Law of Contracts - Advice to Tom and Sarah - Essay Example

Law [Student’s Name] [Professor’s Name] [Course] [Date] Advice to Tom and Sarah Tom and Sarah should terminate the contract made with Hot Air Limited and regard themselves as discharged from their contractual obligation because of the other party’s fraudulent misrepresentation. Misrepresentation refers to a false statement or fact that a person makes to another and induces the person to get into a contract1. A fraudulent misrepresentation occurs when a party enters into a contract regarding goods, which may be defective and which it is aware of and remains silent on the issue2. They should also sue Hot Air Limited for the court to consider the contract void so that the company can return the money; the party refused to disclose what had been wrong with the humidifier even after Tom and Sarah insisted. This means that Hot Air Limited knew that there was something wrong with the humidifier even as they entered into the seven days contract with Tom and Sarah. In this case, the seller made false promises regarding the quality of the product. Suing Hot Air Limited would allow a remedy of rescission and damages incurred. Article 4 (103) in the “European Contract Law” (1998), permits a person to avoid a contract because of mistake grounds, “in the case the mistake crops up from information presented by the other person and if the person were aware of the mistake and it was opposite to fair dealing and good faith”3. Tom and Sarah should argue that if they knew the state of the humidifier, they would have declined to enter into the contract with Hot Air Limited or they would have claimed vast dissimilar terms. Evidently, Hot Air Limited cannot claim that it was mistaken because they declined to disclose to Tom and Sarah about the state of the humidifier. Misrepresentation of material fact by Hot Air Limited would make the contract void. Consumers either encounter misrepresentation by words or conduct even if not everything done or said can constitute a misrepresentation4. Tom and Sarah can thus void the contract as victims-unfair means induced their participation in the contract. The remedies available for misrepresentation entail restoring the two parties to their pre-contractual arrangement in which every party hands back the benefits received under the contract. Tom and Sarah can void the contract and claim harm encountered. The damages recompensed in this case would depend on the tort of deceit5. Tom and Sarah would have to show that the other party deceived them, and they believed and relied upon the deception justifiably when buying the humidifier causing some damage. Article 4 (103) (2) says that when a party makes a fundamental mistake, it does not have a right to void the contract in case “her or his mistake” was not excusable or if there is assumption of the risk of mistake. When used jointly with Article 4 (103) (1) as well as the need for good faith, Article 4 (103) (2) does not excuse Hot Air Limited as it dealt in bad faith; it made a fraudulent misrepresentation so that it could induce Tom and Sarah into accepting their humidifier under a contract. It is a tightly well-known statute once fraud is demonstrated, the guiltless party (Tom and Sarah) persuaded into the contract by virtue of the deceit have a right to withdraw the contract. In case, a person makes the mistake of recognizing the other person, as opposed to the traits of the other party, determined to contract with another person, and the other person knows this, the agreement is void because of fault made6. Tom and Sarah would need to prove to the court that they intended to contract with Hot Air Limited; Hot Air Limited was aware that the humidifier was faulty, and the quality of the humidifier was important to the contract. In case the two substantiate each of these aspects, the judge would rule in their favor7. Furthermore, as discussed previously, the fraudulent misrepresentation law would allow the court to consider the contract void. A void contract is one that courts even decline to consider as it goes against a statute or is against public policy. An unvoidable contract is not enforceable at the option of the victim. In this case, the court would allow Tom and Sarah to recover their money, which they gave to Hot Air Limited while participating in the void contract. The misrepresentation of some material facts about the humidifier are the proximate cause of the victim’s damages. By showing that misrepresentation of facts by the company at the option of the two buyers, the contract would be voidable at Tom and Sarah option. The parties can sue for damage of the several paintings in the gallery that showed signs of water penetration on the surface levels of the paint. If Hot Air Limited, the seller of the humidifier asserted that the humidifier was sound while knowing that it was defective, it committed fraud. If it has been unaware of the state of the humidifier and stated that the humidifier was all right, this is an innocent misrepresentation. If both Tom and Sarah relied on the sincere belief that the humidifier was sound, they would get their money back. However, if the misrepresentation by Hot Air Limited was not innocent, the victims may recover the expenses associated with the purchase of the humidifier and lost opportunities elsewhere. Concerning Marbella Ltd, the company is liable for the faulty products. Customers like Sarah receive statutory protection to make sure they have redress in case the goods they bought are not satisfactory. The Sales of Goods Act enacted in 1979 stipulates that traders are legally responsible to sell goods as described; this means that the goods should match descriptions offered before purchase8. Described refers to any verbal description or advertisement made by a trader. The goods should also be of satisfactory quality, this takes into account the description offered as well as the price of the goods. This clause includes all the cosmetic and minor defects that a product may have and substantial problems9. It also means that a product has to last a reasonable time. It includes the finish of the goods, their appearance, durability, and safety. The act does not give the customer any rights in case he knew about the fault when buying the product. They should also fit their purpose or any purchaser made known to the seller before the sale10. Fit for purpose covers the use of a product and anything that the retailer says that the item will do when trying to sell the product. The goods that Sarah bought ought to have been satisfactory or merchantable quality as described, and fit for purpose. If goods do not meet these conditions by the Sales of Goods Act, a consumer is entitled for a refund as long as he or she does it in reasonable time. The calendars that Sarah bought did not fit the purpose for which they were bought and thus she is entitled to a refund under the Sales of Goods Act from Marbella Ltd; however, since the company has gone under, Sarah can claim a refund from the credit care company under the Consumer Credit Act. Sarah paid for the calendars using a credit card, and she can claim money back. Marbella Ltd went into administration because of insolvency. The Consumer Credit Act comes in handy especially if a seller is not cooperative or has become insolvent. The credit company in this case is also liable for the faulty goods. The Consumer Credit Act governs the manner that credit providers should treat customers. The Act has important provisions including Sarah’s rights in relation to her credit files and the extra protection she receives because she bought the calendars with a credit card. In case the buyers make any payment such as a deposit by credit card or by credit arranged with the supplier and the cost of the good is less than £ 30,000 and more than £100, the credit company is equally liable 11. Section 75 of the Consumer Credit Act also has extra shopping rights in case the customer made the payment with a credit card. For instance, if a consumer buys a faulty product, not what ordered or if it does not perform, the seller is usually in a breach of contract and the consumer usually have a right to repair, replace, or refund. The consumer also has similar rights in case of any goods supplied by the supplier of materials or service used when providing the service. The service providers are usually in a breach of contract when the service element is not performed in the proper manner. Nonetheless, consumers who pay using a credit card are usually at an advantage because the providing company is severally and jointly liable under Section 75 along with the trader or retailer, for any misrepresentations, or breach of contract. The credit card company is also liable under s.75 even if the customer made partial payment using the credit card. The goods in question determine what time is reasonable. The Sales of Goods Act entitles consumers to get faulty goods replaced or repaired free up to six years after purchase12. In case a buyer discovers a fault within six months after purchasing a product, and it is not because of accidental misuse, damage, or wear, and tear, the seller has to replace or repair the faulty goods13. In case the seller refuses to repair or replace the good, he or she must provide proof that the product was not faulty at the time of purchase or he or she did not expect the product to last very long. Six weeks is a reasonable time because calendars are products that Sarah will use for the entire year. The buyer is supposed to notify the seller as soon as he or she becomes aware of the anomaly. This applies in this case because as soon as Sarah noted that the calendars were 2011 editions, she attempted to contact Marbella Ltd and learned that the company had just gone into administration due to solvency. The company has a liability in contract, misrepresentation, and tort in respect of defects in the goods, which is limited to the repair or replacement of faulty material or items, issue of credit notes, offering a refund or any other compensatory measures, as the company at its discretion considers suitable under the circumstances. The buyer however has to comply with the manufacturer’s warranty where appropriate. The first step in claiming the refund entails informing the seller of the problem within reasonable time14. In case a seller agrees with the buyer that a refund is necessary, the process is usually straightforward. However, the seller may need proof of purchase to show that the buyer received the goods from him or her and to show the date bought to evaluate ‘reasonable time’. Bankcard statements or cheques also note purchase of products. In case the seller rejects the refund claim, and if the product has a valid warranty and its faulty, the buyer should seek a refund from the product manufacturers. Some manufacturer’s usually offer a guarantee for faulty goods. If is the case, a consumer is supposed to tell the manufacturer about the fault and seek a refund. If neither the manufacturer nor the retailer offers a refund, the buyer should write to the retailer rejecting the faulty goods and informing him or her that he will be exercising his Sales of Goods Act rights in case there is no refund15. The buyer should then explain that he or she would take the matter to the claims court unless the retailer offers a full refund. Concerning the counterfeit artwork by Damian Hirst that Sarah bought, both the Sales of Good Act and contract law protect her. Sarah acquires good title because she bought the goods from a seller whose title is voidable but at the time of the sale, she did not avoid it. Section 23 of the Sales of Good Act states that any buyer who buys a product in good faith and without notification of any defect in the title of the retailer acquires a good title in case he or she buys from a seller whose title is voidable; however, at the time of the sale, it was not avoided16. Subject to the act, Sarah has a right to reject because the artwork was not of a satisfactory quality; Sarah should return the artwork within a reasonable amount of time so that she can receive a refund. The artwork was not of satisfactory quality in terms of the description offered as well as the price. To all purposes and intent, the Sales of Good Act covers the counterfeit Damien Hirst artwork. Sarah can demand a replacement or refund. In contract for the sale of the artwork, the Sales of Goods Act statute offer Sarah protection, this lies in its basic provisions. Section 13 necessitate that goods sold correspond with the description offered by the seller. Section 12 protects customers in cases in which the seller does not have a right to sell the goods. Section 14 necessitates that businesses ensure that they are selling goods of satisfactory value and those that fit the purpose. The seller may claim that in the contract made between the gallery and the buyer there was statement saying that the gallery would not give refunds under any circumstances. The contract law protects Sarah from such Acts by Sellers. The gallery claimed the painting to be by Damian Hirst whereas it was a counterfeit. This contract can count as void because of misrepresentation. Sarah can withdraw from the contract because she did not know that the artwork was a counterfeit. This is a case of fraud because when making the contract the salesperson told Sarah that she way buying an original Damian Hirst Painting worth £20000 while, in fact, it was a fake worth no more than £100. The contract that Sarah entered into with the gallery took place because of undue influence; she lacked the freedom to choose and consent. It was, thus a fraud misrepresentation because the gallery unintentionally left out some important aspect of the agreement, which was detriment to Sarah as it, would cause her to sell the artwork at a loss. Sarah can sue the gallery for selling her a fake artwork. People who sell counterfeit products face huge fines. Both the contract law and commercial law protect consumers from fraudulent sellers. They protect them from unfair standard terms in contracts. In this case, the contract law and consumer law protect Tom and Sarah from due losses. Contract law allows them to avoid the contract with Hot Air Limited on the grounds of fraudulent misrepresentation. Mistake arose from information given by Hot Air Limited and if they knew of the mistake, they would not have agreed to the contract terms. It was contrary to fair dealing and good faith and thus contract law allowed Tom and Sarah to avoid the agreement. In the second case with Marbella Ltd, Commercial law-Sales of Goods Act- Consumer Credit Act enable Tom and Sarah to seek refund for the faulty calendars. In the third case, both the contract law and commercial law come in handy in protecting them from losing the £20000 they paid for the artwork. References Advice Guide. Supplier has Gone out of Business. 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