MGMT1601 Business Law | Analysing any Potential Legalities of the Comp

Develop a 25 minute mock consultation which analyses any potential legalities that the company may face in relation to the 3 customers as the passenger.

Answer:

Michael

He owns a company that hires cars and he has hired two cars from Crunchem Cars Ltd which is run by Fred Wormwood. After purchasing the cars, when he brought the cars home, he noticed that the cars had scratches along the vehicle’s roofs. A consumer rights act entails that the rights of the consumers shall be protected. The rights of the consumer shall be protected against the trader. A consumer under the United Kingdom is defined as an individual who acts for any purpose which is outside his trade or profession and he acts for personal gains (Howells and Weatherill 2017). The concept of a consumer under the UK and EU law states that it will be any person who enters into a contract for both personal and business goals. A trader on the other hand is one who works to effectuate his own trade and business and works to enlarge and improve his trade name (Barnard 2015). Commercial law entails the rights of the consumers who indulge in buying good and also deal in trade (Howells and Weatherill 2018). Commercial law provides rules that apply to merchants and also includes the rules of business that is conducted between the consumer and the trader (Newton 2015). Consumer law helps in regulating trade and also creates statutes to prevent traders from suing unlawful and dishonest means to dupe consumers (Whish and Bailey 2015). The goal is to create an equitable condition from both buyers and sellers (Singh and Mukherji 2018). Under the consumer law, the consumer is defined as any person who purchases goods or services which are thereafter sold by manufacturers or retailers. The rights of the consumers are preserved with the help of both common law and federal law. In cases when the trader makes false advertisements and does not follow product safety practices, the consumer law comes to play (Gibson and Thirlwall 2016). The Consumer Protection law is intended to preserve the rights of the consumers against any unfair practice followed by the trader. Consumer goods are defines as any product that is bought for personal use. In this case, the car was not purchased for personal use. The new car bought by Michael was business purpose because he deals in hiring cars and uses them for business gains. HE can come under the definition of a consumer of he can prove that the car was bought for his own personal gain. Car purchases in the United Kingdom are governed by the Misrepresentation of Goods Act, 1967 which prevents a buyer from the false claims made by a trader. A trader under the Misrepresentation of Goods Act, 1967 cannot make ay false claims regarding the quality and fitness of the car he is selling. In case a car is bought from a dealer, the Sale of Goods Act. 1979 governs the rights of the buyer and also entails that a car has to be of merchantable quality and it has to be fit for the intended purpose.

Satisfactory quality

Under the Sale of Goods Act and supply of services by the trader to the consumer, there are certain basic provisions regarding the quality and fitness of the product (Janssen 2017). This Act provides protection to the purchasers. The Consumer Rights Act 2015 gives rise to a consumer contract and the new Consumer Rights Act, 2015 replaces the previously existing Sale of Goods Act. The main provisions of the Act says that whenever a seller is selling a product my description, there is an implied duty that subsists within the seller that the product shall correspond to the description of the product and shall not deviate from the already mentioned description. The trader must sell goods which are of satisfactory quality and all also fit for the intended purpose. The “satisfactory quality” clause is mentioned in the Sale of Goods Act, 1979 which states that the goods shall be of satisfactory quality. In cases when the buyer had the time to check the quality for the product and then he went on to but the same, the seller shall have an upper hand (Abbott and Tyler 2017).  The satisfactory quality test will not apply only in cases when the goods were shown to the buyer and he failed to notice the defect in the product. Under the Consumer Rights Act, 2015, the satisfactory quality test means that the product shall not be damaged or faulty when the buyer receives it.

The question of the scratch being an impediment to the quality of the car is not a yardstick to judge of the car is of supreme quality or not. The scratch does not entail that the car is not of proper quality. The scratch does not affect the running of the car and cannot be held to be an impediment to the intended purpose of the product. Under the Consumer Guarantees Act, a buyer buying second hand cars shall be guided by the same rules as the buyer buying new cars. in the Clegg v Andersson case, it was held that fitness for a purpose and quality test are two different things. Section 14(2) looks at the quality which has to be understood in line with subsections (2A), 2(B) and 2(C). The particular purpose of the product has to be seen in accordance to section 14(2) to see if the product meets the requirement (Willett 2016).

The quality test needs to be examined by both the parties and while selling a second hand product, the seller has to also comply with the fitness test. In the case of Randall v Newsom, it was held that even if the defect was minor that could not have been understood without careful consideration, the trader is within his duty to supply goods of supreme quality and goods which have passed the satisfactory quality test. If the trader has expressly mentioned that the product is second hand, it is not reasonable to expect proper and standard quality and therefore the buyer cannot expect the same quality of that of a new car.

Matilda

Matilda is governed by the Consumer Rights Act, 2015 and she is the consumer under the definition of the Act that protects and preserves the rights of the buyer. In the present case, Matilda has purchased Matilda a top of the range soup maker for her new flat. She opened the appliance several weeks after purchase and realized that the glass jug, which is essential to the operation of the machine, was broken. Several accessories were also missing from the box.

Under the Consumer Protection Act, the consumer has the right to reject the good if the product does not match the quality standard. The seller who is selling the goods for a price is duty bound to sell goods that are of supreme quality and are not defective. Under section 40 of the Consumer Protection Act, 2015, the consumer has the right to reject a good that does not fall under the standard quality test. The consumer has a right if the seller breaches those conditions. The statutory remedies entail that the consumer has the right to reject the good or ask for a replacement of the good if they do not match the standards. The consumer has the right to reject the good with 30 days of buying the goods and in such cases the consumer can also claim refund if the prices are high. In the Buchanan-Jardine v Hamilink case, it was held that there is an implied condition of quality of a product and it shall not be breached under any condition. There shall always be a condition of quality of the product unless it has been clearly and expressly mentioned in the clause that quality shall not be kept into consideration.

Time is of essence in a Consumer Protection Act case because the act gives the right to a consumer to reject the product if it does not meet the quality test. After the 30 day period lapses, it becomes difficult for the consumer to claim that he can claim that the seller has breached his statutory duties. In this present case, Matilda had enough time to check the quality of the product but did not do so. She opened the appliance after a considerable amount of time and therefore it can be said that she has lost the time to make a claim against the unfitness of the product. In the Clegg v Andersson case, it was held that the quality has to eb checked at the time of the delivery and not at a later date. When the box was opened, it was seen that some essential products were also missing which were not checked by Matilda. If the consumer does not exercise the right to reject the good within the 30 day period, the consumer can claim a repair or a replacement. In questioning the satisfactory quality test, it is imperative to examine it in the eyes of a reasonable man and what a reasonable man would have thought of the product 

Jennifer

Nervous shock happens when a person suffers an injury due to the negligent act of another person. Negligence occurs when a person who had a duty of care towards another breached the duty so as to cause harm to the other party. Bourhill v Young [i][1943 it was held that law recognises the statutory duties of the seller and states that he has a duty of care against people at large (Lim 2014).

The Unfair Contract Terms passed by the United Kingdom parliament puts a restriction of contracts that try to limit liabilities (Micklitz and Reich 2014). In this case, it was clearly mentioned by car dealer that he shall not be liable for any negligence and will not be bound by common law or contractual obligations. This is a way to escape liability and therefore an unfair contract term which cannot be held to be binding. In a case of a second hand car it is not reasonable to expect the same quality of that of a new car but the car should meet the quality and fitness test.

Agatha

Caparo Industries plc v Dickman found the test that needs to applied while applying the test of negligence (Maguire and Banks 2015). Donoghue v Stevenson applied the test of negligence which said that a principal owes a duty of care and in case he breaches that duty, he shall be made liable. The Wagon Mound case held that the damage must be of the nature that was foreseeable. Once the damage had taken place, the defendant shall be liable for the entire damage. The Reasonable Man test says that damage will be said to be taking place if a reasonable man could foresee the damage arising out of any particular activity (Goh and Round 2017). Vicarious liability means that the owner or the principal shall be held liable for the actions or omissions of its agents. In this case, a reasonable man could not have foreseen the brakes failing (Deakin 2018). The second hand car was sold at an overpriced sum therefore there were chances that the car could have been damaged.

Fred Worswood

He is the seller of the product and he has the liability to ensure that the product he sells meets the quality and standard of product. He has a duty to sell products that match the sample he has shown. One way for him to escape liability is to show that he has exercised proper care in selling the products and the buyers had enough time to examine the products and after they were convinced that the products were of supreme quality, they bought the products. The principle states that the buyer needs to be aware of his rights, that is, caveat emptor, which means that the buyer has to be satisfied that the products he is buying match the quality and the standard that it was intended to serve (Malek, Begum and Hoque 2016). In cases of second hand cars, the buyer cannot claim that the quality shall be similar to a new car and in this case Fred ahs clearly mentioned that he is selling a second hand car therefore, he can be exempted from liability if he proves that he has taken due care in selling the products and has notified the buyer the nature of the goods he is selling.

References

Abbott, H. and Tyler, M., 2017. Safer by Design: A guide to the management and law of designing for product safety. Taylor & Francis.

Barnard, J., 2015. Consumer rights of the elderly as vulnerable consumers in South Africa: some comparative aspects of the Consumer Protection Act 68 of 2008. International journal of consumer studies, 39(3), pp.223-229.

Deakin, S., 2018. ORGANISATIONAL TORTS: VICARIOUS LIABILITY VERSUS NON-DELEGABLE DUTY. The Cambridge Law Journal, 77(1), pp.15-18.

Gibson, H.D. and Thirlwall, A.P., 2016. Balance-of-payments theory and the United Kingdom experience. Springer.

Goh, B.C. and Round, T., 2017. Wild negligence: Donoghue v Stevenson.

Howells, G. and Weatherill, S., 2017. Consumer protection law. Routledge.

Howells, G. and Weatherill, S., 2018. Consumer protection law. Routledge

Janssen, A., 2017. Information rights and obligations: a challenge for party autonomy and transactional fairness. Routledge.

Lim, E.C., 2014. Proximity, Psychiatric Injury and the Primary/Secondary Tortfeasor Dichotomy: Rethinking Liability for Nervous Shock in the Information Age. Nottingham LJ, 23, p.1.

Maguire, R.L. and Banks, A., 2015. The risk of negligence following the failure of a human replacement function in an automated system.

Malek, A., Begum, A.M.A. and Hoque, K.A., 2016. Doctrine of Caveat Emptor (Buyer be aware) in Common Law and the Doctrine of Khiyar al aib (Option of defect) in Islamic Law: A Comparative Study. IIUC Studies, 10, pp.201-216.

Micklitz, H.W. and Reich, N., 2014. The court and sleeping beauty: The revival of the Unfair Contract Terms Directive (UCTD). Common Market Law Review, 51(3), pp.771-808.

Newton, C.D., Bank of America Corp, 2015. System and method for consumer protection. U.S. Patent 9,177,317.

Singh, N. and Mukherji, N., 2018. Consumer Rights in E-Commerce.

Whish, R. and Bailey, D., 2015. Competition law. Oxford University Press, USA.

Willett, C., 2016. Fairness in consumer contracts: The case of unfair terms. Routledge