Example Contract Law Essay (Undergraduate)


Example Contract Law Essay (Undergraduate)

Here is an example of a first-class contract law essay that was written by an undergraduate student at a top UK university.

ASSIGNMENT

Firstly, Sonia’s first claim is that “Cars Direct” is in breach of general quality standard under s.14(2) of the SGA 1979 because the gear box and the breaks failed and the car had “scratches” on it. To establish that the goods were of unsatisfactory quality, the court's principal concern is to look at their intrinsic quality, using the tests indicated in subsection (2A), (2B) of s.14[1]. Sonia’s claim automatically succeeds under s.14 (2B) (a) and (e)[2]. The car was supplied to be used as a car but did not work and was unsuitable for any of the purposes for which cars are supplied in the same way the press was not capable of operating as a vacuum press in Peakman (t/a MJP) v Express Circuits Limited[3]. Justice Rougier categorically held the new motor car to be unmerchantable as the defect went “far beyond that which a buyer must accept”[4], namely that the car should not crash after 150 miles[5]. Similarly, in Sonia’s case, a reasonable man would expect to be able to use his car for longer than three weeks. A breach of s.14(2) SGA entitles Sonia to repairs under s.48A SGA at the seller’s expense, which the seller has rejected. Under S48C (2) SGA, where a request for repair or replace has not been complied with, Sonia can rescind the contract and get her money back.

Secondly, Sonia may claim under s.14(3) of SGA 1979 because she was “not able to drive the car” and the car was not fit for its purpose of being driven. Ashington Piggeries[6] involved the supply of herring meal for the purpose of feeding animals and not using it as a fertilizer. The herring meal contained DMNA and was thus unsuitable for mink. The majority held that mink was within the foreseeable range within the animal criteria and the buyer relied on the seller to supply herring meal that would be suitable for mink. Likewise, from the context it was clear that Sonia required a functional car which was reasonable and foreseeable to any reasonable man,

However, a reasonable reliance on the seller by the buyer must be established. Case of Aswan[7] suggests that if the buyer does not sufficiently indicate his purpose he cannot reasonably rely on the seller to supply goods suitable for it. Slater[8] suggests that if the buyer failed to make known that where goods were to be used for other than their normal purpose, the extent of the seller’s obligation under the implied condition as to fitness for purpose was to ensure that the goods were fit for the purpose for which they would ordinarily be used. The buyer of a camshaft in failed to explain the idiosyncratic nature of the boat and the seller could not have potentially foreseen the unusual nature of the case. Similarly, in Jewson[9], Mr. Kelly ordered some boilers but later realised that they had to have had a certain energy ratings for flats to be saleable. However, the reason why most people bought boilers was not for them to meet an energy rating but to heat rooms. In this case, Sonia has not indicated factors peculiar to her purpose. It is clear that Sonia needed a functional car and nothing more. However, since Sonia was sold a dysfunctional car, she is entitled to rescind the contract and receive a full refund.

It thus remains speculative which direction the court will take in terms of addressing breach of s.14(3)[10]. However, if the Court takes the view of Ashington Piggeries[11] Sonia will be able to rescind the contract only if there is no acceptance of the car. Sonia had the opportunity to run the car for a few weeks before the gearbox and the brakes failed. The fact that Sonia fixed the car using her private funds intimates a degree of acceptance and lends weigh to the car dealer’s statement that the car was second hand and “what do you expect of it”. Nevertheless, this is only a factual premise that will be considered by the judge when deliberating whether the above facts are enough to establish acceptance and negate rescission.

Bernstein[12] suggests that after three weeks the defendant could not rescind the contract due to a lapse of reasonable time under s.35[13]. Although the defendant was in hospital, he could have made more trips later to try out his car. Although Justice Rougier does suggest that the period of time which was reasonable for the purposes of s.35[14] depends in part upon the complexity of the intended function of the goods. To test a car generally takes a less than a day due to its uncomplicated and ‘immediate use’ nature. This thus suggests that the several week period is sufficient to intimate acceptance.

Thirdly, Sonia can attempt to rescind the contract for failure by “Cars Direct” to supply information regarding the faults of the car. In the case of J & H Ritchie Ltd[15], the appellants were entitled to reject the seed drill and power harrow because the sellers refused to supply the buyers with an engineers report detailing the problem. This failed to indicate that the machinery had been repaired to factory gate standard. In Sonia’s case “Cars Direct” claim that the car is second hand but Sonia could refuse to accept the car until she has an engineer’s report to show that the car had no prior damage.

Sonia could obtain a remedy for misrepresentation under the Misrepresentation Act 1967 by proving that “Cars Direct” made a statement of existing fact that the car was 12 years old, that the statement was inaccurate and that it induced Sonia to enter into the contract for the purchase of the car. Firstly, “the representation must be an unambiguous false statement of fact.”[16] Under the guidance of Bisset v Wilkinson [1927] AC 177 “a statement of opinion or belief which proves to be unfounded is not a false statement of fact.”[17] Bob, however, made a statement of fact as he had “the special knowledge and skill possessed by the party making the statement.”[18] In order to prove actionable misrepresentation, is whether“ the statement is substantially correct so that any difference between what was represented and the correct position would not have been likely to induce a reasonable person to make the contract.”[19]Finally, if it is established that the age of the car “would have induced the reasonable person to enter into the contract”[20], then Sonia is entitled to rescind the contract and claim her money back.

In relation to the dysfunctional camera purchased abroad, Sonia can rely on Directive 1999/44/EC[21], Article 3(1) which stipulates that the seller “shall be liable to the consumer for any lack of conformity which exists at the time the goods were delivered”. In Sonia’s case, under Article 2(2)(c) the camera was not fit for purposes for which goods of the same type are normally used. Under Article 3(2) Sonia is entitled to have her camera repaired or replaced. If the repairs are not carried out in a reasonable time, Sonia will be able to rescind the contract and receive a full refund under Article 5. Alternatively, Sonia could claim against the credit card company that is likely to have a UK branch because the camera was purchased using a credit card for a sum exceeding £100. The credit card company has the same obligations as the seller under the ambit of Section 75 of the Consumer Credit Act 1974 and it may be more practical and convenient to lodge a claim against the credit card company as opposed to the original retailer in Spain.

John has purchased a camera online and is now afraid that he will not receive a refund. However, under the Consumer Protection (Distance Selling) Regulations 2000[22], Article 10, John has a right to cancel the contract by giving a notice of cancellation to the supplier in writing or in another durable medium. Under Article 7(1)(a)(vi), the shop has failed to provide John with  “the existence of a right of cancellation” and therefore, under 11(4) the cancellation period ends on the expiry of the period of three months and seven working days beginning on the day after the day on which the consumer receives the goods. John can therefore claim a full refund.

In conclusion, in regard to the broken car, it appears that Sonia may have a weaker case under the s.14(2) and s.14(3) because there is evidence to suggest that she accepted the car which would bar Sonia from rescinding the contract. The strongest case is under misrepresentation because it could be argued that Sonia would not have bought a car that was 3 years older as she may have anticipated the technical problems associated with the age. Under Directive 1999/44/EC, Sonia is entitled to have her camera repaired and, if done in an unreasonable time, rescission and full refund. Under Consumer Protection (Distance Selling) Regulations 2000, John can cancel the contract by notifying the seller within the seven day limitation period following his receipt of goods.

References

Case Law

Ashington Piggeries Ltd v. Christopher Hill Ltd [1972] AC 441

Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All E.R. 220

Bisset v Wilkinson [1927] AC 177

Daimler Chrysler Corp. v. Franklin, 814 N.E.2d 281, Ind. App., Aug 30, 2004

Esso Petroleum Ltd v Mardon [1976] QB 801

George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2, HL

Jewson Ltd v Boyhan [2003] EWCA Civ 1030

Jones v Gallagher [2004] EWCA Civ 10

J & H Ritchie Ltd v Lloyd Ltd [2007]UKHL 9

Paige v. Hyundai Motor America, Inc., S.E.2d, 2005 WL 22962, Ga. App., Jan 06, 2005

Razor v. Hyundai Motor America. Appellate citation: 349 Ill. App. 3d 651.Jun 16, 2004

Peakman (t/a MJP) v Express Circuits Limited

Photo Production Ltd v Securicor Transport Ltd [1980] 2 WLR 283

R&B Customs Brokers Co Ltd v United Dominions Trust Ltd [1988] 1 All ER 847, CA

Rogers v Parish (Scarborough) Ltd [1987] Q.B. 933

Slater v Finning Ltd [1997] AC 473

Smith v Eric S Bush (A Firm) [1990] 1 831, HL

Statutes and Other Legislation

Misrepresentation Act 1967 (c7) HMSO 1967

Directive on Unfair Terms in Consumer Contracts 1993

Sales of Goods Act 1979 (SGA)

Unfair Contract Terms Act 1977(UCTA)

Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR)

Directive 1999/44/EC of the European Parliament and of the Council, 25 May 1999

Directive 1999/44/EC of the European Parliament and of the Council, 25 May 1999

Books

Atiyah PS , J Adams and H MacQueen, Atiyah's Sale of Goods (12th edn Longman) 2010

Goode R  and McKendrick E , Goode on Commercial Law (4th edn Penguin) 2010.

Goode, R.M. Consumer Credit Act: A Students Guide. Butterworths. (1979).

McKendrick Contract Law: Text, Cases and Materials, 2nd ed, Oxford University Press, 2005

McKendrick E Contract Law (8th Edition) Palgrave Macmillian, 2012

Beale, Bishop and Furmston, Contract Cases and Materials, 5th ed, Oxford University Press, 2007

[1] Sale of Goods Act 1979

[2] Sale of Goods Act 1979

[3] Peakman (t/a MJP) v Express Circuits Limited

[4] Per J. Rougier, Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All E.R. 220

[5]Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All E.R. 220

[6] Ashington Piggeries Ltd v. Christopher Hill Ltd [1972] AC 441

[7] M/S Aswan Engineering Establishment Co v Iron Trades Mutual Insurance Co [1987] 1 All ER 135

[8] Slater and others v Finning Ltd [1996] 3 All ER

[9]Jewson Ltd v Boyhan [2003] EWCA Civ 1030

[10] Sale of Goods Act 1979

[11] Ashington Piggeries Ltd v. Christopher Hill Ltd [1972] AC 441

[12] Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All E.R. 220

[13] Sale of Goods Act 1979

[14] Sale of Goods Act 1979

[15] J & H Ritchie Ltd v Lloyd Ltd [2007]UKHL 9

[16] McKendrick E Contract Law (8th Edition) Palgrave Macmillian, 2009 p218

[17] Bisset v Wilkinson [1927] AC 177 at 80

[18] Esso Petroleum Ltd v Mardon [1976] QB 801 at 70

[19]  Avon Insurance plc v Swire Fraser Ltd [2000] 1 All ER (Comm) 573

[20] JEB Fasteners Ltd v Bloom [1983] 1 All ER 583

[21] Directive 1999/44/EC of the European Parliament and of the Council, 25 May 1999

[22] Consumer Protection (Distance Selling) Regulations 2000