Marketing & law report

8/7/2019 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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Marketing & law report