BUSINESS ORGANISATIONS

Business Organization



Business Organization

The principle areas that this question is concerned with are contracts relating to the sales of goods and exclusion clauses. An exclusion clause is a term in a contract or notice which either seeks to exclude liability or remedies for breach of contract and negligence, for the party relying upon it.

The first scenario involves Big Deal Ltd and Mr. Boom, who is acting on behalf of Slump Ltd. The question arises as to whether a contract has been formed between both parties. The Sales of Goods Act 1979 would come into effect if such a contact had been formed, which provides legal rights to buyers of goods.

A contract for the sale of goods can be defined using s.2 (1) of the Sales Of Goods Act 1979 as `a contract of sale of goods by which the seller transfers or agrees to transfer ownership in goods to the buyer for money consideration, called the price'. Further,

It can therefore be ascertained that the definition of a contract for the sale of goods was satisfied with regards to Big Deal Ltd and Slump Ltd, as there transfer of the ownership of goods (cars) in return for a money consideration.

S.14 of the Sales of Goods Act 1979 would relate to the faulty cars presented in the first scenario. The `Sundat GR 2 model' had developed serious engine faults and the brakes were defective. Under S.14 (2) of the Act, there is an implied term `that the goods supplied under the contract are of satisfactory quality where the seller sells goods in the course of a business'. S.14 (2A) states that `goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, the price (if relevant) and all other relevant circumstances.

The defendant in the question, Big Deal Ltd is a business seller; therefore, s.14 will be able to apply to Mr. Boom who is acting on behalf of Slump Ltd. Section 14 (2), S.14 (2A) and S.14 (2B) are already contained within the con tract, regardless of either party mentioning these implied conditions or not. A condition is an important term that goes `to the root of the contract'; the significance of which being that if these terms are broken by the seller, the buyer will be entitled to a refund plus damages.

It can be reasonably assumed that the salesperson of Big Deal Ltd, Mr. Smoothie, had more experience and knowledge of cars than Mr. Boom as he works for a car dealership. It would also be reasonable to assume that the salesperson's `special knowledge' of cars would be relied upon by Mr. Boom. It would be assumed that Mr. Boom had little or know knowledge and experience in dealing with cars and was merely directed by Slump Ltd to purchase three cars of a certain `Sundat GR2 model'. The question arises as to whether the three cars purchased were actually Sundat GR1 models, and that they had developed `serious engine faults and ...