Liability Of Leather Fashions Ltd For The Sale Of Goods

Liability to Tanners Ltd regarding the 100 skins

Whether Tanners Ltd has the right to claim £3,000 from Leather Fashions Ltd regarding the payment for the 100 skins which were ruined during the delivery?

Transporting goods can be a risky and expensive process because there is a risk of damage to the goods or loss of goods which is being transported. It is important that parties should clearly understand their rights and obligations in relation to any loss or damage to the goods in order to avoid dispute. However, in case such understanding has not been established between parties, then it becomes difficult for them to impose liability on the parties in case the goods are damaged or lost during transit. The Sale of Goods Act 1979 is the main legislation which governs the relationship between seller and buyer and provides key provisions which assist them in resolving their dispute. As per this act, ownership of goods is transferred from the seller to the buyer when the latter is able to acquire proprietary rights on such products after which the obligations can also be imposed on the party. Section 32 of the act provides provisions regarding delivery of the goods through carrier. As per subsection (3), unless otherwise agreed by the parties, the loss or damage of the goods during transit is imposed on the seller if the buyer declines to accept the delivery. In case the goods are lost or damaged during transit, then the party who is the owner of the goods suffer such loss. Therefore, the title or ownership of goods is a relevant principle which can pass from the seller to the buyer in several ways.

Section 12 (1) provides that it is a general rule that the seller must have the right to sell the goods. After the agreement of sale of goods, the title of the goods transfers from the seller to the buyer after which the liability of loss or damage of the goods can be imposed on the buyer irrespective of the fact whether the goods are transferred or not. The moment goods pass to the buyer, the seller ceases to be the owner of such goods. The title of the property is transferred after the delivery of goods is completed by the time and place of the seller. Sometimes the ownership is transferred during or at the time when the shipment is made. The ownership is also transferred if the buyer specific destination for accepting the delivery of the goods. At the time, the legal title of the goods is being delivered. Based on these elements, it can be constituted that the risks relating to lost or damage of the goods remains with the seller until the goods are transferred to the buyer unless provided otherwise. However, in case the property is transferred to the buyer, then the goods are at the buyer’s risk irrespective of the fact whether the delivery is completed or not. Section 20 (1) of the act provides that until the property is transferred to the buyer, then the seller is responsible for the safety and risk of the goods. After transfer of the property, the goods are at buyer’s risk.

Liability to Imran regarding the sale of the car and breach of implied terms

In the given case study, a contract for sale of goods is made between Leather Fashions Ltd and Tanners Ltd for purchase of 100 skins. Tanners Ltd was responsible for delivering the goods to Leather Fashions Ltd. During transit, a runaway bus crashed into the lorry which is carrying the skins due to which they were ruined. Tanners Ltd sent an invoice of £3,000 to Leather Fashions Ltd in order to recover the amount. However, as per the provisions of the Sales of Goods Act, Tanners Ltd did not have the right to receive such payment. The methods of transfer of ownership given under section 12 (1) of the act provided different ways through which title of the goods can be transferred, however, in this case, those elements were not present. Leather Fashions Ltd can only be held liable if the ownership of goods had been transferred, however, it is not the case. This is also mentioned in section 32 (3) of this act. Under section 20 (1) of the act, Leather Fashions Ltd cannot be held liable to make the payment to Tanners Ltd.

To conclude, Tanners Ltd cannot claim £3,000 from Leather Fashions Ltd since the ownership of goods were not transferred.

What are the liabilities of Leather Fashions Ltd regarding the sale of car to Imran and whether any implied terms are violated?

Section 14 (3) of the Sale of Goods Act 1979 provides key provisions regarding quality and fitness of goods sold by seller to buyers. As per this section, an implied condition is included in the sales contract which provides that goods must be reasonably fit for the purpose which the buyer has expressly or impliedly made known to the seller. In case where the buyer has asked a seller regarding advice or further information regarding the product which is purchased, then it is considered reasonable that the buyer can rely on the skills of the seller. Consumer Rights Act 2015 also provides provisions for protecting the rights of consumers from unfair trading practices. As per section 9 (1) of this act, the consumer goods sold must be satisfactory in quality. Subsection (2) provides that an objective test can be applied in order to determine whether the goods are satisfactory or not. Moreover, subsection (3) provides that the quality of the goods includes safety, fitness for purpose, durability, freedom from minor defects and appearance. In Shine v General Guarantee Corp case, the court provided that the purchaser must accept the goods at the same price if he had known of the defect.

Furthermore, Misrepresentation Act 1967 protections buyers from misrepresentations made by sellers regarding their products or services. There are three types of misrepresentation which include fraudulent, innocent and negligent misrepresentation. In Derry v Peek case, the court provided that parties can be held liable for fraudulent misrepresentation if the goods or services are sold based on deceit. In Rowland v Divall case, the court provided that in case the buyer wanted to rescind the contract for sale, then he/she is entitled to receive full payment for such goods even if the buyer has enjoyed the goods for some time. In the case of fraudulent misrepresentation, the parties have the right to rescind the contract and claim damages as provided by the court in Smith New Court Securities v Scrimgeour Vickers case.

In the given case study, Leather Fashions Ltd has sold an old VW car to Imran who operated a business of 2^nd hand cars. This car is sold for £5,000, and it was advertised by Leather Fashions Ltd that the car is only 3 years old and it has serviced and maintained by VW dealer only. In reality, the car is 4 years old, and it has been serviced and maintained by local garage. Many parts of the car have been replaced by local parts due to which the car no longer meets the fuel economy specifications. As per section 14 (3) of the Sales of Goods Act, Imran has the right to receive quality and fitness products to ensure that it must be reasonably fit for the purpose. Moreover, Imran can also hold Leather Fashions Ltd liable for violating section 9 (1) of the Consumer Protection Act since he did not receive the goods in satisfactory quality.

As per the judgement of Shine v General Guarantee Corp case, the car sold to Imran was not in acceptable quality since Imran can no longer sell it as exclusively dealer maintained and it also failed to meet the specifications on fuel economy. Imran can hold the company liable for fraudulent misrepresentation. As provided by the court in Derry v Peek case, Leather Fashions Ltd sold the car to Imran based on deceit, therefore, he can hold the company liable. Although Imran has used the vehicle, however, he cannot still claim full purchase price from Leather Fashions Ltd (Rowland v Divall). Leather Fashions Ltd lied to Imran in order to conduct fraud based on which he has the right to rescind the contract and claim damages for the loss (Smith New Court Securities v Scrimgeour Vickers).

To conclude, Leather Fashions Ltd has violated implied terms of the contract and the company has relied on misrepresentation to sell the car to Imran based on which they are liable to pay the full payment to Imran and damages for the loss suffered by him.

Whether Adil, Boris, Jamil, and Charlie are in partnership and what are their liabilities towards the debts of Plumtech? What options are available for Adil based on the fact that Boris has received compensation from Charlie?

A partnership is referred to a legal relationship which is formed between two or more parties who agreed to come together to run a business in common with an objective to generate profits. The Partnership Act 1890 is the key legislation which governs the partnerships in the United Kingdom. The nature of the partnership is defined under section 1 of this act which referred it as a relationship which is constituted between personal carrying business in common to generate profit. Partners have unlimited liability in the business. Certain elements must be present to ensure that a partnership structure is formed between parties. The first key element is that relationship between the partners. Tiffin v Lester Aldridge LLP is a relevant case to understand this element in which the court provided that a party who also receive a salary and a small amount of profits is considered as partners. The partner also received limited rights in the firm based on which he was allowed to hold other partners liable for unfair dismissal.

The second element is that the partners must carry out the business operations. This element was highlighted by the court in Khan v Miah case in which the court provided that trading did not begin between parties based on which the partnership has not established. The third element is that the business must run “in common” by partners. George Hall & Son v Platt case is relevant to understand this element. In this case, a farmer and agriculture merchant agreed to grow carrots and sell it to share profits and losses equally between themselves. The court provided that a partnership did not exist because they did not run the operations in common. The fourth element is that the objective of the partners must be to generate profit. Section 2 (3) provides that receiving profits of the business is a prima facie evidence that a party is a partner, however, this did not mean that everyone who receives profits is a partner. For example,

The court provided in Cox v Hickman case that right to receive profits of the partnership business is not enough to form a partnership between parties. Section 9 of the act provides that all partners are jointly and several liable for the actions of each other and the obligations of the firm. Section 5 provides that all partners act as an agent of the firm and other partners based on which liability can be imposed on partners for the action of one partner who is taking under the ordinary course of business. Furthermore, a partner owes a fiduciary duty towards other co-partners under common law. As per this duty, the partners have to ensure that they did not misuse their position while taking business decisions which could result in causing harm to the firm or other partners. In case this fiduciary duty is violated, the partner who has violated his/her duties can be held legally liable by other partners as provided by the court in Birtchnell v Equity Trustees case.

In the given case study, Adil and Boris are in a partnership as per the definition given under section 1 of the Partnership Act. In the case of Jamil, he has lent his premises to Adil and Boris along with a large sum of money to start their business. He has invested in the business, and he is receiving share form the profits as well. However, it did not constitute a partnership between the parties because not all elements of partnership are present. Jamil did not run the business ‘in common’ with Adil and Boris (George Hall & Son v Platt). Moreover, sharing profits is a prima facie evidence of a partnership relationship (section 2 (3)), however, other elements are necessary to be present as well (Cox v Hickman). Boris has misused his position by receiving commission from Charlie on any installations. Boris has violated his fiduciary duties towards Adil based on which he can face legal consequences (Birtchnell v Equity Trustees). Adil and Boris both are jointly and severally liable for the debts of Plumtech, and their personal assets can be used for repaying its debts.

Conclusion

To conclude, Adil and Boris are partners, and Jamil is not a partner in the firm. Boris can face legal consequences for violating his fiduciary duty, and both Adil and Boris are liable for the debts of Plumtech.

References

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Birtchnell v Equity Trustees (1929) 35 ALR 273

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