Business Law, Quiz Example

Facts of the Scenario

When explaining the facts of a potential lawsuit or breach of contract, the facts related to the suit or breach are the relevant issues at hand. For this scenario the facts are as follows:

1. Robertson, minor entered into a conditional contract to purchase a pick-up truck for 1,743.85.
2. He traded in a car worth a value of 723.85 towards the purchase price.
3. Further he agreed to make payments towards the remaining balance of $1020.00 in 23 monthly installments.
4. Robertson made one payment when the truck began to experience wiring difficulties.
5. By the time Robertson made the first payment, he had turned 18 years of age.
6. Two weeks after the commencement of the faulty wiring, the truck caught fire and was nearly destroyed.
7. Robertson refused to continue making installment payments.
8. Julian Pontiac sued for recovery of the truck.
9. Robertson filed a complaint to rescind the contract and recover the amounts he paid.

IRAC Method

Issue 1: Robertson entered contract at the age of 17 as a minor.

Issue 2: A month after entering the contract the vehicle was found to be faulty.

Issue 3: Can Robertson be liable in contract after he turns of legal age?

Issue 4: Is there a remedy in tort?

Issue 1: Law states that Robertson does not have the legal capacity to enter into a contract as a minor.

Rule 1: Further it is up to the minor whether he wants to enforce the contract or not. The law is as such to protect the interests of the minor against unjust and unfairness. Though, the minor is responsible for the debt until he applies for rescission of the said contract. If the minor attempts to recover any monies from having repudiated the contract he has to show that he suffered a total failure of consideration. (Steinberg v Scala 1923) where it was distinguished that there was no failure of consideration in this case to the minor because the company had fulfilled its side of the bargain by allotting the shares on the basis of the payments made to the company.

Application 1: With respect to this scenario, Robertson has the choice to either continue with the contractual obligation or to ask for a rescission from the court of law based on his inability to contract as a minor.

Conclusion 1: With respect to Robertson being a minor at the time of the offer and acceptance, I feel the court will make the contract voidable because of his inability to legally enter into a contract as a minor.

Issue 2: A month after entering the contract the vehicle was found to be faulty.

Rule 2:  Remember, the rule of law that a contract entered by a minor can be either enforced or voidable applies here. If Robertson rescinds the contract, he is not responsible for the truck and he can make application to the court to recover his payment (one payment) as long as he can show that he suffered a total failure of consideration. (Steinberg v Scala 1923). The Sale of Goods Act 1979 ensures a consumer will receive a product of satisfactory quality.

Application 2: There are three defenses and remedies available to Robertson. He can have the contract made voidable for inability in enter legal contract (capacity), further he can recover money for one payment barring he can show total loss of consideration (money/exchange) and he can bring action under the Sale of Goods Act 1979.

Conclusion 2: According to the laws, Robertson should be successful with his attempt to rescind the contract and collect his payment made to the car dealership.

Issue 3: Can Robertson be liable in contract after he turns of legal age?

Rule 3: Law states that a minor can be made liable in contract to a degree that is reasonable and fair. If the court finds that the matter or substance of the contract was necessary to the minor, then the court can find that the minor, (now an adult) is liable for the use of the product. Three factors constitute necessity:

1. the goods are capable of being necessities
2. the minor has not already been supplied with items at the time of delivery
3. the supplier must show that the goods have been sold and delivered

Ryder v Wombwell 1868 it was shown that a pair of cufflinks was not necessities to an infant with an income of 500 GP.  Nash v Inman 1908 showed that a tailor could not recover 122 GP of items provided to a minor because the minor had already been supplied with adequate clothes hence they were not considered necessities.

Application 3: It would be up to the discretion of the court to rule on this matter however, is a truck a necessity?

Conclusion 3: In my opinion, the court may rule a truck is a necessity if he were about to graduate and go off to college, considering he did not have one prior to the purchase and the idea that he was about to turn 18 a month later. However, Robertson would still have a claim under the Sale of Goods Act 1979 for faulty product. Factors would also have to be considered if he was under ‘duress’ when making the purchase agreement. A contract is not legal if the contracting party is under duress.

Issue 4: Is there a remedy in tort?

Rule 4:  The Sale of Goods Act 1979 makes getting a refund possible for up to 6 months if faulty goods are established as a potential issue. The legislation places the onus of proof on the retailer to demonstrate that they weren’t defective when purchased. Further the Consumer Protection Act 1987 places strict regime on suppliers of products. The law states “where any damage is caused wholly or partly by defect in a product, every person to whom supplied the product including the manufacturer, the person who abstract the products or the person who carries out the business” shall be liable for the damage” It was distinguished in (A v National Blood Authority 2001) a product is considered defective if it does not provide the level of safety which a person is entitled to expect. It does not matter if the lack of safety could have been avoided by the manufacturer. The argument of reasonable precautions was rejected by the court.

Application 4: When applying the law, it is shown that the car dealership has provided a faulty and defective product to Robertson. There is a remedy under Sale of Goods Act 1979 and the Consumer Protection Act 1987 placing liability on the car dealership especially since the faulty wiring was discovery immediately after the purchase of the vehicle which led to the car catching on fire and Robertson could have potentially been injured or killed.

Conclusion 4: I feel the court will rule in Robertson’s favor and find that he is not responsible for the contract of the vehicle, he can recover the one month payment and they may award damages for emotional distress associated with the fire.