Problems in Contract Law - Case Study Example

Name Course Instructor Date 29th February, 2012. Word Count with References: 2722. Introduction Basically a contract is the agreement that is reached at by two people voluntarily and this agreement that is reached by the two parties has legal consequences or the intentions to create legal consequences (Elliot, & Quinn 2003, p 2). While the term agreement may imply that a contract has to be written, oral contracts also act the same as written contract (Frey & Frey 2000, p 22). The U.K. government legislation defines SAG 1979 as an Act that governs all contracts of sale of goods which are entered into when a buyer buys goods from seller. The SAG 1979 therefore reinforces what the Unfair Contract Terms Act 1977 protects by having some implied terms. Thus, the SAG 1979 terms are applied in all contracts of SAG regardless of the terms that the contractual parties had agreed on. However, for a contract to be termed as a contract of sale it has to be a contract that is involving the transfer of ownership of the goods and the consideration for the transfer of the goods is in monetary terms. This therefore eliminates barter trade as being termed as contracts of sale (Blair & Britain 1980, p9) Issue 1 A contract is said to be made up of several elements with one of the elements to a contract being mutual assent which is arrived at when an offer is made by one party and the other party agrees to the offer or in contractual terms accepts the offer (Editors & Vook 2011, p15). The crossroads where an offer is met by acceptance, a contract is therefore borne and hence in the case of Hot Air Limited and Portsmouth Gallery, there was a contract between the two parties (Eisenberg & Fuller 2006, p 7). However, the case between Hot Air Limited and Portsmouth draws another dimension of contract law in that the offer that was made to Portsmouth Gallery was meet with an unqualified acceptance and hence such an acceptance is not meant to change the terms of the contract which stipulated that refunds for goods once bought can only be made within 7 days after the goods are sold (Knapp, Crystal & Prince 2007, p 20). This therefore brings light into the fact that just because Portsmouth Gallery partners realized that the humidifier was faulty two months after purchase will not change the terms of the contract that Hot Air Limited cannot give a refund for the commodity sold and not returned within seven days of purchase as stipulated in the contract1. To further emphasis on the point, another basic point to consider when entering into a contract between two parties is that parties to contract must be of sound mind and age in order to contract and therefore Portsmouth Gallery partners when they entered into a contract with Hot Air Limited must have read the terms of the contract that goods were only to be refunded if the goods were to be returned within 7 days after they are purchased. Law generally does not give provision for ignorance and hence the terms of the contract stipulated that such an item could not be refunded. In addition, among the key facts that SAG 1979 presents in relation to whether a buyer can return goods and request for a refund is the fact that if goods are unsatisfactory and therefore do not meet the quality that is expected or should be expected by any reasonable person at the time that the sale took place, the buyer is therefore liable for a refund but the refund is subject to the terms that are specified in the contract which in this case, the terms of the contract are clear that the refund for goods can only occur after seven days of purchase (Beale, Bishop & Furmston 2007, p20). Within the first six months of the purchase, the onus of proving that the good(s) is not faulty and hence can be repaired or replaced depending on the terms of the contract is on the seller2. After six months of purchase of the good(s), the onus of proving that the good(s) was faulty at the time of purchase is on the buyer who must prove beyond reasonable doubt that the good ought to be repaired by the seller (Fuller 2010, p45). When one party to the contract breaches the contract, the other party can terminate the contract which Portsmouth Gallery attempted to do after they were denied information relating to what had gone wrong with the humidifier (Gambino 2000, p 12). However, the terms of the contract did not allow the provision for termination of the contract since refund for goods could only be made within a specified period of time but that does not eliminate the facts presented in S 14 (2) of the Sale of Goods Act 1979, that goods that have been purchased must therefore be satisfactory. S 11 (4), of the SAG, stipulates that the breaching a condition by the seller can only receive the treatment of breach of warranty and not as ground for the buyer to repudiate the contract (McKendrick & Cohen 2005, p 29). But the contract of sale in this case is serviceable by the seller who took the humidifier after two months of operating and repaired the humidifier. Therefore, Portsmouth Gallery had no right to reject the humidifier which was repaired by the seller. Compensation or breach of contract would have risen if the seller had not taken the humidifier to repair it (Carter 1984, p 45). In addition, the time taken by the plaintiffs to return the humidifier to the seller would be termed as unreasonable and does not correspond to the terms which had been specified in the contract. The ratio decidendi behind this reasoning is that it took the plaintiffs two months to establish that the device was faulty while they could have detected that the device was faulty within the first 7 days. Further evidence in regard to the case study clearly shows that the seller had repaired the item within reasonable time. The reason as to why there is justification that the seller took reasonable time to repair the humidifier without causing any inconvenience is that the plaintiff took two months to notice that the humidifier was faulty and hence by the seller taking one week to repair the humidifier is therefore reasonable and which did not cause the partners inconveniences owing to the fact that the humidifier has stayed in their gallery for two months while still faulty (Miller, Vandome & McBrewster 2011, p23). The plaintiffs (Sarah and Tom) case facts should also be reviewed in light of the S. 14 of the SAG 1979 Act in addition to the conditions necessary or the ingredients of a contract. It may seem that under S. 14, that the parties are entitled to remedies for instance the refund of the purchase price of the humidifier from the seller (Basedow 2006, p8). For instance, in judging whether goods are of good are satisfactory in qualify for the purpose for which they were intended (Boundy 2010, p4) considerations would be made to ascertain whether there is a breach on the side of the buyer would be made and will involve finding out whether the if good(s) was used for the purpose it was intended to be used for and hence there would be no breach of contract for the humidifier purchased was in line of business for which it was intended (Mulcahy & Tillotson 2004, p 32). Therefore, the defendant (the seller) does not have any claim that the goods were not used for the intended purpose. The intentions of the seller to repair the humidifier are clear where after Tom and Sarah notified the seller that the humidifier was not working properly, the partners agreed to give the seller the humidifier which made the seller infer that they were requesting him to repair the humidifier (Atiyah, Adams & MacQueen 2005, p17). S. 48 B stipulates that a buyer can request a seller to repair or even to replace good(s) which had been previously sold and the expense is to be incurred by the seller (Bridge 2009, p35). Therefore, by the partners giving out the humidifier to Hot Air Limited, they were expecting that the humidifier should have either been repaired or replaced which the seller did and they therefore automatically lose their contractual right of rejecting the humidifier through repudiating the contract (Wishart 2007, p5). Further ascertaining that the partners could not reject the humidifier and ask for a return of the purchase price is the fact that their implied request for a repair or a replacement of the humidifier had been met by the seller who even assured the partners that the humidifier was as good as new (Macdonald & Koffman 2007, p15). Therefore even under S. 48 C (2), under Rescission of the contract, the parties are not protected by the clause basing my argument on the fact that their implied request for a repair or replacement had been meet by the seller for if they did not want the replacement or the repair (Furmston 2000, p14) they would have clearly stated their terms to the seller but contradicting terms exists in the case study where the partners allowed Hot Air Limited to stay with the humidifier for up to a week, indicating that there were okay with either a repair or a replacement (Britain & Thomas 1980, p30). Had they wanted a refund of the price of purchase, they would not have allowed the seller to stay with the humidifier for a week. Their demands are also out of context in that even if the seller were to agree to refund the purchase price of the humidifier, it was up to the seller to judge whether he would have deducted some purchase value of the humidifier due to the fact that the partners had used the humidifier. My advice to Tom and Sarah is that they should accept the repaired humidifier (Stone 2009, p10). Issue 2 In advising Sarah and Tom on the issue of the 50 calendars which Sarah bought on a holiday in Spain only to discover that the calendars were of the year 2011 instead of the year 2012, a breach by the seller can be established. In judging the case, S. 14 (2) would be relied in answering the question in the acceptability test of whether a reasonable person would have accepted the goods while knowing that the calendars were of the previous year. In Shine v General Guarantee Corp [1988]1 All ER 911, the court established a breach on the side of the seller since the car that the claimant had bought gave him a lot of problems. The facts of the case established that a normal and reasonable person would not have accepted and bought the goods had he known that the goods were faulty3. Issue 3 S. 13 of the SAG 1979 clearly stipulates that where goods have been sold by the seller through description, the buyer without a doubt expects that the goods will correspond to the description given by the seller. However, application of the S. 13 SAG act will vary in regard to whether Sarah had already seen the art work originally thought to be the work of Damian Hirst; an international renowned artist (DeBattista 1998, p50). In Harlington & Leinster v Christopher Hull Fine Art [1991] 1 QB 564, it emerged that the claimant has no protection under the S. 13 SAG Act by the fact that they had sent experts to inspect the paintings despite the fact that the painting that they bought was a fake and was worth less than what they had purchased. Therefore, Sarah cannot claim for a refund for the art work by Damian Hirst if she had inspected the art work before buying for she has no protection under the S. 13 SAG Act. However, if she had not inspected the goods, she would have been protected by the S. 13 SAG Act and therefore liable for remedies4. In Re Moore & Landauer [1921] 2 KB 519, the Court of Appeal Ruled that that the purchaser of goods had the right to reject the goods since the goods had not been delivered as they were described. The case involved a situation where the purchaser had bought 3100 tins which were to be delivered to him packed in cases containing 30 tins. The seller delivered the actual number of tins the purchaser had purchased but packed the tins in packs of 24 which the Court of Appeal held that the claimant (purchaser) had every right to reject the goods since there were not as they were described5. Hence, Sarah can only reject the art work believed to be by Damian Hirst if she had not inspected the goods before they were delivered to her and this will also make us ignore the fact presented by the sales assistant at London Gallery that refunds were not to be given under any circumstance for as discussed in the introduction section that SAG 1979 terms are applied in all contracts of SAG regardless of the terms that the contractual parties had agreed on (Blum 2007, p 45). Cases Harlington & Leinster v Christopher Hull Fine Art [1991] 1 QB 564 Re Moore & Landauer [1921] 2 KB 519 Shine v General Guarantee Corp [1988]1 All ER 911 References Atiyah, P., Adams, P. & MacQueen, P. 2005, Sale of Goods. London, Longman. 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