M2: Analyse how consumers are protected in the event of breach of contract for the supply and sale of goods or services.
For M2, I will analyse how consumers are protected in breach of contract of law for supply and sales of good or service by legislation like Sales of Good act 1979 which imposes responsibility to the seller to make sure products are good quality. Also, I will be explaining the limitation of this legislation in protecting customers from defected products.
Example of breach of contract and how statue help protect consumers for supply for the supply and sale of goods and services.
Causes of breach of contract Advantages Disadvantages
Default goods Under section 14 of sales of good act 1979 all goods send to customers must
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be satisfactory. Therefore, customers are able to claim damage for loss due to breach of contract as the seller was not able to follow the implied condition in the contract. The buyer is able to reject the contract and claim money back or monetary compensation for the loss. The disadvantage is that other party is able to claim exclusion clause which may limit their liability for the breach of contract. Business are able to include exclusion clause in contracts or receipts. However, exclusion clause will only be valid if it’s reasonable. Fail to pass ownership to the buyer Under section 12 of sales of good act 1979, the sellers have legal rights to pass ownership to the buyer. If the seller fails to pass ownership to the buyer and the buyers has paid for the goods, they are able to claim damage for breach of contract. Therefore, sellers have to compensate damage for the loss to the injured party which is the buyer. Reservation of title can be used which is a remedy for breach of contract which gives the seller the right to reserve title (ownership) until the contract price has been paid by the buyer. Sample product does not match the goods that were given to the buyer Under section 5 of Sales of good act 1979 the buyer has the right to examine sample product to see if the product seller gave to them is the same.
If the product was not the same as the sample product, the contract is breach. Therefore, they buyer is able to reject contract and ask for compensation for breach of contract. Seller have the responsibility to make sure that they product they sell or customers is free from defects for it to be reasonable examination. The injured party right to claim damage for breach of contract is not forever. The Limitation Act 1980 imposes that consumers only have 6 years to be granted remedies for contracts under deeds (for example, sale of land). If they exceed the limit to claim for damage, customers may not be granted any compensation for the damage. However, courts will have to examine case, for example if customers experience fraud, the time limit to claim remedies may extend.
TASK 4: REMEDY FOR BREACH OF CONTRACT
P7: Describe the remedies available for breach of contract.
Remedy – compensation or solution for the victim for the breach of contract
What is breach?
Breach is where one party fails to carry the term in the contract. Therefore, the injured party is able to claim damages for loss due to breach of contract.
DIFFERENT REMEDIES FOR A BREACH OF CONTRACT:
1.) DAMAGES– Any breach of contract allows the injured party to claim damages. The main purpose is to help injured party in a position as if the contract was not breach and that contract was perform.
There are two types of damages:
Liquidated damages: Damages agreed during the negotiation stage.
o For example: Euro London V Claessen (
2006) Unliquidated damages – damages that were not agreed in the contract. However, the damages for unliquidated damages are to compensate for the loss. Therefore, if the other party claim damage but there was no loss from damage, courts will award damage as nominal to recognise that contract has been breached. For example: Anglia TV V Reed (1972) - Anglia TV told Reed to play leading role in a play that will be aired on the television. However, Reed cancelled and Anglia was not able to find a replacement. Anglia has lost £2,750 as Reed breach the contract, therefore Anglia was able to sue Reed and defendant was liable to pay expenses that Anglia lost.
Takem’s is an appliance store in the state of Virginia serving the residents of the Appalachian regions of Virginia, Kentucky, Tennessee, and West Virginia. The business model which is currently being conducted in the appliance store has been called into question by one of the customers who has recently purchased a computer on credit. The owner of the store, Tommy, is now contemplating what should be done to handle this situation and protect his interest in the future. In this discourse, the author attempts to reveal to the reader the alleged infractions that Takem’s may be liable for regarding the situation with his customer, Ms. Sally
(1) When the contract was entered into, was it apparent that damages would be difficult to estimate in the event of a breach? (2) Was the amount set as damages a reasonable estimate and not excessive? (Cross & Miller, 2012)
However prior to the modern understanding of Consumer Rights there was a understanding of Caveat Emptor – Buyer Beware –this has been a fundamental premise of consumer wellbeing prior to World War ‖ , relation to transactions, principle that the buyer purchases at his own risk in the absence of an express warranty in the contract . This common law rule assumes that buyers and sellers are in an equal bargaining position. However there has been evident change in consumer rights which have contributed to the precedence of using Caveat Emptor is no longer acceptable, apparent in the case ACCC v Hewlett Packard Australia (HP), illustrated that no longer can a company ...
If a breach of contract is both material and opportunistic, the injured promisee has a claim in restitution to the profit realized by the defaulting promisor as a result of the breach. Liability in restitution with disgorgement of profit is an alternative to liability for contract damages measured by injury to the promisee.
Even though consumers have great protection rights in Australian Customer Law, they have to understand that this law is designed to provide consumers and sellers a fair go. Therefore, consumers also have to be aware that they will not be protected if they are careless and make unreasonable demands.
"A contract is a legally enforceable promise or set of promises. In other words, when promises have the status of contract, the contracting party harmed by a breach of the contract is entitled to obtain legal remedies against the breaching party" (Mallor et al., 2015, p. 320)
Over the past years, Lancer Gallery's business has been growing reasonably counterfeit revenue is a small amount. Despite the expected attracting turnover of that contract, it will be risky for Lancer. The company total sales are about $ 35,000,000. The new contract although might increase that amount more than $ 4,000,000 in addition to sales, but it's going to harm the company's distinctive competence. Lancer's reputation will land beside their customers' relationship will be also affected and change (since they will not be the only one in this business anymore), the initial sales of the original $ 35,000,000 will be cut down. Indeed, this is not a wise decision to be accepted under any circumstances. We are recommending Lancer Gallery that does NOT accept this
The Lex mercatoria was an international law of commerce governing the trades and disputes based on the customs and practices of merchants. By the nineteen century, the law of merchant was fully incorporated in the Common law, but the development of commercial law led to a conflicting mass of case law . Following the commercial community recommendations, European countries started to rationalized the commercial law by building codes . English law didn’t follow this path, but instead adopted a series of Act of Parliament focusing on specific area, such as Bills of Exchange Act 1882 and the Sale of Good Act 1893 . Finally, the rise of the consumerism forced the Parliament to recognize the separateness of certain commercial transaction and to adopted an interventionist approach that aimed to create a body of laws protecting consumers, such as the Unfair Contract Terms ACT 1977 and Consumer Protection Act 1987
As the law currently stands, dishonest private sellers are essentially rewarded for their conduct, while consumers are negatively impacted, and this does not reflect the intended purpose of the legislation . The legislation should therefore be reworded to serve the intended purpose of the act, which would extend consumer protection guarantees to consumers of private one-off
The plaintiff firm of surveyors bought a second-hand Rolls Royce from the defendants which developed serious defects after 2,000. It was held that the firm was acting as a consumer and that to buy in the course of a business 'the buying of cars must form at the very least an integral part of the buyer's business or a necessary incidental thereto'. It was emphasised that only in those circumstances could the buyer be said to be on equal footing with his seller in terms of bargaining strength.
Breach of a contract – failure or refuse to perform than the contract has been breach than the other party has the right to terminate the contract.
In taking the role of the Consumer, I would like to know that when I
It only summarizes the concept that a buyer must test, observe, judge, and analyse a product considered for purchase. However in modern time’s trend of laws protecting consumers has minimized the importance of this rule. Nevertheless buyer is still required to inspect goods before purchasing. Moreover increasingly responsibilities have also been placed upon the seller. There are certain exceptions to this rule of caveat
Damages is the common remedy in cases of breach of contract. The party who is not able to perform the contract is broadly liable for damages. However, there is an exception to this principle, ie. common law doctrine of frustration. A contract is said to be discharged when performance becomes impossible, illegal or radically different from what was formerly envisaged. In other words, a contract is frustrated, when, after the contract is made, and without the default of either party, a change of circumstances occurs which renders the contract legally or physically impossible of performance.
Consumer care: The customer is the most important in all declarations of good business and it should therefore assist consumer protection movements.