Commercial Law - Coursework Example

Commercial Law Work Table of Contents Commercial Law Work 1 Table of Contents 2 Introduction 3 Sales of Goods Act- 1979 4 Unfair Contract Terms Act 1977 5 Recommendations to Greg 6 Conclusion 9 References 10 Introduction It often been argued in today’s business world that customers are the king and has the highest priority as well as power in managerial decision making of any company. However, owing to the repeated occurrence of company’s breach in maintaining transparency when serving its customers, many legal provisions have been developed to assure the customers’ interests are justified when entering into any kind of contracts with the seller. These provisions are fundamentally categorized as Consumer Protection Acts which further constitute of Sale of Goods Act 1979 and Unfair Contract Terms Act 1977 in the European Union (EU) legislation1. With reference to the case situation witnessed by Greg when dealing with his supplier Sprewfit, this study will aim at recommending the consumer (i.e. Greg) with certain remedial measures to suffice his losses with the application of Sale of Goods Act 1979 and Unfair Contract Terms Act 1977. As observed in the case scenario, Greg was working on a new project of renovating a home and estate of “Downly Abbey”, in the village named Downly. The required materials for the renovation project were supplied to him by Sprewfit. The company also took the contract that to serve with the required amount of plaster which would be used in the interiors of the home and estate of “Downly Abbey”. After certain period of time, Greg noticed that the materials that were provided to him were of low quality, and certainly incompetent to suffice his requirements for a Grade II home and estate renovation project. However, when Greg approached Sprewfit for compensation, the supplier denied any legal obligations in this context on the premise that Greg had already signed the contract agreement depicting his consent to the terms and conditions which does not specify Sprewfit to be lawfully obligated in compensating Greg for his losses after the order has been supplied, checked and signed for receipt. Sales of Goods Act- 1979 The Sales of Goods Act 1979 was introduced in the EU sector to secure transparency and fairness during the process of selling goods. There are certain specific contracts to which this particular act has been applicable. One of the most crucial norms of this law is that it is applicable only to the contract of the sales of goods that took place on or after the 1st of January 1884. It has been learnt that a sales contract is a contract where the seller agrees to transfer the possession of the goods or any other property in exchange of money which can also be referred as the price of the property or goods delivered. The goods sold may be of existing goods, owned or possessed by the seller or it may also be goods or property which would have to be manufactured after the contract is made. These types of goods are referred as called ‘future goods’. As per the provisions mentioned in the act, the goods are sold under a certain terms and conditions that must be agreed by the seller as well as the buyer prior to the validation of the agreement. Notably, if the conditions are not satisfied by the seller which results to the losses suffered by the buyers, the entire issue would be termed as a breach of contract. Consequently, the buyer could claim for compensation or damage if such situations indicating breach of contract arises2. Unfair Contract Terms Act 1977 The Unfair Contract Terms Act 1977 set to enforce additional limits on the level to which civil accountability for breach of contract on the basis of the inattention towards the liabilities, obligations and of duties of the sellers can be shunned by means of contract terms and otherwise. It has often been witnessed that companies focus on applying terms and conditions explicitly in their agreement offered to the customers mentioning certain aspects which might hinder the interests of the buyers and thus cause losses for their property. This particular legal provision is often regarded as a means to solve the obligations that might arise due to the non-compliance of any expressed or implied terms of the contract taking sensible care to implement skills so as to secure the interests of consumers. According to this Act, there are certain obligations which are to be obeyed by the companies irrespective of what is being written in the contract engaging the customers and the company treating those as the statutory rights of the customers. Also it has been clearly mentioned in this act that the terms and conditions of the company should be ambiguously depicted and adequately explained to the customers. It has also been mentioned that any terms in the contract that might create disadvantage at a later stage to the buyers would also be clearly conveyed to the customers with utmost importance by the seller. Non-compliance to these aspects shall be deemed as the conduct of unfair treatment towards the customers and thus, the company might fall under the provision of breach of contract3;4. Recommendations to Greg As observed in the case scenario, Greg is a builder who specializes in building new houses as well as flats along with renovating the old properties. The case mainly deals with one of Greg’s project where he intends to renovate a stately home of ‘Downly Abbey’ situated in the village of Downly. He purchased the material from one of his Trade Services Director, Ajay, the owner of Sprewfit. In the initial stage of his new project he placed an order of 1000 meters for under floor heating pipes. After receiving the goods on the due date (i.e. plastic pipes), Greg checked only a single pipe and signed the delivery note sent by Ajay. The mistake Greg made when signing his agreement to the contract was that he overlooked the term mentioned in the delivery note where it was clearly mentioning that by affixing his/her signature, the buyer agrees that he/she has already examined all the goods properly and is agreeing to the conformity of the contract’s terms and conditions. However, after a certain period of time, Greg observed that maximum number of pipes were bent and were not qualified to be used in a Grade II property renovation. As a consequence, Greg now faces enormous dilemma concerning his rights as a buyer owing to his carelessness that he did not examine the goods and signed the contract. Also Greg tied up with the same company for the plaster work of the entire project. After the completion of plastering the entire estate, Greg noticed that there were large cracks in the interior walls which made him concerned that the plaster materials were also not quality assured. Greg contacted the company immediately and explained them the situation. However, in response to Greg’s plea, the company (i.e. Sprewfit) admitted no legal liability submitting Greg with the delivery note which he had signed and additionally, with the clause 10 of the standard terms and conditions of the company which stated that “The seller excludes all liability for any claims for loss arising from alleged breaches of any of the implied terms under the Sale of Goods Act 1979”. It has been clearly mentioned in the sales Sale of Goods Act 1979 that the buyers must examine the goods before the contract is made. That evaluation would reveal the quality of the goods to the buyer. Hence, in compliance with the provisions mentioned in the Sale of Goods Act 1979, Greg is not qualified for claiming the compensation for any other damage he had to suffer owing to his ignorance to examine all the terms and conditions mentioned in the contract. However, it has to be mentioned that under section 48A (3) of the Sales Act that any sales of goods which do not satisfy the quality standards ordered by the buyer that have been mentioned in the contract within the initial stages, i.e. within the six months of the date of delivery, the buyer possesses the right to ask for repair, right to ask for replacement, right to ask for reduction in price and even the right to drive the cancellation of the contract. Under section s.48 B of the Sales Act, Greg can thus ask the company to repair the plaster of the interior walls. It has also been observed that the company would have to comply with the instructions of the buyer (i.e. Greg) [Hoenig v Isaacs [1952] 2 All ER 176]5. In this context, the provisions mentioned under section s.48 B of the Sale Act would force the company to replace the entire consignment compensating the losses incurred by Greg. However, it would be worth mentioning that if the company fails to provide Greg with what he claimed due to any reason, the buyer (i.e. Greg) will possess the right to ask for price reduction or even cancellation of the contract under section s.48C of the Sales Act6. Again, with due consideration to the Unfair Contract Terms Act 1977, it can be affirmed that Stewart must have been fair while conveying the terms and condition of its contract when selling goods. As per the act, the terms and conditions of the contract must be explained unambiguously to the buyer even stating the disadvantages of some specific terms mentioned in the contract which might be faced by the customers in the later period of the enforcement of the agreement. However, it has been observed from the case study that Sprewfit ignored the provision to clearly explain the terms and conditions of the contract to Greg along with the consequences which might crop up in the later period. Hence, it can be affirmed that there was a lack of transparency in the terms and conditions mentioned by the company when dealing with Greg. It has also been mentioned in the Unfair Contract Terms Act 1977 that irrespective of the written verses in the terms mentioned in the contract, Sprewfit is legally bound to agree to certain indirect obligations which are termed as statutory rights of the customers. Thus, it can be implied under the Act that the quality of goods must go with the portrayal given by the company to Greg. Terms and conditions that deny the customers to get the compensation would be considered unfair under the Unfair Contract Terms Act 1977. In this case the company would be bound to pay compensation to Greg according to the Unfair Contract Terms Act 19777. Conclusion It could be summarized from the overall observation presented in the paper that Greg, as a buyer in loss because of the unfair conduct of Sprewfit, its supplier, would be liable for certain compensation even though he had been ignorant in examining all the terms and conditions prior to giving his consent to the company’s agreement. As the company, i.e. Sprewfit, completely denied paying any compensation to Greg on the ground of the contract which stated that the company was not liable to pay any compensation, the provisions under Sale of Goods Act 1979 and under Unfair Contract Terms Act 1977 can be brought into effect. Applying these provisions, it can be suggested that Greg could claim for compensation from the company on certain grounds of unfair treatment and lack of transparency in the business conduct of his supplier. According to the Sale of Goods Act 1979, the company would have to replace or repair the goods to Greg on the ground that their quality was below par in comparison to the quoted attributes. Also, on the basis of the Unfair Contract Terms Act 1977, the unethical terms and conditions of the company would be considered unfair owing to which Sprewfit would be liable to pay the required compensation to Greg. References Crown, ‘Unfair Contract Terms Act 1977’, Home, , 1997, (assessed 18 March 2008). Crown, ‘Sale of goods Act 1979’, Legislation, , n.d, (accessed 18 March 2013). e-Lawresources.co.uk, ‘Hoenig v Isaacs [1952] 2 All ER 176 Court of Appeal’, Home, , n.d., (assessed 18 March 2013). Hiscock, J and Lovett, F. Level 2 Beauty Therapy, Heinemann, 2004. Law Works, ‘The sale of goods Act 1979’, Home, , 2012, (assessed 18 March 2008). Office of Fair Trading, ‘Unfair contract terms guidance’, Home, , 2008, (assessed 18 March 2008). Read More