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Contract Law: Case Study Of Shivran Add in library

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Questions:

Box 1 Fact scenario

Shivran decided to buy a new washing machine at White Goods R Us, a major retailer of household appliances. As he is environmentally aware, he wanted to buy a washing machine with low electricity consumption and visited the local store. He made the salesperson at White Goods R Us aware of his energy saving requirement. The salesperson said that a manufacturer of the washing machines, Matelot gmb, was running a promotion and pointed to large posters around the store stating the price and describing the key features of Matelot gmb’s washing machines.

Shivran said he was interested in the LowAmp-15 range, which, according to the poster had a special ‘energy save’ facility. He said to the salesperson that he was particularly interested in the model called ‘LowAmpere-15’ in this range. The salesperson then told Shivran there was a special promotion on another machine. The other washing machine was the ‘Ohms-42’ model and that it had the same energy saving specification, was especially strong and reliable and was, therefore, popular with both domestic consumers and commercial users. (Shivran thought to himself he could buy two machines: one to clean laundry in his hotel business and the other to clean his clothes and domestic laundry at his flat. The flat was above his small hotel/restaurant). The salesperson pointed out that another advantage of buying this model in the promotion over the LowAmpere-15 was that the purchase also included a Stoof T40 vacuum cleaner. Both machines were manufactured by Matelot gmb. Shivran remembered he had seen White Goods R US’s advert on TV stating the Stoof T40 vacuum cleaner was a lightweight machine, easy to lift around the house, and that it had especially low noise characteristics.

Shivran informed the salesperson that he did not need a vacuum cleaner but said he had seen the advert on TV about the energy saving and special lightweight feature of the Stoof T40, and it would be good for his elderly mother (Fleur) who was an artist and too frail to lift normal vacuum cleaners.

The salesperson said nothing but simply added that, if he purchased both machines today and was able to receive delivery tomorrow, delivery was free. Shivran said his mother lived over 100 miles way away and he could not take it to her. Shivran gave his mother’s address to the salesperson who then made a phone call to his supervisor. The supervisor then confirmed the goods would be delivered separately.

The result was that Shivran paid £699 for the goods: two washing machines with vacuum cleaners, including delivery. The two washing machines and one vacuum cleaner were delivered to him the next day and the other vacuum cleaner to his mother at her address the following day.

After installing one of the washing machines in his flat, he loaded it for the first time and shut the door. After it had been running for a few minutes he noticed that it did not have the energy save facility. However, as he had already loaded the machine and it had begun its wet cycle, Shivran decided to continue with washing the clothes in the machine rather than run the risk of flooding his floor by taking the clothes out before the cycle finished.

Twenty minutes after he had turned it on he noticed a smell of burning. He went over to investigate, and, without warning, the machine burst into flames, setting fire to the kitchen cabinet above it. While putting out the fire Shivran suffered second degree burns to his hands. His doctor said it would not be safe for him to work for four weeks, especially as he was serving the public with food. Shivran is a self-employed hotelier with net earnings of around £1600 a week. The clothes in the machine were burnt, as was some of the wooden flooring on the kitchen floor.

Shivran asked an electrician to look at the machine. The electrician thought that a defective component in the machine had caused the problem; the delivery and installation of the washing machine had been satisfactory.

In the meantime, he heard that his mother had strained her back while using the vacuum cleaner for the first time and that as a result she was in traction in hospital. When he visited her in hospital she told him that she would be bed bound for three months and would not be able to work, and would lose commissions totalling £2000. On visiting her home he found that the machine delivered was a Stoof T40. He checked the specifications in the delivery note and discovered that this model was a very heavy industrial machine.

He then went back to White Goods R Us to complain but the complaints manager told him that it was all Matelot gmb’s responsibility, not theirs. Shivran was told to look on the back of the order form he had signed when he bought the washing machine and vacuum cleaner.

It read:

White Goods R Us is not liable for any loss or damage whatsoever in relation to items which prove to be faulty. Customers must rely on the Matelot gmb’s guarantee.

Shivran then read the guarantee, which stated:

Matelot gmb will put right, free of charge, any defects in its electrical appliances for a period of two years from the date of purchase. If the electrical appliance is beyond economic repair, then Matelot gmb will replace it. However, Matelot gmb is not liable under the terms of this guarantee for any losses caused by any such defects.

Question 1

On what grounds could Shivran pursue a claim in contract against White Goods R Us?

Question 2

On what grounds could Shivran’s mother pursue a claim against White Goods R Us?

 

Answers:

Issues

  • The legal issues, which arise from the given facts, may be stated as follows;
  • Whether Shivran is entitled to institute proceedings against White Goods R Us under the law of contract?
  • If so, what are the grounds on which such proceedings can be instituted?

Relevant Legal Principles

A contract is an agreement enforceable at law. An agreement gives rise to rights and obligations of the concerned parties. In case of contracts, the rights and obligations are enforceable in a court of law. However, situations arise which destroy the basis upon which a contract is formed. Such situation may arise due to the occurrence or non-occurrence of any event or the existence or non-existence of any fact. Such situations lead to the discharge of the contract or vitiation of a contract.

In this context, a contract for sale of goods is applicable. A contract for sale of a goods is deemed to be a contract under which the property with respect to certain goods are transferred by the seller to the buyer in consideration of a money referred to as price. In the United Kingdom, the provisions of the Consumer Rights Act 2015 govern a contract of sale. A contract for sale of goods may be either in writing or in words. A contract may as well be implied from the conduct of the parties.

In a contract regarding sale of goods the statue implies certain terms for the purpose of rendering protection to the buyer. Under the provisions of the Consumer Rights Act 2015, a purchaser of goods, is entitled to the following protections;

  • When a seller purports to sell goods by description, the goods must correspond to the description (Section 11)
  • Goods sold must be fit for purpose (Section 10)
  • The goods sold by a seller ought to be of satisfactory quality (Section 9)
  • When goods are sold by sample, the final goods delivered to the buyer ought to correspond to the sample in terms of quality (Section 13)
 

Section 10 of the Act applies in cases where within the course of trade goods are sold. This provision imposes burden upon sellers to sell goods which are of satisfactory quality. The provisions of this section are not applicable in cases where the seller has attracted the attention of the buyer towards the defects of the goods and the buyer had a reasonable opportunity to examine the goods (Great Britain., 2015).

We may discuss common law provisions in this context. In order to determine whether goods are of satisfactory quality, the courts take into consideration various factors. The primary criterion for determining satisfactory quality of goods is the rationale of a reasonable person. In the given circumstances, what a person of reasonable prudence would think is considered (Furmston, Cheshire and Fifoot, 2012). The quality of goods is determined on the basis of the following factors;

  • Fitness for all such purposes for which the goods in question are supplied;
  • The goods must be free from minor defects;
  • The goods in question must be safety and ought not cause harm upon use;
  • The goods in question must also be durable (Furmston, 2000)

Having applied the above-referred conditions to the facts of a given case, the courts determine whether goods sold are of satisfactory quality or not. For instance, if a pair of shoes fall apart within a few days of purchase, the seller is held liable for supplying goods, which are not of satisfactory quality (Macleod, 2006).

The court also apply acceptability test in order to determine quality of goods. This takes considers whether a purchaser of reasonable prudence would have purchased the product in spite of being aware of the defect. In this context, we may cite the case of Shine v. general Guarantee Corp (Shine v. general Guarantee Corp, [1988]). In this case, the plaintiff had purchased a second hand car for a dealer of cars. The car gave constant trouble. Upon inquiry, it was found that the car had met with an accident and was completely submerged into water. An action under Section 14(2) of the Act was instituted against the dealer. The court observed that in case of consumer sales courts apply the test of acceptability for determining quality of goods. In this case, a purchaser of reasonable prudence would not have purchased the product if he were aware of the defects. Thus, the dealer was found liable for breach of contract (McConnell, 2002).

Another test applied by the courts in these cases is the usability test. This test takes into consideration whether a purchaser of reasonable prudence could have used the goods in question for the purpose for which the said goods are commonly sold. In Aswan Engineering v. Lupdine (Aswan Engineering v. Lupdine, [1987]) liquid waterproofing was purchased by the claimant which were contained in plastic pails. It was stated that the pails can be stored outside. The claimant in  this case stored the pails outside in soaring temperatures of 70 degree Celsius leading to the melting of the pails. The court applied the usability test and observed that if the goods would have been used for purposes for which they are commonly used, they could have been used. Extreme weather conditions lead to the melting of the pails. There was no breach of contract in this case (Postema, 2001).

Section 11 of the Act provides that in cases where goods are sold by description, it is mandatory that the goods must correspond to the description. However, if the buyer had an opportunity of inspecting the goods before purchase, then the provisions of this Section will not apply.

Section 31 of the Act provides that liability arising under the above-stated Sections cannot be excluded by a seller.

 

Application

Applying the afore-stated legal principles and case laws to the facts of the given case, we may state as follows;

In the given case, Shivran had made it clear to the salesperson of White Goods R Us that he wished to purchase energy saving washing machine and he also expressed his intention to purchase a washing machine belonging to the Low Ampere 15 range. However, the salesperson told him that he should purchase the model Ohms 42 as it had the same energy saving feature and was comparatively more reliable and durable. Shivran relied upon the description given by the salesperson and brought two washing machines. Thus, it was sale by description. As per the legal provisions discussed above, the final delivered washing machine must conform to the description. In the absence of such conformation, it would amount to breach of contract of sale as in this case a contract of sale was entered into between Shivran and White Goods Us. Upon installation of the washing machines, Shivran found that the said model does not save energy. Moreover, it also burst while being used for the first time.

As required by the provisions of the Consumer Rights Act 2015 the goods do not match with description leading to violation of Section 11 of the Act. They are also not of satisfactory quality as required under the provisions of Section 9 of the Act. The washing machine was also not fit for purpose as required by Section 10 of the Act. A person of reasonable prudence would not have purchased the goods if he/ she were aware of the defects of the goods. Thus, White Goods R Us has committed breach of contract of sale of goods. Moreover, under the terms of the Consumer Rights Act 2015 action for breach of contract may be instituted for misrepresentation.

Conclusion

The above discussion may be concluded by stating that Shivran is entitled to institute proceedings against White Goods R Us for breach of contract for sale of goods under Sections 9, 10, 11, 31 of the Consumer Rights Act, 2015.  

 

2. Issue

  • Whether Shivran’s mother is entitled to institute an action against White Goods R Us?
  • If so, under what grounds?

Relevant Legal Principles

Shivan’s mother can institute action against White Goods R Us on the ground of negligence under the law of torts. The law of negligence lays down that when a person fails to abide by the duty of care owed towards another and the said breach of duty of care causes the other person to suffer harm or injury then the former is held liable under the law of negligence. In the given case, the relationship between Shivran and White Goods R Us presupposes the existence of duty of care. The harm was foreseeable in this case. White Goods R Us failed to take reasonable care to ensure that harm is not caused ( Zipursky, 2011).

 

Application

Shivran’s mother had to be hospitalized for the negligent conduct of White Goods R Us. She also suffered economic loss of £2000. When Shivran had specified that he is looking for a light weight vacuum cleaner for his mother he should not have been provided with  a heavy weight vacuum cleaner.

Conclusion

Shivran’s mother may bring action for negligence against White Goods R Us under the law of torts.

 

Reference List

Aswan Engineering v. Lupdine [1987]All ER 1, p.135.

Furmston, M.P., 2000. Sale and Supply of Goods. Psychology Press.

Furmston, M.P., Cheshire, G.C. and Fifoot, C.H.S., 2012. Cheshire, Fifoot and Furmston's law of contract. Oxford university press.

Great Britain., (2015). Consumer rights act 2015 (commencement no. 3, transitional provisions, savings and... consequential amendments) order 2015. [S.l.]: Tso.

Macleod, J. (2006). Consumer sales law. Abingdon, UK: Routledge.

McConnell, S. (n.d.). Consumer Rights Act 2015.

Postema, G. (2001). Philosophy and the law of torts. Cambridge, UK: Cambridge University Press.

Shine v. general Guarantee Corp [1988]All ER 1, p.911.

Zipursky, B.C., 2012. The law of torts. The Routledge Companion to Philosophy of Law, p.261.

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