Example Contract Law Problem Question Essay (First Class)

Example Contract Law Problem Question Essay (First Class)

Here is an example contract law problem question essay that was written by a student at one of the leading universities in the UK. The essay got a first class mark.

Bunter can claim under section 14 of Sale of Goods Act 1979 (SGA 1979) on the counts of Maple 00A being of “[un]satisfactory quality” and “unfit for a particular purpose”.  Presently, it is enough to establish that the seller is dealing in the “course of a business” as the transaction is integral to its business. Under the authority of R&B Customs B\rokers Co Ltd Bunter is more likely to fall under the heading of a consumer than a business. Bunter’s transaction is incidental to his position as an academic, rather than integral to it since he is not in a business of buying notebooks; he is an academic who incidentally happens to need a notebook for his research.

Firstly, Wickwar Computers (WC) is in breach of s. 14(2) of the SGA 1979 as the computer begins crashing after 3 weeks.  To establish that the goods were of unsatisfactory quality “relevant circumstances” will be considered, namely s.14(2B) (a), (c) and (e).  Maple 00A is evidently not fit for all purposes for which such goods are commonly supplied. Maple 00A is not free from minor defects as it keeps on crashing when performing simple tasks due to what has been described as a loose connection in the power supply. In the case of Bernstein v Pamson Motors (Golders Green) Ltd, a new car failed in the middle of a motorway due to a piece of sealant entering the lubrication system which cut off the oil supply to the camshaft. Justice Rougier categorically held the new motor car to be unmerchantable as the defect went “far beyond that which a buyer must accept”. The case however failed on the basis of acceptance through a lapse of reasonable time under s.35 of the SGA 1979. Lord Justice Rougier pointed out that after the Plaintiff recovered he had taken two or three short trips in his car for the purpose of trying it out and “had an opportunity to make more trips had he wished to do so”. The appellants remedy was therefore limited to damages and did not extend to a rescission of the entire contract. It now becomes a question of fact whether Bunter has had a reasonable time to examine the notebook to ensure that it is in conformity with the contract as provided by s.35 (2) (a).

However, instead of attempting to reject the Maple 00A, Bunter accepted repair under s.48B of SGA 1979. However, by accepting to have the Maple 00A repaired in no way is Bunter accepting the notebook as is stipulated by subsection (6)(a) of s.35 of SGA 1979. Repair should rather be regarded as a second contract. The notebook had been repaired. The cost of repairs was presumably not disproportionate to the value of the Maple 00A, or the manufacturers would not have carried out the repairs. It is a question of fact whether the notebook was repaired within a reasonable time, if it was then the sellers would not be in breach of the obligation to repair under s.48B(2)(a). Accordingly, the right to rescind would not arise under s.48C. In the case of J & H Ritchie Ltd v Lloyd Ltd, 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 Bunter’s case WC do not know the nature of the problem of the notebook and Bunter could refuse to accept the notebook until he has an engineers report to show that there has been no consequential damage. Similarly Bunter could argue that the repairs were not done within “a reasonable time” as stipulated by s48B(2)(a), and if it is proved likewise then Bunter will be able to get a reduction in price or rescind the contract. It is very unlikely that Bunter had experienced significant inconvenience as he was given a replacement laptop of the same specification. Nevertheless the buyer was entitled to rescind the contract in the case of Rogers v Parish (Scarborough) Ltd all because the seller had failed to repair the Land Rover within a reasonable time, which helped the buyer to fulfill the condition set out in 48C(2)(b)., In the present case if Bunter can prove that the manufacturer took longer to repair the notebook than is reasonable, then he will be able to proceed to section 48C and have a greater likelihood of rescinding the contract and getting his money back. However, as suggested By Pamson Motors, it is important that Bunter is not held to have accepted the notebook for a lapse of reasonable time, which will clearly be a question of fact. Otherwise, if a lapse of reasonable time for the purposes of examining the notebook (s.35) is established than by virtue of s.11(4) Bunter will only be able to treat a breach of condition by the seller merely as a breach of warranty to which extent his remedy will be restricted to that of damages and not rescission.

As follows, if the repairs are proved to have been carried out in accordance with s.48B(2)(a) then Bunter can claim under s.14(3) of SGA 1979. The Maple 00A model was clearly unfit for the purpose of running the statistical software. The case of Ashington Piggeries involved the supply of herring meal for the purpose of feeding animals as opposed to using it as a fertilizer. The herring meal was 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. Similarly, Bunter indicated that he needed a notebook for a program that analyses documents in lots of languages and the seller should have therefore foreseen a range of such programs that could be used in university research. However, a reasonable reliance on the seller by the buyer must be established. Case of Aswan suggests that if the buyer does not sufficiently indicate his purpose he cannot reasonably rely on the seller to supply goods suitable for it. Alternatively it can well be maintained that Bunter had failed to properly indicate the complex nature of the software and thus cannot reasonably rely on the salesman to supply such software in the same way as a foreign merchant cannot rely on an English merchant as to what is saleable in foreign merchant’s country. (Teheran-Europe Co Ltd v S T Belton (Tractors) Ltd [1968] 2 QB 545 per Diplock LJ at 560-61). Even if reasonable reliance is successfully established in this case and the seller is liable under s.14(3), it will be difficult to contradict the intimation of acceptance through a lapse of reasonable time for the purpose of examining the goods under s.35 (2) (a) and (4).

It is now vital to determine whether acceptance under s.35 can be established. If it is, then under s.11(4) the breach of conditions by the seller can only be treated as a breach of warranty which will reduce Bunter’s claim to damages. Case of Clegg v. Anderson suggests that nature and complexity of the goods are relevant factors in deciding whether a consumer had had a reasonable opportunity for examining goods. Bunter had the Maple 00A for three weeks up until the fault developed. In Truk (UK) Ltd v Tokmakidis GmbH Judge Jack QC examined a list of factors to be taken into account when determining reasonable time. One of such factors is that the time could be extended by dealings between the buyer and the seller, in particular as regards the repair of the goods. This extension is unlikely to apply as Bunter then got a replacement notebook of the same specification whilst Maple 00A was being repaired and therefore had 8 weeks to test out his software. This he evidently failed. Like the defendant who failed to make more trips in Bernstein when he was out of hospital, Bunter had failed to run the software on the loaned notebook. Although in Rogers the plaintiffs succeeded in rejecting the vehicle after 6 months when the vehicle had done 5,500 miles simply because the defendants failed to argue that the right to reject had been lost due to a lapse of reasonable time. This points towards acceptance under s.35 and Bunter will thus not be able to rescind the contract but rather claim damages.

However, the If however, Bunter is held to be dealing in the ‘course of a business’ then all the forms of redress will be reduced. If the breach of sections 14(2) and (3) is proved to so slight that it would be unreasonable for the buyer to reject, then the breach of condition may be treated as a breach of warranty under s.15A. This would reduce Bunter’s claim to damages for breach of warranty under s.53 of SGA 1979.

What is a reasonable time in relation to a bicycle would hardly suffice for a nuclear submarine."

That section seems to me to be directed solely to what is a reasonable practical interval in commercial terms between a buyer receiving the goods and his ability to send them back, taking into consideration from his point of view the nature of the goods and their function, and from the point of view of the seller the commercial desirability of being able to close his ledger reasonably soon after

Zaf says:

the transaction is complete. The complexity of the intended function of the goods is clearly of prime consideration here. What is a reasonable time in relation to a bicycle would hardly suffice for a nuclear submarine

he leading English case on what is a reasonable time for the purpose of s.35 has for some time been Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All E.R. 220. Here Rougier J. applied an objective test of “a reasonable practical interval in commercial terms between a buyer receiving the goods and his ability to send them back, taking into consideration from his point of view the nature of the goods and their function, and from the point of view of the seller the commercial certainty of being able to close his ledger reasonably soon after the transaction is complete.” A gap of 28 days from delivery was held to bar rejection of a new Nissan Laurel. This involved ignoring some circumstances peculiar to the buyer, in this case that the car was delivered in winter, he was ill soon *L.Q.R. 545  after and it was only his first substantial trip in the car when it broke down on a motorway after having done 140-odd miles from delivery.

Price does not matter, not a core term of a contract. But Q arises when its deposit not payment (Watford electronics v Sanderdson)

Rejection process s48 SGA (3 month):

The difficulty of enforcing those rights against a retailer in a different Member State would be overcome by making the manufacturer directly liable to the consumer for poor performance of their products. Consumers would be given a choice of four remedies: rejection, price reduction, replacement or repair. In addition “manufacturers guarantees”, where given, would be required to meet certain minimum requirements and be legally enforceable.

The first point to note is that the Directive gives rights to “consumers” only

consumer is defined as “a natural person who is acting for purposes which are not related to his trade, business or profession

If lack of conformity becomes manifest within a year of sale, the consumer would be able to demand rescission, repair, a part refund or a replacement.21 Sellers22 have called for the choice between repair or replacement to lie with them rather than with the consumer, on the basis that the consumer would otherwise gain a windfall by having a (new) replacement after a number of months of free use of the original product. On the other hand, it can be argued that the choice between repair and replacement should lie with the consumer because, first, repair often fails to cure the defect and secondly, discretion over remedies should not lie with the party in breach (the seller). The Proposal suggests a different regime for defects becoming manifest between one and two years after the sale. In such cases, *J.B.L. 170  the consumer's rights would be limited to obtaining (free) repair or an “appropriate” price reduction, again at the consumer's choice.23

The above remedies would imply some limited change for English law. Currently, English law does not provide repair as a remedy and rescission is only available whilst the consumer is not deemed to have “accepted” the goods within the meaning of section 35 of the Sale of Goods Act 1979. Usually this “acceptance” occurs by implication, through the consumer keeping the goods for a few days or weeks after the sale.24

Although the Proposal does not imply wholesale changes to the United Kingdom Sale of Goods Act, it might be identified as changing United Kingdom consumers' rights in a more subtle way. Any resulting legislation will, in accordance with European law,25 have to be interpreted in a “purposive” fashion. This is not the case with the Sale of Goods Act, which is to be interpreted according to the natural meaning of the words. The promotion of the internal market through increased “consumer confidence” is the dominant purpose of the Proposal. Thus, in any doubtful cases, a pro-consumer interpretation can be expected.