Case Study: John v ‘Sheds R Us’ & Hedgeco Ltd

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Case Study: John vs. ‘Sheds R Us’ & Hedgeco Ltd

Introduction

The buyer is not entitled to a legal right if the item purchased gets damaged accidentally, the buyer misuses the item and makes it faulty, the buyer makes attempts to repair the item himself or he was aware of the defect while buying (Atiyah, Adams & MacQueen 2005).

Legal basis for an action under the sale of goods

According to the Sale of Goods Act, the goods that a trader sells are expected to meet certain conditions. The goods should be:

  1. Fit for purpose[1] (Section 14): they must be in line with the intended purpose of the item with regards to the purpose queried by the buyer, and the buyer relied on that assurance to purchase the goods. John relied on the skill and judgment of the manager to purchase the hedge cutter because gardening is an area of specialization for the seller company (Bridge 2009). John only has to prove to the court that he had impliedly or expressly intimated to the seller that he intended to use the hedge cutter for cutting his hedge and therefore relied on the judgment of the seller to purchase the item. It is important to note that ‘Sheds R Us’ will still be held liable despite the fact that the company purchased the hedge cutter from ‘Hedgeco Ltd’ who was the manufacturer. This legal provision requires that the goods fall in a description of the seller’s course of business. It applies to dealers, retailers, millers, whole-sellers and manufacturers.’ Sheds R Us’ is a dealer in hedge cutters and will therefore be held liable for breach of condition.
  2. As described (Section 13): They should be in line with the seller’s verbal or advert description. The doctrine of caveat emptor waives liability from the seller to the buyer in the case where the goods do not with the expected quality or character. However, there are exceptions to this doctrine. In the case of Grant v Australian Knitting Mills Ltd[2], the court was of the view that even though it is expressly provided that the sale is by description and the buyer intends to purchase that item placed at the counter for display, that particular thing must correspond to its description if it’s sold by description as far as it was not intended to be specific. Sale by description also involves items which have been displayed for sale and the buyer has selected them at will. It is also provided in law that description sales will be binding even where the buyer had an opportunity to make examination on the goods with reasonable care even if the buyer had made selection on his own from the stock offered by the seller (Bridge 2010).

Sale by description is a question of fact depending on prevailing circumstances of a particular case. In our case study, John bought the hedge cutter which was on display at the defendant shop. Even though he had an opportunity to examine the goods, the seller was expected to explain to him about the precautions to be considered when using the machine. This could not have occasioned injury to John because he could indeed have applied the precautionary measures so as not to be electrocuted by the machine. Since this was a breach of warranty and condition, then John is entitled to damages in relation to the injury occasioned to him by the machine and full refund, or seek replacement of the hedge cutter.

  • Merchantable[3] (Section 16): this implies that the goods should not have substantial problems and/or cosmetic and minor defects[4]. It applies where the sale is in the course of the seller’s business and the item in question falls under the description of the business conducted by the seller. With regards to the ordinary course of business, the court held in Stevenson v Rogers[5] that the scope is wide enough to include the company’s ancillary business. There is no need to prove reliance on the judgment and skill of the seller. Goods of merchantable quality are of such a nature that the buyer is fully aware of the facts and the any hidden defects to limited to their noticeable character. The issue of whether the goods are merchantable depends on the description by the contract and the prevailing circumstances surrounding a particular case. The price for the item is also a matter of consideration; merchantability of the goods will be lost if the contract price is higher than the intended price. It does not imply that the goods should meet certain specific quality or grade requirements. However, they are expected to be in merchantable condition at a reasonable period with regards to the circumstances of the case and the brand of goods.

In the case of the contract between John and Sheds R Us, John can prove to the court that the hedge cutter was not of merchantable quality. The contract price for the hedge cutter was higher than the real price owing to the fact that it was defective. In addition, the hedge cutter did not take reasonable period before spoiling. This is because it spoilt at the first instance that John attempted to use it.

John also expected the water fountain to remain in good condition for a reasonable period of time, not for such a short time. In the case of Bernstein v Pamson[6], the plaintiff purchased a car. He used the car for a month after which it broke down. He returned it but the defendant seller rejected it. The court held that in the circumstances of the case, a reasonable period of time had elapsed as to enable the seller close the transaction ledger. From the particular circumstances of this case, John can claim that the water fountain was not of merchantable quality. There was a breach of condition, and the company cannot reject liability simply because the fault was on the agents. The manager of ‘Sheds R Us’ assured John that the water fountain would be delivered and fitted by ‘Sheds R Us’ on John’s garden lawn. The manager made a manifestation that there is a principal-agent relationship between ‘Sheds R Us’ and the employees of the company by way of implied authority. Implied contract does not have express provisions but only relies on the conduct of the parties and the circumstances of the case (Atiyah, Adams & MacQueen 2005). The assent of the principal is implied if according to his conduct in relation to the circumstances of the case, he delegates authority to another party to act on his behalf (Goode & McKendric , Bridge 2010). The manager’s statement that ‘Sheds R Us’ would deliver and fit the water fountain for John was an implied representation that the employees would act on behalf of the company. He is thus precluded from denying the liability caused by the negligence of their employees. For the doctrine of estoppels to apply, three conditions must be met: there must be a representation, reliance by a third party, and alteration of the position of the third party to his detriment as a result of such reliance (Bridge 2010).

Where the buyer purchases unsafe products without knowledge, he is entitled to the cost of making right the damage[7] (Ortiz & Viscasillas 2012). The Sale of Goods Act also provides that the buyer is said to have accepted the items if he confides to the seller about his acceptance or if upon delivery, he makes an implication by his conduct that is contrary to the seller’s ownership.  John ordered shed D but the seller delivered shed B. He made complaints to the company’s employees who are legally recognized as agents of the principal about the different shed delivered to him. In this respect, the manager cannot refuse liability on grounds that John had not made the complaint directly to him because the agent and the principal are regarded as one. He had rightfully implied that he did not want shed B because he had specifically ordered for shed D. Therefore, he has a right in law to reject the shed and demand full refund of the price because the shed did not pass to him since he had not accepted it.

According to Section 35(2) of the Act, if the buyer had not examined the goods at before they are delivered to him, he is presumed to have accepted the goods unless he seeks a suitable opportunity to examine them in order to ascertain whether they conform to the contractual agreement. Section 35 however will not apply to the hedge cutter. This section covers simple tangible items which do not have the capacity of complicated physical conditions and the buyer can identify the defects. It would not be reasonable to expect John to make an examination of a hedge cutter and understand and appreciate the defects in the machine. In light of this, the buyer is supposed to be intimated about the effects of the item being purchased.

In case a buyer purchases goods which do not meet the above requirements, he is entitled to return them, demand full repayment, and if it will be more expensive to purchase the goods at some other place, be compensated for the extra price as well (Section 15B). It is however worth noting that the right to reject the purchased items and demand full repayment is limited to the extent that the buyer has not yet been deemed to have ‘accepted’ them. It does not imply that the purchaser does not have a legal remedy against the trader; he is only not entitled to a full refund. Rejection arises where the seller fails to conform to the contractual conditions (Atiyah, Adams & MacQueen 2005, Section 48). John is entitled to reject Shed B because the seller breached the contractual condition to supply John with Shed D. By supplying Shed B instead of Shed D, the seller breached the contract, thus creating another offer for Shed B which John did not accept. In this respect, John has a right to reject the shed and claim full refund. The purchaser is in the first instance entitled to the right to have the items replaced or repaired. However, where these remedies will be rendered inadequate, then the buyer will be entitled to a reasonable reduction of the price of the goods, or to return them and be refunded[8]. With regards to the Hedge cutter, the fact that is not of merchantable quality means that there was a breach of condition. John can seek repair or replacement (Section 48B), or reject it completely and demand full refund. He is also entitled to damages for injuries caused to him by the hedge cutter. John can also file action for damages for non-delivery. The law provides that a buyer has a right to claim damages not only where the seller has defaulted to deliver but also if delivery is made the goods are not which were contracted for and the buyer rejects them. The court will presume non-delivery of the shed because Shed D was not delivered, even though the seller delivered Shed B.

Conclusion

There is no bar for John to claim a legal redress under the sale of goods contract because the contract between him and the manager satisfies all conditions required under such contracts which constitutes an agreement that the seller will pass property in the goods to the buyer in consideration for the price. The Sale of Goods Act provides that once the property in the goods has been transferred to the buyer, the risk either of loss or damage is prima facie passed to the buyer when property passes; the party entitled to property is also entitled to the risks. However, there are exceptions to this general rule.

 

References

 

Atiyah, PS, Adams, JN, MacQueen, HL 2005, The Sale of Goods, Longman: Pearson.

 

Bernstein v Pamson [1987] 2 All ER 220

 

Bradgate, R & White, F 2007, Commercial Law, Oxford University Press, Oxford.

 

Bridge, M 2009, Sale of Goods, 2nd Ed. Oxford University, Press, Oxford.

 

Bridge, M 2010, Benjamin’s Sale of Goods, Oxford University Press, Oxford.

 

Consumer, 2013, Citizen Advice, viewed 28th May 2013, http://www.adviceguide.org.uk/england/consumer_e/consumer

 

Goode, R, & McKendrick, E, Goode on Commercial Law, 4th Edn, Penguin.

 

Grant v Australian Knitting Mills Ltd [1936] A.C. 562

 

Ortiz, RI, Viscasillas, PP, (2012) “The scope of the Common European Sales Law: B2B, goods, digital content and services”, Journal of International Trade Law and Policy, Vol. 11 Iss: 3, pp.241-258.

 

Sale of Goods Act (as amended), BBC-One Watchdog, viewed 28th May 2013, http://www.bbc.co.uk/programmes/b006mg74/features/consumer-law-sale-of-goods

 

Sale of Goods Act Explained, 2013, Office of Fair Trading, viewed 28th May 2013, http://www.oft.gov.uk/shared_oft/738369/738375/OFT002_SOGA_explained.pdf

 

Sale of Goods, TransLegal,  viewed 28th May 2013, from http://www.translegal.com/lets/sale-of-goods-2

 

Stevenson v Rogers [1999] 1 All ER 613 Court of Appeal

 

UK Sale of Goods Act

 

[1] Sale of Goods Act Explained, 2013, Office of Fair Trading, viewed 28th May 2013, http://www.oft.gov.uk/shared_oft/738369/738375/OFT002_SOGA_explained.pdf

 

[2] [1936] A.C. 562

[4] Sale of Goods, TransLegal,  viewed 28th May 2013, from http://www.translegal.com/lets/sale-of-goods-2

 

[5] [1999] 1 All ER 613 Court of Appeal

[6] [1987] 2 All ER 220.

[7] Citizens Advice (2013). Consumer. [online]. Retrieved from: http://www.adviceguide.org.uk/england/consumer_e/consumer

 

[8] Sale of Goods Act (as amended), BBC-One Watchdog, viewed 28th May 2013, http://www.bbc.co.uk/programmes/b006mg74/features/consumer-law-sale-of-goods

 

 

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