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The Contract and Sale of Goods laws are meant to ensure the transparency and reliability of the commercial purchases and increase the professionalism of both sides. The law stimulates the introduction of innovations and responsibility for the results of the deals. Overall, the main principles stated in the law aimed at making the organizational purchase process effective by focusing on the creation of equal conditions for the participants.
The rights and responsibilities, as well as the commercial transaction content, are usually established according to the agreements made between the sides. Therefore, the accurate and comprehensive formulation of the terms of the deal in the contracts is of significant importance. It is also important to pay attention to the determination of the responsibilities of the parties to avoid the losses due to the unexpected incidents of different kinds.
The Sale of Goods Act is meant to help the parties in the cases when the difficulties in the identification of the responsibilities and rights that should be applied in the deal arise. The act regulates the relations between the sides and helps to make the negotiations more productive. The Contract law provides a set of substantive norms; it forms the model principles of the contract creation and defines the major terms. In this way, the provided uniform standards regulating the contracts and sales facilitate the elimination of the legal barriers and assist the trade development.
Blackboard and PosterPLUS Case
According to the terms of the contract between the parties, Blackboard was responsible for the long-term supply of the cast vinyl to PosterPLUS. The total value of the supplied materials was $200.000. The cast vinyl was purchased by PosterPLUS for the production of labels for bulk shipping. The great portion of the material was used for the manufacturing of labels for the SEASTORM company that later made a complaint about the low quality of the purchased items. As a result, PosterPLUS had to supply the company with new labels with a value of $10.000 at its own expense. Moreover, they still had the vinyl film worth of $20.000 previously provided by Blackboard. In this way, PosterPLUS suffered tremendous financial loss.
Actions for Breach of the Contract
In this case, the main question is whether Blackboard is responsible for the losses suffered by PosterPLUS as initially, the company knew about the purposes of the purchased materials application. Nevertheless, by putting forward the clause which states that “Blackboard gives no warranty that the goods are fit for any particular purpose,” the company attained the opportunity to dodge the given responsibility.
According to the Sales of Goods Act (1895), Actions for Breach of the Contract, the buyer may apply to the court in the case when the supplier fails to deliver the goods of a specific character. Article 51 of the Act states:
‘In any action for breach of contract to deliver specific or ascertained goods, the court may, if it thinks fit, on the application of the plaintiff, by its judgment or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages.’ 1
According to the terms of the contract, Blackboard was to supply the particular type of vinyl film, the cast vinyl, which is characterized as the material of premium quality and a long period of working life. Thus, it is possible to assume that the contract condition wasn’t met. The results of the material analysis are in favor of PosterPLUS. The investigation made it clear that the supplied vinyl was deficient due to the wrong production process. Thus, Blackboard failed to perform the contract’s requirements at the initial phase of the transaction. And since there were significant damages made to the PosterPLUS’s financial state, Blackboard needs to take measures to reimburse the losses and fulfill its obligations towards the contract terms.
Assessment of Damages
Although Blackboard didn’t give warranties for the outcomes of their materials used in manufacturing, according to the terms of the contract, the company guaranteed high quality of the cast vinyl film. In this way, the warranty of the quality wasn’t performed.
As Article 52, par. 3, states ‘In the case of breach of warranty of quality, such loss is prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty.’ 2 First of all, Blackboard needs to reimburse the losses of PosterPLUS that equal $10.000, and the price of the defective film that is left in the stores.
In this way, the total amount of reimbursement will be estimated at $30.000. Moreover, PosterPLUS’s vinyl label production is the source of its profit. By being unable to use the deficient materials for sale, the company loses a significant part of its revenue. Thus, additionally to the mentioned compensation sum, it is required to calculate the loss of the potential profits. Therefore, the damages provoked by the failure to perform the quality warranty will cost Blackboard over $30.000.
The given case demonstrates that the inability of the sides to perform the specific terms of the contract and fulfill the responsibility has the legal implications and entails financial expenditures, and the side that failed to perform loses more. It is also worth mentioning that when one party doesn’t comply with the terms of the contract intentionally, its behavior may be regarded as unethical. In this particular case, there is the possibility that Blackboard wanted to dodge their responsibilities by refusing to guarantee the results of the materials’ application. The Australian Contract law doesn’t allow the organizations to conduct in a misleading way and requires responsible behavior.
‘Transactions or dealings may be unconscionable when they involve serious misconduct or something clearly unfair and unreasonable.’3 In case the organizations engage in unconscionable conduct in the commercial and business relations, the enforceability of the contracts and particular agreements are threatened. Nevertheless, the Sale of Goods Act and the contract laws provide the necessary information for the companies like PosterPLUS to use for the breach of contract and damage measurement.
The laws provide standards that increase the validity of the documents. The Contract and Sale of Goods laws introduce the definitions that have not merely legal but the ethical significance as well. The major norms stated in the laws are based on the idea of equality and fairness, and the compliance with the legal principles and concepts in deals helps to develop trade and business at both local and national levels.
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- Sales of Goods Act (Australia, 1895) Pt V 19 .
- Sales of Goods Act (Australia, 1895) Pt V 19 .
- Australian Government, Contact law and consumer law: continued (Attorney-General’s Department, 2012) 2.