National Diploma, Business, year 2 / Contracts and Legislation

Contracts and Legislation Assignment 2

Guy Habgood

Scenario P2, M1

Adam runs Eden Garden Centre near to Winchester and was included in assignment 1.

He is seeking advice about his business contracts and related topics and describes several situations he has encountered recently. You are required to write a short report to Adam.

1. Explain to Adam how the Implied terms within the Sale of Goods Act 1979 (as amended) sections 12-15, relate to the following instances. In each case explain how the consumer legislation may protect the consumer.

A.)Regarding case A, the sack of grass seed sold to the football grounds man is different to that which was described by Adam. Therefore due to the seeds germinating a different variety of turf Adam is in breach of contract. Adam may have breached the contract under s13 Sale of Goods Act, through the form of the description (description may be given through word of mouth or by written notice put in place by the seller) or through sales by sample and description (where the sale is by sample as well as by description, the seller will be in breach of s13 because even if the goods match the sample if they do not match the description the seller is liable).

Relevant Case Law (s13 Beale v Taylor, 1967)

This case I believe is relevant to Adams situation regarding case A as it was a major breakthrough case during the 1960’s where by a car was described in good faith by the seller but turned out later to be two halves of two different cars welded together. This relates to the sack of grass seed described by Adam which later turned out to be different to what was previously stated.

B.)As to case B, due to the sales assistants lack of knowledge unfortunately Adam would be liable as the staff at Eden Garden Centre are his own personal responsibility. Within this case Adam would also be in breach of contract under s13. The main description acts he would be in breach of may include: The form of the description (description may be given through word of mouth or by written notice put in place by the seller), through sales by sample and description (where the sale is by sample as well as by description, the seller will be in breach of s13 because even if the goods match the sample if they do not match the description the seller is liable) and lastly through the relationship of description to quality (The sellers obligation concerning quality and description). However for the consumer to sue due to catching the flu may be difficult, as for them to actually prove the flu was caused by the so called “waterproof overalls” would be hard.

Relevant Case Law (s13 Harlingdon & Leinster Enterprises Ltd v Christopher Hill Fine Art, 1990)

Within this case the main factor which relates it to case B is the knowledge the seller had of the product when selling it to the customer. Within the case we see an art dealer who had little knowledge on German impressionist painting selling two paintings which he claimed to be by a famous German impressionist. This later turned out to be incorrect and it was held that the buyer had relied on his own skill and judgment when deciding to buy so sale was not by description. However in case B above the consumer is relying on the description given by the sales assistant and so the consumer would most probably have grounds to sue.

C.)With case C it is clear the customer did not take the correct precautions before using the weed killer e.g. reading instructions or user manual. Therefore Adam is not liable for any damages as the consumer has clearly been negligent.

Relevant Case Law

Case C Indicates there have been no breaches in contract as the goods are of satisfactory quality and match the description given. The consumer is therefore held responsible as he failed to read the manual where it clearly stated that the weed killer may harm other plants and shrubbery. This case becomes hard to link with any case law as it is clear that the consumer is negligent.

D.)Case D suggests the lady thinks she needs a receipt in order to exchange or refund her product. However under s14, due to the product not ...

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Relevant Case Law

D.)Case D suggests the lady thinks she needs a receipt in order to exchange or refund her product. However under s14, due to the product not being of satisfactory quality i.e. faulty, Adam and the Eden Garden Centre are personally liable and are required to either refund of replace the product in question.

Relevant Case Law (s14 Geddling v Marsh, 1920)

This I believe is a relevant Case Law to supplement case D as it states in pure and simple terms that the goods sold, in this case bottles of mineral water were not of satisfactory quality and therefore the seller is held liable. This mirrors case D the only difference is that of the receipt which does not need to be shown as long as the consumer can prove she bought the product there.

E.)Eden Garden Centre are unable to insert this new clause in their contract which states “no refunds can be given under any circumstances” as it falls under the unfair contract terms act as well as the consumer protection act. These acts issue a number of sections within which Eden Garden Centres terms would be deleted.

Relevant Case Law (Unfair Contract Terms 1977)

Eden Garden Centre may find it hard to implement their clause above in case E as faulty products or products sold under a false description must be either replaced or refunded. Also if the Office of Fair Trading receive complaints about allegedly unfair terms for consumers they may require Eden Garden centre to either change or withdraw the term.

F.)In the event of a piece of Eden’s garden machinery being defective the consumer in this instance can seek redress from The Sale of Goods Act 1979 under s14 where it clearly states that all products sold should be safe, durable and free from defects. The meaning of satisfactory quality under s14 is that of the goods being sold must meet the standard which a reasonable person would regard as satisfactory.

Relevant Case Law (Godley v Perry, 1960)

Within this case a boys toy shattered causing a piece to hit him in the face and loos an eye. This is relevant to case F as the Garden machinery was also defective and caused injury to the user. In the case regarding Eden garden centre they will be held liable. It is irrelevant that the defect was caused by a design or manufacturing fault over which Eden garden centre may have no control.

2.) M1: Explain which court or courts might hear the case against Eden nurseries A) if the claim was worth £12,000 and B) if the claim was worth £80,000

Civil law compared to criminal law deals with disputes created between individuals and/or organisations, in which compensation may be awarded to the victim. Civil law courts provide a forum for deciding disputes involving torts such as accidents, negligence and liability. There are three main types of court depending on the seriousness and the monetary value of the dispute.

Small claims court deals with cases up to the value of £5,000
County court deals with cases up to the value of £5000-£15,000
High court deals with cases anywhere above the £15,000

The above monetary brackets should only be used in disputes regarding breaches of individual and/or organisational business contracts. The courts also have other purposes within which monetary value may not be the deciding factor on where the dispute takes place.

Having taken into account the above information it is clear that if a claim of £12,000 was made against Eden garden centre the claim would be taken to the County Court.
If the claim was in the region of £80,000 it would be taken to the High Court.

Eden Nurseries had problems with both private and business customer in the past twelve months:

A.) In the case of Bobby Smith the tree he sampled and then subsequently the tree’s he received turned out to be diseased and not as rare as per the samples. Bobby may be able to seek redress under a number of forms of legislation which I have briefly listed below:

s13 Sales by Sample and Description
s13 The relationship of description to quality (Beale v Taylor 1967)

s15 the goods must correspond with their samples
Unfair contract terms act 1977 (4 correspond to any sample which has been provided.)

Below I have gone into more detail regarding these pieces of statutory legislation.

S13 Sales by Sample and Description

Under s13 Bobby Smith may have grounds to sue as sample and description he chose did not turn out to be the sample he received. The seller, in this case Eden Nurseries will be in breach of s13. This is because even though the trees matched the sample they did not match the description which stated that they where a “rare apple tree” on these grounds Eden Nurseries is in breach of contract and Bobby would have grounds to sue.

S13 the Relationship of Description to Quality

In the case of Bobby Smith the relationship of the description compared to the quality is of a poor standard. The description given is incorrect as the trees are later found not to be as rare as described and the trees are diseased indicating a low quality. It is the obligation of Eden Nurseries to supply an acceptable standard of quality to its consumers as well as to correctly state the description of the trees. Unfortunately there has been a failure to do so and Eden Nurseries are therefore in breach of contract under s13 The Relationship of Description to Quality act.

Beale v Taylor (1967)

Bobby Smith’s situation is greatly reflected in the case of Beale v Taylor (1967). Where by a car was described in good faith by the seller as a 1961 Triumph Herald convertible, but turned out later to be two halves of two different cars welded together. This is similar to Bobby’s situation as at the time of purchase the sample (whether it was a sample tree or in the case of Beale v Taylor most likely a test drive) seemed to be correct. However after closer examination the tree’s turned out to be diseased and not as rare as once thought and in the case of Beale v Taylor the car turned out to be forged.

S15 the Goods Must Correspond With Their Samples

Under s15 the goods must correspond with their samples. Within s15 it states that the bulk must correspond with the sample in quality. In the case of Bobby Smith he will have to show that any defect complained of in the bulk of the goods was not present in the sample.

Unfair Contract Terms Act 1977

The unfair contract terms act was put in place in 1977 in order to make sure:

The goods match their description; and
Are of satisfactory quality; and
Are suitable for their purpose; and
Correspond to any sample which has been provided.

Eden Nurseries are in breach of contract on almost all of the above and for Bobby Smith this would provide a firm foundation when taking action against them. In conclusion I believe Bobby Smith has relevant grounds to sue on all of that acts above.

B.)With Clive Ethelred, the redress he may be able to seek from Eden Nurseries is that under The Supply of Goods and Services Act 1982. The Supply of Goods and Services Act covers a large criteria however I will cover the sections most relevant to the case of Clive Ethelred.

The supply of goods and services act, sections 2 – 5
Contracts for the Supply of services terms, sections 13 – 15

Contracts for the Supply of Services terms s.13 to s.15, require that the supplier of the service acting on behalf of Eden Garden centre for Clive Ethelred must carry out the repair with reasonable care and skill as well as a reasonable time and charge (no more than a reasonable fee). However after having the garden mower repaired the repairs still seemed to be ineffective and did not cure the problem. This means that the supplier of the service is in breach of contract as the problem is still persistent. Clive Ethelred has a choice to either affirm the contract (treat it as still existent) and claim compensation from the supplier of the service for their failure to carry out what was agreed or cancel the contract. These terms apply to Clive Ethelred unless they have been excluded and there are strict limits by which an exclusion or variation will be affective. Clive Ethelred must also take into consideration that these are not conditions or warranties. The terms depend purely on what was agreed within the contract.

• If the supplier to Eden Garden centre does not carry out the work with reasonable care and skill the law treats the matter as a breach of contract and Clive Ethelred can seek redress. Often reasonable compensation in these circumstances will be repair or replacement.

• If Clive Ethelred has not stated when he wants the work or about the charge to be made, then if it is not completed within a reasonable time or the price is unreasonable, this is also treated as breach of contract and the consumer may be entitled to compensation.

• Any goods, parts or repairs supplied to Clive Ethelred within the course of the service must be as described, of satisfactory quality and fit for purpose. If they are not the consumer is entitled to a repair, replacement or compensation.

• In the case of Clive Ethelred the supplier who has broken a contract may also be liable for any consequential loss which is suffered by Clive Ethelred. Ultimately it would be for the courts to decide whether or not a breach of contract has occurred and the redress, in the form of damages (compensation), to which Clive Ethelred might be entitled.

• A claim can be pursued though the courts for up to six years providing Clive Ethelred can show that the problem was due to the work not being carried out properly or the goods or materials used not being of satisfactory quality.

On these grounds I believe that Clive Ethelred may have grounds to sue the supplier of the service. However since Eden Nurseries is responsible for the repair of the garden mower they may also be within breach of contract as they are asking him to pay for something that has not been fulfilled under sections 13 – 15.

C.)Due to Bill Weeks ride-on lawn mower catching fire due to inherent mechanical faults it is likely Bill will be able to make a case against Eden Nurseries as there is relevant legislation in place in the form of the following:

Consumer Safety Act, 1978
Sale of Goods Act, 1979
Consumer Protection Act , 1987 (Heart v Brendling Kitchen Wares, 1984)

Consumer Safety Act, 1978

For Bill Weeks this is a substantial piece of legislation that will become useful when building a case towards Eden Nurseries. The introduction of the Consumer Protection act, 1987 and General Product Safety Regulations, 1994 has provided a strong foundation for many consumers looking to seek compensation for faulty goods. One of the main primary sources Bill Weeks should contact is the Trading Standards Service as they will be able to support Bill with any claim he will be making towards Eden Nurseries. There are also certain regulations under the Consumer Safety Act that are in place which Bill Weeks could use such as the Garden Appliances (safety) regulation 1995 as well as Mechanical Goods (safety) regulation 1988.

Sale of Goods Act, 1979

The Sale of Goods Act is relevant to Bill Weeks as it clearly states several conditions that all goods sold by a trader in this case Eden Nurseries must meet. The goods must be:

As described
Of satisfactory quality
Fit for purpose

It is clear that in the case of Bill Weeks ride-on lawn mower the product does not meet the criteria of all three of the above. It may be as described. However if on the back of the packaging it states anything in conjunction with the product being tested before use Eden Nurseries may be liable for all three. Due to the product catching fire and burning his leg because of an inherent mechanical fault it is most certainly not fit for purpose. Also as it states within the case that the product is “expensive” it should most definitely be of satisfactory quality (meaning that it should be free from minor or substantial problems and last for a reasonable amount of time) which it is also not.

Consumer Protection Act, 1987

The Consumer Protection Act is the most important line of defence for Bill Weeks when building his claim as it covers injuries caused to consumers through defective goods. The Consumer Protection act is used when businesses can not be relied upon to regulate themselves. This includes the businesses activities when dealing with employees, other firms and in this case Bill Weeks. Even if Eden Nurseries expressly excluded liability for damages howsoever caused Bill weeks could use the Consumer Protection Act to remove their clause. This would be possible as under the act it clearly states that a firm supplying defective goods would be liable for any injuries caused when using the equipment.

Heart v Brendling Kitchen-Wares, 1984

A relevant case to back this up would be that of Heart v Brendling Kitchen-Wares, 1984. Within this case the consumer purchased a toaster which was deemed to be of the highest quality by the shop clerk. Subsequently the toaster was found to faulty and resulted in the consumer being electrocuted. The argument was that Brendling Kitchen-Wares had no responsibility over the product as they had clauses in place stating that Brendling Kitchen-Wares where not liable for any damages. However the clause was deleted as Brendling Kitchen-Wares where told they were responsible for all products sold within the shop. It was irrelevant whether they had control over the manufacture or design of their products.

In conclusion along with the relevant case law I believe Bill Weeks has relevant grounds to overthrow Eden Nurseries clause as it does not abide by consumer protection legislation. Eden Nurseries are in breach of contract under a number of Consumer Protection Acts by which Bill Weeks could claim compensation. By using the relevant information I have provided above Bill Weeks may be able to build a strong case. However he should consider taking advice from the Office of Fair Trading in order to come to a firm conclusion on whether to seek compensation,