Unit 7 Business Law of Contract Assignment

Introduction

The Unit 7 Business Law of Contract Assignment helps in clarifying the concept of law of agency, monopoly and anti-competitive practices, law on intellectual property, law on sales of goods and sales of goods and supply of services etc. Thus these laws had been applied to various situations given in the assignment so as their concept and understanding can be more elaborately understood.

The Unit 7 Business Law of Contract Assignment is divided into four tasks each dealing with a separate law that prevails in UK. The assignment is supported with reference and sources in order to authenticate the matter. The reference list is attached at the end of the assignment.

Task 1

Be able to apply the main principles affecting the legal relationship between business organizations and their consumers

P1.1 Analyse and advice Mr Adam on the legal rules on implied terms relating to the sale of goods and supply of services

Under the law of contract of United Kingdom, a contract is an agreement enforceable by law.  A valid contract has various terms and stipulations to which the parties are bound. The terms can be either considered as implied terms or express terms. Express are those terms which are used by the parties expressly and specifically but implied are those terms are those which are included in the contract by custom, usage, law, etc. the scope of express and implied ternms is analysed in Esso Petroleum v Mardon (1976). (Worksmart, 2015)

The terms are also segregated on the basis of importance. The terms which are very important and market essentials in a contract are called conditions and is analyses in Poussard v Spiers and Pond (1876) But the terms which are relatively less importance are called warranties and is analysed in Bettini v Gye (1876). On breach of condition the contract ends but in case of warranty the remedy is damages and the contract survives. (Event Justice, 2012)

The current task is related to the sale of goods and its service and thus there are two types of enactment that deals with the same.

1.  The Sale of Goods Act (1979) herein referred as SGA;
2. The Supply of Goods and Services Act  (1982) herein referred as SGA SGS.

An implied warranty is captured under Section 12(2) of SGA. The warranty is given by the seller that the goods should be liberated from all sorts of defects and is held in Niblett v Confectioners' Material (1921). Under section 13, the goods must be same as per the description of the goods provided by the seller and is an implied condition and is held in Arcos v Ranaason (1933). Under Section 14 (2) if the goods sold are not satisfactory as per the quality of goods then the buyer can put an end to the contract and is held in Stevenson v Rogers (1999). Under section 14 (3) of SGA the goods must serve the purpose of purchase and if it does not do the same then the same is breach of the section. (Elawresourceuk, 2015)

The present task also involves the application of SGS as the goods are supplied along with the services.Under Section 13 of SGS, if the goods are sold with the allied service then the services must be provided with proper care and reasonable skills. Under Section 14, the services must be provided in a reasonable time. (Elawresourceuk, 2015).At times the party may limit or exclude the liability by inserting the exclusion clause but the same must be bought to the knowledge of the opposite party in order to avail the benefit of same. But, under section 6 of the Unfair Contract Terms Act 1977 in case of the consumer contracts the exclusion clause are not allowed and thus the same are void as per law. (Ashurst, 2009).

Now, as per the facts of case Mr Adam decided to purchase T.V. from a store. Miss Bianca, manager, described one T.V. as ‘very high quality, durable and good value for money’ and is also mentioned on the TV. Mr Adam purchased the said TV and signed relevant documents.

However the TV supplied to Mr Adam does not fulfil any of the terms mentioned. Thus there is a clear violation of sections 12(2), 14(2) and 14(3) of SGA.Further, the TV would be delivered to him in next three working days and was installed by the store engineers. But after three weeks there was flash and puffs of smoke came out of it.

Thus, section 13 and 14 of SGS had been violated since the after sale services are not provided adequately. Also, when Adam called up the Departmental store, the store denied their liability. They also rely on the clause on the document which excludes their liability for the malfunctioning of goods once supplied and installed. But, the exclusion clause which is mentioned is void as per section 6 of the Unfair Contract Terms Act 1977. Thus, Adam will be able to claim for his loss from the store.

P1.2 Analyse and advice Mr Adam on the statutory provisions on the transfer of property and possession

The present task makes an evaluation of the Sales of Goods Act, more specifically to the law that deals with the transfer of property and possession.

Under section 16, in unascertained goods the ownership of same passes when the same are ascertained (Kursell v Timber Operators & Contractors Ltd (1927). Under section 17, when the goods are ascertained then the ownership of same passes as proposed between the parties to contract. Under section 18, when the goods had been ascertained but the intention of parties is not clear than the rules of section 18 prevails. (Merrett L, 2015)

• Under 18(1) in case of the unconditional contract the goods passes right away and is held in Dennant v Skinner (1948).
• But in case of any stipulation or condition the goods pass on fulfilment of the condition only under section 18(2). (Cf Nanka Bruce v Commonwealth Trust Ltd (1926);
• under As per 18 (3) and( 4) in case the measurement or approval or weight is to be done by the buyer and is a condition for the specific goods then in that case the ownership will pass after the same is done (Weiner v Harris (1910).
• Under section 18 (5) in case the goods which are unascertained are absolutely appropriated than the ownership moves to the passes to the purchaser of the goods.

P1.3 evaluate the statutory provisions on buyer’s and seller’s remedies in sale of goods contracts

The several remedies with the Seller comprises of, firstly, seller can stop the goods when the same are under transit as per section 44, 45, 46 of SGA. But the buyer should have been insolvent in order to avail such right; secondly, there is the right to resell the goods under sections 47 and 48 of SGA. But the goods must be perishable or there must be stipulation in contract to avail this right; Thirdly, the seller can claim damages as per section 50 of SGA for denial of goods by buyer; Fourthly, the seller has a lien as per section 41, 42 and 43 of SGA; Fifthly, the seller can ask for the price of goods as per section 49 of SGA. (Williams S, 2007)

The Various Remedies with Buyer Are, Firstly, the buyer can claim damages in case of non-delivery as per section 51 of  SGA; secondly, the buyer can reject the goods when the same are not in  conformity with the implied terms as per SGA; Thirdly, the buyer can get the goods repaired or replaced as per section 48B of  SGA; Fourthly, Buyer in case of breach of warranty can get damages as per section 53 of SGA; Fifthly, the buyer can accept the goods which are proper and thus reject the goods which are in noncompliance with the terms as per section 35A SGA; sixthly, under section 52 of SGA Specific performance can be attained by the buyer; Seventhly, the buyer can recover monies in case of the  non-delivery as per section 54 of  SGA. (Gov.uk, n.d)

P1.4 apply product liability statutory provisions for faulty goods

As per the law of negligence a person is held negligent whenever the duty of care which is imposed against the wrongdoer is being violated and the said violation results in the injury to the innocent. The law was much developed by the renowned case of Donoghue v Stevenson (1932).

The concept of strict liability is associated with the breach of duty of care in law of negligence but product liability applies in case of the defective goods supplied as per the Consumer Protection Act 1987. The suppler, importer, marker and the producer as per section 2 are the comprising persons who supply defective goods.

Further, under section 3 the goods when not safe for the use for which they are purchased then the same are defective in nature. The concept is held in Bogle v McDonalds Restaurants (2002). (Burmby C, 2012)

 

Task 2

Be able to apply the legal rules on consumer credit agreements and agency   

The facts reveals that Claire is of the opinion that her credit rating is above average and the same is authenticated by ‘Equifax’ which is a credit rating agency. She is sure that she will get credit easily. But she is upset that due to bleak economic condition she may lose her job any time in future. She is also taking training to become an Estate Agent as in case she loses her job and she had also got to know that she has various legal obligations towards her various potential clients.In such situation there are various aspects of Consumer Credit Act 1974 is analysed.

P2.1 Differentiate between types of credit agreements which Claire could use to obtain the new car.

An enactment that recognizes various kinds of credit agreements which can normally be considered by a person prior taking any loan is The Consumer Credit Act 1974. The various kinds of credit agreements are:

First, Bank loans are the loans which is provided by a bank by granting overdraft facility and other personal and ordinary kinds of loans.

Second, Hire purchase credit agreement under which the customer is in the possession of the property purchased on credit and he pays the instalments for the same and the property is transferred on the payment of last instalment. These agreements are regulate by the Consumer Credit Act 1974. (Citizens advice, 2015).

Third, Conditional sale agreement are those agreements in which credit is provided but the debtor buys the goods after the contract comes to an end that is all the credit money is paid by the debtor. If the condition upon which the credit is given is violated than the agreement can be terminated by the creditor. These agreements are regulate by the Consumer Credit Act 1974. (Citizens advice, 2015).

Credit sale agreement is agreements under which the goods pass to the buyer who purchases on credit and he can further pass them. If the buyer is not able to pay his dues then the seller has the right to claim his debts and also has the power to get his property attached.

P2.2 Analyse the rules on termination rights and default notices for Claire to be informed in case she subsequently has trouble paying the debts as required in the contract.

The parties to the credit agreement has right to terminate the agreement before its expiry and the same is acknowledged under the Consumer Credit Act 1974 (CCA).

A creditor may cancel the agreement by serving the default notice. When the debtor defaults, the creditor can issue default notice on the debtor. The creditor can proceed further but the default notice must be served by him. The creditor can demand dues, recover goods, terminate the agreement by serving a 7 days’ notice. But in case of no fault on the part of creditor then court can order as per section 127 of CC. The court can also provide extra time for repayment to debtor as per section 129 of CC.

Under section 94, 95, 96, 97 of CCA, a debtor can go for an early settlement of the credit agreement. Under section 98, 99, 100, 101 of CCA a debtor may return goods to creditor in case of termination as is incapability to pay credit amount as per the agreement. But the debtor must pay off the balance due after the return of goods on termination of credit agreement. The goods returned by the debtor should be in proper and good condition. (Citizen Advice, n.d)

P2.3 Analyse the general features of Agency and differentiate between the different types of agent.

When one person authorizes another person to act on his behalf and represent him while transacting business with the third person then such a person who is given such a power is an agent and the person who gives such a power is principal. The acts of the agents done on the behalf of principal thus bind the principal and the relation between the principal and agent is known as an agency. The basic features attributed to an agency relationship are: (Lardbucket, 2012)

• A formal contract is not mandatory, but the relationship of an agent with the third party should be  a contractual relation;
• The agent as well as the principal must have attained the age of majority and they must be of sound mind as to enter into a valid contract.
• The reason behind the existence of agency is that it saves principal resources and time.
• The agent binds the principal by his actions which are authorized by the principal

The agents who are appointed by the principal are following: (Lardbucket, 2012)

• Auctioneers is a kind of agent that deals with tangible and intangible property and the main task to carry out the auctions of the property on behalf of the principle.
• Estate agents are those agents that deal with real estate or property. The main feature is sale and purchases the property on his principal’s behalf.
• Partners are the agents of partnership firm. They represent the firm and the other partners of the firm in all the activities of the firm.
• Brokers are those agents that deal with intangible property.
• Directors are the Company’s agents and represent the company in all the actions that are authorised to them.
• Factors are those agents that deals with tangible property
• commercial agents are those agents who can purchase and sell off the goods in place of principal.

P2.4 Evaluate the rights and duties of an agent to assist Claire understand her position once she becomes an Estate Agent.

Responsibilities Associated With An Agent Are First. the agent should enter into proper and valid contracts while transacting with the third parties; Second, the agent must follow the order and directions of his principal; Third, an agent must work with reasonable skill, proper care and diligence; Fourth, an agent must not work in conflict of interest with the principal and he must also not make any secret gain or profit. He is in fiduciary relation with his principal; fifth, he must preserve the confidential information of the principal. (Lardbucket, 2012)

The Rights Associated With An Agent Are; First reasonable expenses can be claimed by an agent for his work; Second, an agent must have the proper and valid contract with  the third party while transacting business; Third, an agent has the right of lien; Forth, an agent has right to be remunerated for his job. (Lardbucket, 2012)

Task 3

Understand the legal rules relating to monopolies, mergers and anticompetitive practices

P3.1 outline monopolies and anti-competitive practice legislation in the UK

The monopoly and anti-competitive practices within the market have significant impact on the consumers. If the monopoly and anti-competitive practices are not checked that it will result in causing great hardship to the consumers. There are various enactment in United Kingdom which keeps a check on monopoly and anti-competitive practices. (Bellamy et al, 2013)

Competition is very important as it results in the enhancement of efficiency and results in the mitigation of the prices which ultimately affects the consumers. The competition Act 1998 had been evolved to serve the said purpose. In UK, in order to enhance competition there are several legislation policies which are framed which regulates monopolies, mergers and anti-competitive practices. Thus, to keep a check on the activities which reduce the competition within the market the competition Act 1998 had been enacted. The penalty of up to 10% of annual turnover is charged on the defaulting parties or enterprises.

Further, in order to provide solicitor to the competition Act 1998, The Enterprise Act 2002 had been enacted along with various other measures. Under the act, competition tribunal had been set up to check the mergers etc.

In order to make the anti-competitive practices successful and enforce them properly the act known as The Enterprise and Regulatory Reforms Act 2013 had been enacted. Under the Act, the Competition and Markets Authority (CMA) took over the key functions of the Office of Fair Trading. This authority was set up in order to analyse the market and thus to create a consumer friendly atmosphere within the market.

P3.2 explain the role of the Competition Commission within the context of monopolies and anti-competitive practices and the UK Office of Fair Trading

The monopoles and anti-competitive practices are controlled through the established competition commission and the office of fair trading.

Office of fair trading: It has various functions though its functions are now shifted to CMA from 2014, April. The major functions of office are First, to advice on issues which help in reducing the monopolistic and anti-competitive; second, Granting  of various exemptions as and when  the entities needs them; Third, It can take decisions which are enforceable in the court of law; Forth, it further checks the entities which are working according to rules and procedures as laid down by the Market Policy Initiatives Division for the welfare of the customers and which are not; Fifth, publication of information to reduce the monopolistic and anti-competitive practices; sixth, carrying out of investigations  of enterprises or undertakings in case of breach of the laws or rules and regulations or enactments by them; Seventh, the office of fair trading is backed by the various agencies which thus helps the office in achieving its aim. The agencies comprises of Ofcom, Ofgem, telecom, electricity etc.

The competition commission had also been established to deal with the competition within UK. Its various functions had been shifted to CMA from 2014 April. Its various functions are First, it had the power to carry out the investigations of mergers of entities; second, it disposes of the appeals referred to it by the other regulatory bodies or agencies; Third, it can issue recommendations and thus decision making power is also with it in case there is fault on the part of the entities in case of mergers which had thus been investigated. (Economics help, n.d)

P3.3 define dominant positions within the EU common market

As per TFEU, Article 102 is related to the concept of dominant position. In case of any entity not acting in the market for the benefit of the consumers or the competition in the market or the market as a whole and thus using its dominant position to exploit the consumers by using its position then the same is not valid as per the TFEU’s article 102.

The entity is said to be misusing its dominant position when it enters into such agreements or contracts which thus reduce the competition within the market and thus affects the market and the consumers within the market thus also reduces the competition within the market and moreover the decisions can only be taken by involving the competitors. All the agreements cannot be entered by the entity having dominant position they can be entered by them only when the same are beneficial for the market or the society. (Donoghue & Padilla, 2015)

P3.4 consider the application of EU exemptions to potentially anti-competitive practices

Under TFEU, Article 101 states that all the agreements entered into by the entities are not enforceable, rather, only those agreements can be enforced which are thus in the interest of the consumers or for the benefit of the market as a whole and thus which do not curb the competition within the market. However, there are certain exceptions to the above section the same are that under TFEU’s Section 101(3) the agreements entered by the entities can be allowed to function as per such agreements when they are for the benefit of the customers and thus they do not affect the market in any way or only have a very meagre effect on the market and moreover the same should not affect the states who are the member. The agreements of the entities can thus be carried further and thus are not restricted if any of the above said conditions exists. (Europa, 2011)

Task 4

Know the key provisions relating to intellectual property rights

P4.1 Identify differing forms of intellectual property

Intellectual property right means the right acquired by the inventor or the creator of the work. The work can be artistic, literary, musical, relating to design, invention etc. In United Kingdom, Intellectual property right can be granted in the following forms. The same are: (GovUk, 2015)

• Trademark: The Trade Mark Act 1998 governs and grants protection to the trademarks. A trademark is a mark, symbol or logo which thus differentiates the products of one from another.
• Copyright: It gives the protection as per statue but the copyright is protected even without the same being registered. It protects the artistic, musical or other works of a person and the same cannot be copied by another as per the copyright law. The copyright, design and patents act 1988 guides copyright law in UK.
• Patent: The Patents Act 1977 governs the granting and the protection of the patents a patent right is provided to the persons who invents something new and novel.
• Designs: The design Act is there to protect the infringement of the designs of one person by any other person. It thus grants protection to the shape, colour, and texture of the product of one person as the same does not permits the other person to make the same product with similar or same specifications which is being protected by the designs act. The copyright, design and patents act 1988 guides’ designs law in UK.

P4.2 Outline the principles relating to the protection of inventions through patent rights and their infringement in a given business scenario

Patent is provided in case of the products which are new or novel and thus the patented product cannot be used, made or imported by anybody else other than the owner having the patented right in such a product. Under The Patents Act 1977, Section 1 (1), a patent can be granted on the invention which is new and the same must had an inventive step and that invention step must not be an obvious one for the expert having knowledge in such subject on which the patent is granted. Also the invention should have industrial application associated with it. If all the requirements are fulfilled than a patent can be granted. (Gov.uk, n.d)

The patent owner has the right to sell, import, license the patented product as per his own will. The patented right is granted for a period of 20 years from the registration date but the same must be renewed after every four years.

If anybody without permission from the owner of the patent sells, imports etc. the patented product then such person is liable for infringement and owner can demand injunction, delivery up, damages, destruction of goods, accounts of the infringer by court of law. (Nibusinessinfor, 2015)

P4.3 Describe the principles relating to copyright protection and their infringement in a given business scenario

Copyright is governed by the Copyright, Designs and Patent Act 1988. The copyright is achieved on the product as and when the same comes into existence as no compulsory registration is required for its protection. Copyright is granted in case of musical, artistic, literary works etc. The copyright is granted for a period of 70 years after the author in case of the literary, dramatic and musical or artistic work, the same is 50 years in case of computer generated work, and 25 years in typographical arrangements. The owner of the copyright can thus make copies, communicate, perform the work or adapt it in any way without any permission as per section 16 of the Copyright, Designs and Patent Act 1988. (Taylorwessing, 2013)

In case of any infringement  by any other person who uses, sells, imports the copyright work without the permission of the owner, than the owner  can take legal action and demand retention of accounts, injunction etc. apart from other reliefs that may follow. (Findlaw, 2015)

P4.4 Compare and contrast the protection of trademarks and business names.

There are various differences between trade mark and the business name they are as follows: (Battle,  n.d)

• It is the Business Names Act 1985 that is the guiding enactment for business names whereas the trademarks are guided by the Trade Mark Act 1994.
• A business names is registered as per the Business Names Registration Act but in case of a trademark a trademark is registered as per the Intellectual property office;
• In case of registered business name the infringer is only liable for passing off but in case of the infringement of the registered trade mark in the infringement follows on the infringer.
• The business name must be registered as a trademark in order to avail the protection and benefit of a business name. But it is not compulsory to register the trademark business name to secure better protection.

Thus, these are the major distinction between the two.

Conclusion

The relevant laws that are thus related to every business are understood by this Unit 7 Business Law of Contract Assignment and thus these laws had been applied to various given situations in order to make them more clear and understand them with the context to the daily business and routine life of every individual.
The laws are both national and international but is applied in UK will full force. It is thus submitted that all legal aspects of the assignment must be understood Cleary in order to apply them practically with full authenticity.

References

Arcos v Ranaason (1933).
Ashurst (2009) Limitation and Exclusion of Liability
Bettini v Gye (1876)

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