CASE STUDY - LEGAL ADVICE

Case Study - Legal Advice

Case Study - Legal Advice

When a customer purchases goods and/or services from you as a trader, you are both entering into a legally binding contract. The contract consists of various implied terms that are laid down by law. These terms cover issues such as quality, description and fitness for purpose. Express terms can also be made part of the contract through mutual agreement or negotiation. An example of such a term would be agreeing a specific delivery date. Failure to comply with the terms of the contract is commonly referred to as being in breach of contract, and this normally results in the wrongful party being liable to remedy the breach in some way. The remedy usually takes the form of a refund, repair or other form of compensation, the amount and exact nature of which will be dependant on the nature of the breach. In order for a term to be binding, it must clearly be part of the contract, be legal and, dependent on their exact nature, may have to be considered fair and reasonable. A contract does not have to be written but, where there are key express terms, it is best to detail these in writing so there can be no dispute later on.

By displaying or advertising your goods in a shop or catalogue etc., you are stating to customers that goods are available at the price indicated, this is legally referred to as giving an invitation to treat. The customer will then request to buy the goods, referred to as making an offer, which you can refuse or accept. Once you accept the offer and the customer makes a payment or some other commitment to purchase, referred to as offering consideration, the contract is made. You always have the right to refuse an offer and to not sell an item to a customer.

The most common breach of contract by the consumer involves them changing their mind and refusing to go ahead with a purchase having previously placed an order with you. Your remedy in this case will depend upon the nature of the goods and/or service ordered. For the majority of transactions, a lost sale cannot be recovered and, therefore, you are entitled to claim loss of profit and any other reasonable costs incurred. However, if the goods and/or service are considered to be unique and the specific item is sold to another customer, then you have not lost a sale and cannot pursue for loss of profit, but you can still pursue for any extra costs reasonably incurred. It is under this principle that deposits are considered non-refundable should a customer simply change their mind. You must bear in mind that if the deposit does not cover the loss of profit, where applicable, and your reasonable costs, then you can claim the extra from the customer, but where the deposit is in excess of the lost profit, where applicable, and your reasonable costs, you must ...