includes practices or language or fraudulent non-dissemination of circumstances ,which as per reasonable commercial norms of fair dealing , the promisee should have divulged. (DiMatteo 2009:372). In Taylor v Caldwell, if a hall owner’s negligence had caused the fire, then this would probably have been adequate to eliminate the possibility of frustration. The section 3 and 4 of the impossibility of Performance and Other Excuse in International Trade, fault typically does not impact the privilege to be exempt from specific performance. However , if any fault on the obligor’s side normally leads to liability in damages and if the obligee has committed any fault, which will normally result in the exoneration of the performing party.( Maggi 2004 :319). In UK, the Sale of Goods Act (SGA) is the nodal law assisting consumers to avail remedies when they land up in wrong purchases. Under UK laws, breach of contract would rather be explained as non-performance, which offers a right of action. “The SGA 1979” was amended by “the SSGA 1994” and “the SGA (Amendment) Act 1995.” It is to be noted that the general law of contract will be given due consideration if it impacts the special contract of sales. Section 14(2) of the SGA expresses that where the vendor markets merchandise in the ordinary course of business or trade, there is an implicit condition that goods so supplied under the contract of sale are of acceptable quality and should rationally fit for their purpose. Thus, under SGA, a seller should sell products that will fit into its description, should conform to its purpose and should have acceptable quality and if the product fall short of these, then, suppliers has the duty to redress the grievances raised by the buyer. In Fletcher v Sledmore, a car dealer and his customer visited the defendant who was a dealer in second hand cars. The customer inquired the defendant about a specific car, and defendant informed him that it was “a good little engine.” However, this was not true. Then, car was sold to the customer. Court ruled that the defendant committed an offence under false trade description Act. Thus, this decision clearly demonstrates that Act can travel beyond the restrictions of contractual relationships. (Weatherill 2005: 402). A vendor has the obligation to make sure that the products sold “adhere to the contract.” For instance, if a car is sold, then the seller should clearly express the model of the car to be sold, the details about its engine size, its previous owner’s history. In case, if the seller has described the product imprecisely, then the buyer can make a claim against the vendor for the infringement of the provisions of contract and thus sellers might be involved a breach under the Trade Descriptions Act 1968. (The UK insolvency helpline 2008). A buyer under SGA is having the right to either to get repaired or for replacement of product sold as an alternative to get a refund within six years from the date of purchase. In UK, under SGA, there should be a provision in the sales contract to return or reject the goods by the buyer within a reasonable time. SGA does not have any explanation over “what is a reasonable time “under the contract. Thus, it may vary from case to case basis. It could be within few weeks from the date of purchase of the product. Further, under SGA, if a customer returns the products within the reasonable time, then he is entitled to claim a refund of money paid by him. Further, the customer is entitled to claim compensation from the seller for the supply of wrong product at any time if he prefers. (The UK insolvency helpline 2008). Under “SGA”, a seller is liable for supply of faulty or defective goods. Further, products received, which are not one in line with its description by the seller can be returned within 28 days from the date of purchase. A seller has the right to replace the product or a full refund has to be made if replacement is not possible. (The UK insolvency helpline 2008). In Sykes v Taylor –Rose [2004] EWCA Civ 299, the seller was exonerated from misrepresentation as he had inquired whether anything the buyer ought to know. In this case, the sellers had failed to divulge a horrific murder that had occurred on the premises and despite this fact, vendor was held not liable. However, in this case, the buyer has not asked to the seller, whether the brick is suitable for house construction at the sea shore site and has kept silent. Thus, the buyer had declined his rights under caveat emptor (let the buyer beware) and has not asked further inquiries. Further, the seller should have asked the buyer the purpose for which the bricks are purchased and in what type of construction it is going to be used. (Smith et al 2006:144). In this case , we can apply the principles laid down In Fletcher v Sledmore, the seller should have asked the purpose for which ‘Sparkling Bricks’ are being preferred as these bricks are made not of clay, like other types of brick, but of compressed paper. The seller has remained silent and this has caused considerable loss to the buyer despite the fact that he also remained silent for the purpose for which the bricks are going to be used. Thus, as held in Fletcher v Sledmore, ‘Brick-for-All’ can be held liable as they remained silent without asking the purpose for which the brick is going to be used. Thus, the above decision clearly demonstrates that Sale of Goods Act can travel beyond the restrictions of contractual relationships. List of References Bennion Francis Alan Roscoe. (2001). Understanding Common Law Legislation: Drafting and Interpretation, Oxford: Oxford University Press. Courtroomadvice.co.uk. (2010).Common Law in England. [online] available from>http://www.courtroomadvice.co.uk/common-law-england.html< [accessed 9 December 2010]. DiMatteo, LA. (2009).Law of International Contracting. New York: Kluwer Law International. EBSCOhost. (2009). Common law.’ Columbia Electronic Encyclopaedia, 10 (1). Kelly D & Holmes, AE. (2002). Business Law. New York: Routledge Taylor Francis Group. Maggi M. (2004). Review of the Convention of Contracts for the International Sale of Goods. New York: Kluwer Law International. Meiners, R.E., Ringleb, A.H., & Edwards, F. L. (2006). The legal environment of business (9th ed.). Mason, Ohio: Thomson. Smith J P, Sinclair G & Upton W. (2006). Neighbours and the Law. London: Sweet & Maxwell. Stone, R. (2009). The Modern Law of Contract: Seventh Edition. New York: Taylor and Francis. Taylor R & Taylor D. (2007) Contract Law Directors. Oxford: Oxford University Press. The UK insolvency helpline (2008). The Sale of Goods Act. [online] available from >http://www.insolvencyhelpline.co.uk/business_advice/sales_marketing/maximise_sales/soga.php> [accessed 9 December 2010]. Weatherill Stephen. (2005). Consumer Protection Law. London: Ashgate Publishing Ltd. Read More