Business law functions

Business law operates to guarantee that no one takes advantage of consumers and suppliers during or after their transactions. It covers a wide area of contracts obliging buyers and producers to observe intellectual property rights binding other parties in the market.The Competition Commission and the UK office of fair trading also have set laws that mergers, monopolies, and cartels must adhere to. This essay examines common legal issues in the market regarding the sale of goods and services and provides possible legal solutions to them according to the provisions of the law.

The Consumer Rights Act

This act became enforceable from October 1st, 2015. It stipulates the rights and obligations arising from the supply of goods and services to a consumer (The National Archives 2017, n.p). The law replaced the previous consumer legislations regarding regulation of consumer contracts, the sale of Goods Act and Unfair terms of trade. The relationship between the consumer and producer/supplier is formed by a contract which is consequentially established by an offer and acceptance. A contract arises when one party gives another an offer to purchase or sell products or services by some terms and al binding thus becoming a legal binding agreement. In the case of G & H Holmes vs. Hopkins Ltd, the offer is only enforceable by law if the contract was first accepted. The terms and conditions are legally binding to all parties in a contract only when the goods are received by G & H Holmes.it are only when the goods are delivered that the contract can be followed to the letter. Failure to do so constitutes a breach of contract, and the perpetrator will be liable. The mere displaying of products on a shelf for customers to purchase is an invitation to treat (Jalil 2012, p.79). If the customer shows interest by offering to buy the products, the seller can choose whether to accept the offer or deny it. Therefore, G&H Holmes have the right to look for a new supplier since Holding ltd is not in the capacity to give the required products. The offer does not constitute a contract but an agreement. If a seller plans for the goods to be delivered to the consumer, the goods remain at the seller’s risk until they are officially handed over to the buyer. If the goods are damaged before reaching the customer’s premises, the seller should decide for replacements preferably through insurance. G&H Holmes gave an offer to purchase goods; it is the duty of Holding Ltd to supply the goods to make the contract binding.

G and H Holmes were given an invitation to treat when Hopkins Ltd displayed furniture. The contract could only be enforceable once the goods were delivered to are accepted by G & H Holmes. Therefore, G & H Holmes are at liberty to obtain similar goods from another company and Hopkins has no legal authority over them. For Mr. and Mrs. Green, their contract is legally binding since they got what they wanted as they had agreed on the price of the work to be done. Their only term was a cheap makeover, and no further instructions were given. As per the contract act, the contractor has the responsibility of stating his expectations and negotiating the price. However, by signing the contract without stating the requirements but by agreeing on a price, Mr. and Mrs. Green imply the formation of a contract that is legally binding.

Product Liability Statutory Provisions

The Consumer Protection Act and the common law of negligence hold manufacturers, distributors, and suppliers accountable for injuries caused by their products (McConnell 2004, n.p). The guidelines are provided in the second chapter of Part 1 of the Consumer Rights Act 2015. These products may have been used by consumers upon purchase or by employees at the workplace, either way; the manufacturer/seller is liable for damages caused. Injured individuals can sue the manufacturer/seller or even all the distributors of the product for compensation. Business men/corporations who may have imported the faulty product are also liable. The injured person can also be a third party; he/she should not have necessarily purchased the product. Claims may be brought because of personal injury, damage to private property exceeding 250 pounds or death (McConnell 2004, n.p).

In our case, Julia was the third party and was therefore entitled to file a complaint against the supplier of the scooter according to the Right of Third Parties Act. The scooter was defective since it failed within the first month of its purchase; this proves the defect. This is also because the supplier of the scooter did not exclude third parties from the contract using the terms and conditions. Julia is entitled to compensation from the vendor and other distributors which she chooses to sue. Vasca Scooters company as the supplier of the product, they are liable to the injuries Julia incurred. Despite not being the manufacturer, they act as an agent of the manufacturer thus they are the ones to be held accountable. As per the Consumer Protection Act of 1987, the product’s producer, assembler, manufacturer, any person responsible for any process the manufactured good has undergone, a party holding itself as a producer, or any a person who imports the product into EU is legally liable for damages.

Consumer Credit Agreements

Types of Credit Agreements

According to the National Archives, there are four types of credit agreements: “credit sale agreements; hire purchase agreements; hire agreements and conditional sale agreements (2017, n.p). Credit sale contracts mostly involve expensive products which cannot be bought on a sitting. Debtors may or may not pay deposit according to the agreement, and they assume ownership of the product immediately the credit agreement is made. Hire purchase agreements to involve deposits and installments, and the debtor assumes ownership of the product after completing his/her total debt. Conditional sale agreements may require debtors to assume ownership of products after paying the final installment or after meeting the stipulated terms and conditions of the agreement. All the contracts are subject to the Consumer Credit Act (National Archives 2017, n.p).

Hire Purchase Agreements

This type of credit agreement entitles the creditor to be the legal owner of the goods until the whole amount has been paid for them. The debtor is at liberty to purchase the products or return them upon the agreement. The debtor can terminate the agreement before claiming to buy it that is, paying the final installments. The debtor should inform the creditor of his/her wish to end the agreement then return the goods to the latter. This, however, does not end the debtor’s liability if he/she has not paid half of the total amount owing to the agreement (Raimi 2015, p. 247). The creditor can also terminate the agreement if the debtor falls behind his repayments. The creditor can, in this case, repossess the good and pursue the debtor on cash outstanding according to the agreement. The Consumer Credit Act’s provisions protect the debtor from being ‘snatched’ the good by the creditor in the absence of a court order in case the debtor has paid more than a third of the total debt (Raimi 2015, p.247). If the creditor fails to heed to this requirement and goes ahead to repossess the goods, the debtor can sue him so that he can be released from all liabilities to the agreement. The debtor is also entitled to recover all the money paid to the creditor in the form of deposits or installments. The debtor also has an option to claim compensation or the loss of use of the product from the day upon which it was repossessed. If the debtor has not paid a third of the total amount, the creditor should repossess the product with a court order allowing him to do so.

Types of Agents

There are five types of agents ”general; special; agency coupled with interest; servant and sub-agent” (Namazi 2013, p.40). General agents are bestowed upon the responsibility to carry out a wider range of activities on behalf of the principal than other types of agents. They have the power to alter the principals’ legal relationship with a third party, for instance, agents in the assurance industry can terminate the principals’ contracts with clients upon the latter’s failure to disclose relevant information concerning them. Principals’ can, however, restrict general agents’ power by including it in the terms and conditions of their relationship. Special agents have the authority to act only on specially stipulated transactions, for instance in real estate where special agents are hired to find buyers for the principal only; special agents are not required to sign contracts with third parties on behalf of the principal. An ”agency coupled with interest” is one whose compensation depends on his existing delegated authority. This mostly occurs if he/she has entity rights in a property, for example, an author’s agent is entitled to a percentage of the author’s earnings as a result of the agents’ selling ‘bookly’ work to publishers. Subagents are appointed/hired by other agents to carry out the latter’s duties. The principal and general agents are usually liable for the actions of the subagents. A servant can be an employee since this agent has the responsibility to perform duties for the principal based on the terms and conditions put by the latter. The principal, in this case, has a right to determine the desired outcomes of the servant’s work and even the latter’s conduct. This contract can be terminated upon the servant’s failure to meet the master’s standards or completion of the servant’s years of practice.

Rights and Duties of Agents

With the rights and restrictions comes their liabilities. Agents have a right to claim remuneration. This right is provided for in the agency contract hence principals who do not conform to it are liable for breach of contract. The power of retainers enables agents to deduct the amount which principals owe them from the principals’ revenue. Agents have a right to stop goods in transit from reaching their destination if they make the former personally liable. According to agency law, the principal is responsible for all the activities done by the agent unless subagents are involved, then the general agent and the principal are liable (Rasmusen 2001, p.1). The right to indemnity enables agents to make principals answerable to any suffering/losses incurred by the former. Principals should ensure that when a failure occurs, agents are restored to the exact financial condition they were before the loss. Agents have the right to lien; in case of the principal’s debt to an agent, the latter can claim for compensation in the sense that, the debt is paid by having a charge upon the principal’s real or personal property.

Agents are required to act on behalf of and follow the instructions of the principal (Rasmusen 2001, p.1). Agents should also get the informed consent of principals before working on complex situations. They should not carry on delegation unless the principle approves of it, mostly in the case of subagents. Agents are expected to perform their duties with great care; they should seek to maximize the principal’s welfare. Personal interest conflicts should not arise, for instance, all accounting records should be correct and up-to-date implying the agent’s capacity and honest to maximize the principal’s welfare.

In the 3rd illustration, after having paid three installments and the fourth one is not yet due, the customer has to pay 1,015pounds since it is the amount outstanding to reach the half amount of payments required before terminating a hire purchase agreement. In the second case, the customer has paid 2,700 pounds and is required to pay 800 pounds more for him/her to have paid half the amount required in the agreement. In the third instance, the customer has paid thirteen installments, and the product is defective. The latter should prove that the product was defective when he/she purchased it. Upon proving its defect, she/he is entitled to return the product to the supplier and get compensation for loss of usage. In the last instance, if the customer does not terminate the agreement and fails to pay installments after the eighth installment, the creditor can seek a court order and repossess the goods since the client has paid 3,560 pounds, more than a third of the total payment. Moreover, the seller can seek compensation for the extra months the hire purchaser uses the item without paying for it.

Monopolies, Mergers, and Anti-Competitive Practices

Monopolies and Anti-Competitive Practice Legislation in the UK

In the UK, Monopolies, Mergers, and Anti-Competitive Practices are governed by the Enterprise Act of 2002 and the Competition Act of 1998. The Competition Act prohibits anti-competitive practices and abusing of market power by dominant corporations in the market (Slaughter and May 2016, p.6). The first provision restricts undertakings that can impose on other companies/entrepreneurs to participate in trade within the UK. The Competition and Markets Authority, CMA, ensures that the first chapter of this act is enforced. This provision is enforceable in both formal and informal agreements, oligopolistic markets and trade unions. ‘Undertakings,’ in this case, refers to all economic agents. The Competition Act is infringed when economic agents charge unreasonably high prices, charge meager prices to prevent possible competitors from entering the market, force clients to buy more than one product by making one product’s sale to be dependent on another product’s sale and when they give special discounts to consumers who buy all their goods from them (Slaughter and May 2016, p.8). The second provision of the Competition Act discourages misuse of market dominance. A monopoly can abuse its position in the market by hoarding products to prevent competition; charging different prices to different consumers for the same products; forcing customers to buy products exclusively from the firm and leveraging to gain dominance in other markets (Slaughter and May 2016, p.14).

Role of the Competition Commission

To avoid monopolies and anti-competitive practices, the Competition Commission has a role in ensuring that fair trading occurs in activities of mergers. The ”UK Office of Fair Trading” referred mergers which had doubtable activities to the Competition Commission to investigate the suspects’ operations. The CC then determines whether the businesses in question may have engaged in anti-competitive practices. Mergers which were found guilty were subjected to punishments whose magnitude was determined by the CC (Competition Commission 2014, p.4).

Dominant Positions within the EU Common Market

According to Slaughter and May, dominant posts in the market depend on factors such as a company’s market share; barriers of entry in the market and the location of actual and potential competitors (2016, p.13). A firm is said to be dominant if its operations are done independent of other’s competitors and positive outcomes are still realized hence giving the company in question competitive advantage in the market. Napp Pharmaceuticals was a dominant firm in 2001 (Slaughter and May 2016, p.13). Google as an example of a dominant company has been fined severally by the EU in order to regulate it from abusing its dominant position.

Exemptions to Potentially Anti-Competitive Practices

The Competition Act exempts the following potentially anti-competitive practices: economic agents characterized as high-income generators for the government since these regulations will reduce government revenue; contracts made to enforce legal requirements such as the case of Vodafone, its license of operation permits it to post/hike prices and in cases where these regulations ”create conflict between provisions of the Competition Act and the international obligations of the UK” (Slaughter and May 2016, p.8).

Intellectual Property Rights

Intellectual property is an asset which is highly valuable to an entrepreneur since it forms the basis of the company’s existence/position in the market.

Forms of Intellectual Property

The primary types of intellectual property are patents, copyrights, trademarks and trade secrets (Harper 2016, p.1). Trade secrets refer to any information that is used in the operation of enterprises to earn them economic advantages such as high-quality products, increased demand and hence high-profit margins. Trademarks refer to symbols, names, designs or words identifying products produced by particular corporations, they include, the Nike sign, the m-sign for McDonald’s and the Starbucks logo in their coffee cups. Copyrights refer to protection of original works of artists and corporations while patents give inventors exclusive rights to restrict others from designing, using and selling the same products for a specified period (Harper 2016, p.1).

Patents Protection and their Infringements

For a patent to be valid, the invention must have novelty, should be inventive, capable of industrial application and included in patentability (Harper 2016, p.). Novelty refers to non-existence; the invention should be new and not have been precluded by a prior act. An invention is inventive is it is not apparent to persons skilled in the art in question, for instance, individual A invents a one-wheeled wheelbarrow, and individual B invents a two-wheeled wheelbarrow. It can be said that only B’s invention is a simple variation of individual A’s invention hence patents are restricted. A patent is infringed when an unlicensed person/corporation supplies or offers to supply within the UK a similar product which has a patent, in our case, other computer companies are not licensed to provide the patented eBooks hence the inventor (computer company) can sue the perpetrator. The computer company is entitled to permanent or temporary injunctions, an award of damages or legal costs and a proportion of the infringer’s income (The United States Government Accounting Office 2013, p.10).

Copyright Protection and their Infringement

Copyright laws give original producers of products exclusive rights to their works. Copyright owners have a right to copy and distribute their original work; create new work in accordance/reference to their original work; publicize their work either through broadcasting or posting it on social media platforms and a right to perform their work (Reddy 2016, p.50). Copyright infringement occurs when copyrighted products are copied, performed, publicized or distributed without the owner’s permission. The company’s competitors are infringers since they copied are distributing similar eBooks without the proprietor’s consent. Therefore, the owner can sue them and claim damages or a proportion of their profits.

Comparison of the Protection of Trademarks and Business names

Trademarks are used to prevent consumer confusion (Harper 2016, p.21). Trademarks and business names protection are both useful in one’s geographical area; if a company registers its trademark or business name in a particular location; it has the right to use it in this place. However, if another company has not registered the same trademark or business name in another geographical location, the registered trademark protection ceases to exist (Harper, 2016, p.22).

Business names are operational names while trademarks are used to legally protects these names stopping other companies from dealing under the same name. Business name are registered when not trading under a person’s own name unlike trademarks which are exclusive and cannot be shared. Moreover, a person cannot use an entity name similar or identical to another registered business name while trademarks can be used by other companies in other countries. Also, business names do not translate to legal rights over the name, meaning that you cannot stop another person from using a similar name unlike trademarks.

Conclusion

Business law exists to ensure that there is smooth running of activities in the market. Both suppliers and customers are entitled to compensation in the case of breach of duty by their counterparts. The same is provided for in the law of agency for agents and principals. Intellectual property protection for trademarks and business names is exclusive for geographic area and intra-industries. Other forms of protection such as patents, trade secrets, and copyrights are universal; inclusive of geographic regions and inter-industries. Monopolies, cartels and mergers’ activities are also restricted by the Competition Commission and the UK office of fair trading. The two functions to prevent anticompetitive practices and excessive use of a dominant position(s) in the market.

References

Competition Commission. 25 June, 2014. Annual Report & Accounts 2013-2014. Crown.

Jalil, A., 2012. Adoption of the Principle of ‘Invitation to Treat’ in Islamic Law of Contracts. ‘Jurnal Undang-undang & Masyarakat’, pp. 79-92.

McConnell, A. 2004. An Overview:UK. [Online] (updated 2004) Available at http://www.biicl.org/.../1123-overview-

Namazi, M. 2013. Role of the agency theory in implementing management’s control. Journal of Accounting and Taxation, 5(2), 38-47.

Raimi, A. L., 2015. The Right of the Owner to Recover Possession under the Hire-Purchase Act, 1965: A Right in Existence or in Extinction. International Journal of Humanities and Social Science. 5(10), 242-252.

Rasmusen, E. 2001. Agency Law and Contract Formation. Harvard Law School Cambridge.

Reddy, A. N. and Aswath, L., 2016. Understanding Copyright Laws: Infringement, Protection and Exceptions. International Journal of Research in Library Science, 2(1), pp.48-53.

Slaughter and May. June 2016. An overview of the UK competition rules. Slaughter and May.

United States Government Accountability Office. 2013. Intellectual Property: Assessing Factors that affect Patent Infringement Litigation could help Improve Patent Quality. Gao.