Intention
When a person is considering entering a contract, he must intend to be bound by it. This ensures that people who enter a contract, but never intend to be legally bound by them are not trapped in a contract arrangement. All parties must have the intention that the agreement will be legally binding. The law divides agreements into two groups, social and domestic agreements and business agreements.
Capacity
This is the legal ability for someone to enter into a contract. It is illegal for someone below the age of 18 to enter certain contracts. If someone below the age of 18 enters such a contract, this would mean that the contract will be invalid, in other words a contract made by a party who is of unsound mind or under influence of drink or drugs is “prima facie” valid. An example of this could be the Nash v Inman 1908 case where a tailor sued a minor to whom he had supplied clothes, including 11 fancy waistcoats. It was decided that, as the minor was an undergraduate at Cambridge University at the time, the clothes were suitable according to the minor's station in life. Unfortunately for the tailor, however, it was further decided that they were not necessary, as he already had sufficient clothing. Minors are only under a legal obligation to pay for things necessary for their maintenance although even then they will only be required to pay a reasonable price for any necessaries purchased - so no contact was enforceable
Legality
This means that the contract made between two or more people will have to be for legal purposes otherwise, it will be illegal. An example of this could be Pearce v Brooks 1866 where plaintiffs hired out an attractive-looking brougham to a lady (the defendant), knowing that she wished to use it in order to assist her in her profession (prostitution) and she failed to keep up her contractual payments the contract was therefore void. As the plaintiff knew the purpose for which the carriage was to be used the contract was void. Consideration must be legal.
Invitation to treat
There is a difference between an offer and an invitation to treat. The difference between an offer and invitation to treat includes the fact that, for example, the display of goods; the advertisement of a price or an auction are in other words only invitations to treat, not offers, This is sometimes confusing when an organisation makes an “offer” to their customers about a product or service such as “special offers – half price”. an offer is a contract is formed when an invitation to treat is “accepted” no contract has yet been formed. There must still be an offer made usually by the person who has accepted the contract to treat for example gone into a shop and ask about a product.
Task 1.2 (p2)
Statute law is law that has been created by the Parliament in the form of legislations, which means when a consumer buys a product from a company they enter into a contract and the contract has different type of terms attached to it e.g. express terms and implied terms. The most useful terms are implied terms. Created by some of this legislation because it gives extra coverage to customers when they buy products from someone selling in the course of a business.
This is when the two parties agreeing to a contract set the rules or terms of the contract by themselves, it could be in a form of negotiation but the terms are often set there by the people who create the contract. Express term are those promises and statements which have been made either orally or in writing and which are included in the contract. The parties themselves will have agreed these terms.
A term may either be express or implied. An express term is stated by the parties during negotiation or written in a contractual document. Implied terms are not stated but nevertheless form a provision of the contract.
Terms implied by statute
Sale of Goods Act 1979.
Sales of goods Act 1979 has been created by parliament to protect consumers, the key provisions are Section 12: the person selling the goods has to have the legal right to sell them. Section 13: if you are selling goods by description, for example from a catalogue or newspaper advert, then the actual goods have to correspond to that description. Section 14: the goods must be of “satisfactory quality” – that is, they should meet the standard that a reasonable person would regard as “satisfactory”. Also, if the buyer says they are buying the goods for a particular purpose, there is an implied term that the goods are fit for that purpose. Section 15: if you’re selling the goods by sample – you show the customer one bag of flour and they order 50 bags – then the bulk order has to be of the same quality as the sample.
A seller who does not comply with these terms will be in breach of the implied terms and the purchaser, consumer will have rights.
Supply of Goods and Service Act 1982
This is another example of legislation that creates implied term with potential customers.
Any material used or goods supplied in providing the service must be of satisfactory quality.
The Supply of Goods and Services Act 1982 is an of the that requires traders to provide services to a proper standard of workmanship. Furthermore, if a definite completion date or a price has not been fixed then the work must be completed within a reasonable time and for a reasonable charge.
Sales of goods Act 1979:
This act only applies to consumers receiving from businesses. It is very essential that:
- Goods sold whether new or second hand must be as described- e.g. If clothes are said to be 100% made with cotton then it should be 100% cotton.
- Goods sold must of satisfactory quality- must be of the quality and standard in which it is said to be. E.g. 20 carat gold shouldn’t turn out to be 10 carat.
- Goods sold must be fit for the purpose which they are intended- e.g. If a person wants to purchase a washing machine, the buyer needs to inform the seller what he/she wants to use it for just in case it is going to be used in a situation that the product has not been designed to suit. e.g. A washing machine made for a launderette is designed to be frequently used than that in a domestic environment (homes). Sellers can only be held liable if after the buyer has informed them of the potential use of the product and they still proceed in
These are some of the implied terms set out in “Section 14” of the “Sales of Good Act of 1979”. Customers can seek redress if they believe provider has committed a breach of any of these imp-lied terms. In any of these, the customers may be allowed to exchange the product for another in the same organisation it has been purchased within a certain period of time, get a refund or sometimes get a voucher depending on what type of product is involved. If customers are still unhappy they can always contact the Office of Trading Standard.
Consumer Protection Act 1987
This Act relates to price and safety. Under this act it is an offence to:
- Give false information relating to the price of any item to consumers. If a customer goes into an organisation to purchase a product, the correct price of the product will appear when it’s scanned. Failure in this will lead to the sales person asking another colleague for the price of the product and apologising to the customer. This could lead to predicting wrong prices to the customer.
- Lie to consumers’ regarding sales prices and making up price reduction. Organisation’s sales personnel (if qualified) are aware they are not allowed to do this.
- Supply faulty goods to consumers. Organisations providing goods for consumption have to en sure expiry dates are displayed on food items and gives advice on how faulty goods can be returned between certain periods. In 1994, this aspect of the Act was strengthened by the General Products Safety regulations.
Conclusion
All of these, means that organisations are not allowed to charge customers unreasonably for goods and services provided (this includes giving wrong prices on goods). If customers felt they have been charged unreasonably they can always contact the office of Trading Standard just like in the Sales of Goods Act. This act basically relates to both Sales of Goods Acts and Trade Description Act as we can see it talks about the prices and condition of goods and services provided. Organisations have to make sure all repairs and installations are done properly by using the best tools and also carrying out all their services within a reasonable period of time. They have to give guarantee on the services they provide (like fixing an electrical item). If the services don’t meet the guaranteed period, organisations are obliged to provide the services again without charging the customer.
References:
Wikipedia
AVCE Business Law from Ewan Maclntyre
Class notes
