Legal Rights and Liability of Parties

In advising the parties, as to their legal rights and liability, I will discuss the different hypothesis which arises within each situation. The three scenarios involve a contract of sale and an agreement to sell, this is defined under s.2 and ss.2 (5) of the Sales of Goods Act 1979. The first scenario will discuss, sale by description and identify whether the exclusion clause has waive the sellers right. The second scenario, also apply sale by description, fitness for purpose and satisfactory quality and the law of misrepresentation. Finally, the third scenario entails a discussion of hire purchase agreement, rights to sell and the nemo dat principle. In all three scenario’s, I will first establish or review the validity of a contract of sale and conclude by stating what have already been said as well as suggesting other areas of law relating to this issue which may be considered and state the remedies available. I will therefore be discussing the facts carefully, apply it to the relevant area of law mentioned above and using the appropriate evidence to conclude.

Hari & Northwould Garden Centre (Ngc)

In order to advise the parties, we must establish whether a contract for a sale of goods was formed between them as illustrated under S.2 of the Sales of Goods Act.

It could be argued that a contract for the sale of goods was formed between Hari and NGC, considering that NGC had transferred the goods to Hari, as indicated in S.2 of the Sales of Goods Act. The fact that the latter sentence indicated that, there might be a valid contract for the sale of goods between both parties, NGC may be found liable for breaching the contract with Hari, considering the following factors are satisfied.

Hari order a greenhouse from NGC to be delivered to him. However, upon delivery he realised the house was smaller than requested. The general rule indicates that, there is an ‘implied term’ under sale of goods contract that, any goods bought solely upon the supplier’s description, must “correspond with the description”. It must be clear that, the buyer had relied to some extent, upon the seller’s description. However, if it is proven that the buyer had not relied upon the seller’s description, the sale will not be one of sale by description. In applying the law to the facts, the house being delivered smaller than planned, indicates that NGC may have breach S.13, as held in the case of Grant v Australia Knitting Mills.

S.34 of the Sales of Goods Act stipulates that, the seller should give the buyer the right to inspect the goods, therefore scrutinising whether the goods conform with the specification and expectations of the contract. The house was also damaged, by the delivery workers during the process of delivery. In addition to this, Hari refuse to accept the house and requested a replacement.

However, it may be stated that, an implied term was incorporated in contract, under s.14, which states that, any goods sold during the course of a business must be of satisfactory quality. It is submitted that, goods contracted under an implied term during the course of a business, must be of satisfactory quality and fit for its purpose.

In addition, Hari may argue breach of s. 14, illustrating that, it does not satisfy his level of comfort and could not be handled with pride, considering its outward appearance. As confirmed in Rogers v Parish (Scarborough) Ltd.

Alternatively, Hari may also claim that NGC had acted outside the scope of s.32 (2), considering the glass where broken upon delivery. This section indicates that, where the carrier make a delivery on behalf of the seller and the goods are damaged or lost during the course of delivery, the buyer can claim damages, therefore refusing to accept delivery and holding the seller responsible. This was also confirmed in Mash & Murrell v Joseph Emmanuel where the courts stated that, it would be “reasonable to expect” goods which are dispatched by a carrier to the buyer, to be sufficient quality in order to “withstand a normal journey”.

Furthermore, the Court may uphold Hari decision to reject the goods and request a replacement therefore awarding him with damages. A similar situation arose in Lee v York Coach & Marine, where the judges found that there was a breach of condition and the goods was therefore neither of merchantable quality or fit for its purpose, thereby allowing the appellants appeal.

On the other hand, NGC had not only refuse to take responsibility for the damages caused and the error made within the contract, in their defence they pointed out a clause in the contract which states that they do not accept liability for any goods supplied.

A clause must be incorporated in the contract before it is made. The clause NGC incorporated in their contract, is exempting them from any liability with the buyer. If the clause could be found in the contract made between them and Hari, at the time it was formed, it may be difficult for Hari to argue that he was unaware of the clause. This was illustrated in the case of L’Estrange v Graucob, by Lord Justice Maugham, who stipulates that it is irrelevant to argue that the plaintiff had fail to read the clauses. The latter case held that, the clause protected the defendant from liability relating to the machine purchased. As a result of the judgment made in this case, Hari may be unable to claim damages for the damages done to the house, considering the Court uses the above clause to exclude NGC of any such liability.

However, if Hari was unaware of the clause, considering it was not clearly expressed during the construction of the contract, he may argue that the steps taken to bring the clause to his attention was insufficient as established in AEG Ltd v Logic Resources Ltd. Furthermore, if the scope of the clause is ambiguous the decision made may be construed against the seller. This approach was taken in the case of Andrews Bros ltd v Singer and company, where the plaintiff bought a new singer car and a used car was delivered instead, the Court in this case decided there was an express term in the contract and considering the wrong item was delivered there was a breach of contract, therefore the buyers liability could not be exempt.

In addition, Hari may also claim that, the clause has breach S.2 (2) of the Unfair Contract Terms Act (UCTA), considering the damage done to the greenhouse occurred as a result of NGC’s negligence in treating the goods with care, during delivery. The court may also apply s.3, taking into account NGC, was dealing within the course of a business and cannot totally ‘exclude or restrict’ their negligence liability, as explain under UCTA. Taking into account that, NGC may be in breach of s. 14 of SGA, Hari may claim that the breach made infringe s.6 (2) (a) of UCTA, the degree of protection in this case would be absolute.

To conclude, although NGC has pointed out the exclusion clause in the contract at the time it was construed, the Court may not exempt them from their liability. Consequently, Hari can argue that the clause implied in the contract, has infringe the statutory implied terms of the contract. In addition, Hari may therefore rescind the contract or order a replacement of the greenhouse. However, if the Court decided to use the clause NGC added to the contract and exclude them of their liability to Hari, he may not have a valid claim of rescission.

Fred And NGC

In order to identify the parties’ liability and advise them as to their possible claim if any, a contract for the sale of goods must first be established. In addition, the parties must also have an agreement to sell.

It is arguable that, Fred entered into a contract with the NGC, when he purchase the hedge trimmer and the lawn mower. It may be reasonable to state that, a sale of goods contract was formed under s.2 considering that the seller (NGC) has agreed to transfer goods to the buyer (Fred).

Fred purchased an electric hedge trimmer, after using it for two weeks he discovered the blades required sharpening. The general rule states that, goods purchased under a contract during the course of a business must be of satisfactory quality, quality meaning fulfilling the ‘standard of a reasonable person’.

It may be argue that, there is a breach of statutory implied term under s.14 of the Sales of Goods Act, which implies that goods must be of satisfactory quality. This implied term requires durability, however the hedge trimmer he purchased may not be considered durable, due to its short life span. Furthermore, it has been argued that goods purchase should appear of ‘satisfactory quality for a reasonable period of time’, considering it stays in the same apparent state excluding the usual ‘wear and tear’. Lord Diplock in Lambert v Lewis argued that the goods are expected to be fit for its purpose for a “reasonable time after delivery”.

In addition, he may also claim that NGC is in breach of s.14 (3) illustrating that, the goods was not fit for its specified purpose, considering the blade is not sharp enough prove it is defective. As formulated in R & B Customs Co Ltd v United Dominions Trust ltd.

Fred may also argue that, he places reliance upon NGC statement and had given no doubts as to the misrepresentation, when they recommended that their hedge trimmer was the finest and longest lasting in the world. He may be offered to rescind the contract if it is proven that, the statement encourages him to purchase the machine. As illustrated in Flack v Pattinson.

In contrast, NGC may argue that the statement made was a “mere trader’s puff”, in which case his statement was not legally binding, therefore no misrepresentation has been made. Furthermore, it may be indicated that the statement made is not an ‘actionable misrepresentation’ and Fred being a ‘keen gardener’ places no such reliance on it. As established in Baldry v Marshall.

Misrepresentation is said to be ‘a false statement of fact or conduct’, which is used by one party to mislead the other, forcing them to enter into a contract.

NGC assured Fred that, they will supply a quality product yet, fail to deliver such machine. The Court may decide that, NGC’s statement form an innocent misrepresentation, implying that they used a ‘false statement of fact’ to induce Fred in buying both products, by promising him quality and efficiency Long v Lloyd.

Contrary to NGC persuasion, Fred purchased a lawn mower and told NGC, he was holding a garden party within six days. NGC assured Fred that, they will deliver the item within three days instead the delivery took seven days. The general principle states that, if “the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain action against the seller for damages for non-delivery”. Moreover, if Fred rejected the lawn mower on delivery, he may claim a breach of condition, giving him the right to reject the goods or claim damages.

In contrast, NGC may argue they are not bound to send the goods to Fred in a specific time period, considering he did not expressly state he required it on a specific date, by stating that they sent it in a reasonable time.

It is advisable that, Fred reject the lawn mower upon delivery as any form of acceptance may preclude his right to later rejecting the goods, if it is obtain for more than a reasonable length, as enunciated in Richards v Oppenheimer.

To conclude, Fred may be entitled to rescind the contract and return the goods considering. He may claim that NGC is in breach of the statutory implied terms and has subsequently misled him, therefore returning the hedge trimmer and claiming damages for the money he paid to get the lawn mowed. However, if he had accepted the lawn mower, his right to rescind may therefore be precluded and NGC may refuse to accept, therefore fulfilling the contract as illustrated above.

Fred & Others

In order to advise the parties, as to their rights and responsibility, I will be discussing the law relating to hire purchase agreement, right to sell and the relevant remedies available to the parties if any.

The general principle states that, a hire purchase agreement is an agreement, not for a ‘conditional sale agreement’ but is an agreement where the hirer, pays a periodic instalments for the goods hired. Fred purchased a van from Ripoff Garage, on a one year hire purchase agreement with Friendly Finance Co. The scenario clearly states that, Fred took out a hirer purchase agreement, this agreement may be said to fall within the scope of S.189 (1) of the Consumer Credit Act considering that he is paying periodical instalments to the finance company.

Upon the construction of a hire purchase agreement, the creditor remains the owner of the property until the buyer, has completed the periodic payments and exercises his/ her right to buy. In conjunction, it may be argued that Fred is not the owner of the van, has he had not completed his monthly payment to Friendly Finance Co. before he sold it to Inge a similar issue arose in the case of Butterworth v Kingsway Motors.

In advising the parties, it is vital to identify whether there is a right to sell, considering that Fred may not be the legal owner, S.21 (1) of the Sales of Good Act 1979 states that, “where goods are sold by a person Sale by who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell”. In applying the law to the facts, it may be argued that, Fred does not acquire the right to sell the van to Inge, as he is not deemed the owner under the latter statute. This was applied in the case of Greenwood v Bennett.

Moreover, Fred sold the van to Inge and after occupying it for five months. The general principle states that, where a vehicle is hired under a hire-purchase agreement, and before the debtor obtain full ownership of the vehicle, sold this vehicle to a private purchaser, who purchased the vehicle in ‘good faith’, without any notice of the hire-purchase agreement, the sale will be considered effective, as if the creditor has passed the title unto the debtor before the debtor sold the vehicle. The fact that, Fred had not obtained ownership of the van from Friendly Finance, before he sold it to Inge indicates that Inge has purchased the van under a deception considering she is unaware of the hire-purchase agreement and is therefore an innocent buyer. This issue was discussed in the case of Barker v Bell, Lord Denning M.R. illustrated that “…a purchaser is only affected by a notice if he has actual notice that the car is on hire purchase…”.

Upon buying the van from Fred, Inge fitted a roof rack, but identified that the van was not suitable for his business and subsequently sold it to Jamal. Considering that Inge may be an innocent purchaser, he may be able to claim conversion and obtain compensation for the work done to the van as formulated in Greenwood v Bennett

If it is found that, Fred was not the legal owner of the Van at the point of sale, the Court may decide that a ‘good title’ was not passed to Inge. Subsequently, it may be argued that Inge does not obtain the right to sell the Van under S. 12, considering a good title was not passed to him. This issue was argued in Butterworth and Kingsway Motors.

However, where Inge has purchase the van under ‘good faith’, without any notice of the hire-purchase agreement, S. 21 (2) of the Hire Purchase Act applies.

After purchasing the van from Inge, Jamal made an insurance claim and discovered that it is owned by Friendly Finance. It is submitted that, good title can still be passed even where the agent, has acted outside his authority and without the owner’s consent. Due to the facts that, Jamal was unaware of the of the hire purchase agreement with Friendly Finance, it may be submitted that, he is an innocent purchaser and subsequently bought the van, not knowing that Inge had not obtain the right to sell.

However, it may be argued that Inge has obtain a ‘good title by estoppel’, therefore passing good title to Jamal, by claiming that Fred made an intentional representation that he was entitled to sell by conduct, when he sold it. This was upheld in Eastern Distributors v Goldring. Jamal in this case would be an innocent purchaser and is therefore protected by Part III of the Hire Purchase Act 1964.

On the other hand, Friendly Finance may claim for conversion under the Nemo Dat principle, implying that, the right to sell was not obtain by Fred, subsequently seizing the van from Jamal. This was also applied in Butterworth v Kingsway Motors.

To conclude, it may be stipulated that, Friendly Finance has the right to recover the van considering that Fred has clearly and unequivocally breach the contract, when he sold it to Inge before exercising his right to sell. Jamal may be entitled to recover the money he paid from Inge and Inge would have to recover what he paid as well as work done to the van from Fred. Nonetheless, if a good faith was past, taking to consideration that Fred completed the instalments, legal ownership would have automatically pass to Jamal as indicated above.

Bibliography

Book:

Dobson, P. & Stokes, R., ‘Commercial Law’, 7th edition, (London: Sweet & Maxwell, 2008)

Cases:

Andrews Bros ltd v Singer and company [1934] 1 K.B. 17

Baldry v Marshall [1925] 1 K.B. 260

Barker v Bell [1971] 1 W.L.R. 983

Butterworth v Kingsway Motors [1954] 1 W.L.R. 1286

Eastern Distributors v Goldring [1957] 2 Q.B. 600

Flack v Pattinson [2002] EWCA Civ 1820

Grant v Australia Knitting Mills [1979] A.C. 85

Greenwood v Bennett [1972] 3 W.L.R. 691

Kolfor Plant Ltd v Tilbury Plant Ltd [1977] 121 S.J. 390

Lambert v Lewis [1982] A.C. 225

Lee v York Coach & Marine [1977] R.T.R. 35

L’Estrange v Graucob [1934] 2 K.B. 394

Long v Lloyd [1958] 1 W.L.R. 753

R & B Customs Co Ltd v United Dominions Trust ltd [1988] 1 W.L.R. 321

Richards v Oppenheimer [1950] 1 K.B. 616

Rogers v Parish (Scarborough) Ltd [1987] 2 W.L.R. 353

Watteau v Fenwick [1893] 1 Q.B. 346

Legislation:

Consumer Credit Act 1974

Hire Purchase Act 1964

Misrepresentation Act 1967

Sales of Goods Act 1979

Tort (interference with Goods) Act 1977

Unfair Contract Terms Act 1977