BLO1105 Business Law

Answers

1. Issue

The issue is to offer an advice to Bill whether he can demand any compensation from Julie.

Law

Merchantable quality is an imperative implied condition that must be present in order to buy any goods. Goods would be considered in merchantable quality when they are suitable to perform their respective functions for which the purchase has been enacted..It means that if the goods cannot be used for their base purpose then it would not be classified as having merchantable quality.. Further, if any product or good which is not of merchantable quality is sold, then the buyer has the legal rights to claim for the damages. It is possible that the buyer may be provided with the opportunity to complete the necessary investigation or quality check before acquiring the respective goods. If buyer has checked the goods and agreed to buy it in its present condition, then the buyer cannot recover the amount from the seller on account of lack of merchantability owing to the defects that were already noticed while carrying out the inspection. The leading case in this regards is David Jones v. Willis (1934) 52 CLR 110..

Application

It is apparent from the case facts that an old piano has been acquired by Bill at the negotiated price from Julie. Further, he has inspected and minutely checked the condition of the piano. Piano does not comprise any defects and is suitable for its base function i.e. placing music.  Hence, it can be said that piano is merchantable goods.

After acquiring the piano, Bill along with his two sons arrived to load the piano into the van. However, due to unbalance and lack of support and strength, piano had fallen and got damaged beyond repair. It has been claimed on Bill’s part that the piano is not merchantable goods as it broke in just one fall. It is apparent that Bill has purchased piano in order to play music not to check whether it can break in one fall or not. Moreover, he has also checked the condition of piano before the purchase and thus, it can be said that piano was fit to be classified as merchantable good and Bill cannot claim to recover the amount form Julie.

Conclusion

As per the above discussion, Bill cannot demand any compensation from Julie.

2. Issue

The issue is to determine whether Francesca has legal right to recover the remaining commission from Julie.

Law

Enactment of an enforceable contract requires the presence of a host of features one of which is the presence of intention on the end of the contracting parties to be bound in a legal relationship. This condition is automatically fulfilled in case of commercial contract but this is not the case in social agreements. Here, it is quite likely that the parties who enter into a contractual relation would not have intention to sue the defaulting party in case of non-fulfilment of the underlying obligations. This has been established in the Jones v Padavatton [1969] 1 WLR 328 case where the honourable court made it apparent that in domestic agreements, presence of intention to be bond legally is presumed to be absent and there would have to concrete evidence to establish the opposite. However, as established in Simpkins v Pays [1955] 1 WLR 975 case, domestic agreements may be considered as enforceable provided that they fulfil the following two conditions.

• The underlying agreement is of commercial nature.
• The obligations and benefits are mutual.

Application

The case details highlight that an offer to help was floated by Julie, Francesca’s grandmother and Francesca accepted the same and it was mutually settled a commission amounting to 20% of the total sales would be given as compensation for her services. Over the next week, Francesca devoted a lot of effort to promote the garage sale through various means. Even on the day of the garage sale, Francesca was trying to maximise the price of the items sold so that she would maximise her commission. However, later her aunt Julie refused making her due commission and instead offered a sum of $ 100 as the final settlement amount.

It is apparent that contract formation has taken place here despite the agreement being between relatives, This is because the two conditions outlined in Simpkins v Pays [1955] 1 WLR 975 case have been satisfied as the nature of the agreement is clearly commercial as both parties have commercial interest in the agreement and also the obligations and rights are mutual.

Conclusion

As the contract is valid, thus, Francesca possesses the legal right of demanding the pending money.