Breach of Contract by Owl Barn

QUESTION 1

In this scenario, the issue is whether Karen can claim breach of contract by Owl Barn for the delivery of the product that does not match the description of the product that was agreed to in the contract. One of the implied terms in Sale of Goods Act 1979, is that the goods must be fit for the purpose for which sold. In this case, the tank was for the purpose of daily use by the hotel’s 250 guests and employees for which purpose it was to be 9000 litres as per specification. This was also agreed to between the parties and printed on the back of the order form, which was signed by David. Under the Sale of Goods Act, the buyer can reject goods if they do not comply with the implied terms. The buyer can exercise his right to reject if the goods are different from the description as per Section 13, or do not accord with the sample as per Section 15. Furthermore, Section 14 of the Sale of Goods Act provides that the goods should be fit for the purpose and non conformity to this, is a breach of warranty. As the goods were to be delivered as per description, action can lie under Section 13. As the goods were for a specific purpose for which the fitness criterion can be raised, action can lie under Article 14. Accrodingly, this breach gives remedy under Section 53 as per which the buyer can reject the goods and maintain an action for damages.

QUESTION 2

Agency in English law is the component of UK commercial law that deals with the application of agency law in the United Kingdom, and forms a core set of rules necessary for the smooth functioning of business. In 1986, the European Communities enacted Directive 86/653/EEC on self-employed commercial agents. In the UK, this was implemented into national law in the Commercial Agents Regulations 1993. According to Welsh Law there is no such statute directly dealing with the agency laws. Hence the agreement entered between them will hold value. The terms and conditions are clear and after one month’s notice Karen can terminate the contract.

QUESTION 3

The issue that arises in this scenario is whether the terms of the agreement between Walmatrix and Vastum would amount to breach of provisions of Competition law in the UK. The relevant law is contained in the Competition Act 1998. Under this law, there is a prohibition on the restrictive trade practices as well as anti-competitive practices, which may include restriction on trade. Chapter II of the Competition Act 1998 is applicable in this situation as this concerns the anti competition policies in the context of one firm using its dominant position against another to make the other enter into such restrictive clauses. The restraint clause is unreasonable can be struck down by the court (Roussillon v Roussillon (1880); Nordenfelt v Maxim, Nordenfelt Gun Co [1894]; Mason v The Provident Supply and Clothing Co[1913] AC 724). In this case, the clause restricting Walmatrix from selling any competing products for first five years of the agreement may be considered to be unreasonable under the competition law. In the event Walmatrix breaches the term by selling competing products, it may be protected by the common law as well as the Competition Act 1998.

QUESTION 4 (6 marks)

The relevant issue in this question is whether Vastum is entitled to payment after delivering the goods at Liverpool on 2 April. In FOB contract, the risk transfers to the buyer only when the goods are loaded on to the carrier that has been agreed to as between the buyer and the seller. The buyer is under the duty to nominate the ship unless otherwise agreed to (Cargill UK Ltd v Continental UK Ltd_ and Richco International v Bunge). The seller has to effect the delivery by placing the goods on board the carrier agreed upon. In this case, the parties had agreed that Vastum would arrange for the goods to be transported to the UK port of Liverpool and shipped FOB [MV Rosalee] Liverpool Incoterms 2010. Therefore, the agreement was for Vastum to place the goods on board the MV Rosalee. However, the goods were not placed on board the ship but were delivered by carrier to the port of Liverpool, which means that the consignment could not be loaded on board the ship. This means that the delivery has not been effected as per FOB contract because this could have happened only when the goods were loaded on the carrier.