Contract Law Scenario

Viarum

Just a hypothetical situation a friend and I were discussing the other day, this is by no means to be taken as legal advice in any capacity.

Let's say A is a dance school (registered company) and B is a private individual (not a registered company).

A buys a lot of printed T-shirt stock off B, somewhere in the region of 2k euros worth.

Very soon afterwards, the print falls off half of the T-shirts and B admits that he was erroroneous in the way he went about printing.

A seeks a refund for the entire lot and B appears evasive and unwilling to give a refund, however offers to replace the defective T-shirts.



A few questions if anyone could be kind enough to give an opinion:


1. What legal principles can A, as a business, seek to rely on?

2. Is B's offer to replace the currently damaged half of the stock a sufficient response to place him beyond repremand?

3. Is A entitled to any relief for the other half of the stock in which, although still intact, it is reasonable to believe will prove defective in time?

4. Would there be a difference if A was acting in an individual private capacity?


Many thanks folks, it's been ages since I've looked at any contract stuff, any bit of info/opinion would be appreciated!

axer

Viarum wrote: »

1. What legal principles can A, as a business, seek to rely on?

I would assume that one of the conditions of the contract were that they would be of sufficent quality? Was there a written contract here? If there was a condition in the contract that the t-shirts would be of sufficent quality then there would be a breach of contract which could lead to a recission of the contract.

Viarum wrote: »

2. Is B's offer to replace the currently damaged half of the stock a sufficient response to place him beyond repremand?

That is up to A to decide - it depends on what was agreed in the formation of the contract. Plus A should consider the costs of getting the contract recinded (assuming that the money has already been paid) through the courts.

Viarum wrote: »

3. Is A entitled to any relief for the other half of the stock in which, although still intact, it is reasonable to believe will prove defective in time?

It depends on the contract. What was agreed? Anything at all to do with quality? Was all the money paid up front?

Viarum wrote: »

4. Would there be a difference if A was acting in an individual private capacity?

What was A purchasing the t-shirts for? I cannot imagine a private individual purchasing a lot of t-shirts like that for personal consumption thus I doubt A could be seen as a consumer in any way thus consumer law/rights would not apply here.

234

axer wrote: »

If there was a condition in the contract that the t-shirts would be of sufficent quality then there would be a breach of contract which could lead to a recission of the contract.

In this case A does not come within the Sale of Goods and Supply of Services Act 1980 as he is buying in the course of business: http://www.irishstatutebook.ie/1980/en/act/pub/0016/sec0003.html#sec3
Obviously there could be an express condition in the contract as to quality.
Also, breach gives rise to the right to elect to terminate not recission. For recission you need frustration, mistake, misrepresentation, etc. Breach gives rise to a claim for damages based on loss of expected performance.

axer

234 wrote: »

In this case A does not come within the Sale of Goods and Supply of Services Act 1980 as he is buying in the course of business: http://www.irishstatutebook.ie/1980/en/act/pub/0016/sec0003.html#sec3

Exactly. 'A' could not claim to be a consumer.

234 wrote: »

Obviously there could be an express condition in the contract as to quality.

Yes, thats why knowing the agreed terms of the contract is important.

234 wrote: »

Also, breach gives rise to the right to elect to terminate not recission. For recission you need frustration, mistake, misrepresentation, etc. Breach gives rise to a claim for damages based on loss of expected performance.

Yep, my mistake. Termination not recission.

234

My mistake, section 10 of the 1980 Act expressly includes contracts for the sale of goods in the course of business. So there is an implied term as to merchantable quality.
Just goes to show that you should read the whole act before you act like you know it all.

axer

234 wrote: »

My mistake, section 10 of the 1980 Act expressly includes contracts for the sale of goods in the course of business. So there is an implied term as to merchantable quality.
Just goes to show that you should read the whole act before you act like you know it all.

I dont think it does. I dont think either party here could claim to be a consumer. What consumer would purchase 2k euro worth of t-shirts? (I assume mass printed with im sure the school name or something like that).

234

Hmmm section 3(1):
In the Act of 1983 and this Act, a party to a contract is said to deal as a consumer in relation to another party if-
(a) he neither makes the contract in the course of business nor holds himself out as doing so, and
(b) the other party makes the contract in the course of business, and
(c) the goods and services supplied under or in pursuance of the contract are of a type ordinarialy supplied for ordinary use or consumption.

Section 10, ammending section 14(2) of the 1983 Act:
Where the seller sells goods in the course of business there is an implied condition that the goods supplied under the contract are of merchantable quality[.]

Section 3(1)(c) seems to exclude this transaction from being a consumer transaction. Therefore the contract was made in the course of business and section 10 kicks in with the implied guarantee of merchatable quality. Since B admitted that his printing was erroroneoushe has as much as admitted that the T-shirts are not of merchantable quality. I'd say A has b by the balls.

axer

234 wrote: »

Hmmm section 3(1):
In the Act of 1983 and this Act, a party to a contract is said to deal as a consumer in relation to another party if-
(a) he neither makes the contract in the course of business nor holds himself out as doing so, and
(b) the other party makes the contract in the course of business, and
(c) the goods and services supplied under or in pursuance of the contract are of a type ordinarialy supplied for ordinary use or consumption.

Section 10, ammending section 14(2) of the 1983 Act:
Where the seller sells goods in the course of business there is an implied condition that the goods supplied under the contract are of merchantable quality[.]

Section 3(1)(c) seems to exclude this transaction from being a consumer transaction. Therefore the contract was made in the course of business and section 10 kicks in with the implied guarantee of merchatable quality. Since B admitted that his printing was erroroneoushe has as much as admitted that the T-shirts are not of merchantable quality. I'd say A has b by the balls.

Wow, that is very interesting. I never knew that the Sale of Goods act applies to businesses as well as consumers. Learn something new everyday.

234

I didn't think it did either but I can't see anything in the act limiting it to consumer transactions. Maybe somebody could help with this?

Reloc8

Section 14(2) as substituted by S. 10 of the 1980 Act applies in respect of merchantable quality, unless the buyer inspected the goods and an inspection should have revealed defects, or defects were pointed out.

Section 14(1) clarifies that there is no implied condition or warranty as regards quality fitness for purpose in a non-consumer transaction, subject to e.g. S. 14(4).

Section 14(3) defines merchantable quality as being fit for purpose or purposes for which goods of that kind are commonly bought and as durable as it is reasonable to expect having regard to any description applied to them, the price of the goods and all the other relevant circumstances.

Section 14(4) says that where the buyer makes known a purpose to the seller and the goods are supplied there is an implied condition that the goods are reasonably fit for purpose, whether or not those goods are ordinarily used for that purpose, unless the buyer did not rely, or it was not reasonable for him to rely, on the seller's skill or judgment.

All of that applies to business transactions.

In the instant case the goods are most likely not of merchantable quality.

The contract however was for the supply of the t-shirts and the seller has offered to replace them. Presuming that the buyer can not prove financial loss arising from the initially defective product, the seller is likely to be entitled to fulfil the contract and therefore offer replacements.

The real problem is practical in the sense that the seller has the money already. To recover he or she has to establish entitlement to a rescission on the basis of fundamental breach. In the face of the sellers offer to fulfil the contract and in the absence of some reason why this offer is not practically effective to give the buyer exactly what they wanted I would not recommend kicking off a case (which would have to be before the Circuit Court, where the legal fees would outstrip the 2k in question by a multiple of at least 10 by the time the case came up for trial).