Business law

Business legislation guarantees, before and after sales, that the consumers and producers are not used. The coverage varies from arrangements between customers and retailers, to intellectual property rights binding on the market for other organizations. Fair trade regulations are also defined by the Competition Commission and the UK Office which require monopolies, mergers and cartels to adhere. This paper discusses common legal issues in the market, and provides possible legal solutions to them according to the provisions of the law.

The Consumer Rights Act

This act stipulates the rights and obligations arising from the supply of goods and services to a consumer (The National Archives 2017, n.p). The relationship between the consumer and producer/supplier is formed on the basis of a contract which is consequentially formed on the basis of an offer and acceptance; when one participant gives another an offer to purchase or sell products in accordance to some terms and conditions, the offered must accept for the contract to be enforceable by the law. The terms and conditions are legally binding to all parties in a contract and should therefore 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. If a seller makes arrangements 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 make arrangements for replacements preferably through insurance. Mr. and Mrs. Green were given an invitation to treat when the Hopkins displayed furniture. The fire incident at the Hopkins does not exempt the company from fulfilling the terms to the contract it had with the couple; loss or damage of goods in transit should be incurred by the seller and not the buyer. Hopkins should therefore, make arrangements for the products to reach the couple’s premises in good state.

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). 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 as a result of personal injury, damage of private property exceeding 250 pounds or death (McConnell 2004, n.p). In our case, Julia was a 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 defect. This is also due to the fact that the supplier of the scooter did not exclude third parties from the contract using the terms and conditions. Julia and/or her parents are entitled to compensation from the supplier and other distributors which the victims choose to sue.

Consumer credit

There are five types of agents “general; special; agency coupled with interest; servant and subagent” (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 important 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 power 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 mostly 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 normally 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 desirable 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

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 right 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 liable 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 loss occurs, agents are restored to the exact financial condition they were prior to 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 acting 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.

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 agreements 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 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 agreements 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 goods or return them upon the agreement. The debtor can terminate the agreement before claiming to purchase it that is, paying the final installments. The debtor should inform the creditor of his/her wish to terminate 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 protects the debtor from being ‘snatched’ the good by the creditor in 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 of all liabilities to the agreement. The debtor is also entitled to recover all the money paid to the creditor in form of deposits or installments. The debtor also has an option to claim compensation or the loss of use of the good 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 good with a court order allowing him to do so. In the 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 2,700pounds and is required to pay 800pounds 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 id 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 customer has paid 3,560pounds, more than a third of the total payment.

Monopolies, Mergers and Anti-Competitive Practices

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 extremely low 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 products 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

The Competition Commission ensured fair trading by looking into the 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).

According to Slaughter and May, dominant positions 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 it’s 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).

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. The major 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 specific corporations, they include, the Nike sign, the m-sign for McDonalds 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/or selling the same products for a specified period of time (Harper 2016, p.1).

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 obvious 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 individual’s B invention is a simple variation of individual’s A 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 supply 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 (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 works 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 owner’s consent. The owner can therefore, sue them and claim damages or a proportion of their profits.

Protection of trademarks and business names

Trademarks are used to prevent consumer confusion (Harper 2016, p.21). Trademarks and business names protection are both effective in one’s geographical area; if a company registers its trademark or business name in a specific location; it has the right to use it in that location. 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). Trademarks and business names’ protection are also subject to the level of competition in the market/ the type of industry within which they are used. Their protection exists when companies sharing the same business names and trademarks are in the same industry. This is due to the fact that the chances of consumers getting confused are high. Both trademarks’ protection is perpetual provided the companies in question pay registration fee and continue using the trademarks and names.

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 geographical areas and inter-industries. Monopolies, cartels and mergers’ activities are also restricted by the Competition Commission and the UK office of fair trading. The two function to prevent anti-competitive 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.