marketing & law report
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Marketing & Law: Case Study Assignment
Case scenario:
David, a travel agent, ordered a PC from Date Ltd for his office. He signed the order form
which provided that Date Ltd would not to be under any liability whatsoever for loss or
damage caused by defects in the goods.
After David had used the PC for a month he was so pleased with it that he brought a
similar one for his personal use at home. The order form contained the same provision as
before concerning Date Ltds liability for defective goods.
Shortly afterwards the PC in Davids office developed a fault which caused the loss of
records of holiday bookings for that year. David had to hire extra staff to do the work of
reconfirming the bookings. Soon afterwards, the PC in Davids home suffered an electrical
breakdown. David suffered an electronic shock and was unable to work for 6 months.
Advise David.
Introduction:
As David has signed the order form this falls into a binding agreement between
the offerer ( Date Ltd) and offeree (David), therefore law is enforceable.
The type of law which will apply to this legally binding agreement falls under
the Contract Law. The type of contract law entered in this case is a standard
form contract and no conditions or warranties exist under this model of
contract therefore it wouldnt be classes as any type of business contract.
David will be looking to claim compensation for warranties which do not exist
as an expressed term in this agreement as there isnt a contract satisfying the
model of a type of contract where conditions and warranties are expressed in
the contract. As the law concerning this type of contract made is the soga
where the seller agrees to exchange goods for money, it legally implies terms
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into the contract which also includes the conditions and warranties which
allow different remedies to be taken in case of breach
The points which david is looking to sue for:
y The cost of losing data.y Defect in the product.y Personal injuries incurred from the defect in the product.
Losing data:
In the event of claims against loss of data depends on the circumstances,
electronic components and software are common to fail and loss of data is a
common outcome through the failure of computers.
(St Albans City and District Council v International Computers Ltd 1996)
A computer company supplied the local council with a software system to
administer collection of community charge payments. The defect in the soft
ware resulted in the local counsil collecting the community charge far less thenexpected therefore suing the computer company for damages of 100,000.
The contract contained a clause limiting the liability for the defendant
company to 100,000. The outcome was that the judge did not find the
limitation clause reasonable and that the parties did not have equal bargaining
power. The court also focused on wether the contract was made on the
companies written standard terms.
For davids case the contract wasnt made on a standard business terms
contract, also the case in the computer company specifically
designed and provided the program for the job which failed to work this is also
breaching the implied term by statute from s14 of the Sale Of Goods Act 1979
about quality and product being fit for its purpose. The computer supplied by
Date Ltd did seemed to be a general use PC and not designed specific of the
need of the intention which david was using it for. No business term contract
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exists. Most people who have valuable information stored on computer often
back the data with e.g. external hard drives. It would of been davids
responsibility to back up the data. It would be reasonable to conclude that the
loss of data isnt the sellers fault nor the manufacturer as it is recomeneded to
back up important data and as david was going to use the PC for businesstherefore it would be hes responsibility to back up hes computer.
Defect in the product:
Exemption clauses concerning liability under the Unfair Contract Terms Act
1997 are regulated by two ways were they are either void and inaafective or
subject to a reasonableness test. The liability clause exemption which david
signed for may be innafafective as the implied statuteory term from the Sale
Of Goods Act 1979 states that under s5 manufacturerers or distributers
cannot exempt themselves from liability in negligence for loss or defects in the
goods.
(Feldaroll Foundary plc v Hermes Leasing 2004)
The claimant entered into a hire purchase agreement with Hermes Leasing for
a Lamborghini car. The car was defective and Feldaroll relied on the statotury
implied terms from (s14) of the Sale of Goods Act 1974 fitness for purpose. Thedefendant relied on a exclusion by a clause in the agreement. The court held
that Feldaroll were entitled to reject the car.
(s14) of the Sale Of Goods Act requires that the goods are in merchantable
quality and fit for its purpose.
As the contract has Implied terms from the Sale of Goods Act 1979 by
breaching (s14) david may be able to reject and claim a refund for the PC.
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Personal injuries incurred from the defect in the product:
The product proved defect and resulted in personal injury. Three laws which
may be enforceable by implied terms by statute:
y Sale Of Goods Act 1979y The Consumer Protection Act 1987y The General Product Safety Regulations 1994
In order to sue under the Consumer Protection Act the claimant must prove
that the product had a defect, the claimant received injury/damage and it was
caused by the defect so this law could be used against Date Ltd for injuries as
all three conditions exist for Dave. As this occurred within six months of use
dave is eligible for claims as the limitation is three years of date o f incident for
claims.
The general prodcutd safety regulations 1994 impose a criminal liability for
providing unsafe products. Reg 2 of the General Prodcuct Safety Regulations
1994 defines a safe product as a product under normal or reasonably
foreseeable conditions of use, including duration, does not present any risk or
only the minimum risks compatible with the products use, considered as
acceptable and consistent with a high level of protection for the safety and
health of persons (Kelly.D et al, Business in Law, 2000)
As the product does not satisfy the conditions of a safe product the David may
be able to use this against Date Ltd.
Date Ltd is in breach of the implied by statute term of s14 of the Sale Of Goods
Act 1979 as the product proved to be defective so not fit for its purpose.
(Chappleton v Barry Urban District Council 1940)
(Mr Chappleton hires two deck chairs from the defendant, the deck chair
collapsed and resultant in injury for the claimant. The defendant claimed the
exemption cause for liability was printed on the ticket which was given to
chapleton who put it in his pocket unread. Mr Chappleton successfully sued
the council for damages)
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This shows that the exemption clause for liability is seen innafective in the
Chappleton case, as its only a order form Dave signed the exemption clause
may not be seen as reasonable and al so s5 of The Sale Of Goods Act 1979
negligance in exemption clause for liability may come in to act.
(Godley v Perry 1960)
(The claimant a six year old boy purchased a plastic catapult from a newsagent
owned by the defendant. The catapult broke while being used and the
claimant received injury and lost an eye. He sued perry f or breach of the Sale
Of Goods Act 1979 (s14.2) and (3). Perry had brought the catapults by sample
from the wholesaler testing it for defects by pulling the elastic on the catapult
and no defects occurred. Perry brought the wholesaler in to action on
breaching implied terms (s15) of the Sale Of Goods Act, the wholesaler had
purchased the catapults from another supplier and brought them into action
alleging similar breach to the terms perry sued the first wholesaler for ).
It is seen that in the case of a defect of a product the consumer can sue the
seller and the seller can sue the manufacturer or wholesaler. Therfore it is seen
that under sale of goods act Date Ltd is liable for injuries caused to Dave so
Dave may claim for personal injuries from Date Ltd.
There would be an argument whether whose liable for the injuries caused by
defects in the product between the manufacturer and supplier.
Conditions: No conditions are proposed by the seller or buyer
Warranties: No warranties were proposed by the seller
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Express terms: Exemption clause expressed by seller for liability of damages &
defects.
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