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5103LAWBL Introduction To Business Law

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5103LAWBL Introduction To Business Law

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Course Code: 5103LAWBL
University: Liverpool John Moores University

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Country: United Kingdom

Question:

Amina was preparing to host a dinner party, and purchased a new brand of dessert from Puds2Go, a local shop. The dessert contained special ingredients that would create sparkling and crackling effects when it is served, and Amina followed the preparation instructions to the letter.  She was shocked and disappointed when some of the dessert mixture erupted while it was in the oven, leaving permanent marks on the interior and weakening some of the oven’s heating components. Amina managed to serve the rest of the dessert, but she and her guests experienced intense stomach pains soon after eating it, and they were ill for several days.
 
The dessert had manufactured by Sweet Tooth Ltd, who sold these in bulk to Puds2Go. Puds2Go repackaged and sold the dessert in its shops under the brand name ‘Puds2Go Indulgence’. The dessert was the first one to have been produced using a special technique invented by Sweet Tooth Ltd. The technique was subjected to extensive testing before the dessert was released into shops, and there have been no other incidents of the kind encountered by Amina and her guests. Sweet Tooth and Puds2Go have suggested that any faults with the dessert may have arisen after it was sold, or that any faults were caused by some of the equipment which they were legally required to use in order to produce the dessert.
Despite receiving reports of the effects of the dessert on Amina and her guests, Sweet Tooth and Puds2Go did not take any steps to prevent further sales of the product or to alert other buyers or consumers.
Identify and evaluate the contractual, tortious, product liability and product safety issues arising from these facts.

Answer:

Issue
Whether Amina has any kind of contractual, tortuous, product liability and product safety issues against the manufacturer of the supplier of the product that is purchased by her?
Relevant Law
Every buyer or consumer when purchases any product from the supplier or the producer or the manufacturer, then, it is necessary that the product so supplied must be adequate to use as per the expectation of the consumer and the supplier, etc must have comply with their statutory duties that are imposed upon them. However, if the product sold is not as per the standards or if the statutory duties are not comply with by the suppliers, etc then, there are several legal issues that might arise.
All the issues are analyses independently before applying them to the facts of the case.
Contractual issues
When any buyer purchases the goods from the seller, supplier and manufacture, then, a contract is established amid them. The parties are required to comply with the express contractual term that is made by the parties themselves. If the terms are not comply with then there is breach of contract. Apart from the express terms, there are few implied terms which are made part of the contract of sale under the Sales of Goods Act 1979 and the Consumer Rights Act 2015 which must be comply with by the parties. If the implied terms are not comply with then the contract is considered to be violated resulting in contractual liability on the defaulting party. Thus, some of the implied terms that are made part of the contract and which must be fulfill by the contractual parties includes:
i As per section 14 (2) of the 1979 Act, if any seller within the course of his business sells the goods, then there is an implied term made part of the contract of sales that the goods so sold must be of satisfactory quality and is held in Stevenson v Rogers. The goods are considered to be of satisfactory quality when the quality is of the standard as expected by a reasonable man in the given situation. As per section 14 (2B) of the Act, the quality of the goods includes that the goods so supplied are for the purposes for which they are intend to be supplied or the goods must be of satisfactory finish and appearance or are not defective or are safe to use and are durable in nature. Generally the usability test is applied in order to understand whether the goods supplied are of satisfactory quality. It is necessary that the goods must be fit for the purpose for which it is commonly used in order to consider the same of acceptable quality and is held in Aswan Engineering v Lupdine. It is necessary that if the unsatisfactory quality of the goods is bought to the knowledge of the buyer before the purchase then the section has no applicability and is held in Bartlett v Sidney Marcus ltd;
 
ii. Section 9 (1) of the Consumer Rights Act 2015 submits that there is an implied term that is made part of the contract of sale which implies that the goods so sold are of satisfactory quality. It is the objective test which must be used in order to judge whether the quality is satisfactory or not (section 9 (2)). The quality is consider to be good if it is fit for purpose; if it is safe, free from minor defects, durable and is held in Shine v General Guarantee Corp.
 
iii. As per section 10 of the Consumer Rights Act 2015, it is an implied term of the contract of sale that the goods so sold are fit for the purpose so acquired.
Under the Consumer Rights Act 2015, if the provisions of the Act are not comply with then the major rights that are available to the consumer includes:
i. Right to reject – the consumer has the right within thirty days to reject the goods if the goods are found to be in violation of section  and section 10 of the consumer rights Act 2015 as there is breach of implied terms of the contract
 
ii. Right to replacement and repair
 
iii. Right to price reduction
 
iv. Compensation can be claimed for personal injuries, consequential loss and the damage caused to the property
Tortuous issues
The law of tort is a common law principle which emphasis that every person must indulge in such acts and omission which does not hamper the plaintiffs in any manner whatsoever. The defendants are imposed with the legal duty of care against the plaintiffs who are considered to be the neighbors of the defendant. Thus, the liability that is imposed on the defendants under the tort law is the fault based liability. 
The law of negligence simply submits that every defendant must make sure that by no acts or omissions of his any damage is caused to the plaintiff with whom he is sharing proximate relationship. In Donoghue v Stevenson, the defendant is considered to be negligent in his acts or omissions when the legal duty of care is not carried on by him reasonably and because of such breach of duty of care there is harm that is caused to the plaintiff which is not remote in nature. The consumer plaintiff has the right to sue any person in the chain of supply for the damage caused to him, that is, the supplier, producer or manufacturer of the product. 
In Donoghue v Stevens, it was held by Lord Atkin, that every manufacturer of the products owns a duty of care against the consumer that the product manufacturer by him must not cause any kind of damage to the consumer. This is the primary the legal case that was decided by the House of Lords which imposed the liability of negligence upon the manufacturer. Later, the duty of care under the law of negligence is also extended to the suppliers or the producers of the products.
However, every consumer has the right to bring an action of tortuous liability against the manufacture or the supplier or the producer for incurring negligence against him provided there are few essential elements which must be comply with and which includes:
i. Duty of care – Every manufacture or the supplier or producer of the products are under the legal duty to make sure that the products that are produced or supplied by them must be safe and must not cause any harm to the consumers. The legal duty can only be imposed against those consumer plaintiffs who are:
 
a. Reasonable foreseeable by the defendant. If the defendant is not able to reasonably foresee the presence of the plaintiff then there cannot be any legal duty that can be imposed on the defendant;
 
b. The neighbors of the defendant. It is necessary that the plaintiff and the defendant must be the neighbors of each other. The parties are considered to be the neighbors of each other when the acts of the defendant impact the plaintiff directly.
Compliance of both the element results in imposing a duty of care upon the defendant and must make sure that the products that are delivered to the plaintiff by the defendant are such so that there should not be any harm that is caused to the plaintiff.  
ii. Breach of duty of care –The duty of care is considered to be violated by the defendant when the level of care that is expected from the defendant in any given situation is not met by him. The level or the standard of care is different from one situation to another. If the level of risk is higher in one situation then the degree of care is also high; if the plaintiff involved is a child or an aged then the level of care is very high; if the acts involved are dangerous in nature then the degree of care is also very high. Thus, the level of care is dependent upon the situation involved.
 
iii. Damages – The last element which is needed in order to hold the defendant negligent is that there should be some damage that must be caused to the plaintiff because of the breach of duty of care on the part of the defendant. It is necessary that the damage that is caused to the plaintiff is because of the breach of duty of care on the part of the defendant, so, there should be causation amid the acts of the defendant and the damages caused to the plaintiff. Also, the loss that is caused to the plaintiff must be such which is caused because of the breach of duty of care on the part of the plaintiff. If the loss that is caused is not reasonably foreseeable then the defendant cannot be held to be negligent in his actions.
When all the elements are comply with, then, the defendant is held to be negligent in his actions and the defendant is then liable to make good the loss that is suffered by the plaintiff.
Product liability issues
When the claim raised by the plaintiff does not result on the proof of the presence of any kind of fault or any kind of contractual failure, then, the liability that is imposed on the defendant comes under the preview f the strict liability. it is the consumer who owns a duty to prove the case against the producer or supplier or manufacturer and the defendant has defenses to protect his interest. The consumer Protection Act 1987 has laid down product liability in cases of defective products. When any damage to the private property or any injury or death is caused to any consumer because of the defective product supplied then the consumer has the right to raise product liability issue against the defendants. The defendant can be the producers or any person who has imported the product.
The liability can only be imposed on the producer of the goods or the importers provided the goods that are supplied to the consumer are defective in nature. As per section 7 of the Act, the liability that is generated under the 1987 Act is the liability which cannot be excluded any kind of provision or any contractual term. Under the 1987 Act, the product is considered to b defective in nature when the product so supplied is not suitable for the purpose for which it is generally marketed by the supplier. The product is also considered to be defective in nature when the product is not complying with what is reasonably expected from such a product. Thus, a manufacturer or the supplier can product themselves from such defective product by placing a suitable warning on the products.
Product safety issues
Apart from the contractual liabilities, tortuous liabilities and the product liability, there are various other product safety issues which must be cater by the supplier or the producer or the manufacturer of the product. In United Kingdom there are various consumer product safety regulations that laid down which imposes obligations on the manufacturers or producers or the distributors of the product. The various product safety concerns include:
i. The General Product Safety Directive – the General Product Safety Directive lays down the basic safety measures which must be comply with relating to the consumer products. However, the General Product Safety Directive is found to be confusing and thus a new product safety regime is launched which has implied the provisions and given emphasis on the penalties. The General Product Safety Directive is made part of the United Kingdom in 2005 with the help of General Product Safety Regulations.
 
ii. General Product Safety Regulations – the main aim of General Product Safety Regulations  is to make sure that the consumer products that are marketed must be of such nature that they must be safe in nature. The distributors and the producers are obligated to make sure that the product that is supplied by them are safe and thus the risk is reduced. The trading standard departments are given powers to make sure that the products which are unsafe must not be made part of the marketed and must be recalled. If any safety refine is not made part of the product, then, General Product Safety Regulations  makes sure that specific safety regulations must be launched. There are factors which are valid down which must be considered in order to evaluate whether the product is safe or not, for instance, firstly, the characteristics of the pricts, that is, the dangerous the product the more safety standard are required for the same. Secondly, the installations, maintenance and assembly instructions must be provided with the product; thirdly, when the product supplied is to be used with other product then the effect of the cobitaion must be kept in mind fourthly, whether any kind of warning or instructions or labeling is made part of the product r not; the safety must be taken in to account when particular class of consumers are using the products for instance, children, aged persons etc.
It is an offense if the producer or the distributor of the product places an unsafe product in the market for the use of the consumer. If the producer or the distributor is aware that the product is not safe then it is their duty to notify the consumer of the same.
iii. Sectoral legislation – The sectoral legislation applies to consumer products as well. Corrective measures are made part of the sectoral legislations to make sure that the products that are launched in the market must be safe.
The law is now applied to the facts of the case.
Application of law
The law analyzed above is now applied to the facts of the case and it is now evaluated whether any contractual, tortuous, product or sectoral issues are raised in the given factual situation.
Contractual liability
As per the facts of the case, Amina is hosting a dinner party. In order to host the party, she bought a new brand of dessert from a local shop, Puds2Go. The dessert is required to be prepared by following the special instructions, which would give a crackling and sparkling effecr when the same is served. Amina diligently follow the instruction that is mentioned in the letter before preparing the dessert. While the dessert is in the oven at that time the dessert mister erupted given [permanent marks on the interior of the oven. The eruption also resulted in weakening of the heating components of the oven.  
Now, at this stage it is submitted that when Amina bought the oven from the local shop, then there is a contract of sale that is established amid the two. It is the duty of both Amina and the owner of the local shop t comply with the express contractual terms that are made part of the contract of sale. However apart from the mutual contractual terms , there are few implied contractual terms which are ,made part of the sales of goods actv1979 and the consumers rights act 2015 which must be comply with by the seller in order to avoid consequences. However, it is found that the local shop owner has violated the said implied terms which includes:
i. It is found that the local shop owner while carrying out his business activities has sold the dessert to Amina. However, when the dessert was put in the over the same resulted in eruption casing harm to the over. Thus, the quality of the dessert that was sold by the local shop owner is not satisfactory in nature and thus as per section 14 (2) of the 1979 Act, there is breach of the implied contractual term. By applying the law in Stevenson v Rogers Amina can sue the local shop owner for the breach of contractual term and can raise contractual liability against the shop owner. The quality of the dessert is found to be unsatisfactory in nature because the dessert was not safe and the contents of the dessert are defective in nature. this is because when the same is put in the oven, there is a sudden reaction which has resulted in eruption which gave permanent marks on the interior of the oven and has also resulted in weakening of the heating components of the oven.  
 
iv. Likewise, since the dessert supplied by the local shop owner is not of satisfactory quality, thus, there is a clear violation of Section 9 (1) of the Consumer Rights Act 2015. By applying the law in Shine v General Guarantee Corp, the dessert was not safe as it causes eruption at the time of the preparation. Also, after the consumption of the dessert the guests fell ill for several days. Thus, the nature of the goods is such that the same is not safe and durable for consumption.
 
v. The dessert not only resulted in the eruption in the oven at the time of preparation rather, when the same is served to the guests, the guest fell ill for several days. Thus, the dessert was not fit for the purpose it was acquired. The dessert was acquired for the purpose of consumption, but, the same was not safe enough to consume thus there is clear breach of section 10 of the Consumer Rights Act 2015.
Under such circumstances, since there is clear volition of several implied contractual terms, thus, Amina has every right reject the dessert. She can either ask for the replacement of the dessert pr she can seek price of the dessert by returning the product. Compensation can also be claimed for the damage that is caused to her property.
Tortuous liability
The facts further submitted that the dessert which is purchased by Amina from the local shop is erupted while in the oven resulting in eruption which damaged the interior of the oven and has also resulted in weakening of the heating components of the oven.  The facts further submitted that the rest of the dessert which is served by Amina to her guests resulted in stomach pain and there fell ill for several days.
Now, Amina also has the right to sue the manufacturers and the seller of the dessert under the law of negligence.
As per the law held in Donoghue v Stevenson Amina has the right to sue the manufacturers and the seller of the dessert. As per the facts, the dessert is manufactured by Sweet Tooth Ltd. the bull of the dessert is then sold to Puds2Go. Puds2Go then repack the product ad sold the same to the shop under the name Puds2Go Indulgence.
Thus, both Puds2Go and Sweet Tooth Ltd are the parties against whom Amina can buy the claim for negligence. It is submitted that both Puds2Go and Sweet Tooth Ltd owns duty of care against Amina mainly because:
i. Amina is the consumer of the dessert. This fact is within the knowledge of both Puds2Go and Sweet Tooth Ltd that the dessert which is manufactured by Sweet Tooth Ltd and which is repacked and sold by Puds2Go will be ultimately consumed by the purchaser of the dessert including Amina  (as Amina is one of the consumer of the product). Thus, there is a proximate relationship amid Amina and Puds2Go and Sweet Tooth Ltd. so, by applying the law in Cook v.Cook it is submitted that Amina is the neighbor of Puds2Go and Sweet Tooth Ltd and thus Puds2Go and Sweet Tooth Ltd must indulge in acts and omissions which does not cause any harm to Amina;
 
ii. The duty of care also arises because the consumers including Amina are reasonably foreseeable by Puds2Go and Sweet Tooth Ltd.
Now, since Puds2Go and Sweet Tooth Ltd are under the duty to provide safe products to the consumers, it is found that the duty of care is not catered by Puds2Go and Sweet Tooth Ltd as per the level of care that is expected from them in the given situation.
It is found that the dessert was prepared by Sweet Tooth Ltd by using a special technique. The technique requires extensive testing of the dessert before the same is put in the market for consumption purposes by the consumers. It is also found that there is no incident was came into notice as suffered by Amina and her guests. It is suggested by Sweet Tooth and Puds2Go that the dessert might have become faulty after the sale of the product or the dessert is prepared by using the equipment which is not required to be used for the preparation of the dessert.
However, by applying the law in Paris v Stepney Borough Council it is submitted that the level of care that is required from Puds2Go and Sweet Tooth Ltd is not met by them resulting the breach of the duty of care on the part of Puds2Go and Sweet Tooth Ltd. it is also found that despite receiving complaints from Amina, Puds2Go and Sweet Tooth Ltd did not make any attempt to bring the alert of the incidence to other buyers or consumers.
There is a clear breach of duty of care by Puds2Go and Sweet Tooth Ltd that is expected from them in the given situation.
Now,
Because of the breach of the duty of care on the part of Puds2Go and Sweet Tooth Ltd, there is loss that is caused not only to Amina but to her guests. It is found that when Amina put the dessert in the over of peroration, thee is sudden eruption in the oven which not only damaged the interior of the oven but also weaken the interior of the oven, later when the dessert is served to the guest, they felt pain in the stomach after eating the dessert and fell ill.
It is thus submitted that the damage that is caused to Amina and the guest is because of the consumption of product that is manufactured and sold by Puds2Go and Sweet Tooth Ltd. thus, as per Bolitho v City & Hackney Health Authority there is causation present. Also, the loss that is caused is direct and reasonably foreseeable by Puds2Go and Sweet Tooth Ltd. thus; by applying  L and another v The CC of the Thames Valley Police there is no remoteness of damage.
It is thus submitted that the duty of care that is imposed on Puds2Go and Sweet Tooth Ltd is not met resulting in breach and causing damage to Amina and her gusset. So, there is presence of negligence on the part of Puds2Go and Sweet Tooth Ltd.
Product liability
Amina can also bought action for product liability under the Consumer Protection 1987 and she is not require to prove the presence of any kind of fault or any kind of contractual failure. Amina can prove that the defective product is produced by Sweet Tooth Ltd and which is sold by Puds2Go and the local shop and that because of the defective product injury is caused to Amina and her guests.
Product safety liability
 Amina can seek the help GPSD or GPSR and content that the product that is sold to her is not safe in nature. Thus, she can bring proceedings against Puds2Go and Sweet Tooth Ltd.
Conclusion
It is thus concluded that the dessert that is sold and manufactured by Puds2Go and Sweet Tooth Ltd is not safe in nature. Amina can bring action for breach of implied terms of the contract, for negligence, case under product liability and non compliance of product safety requirements.
References
Books/Articles/Journals
Beever, A, Rediscovering the Law of Negligence, (Bloomsbury Publishing, 30-May-2007).
 Bridge, M, Principles of English Commercial Law, (Oxford University Press, 2015).
Charlesworth, J, Charlesworth and Percy on Negligence, (Sweet & Maxwell, 2011).
Grubb A and Howells, G,The Law of Product Liability, (Butterworths, 2007).
L’Estrange, PROXIMITY AND THE STANDARD OF CARE — COOK v. COOK,  1987.
Lambiris, M and Griffin, L, First Principles of Business Law, (Oxford University Press, 08-Feb-2017).
Plunkett, J, The Duty of Care in Negligence, (Bloomsbury Publishing, 08-Feb-2018)
Stone, R, The Modern Law of Contract, (Psychology Press, 2005).
Stapleton, J, Product Liability, ( Cambridge University Press, 1994).
Case laws
Aswan Engineering v Lupdine [1987] 1 All ER 135;
Bolitho v City & Hackney Health Authority (1997);
Bartlett v Sidney Marcus ltd [1965] 1 WLR 1013.
Cook v. Cook (1951) [830 SCR.
Stevens v Brodribb Sawmilling Company Pty Ltd  [1986] HCA 1.
Donoghue v Stevenson (1932).
L and another v The CC of the Thames Valley Police (2001)
Paris v Stepney Borough Council (1950) 367 AC
Stevenson v Rogers [1999] 1 All ER 613.
Shine v General Guarantee Corp [1988] 1 All ER 911 .
Online Material
Elawresource, Statutory implied terms – The Consumer Rights Act 2015, Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982, (2018) .
Outlaw, The UK’s consumer product safety legal and regulatory regime, (2018), .
Martin Ewen, Product Liability, (2017) https://www.mondaq.com/uk/x/645772/Product+Liability+Safety/What+constitutes+an+unreasonable+failure+to+mediate.

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