North South University

MBA Program
Summer 2021

Prepared for:

Professor Dr. Mohammad Nazmuzzaman Bhuian

Prepared By:

Afsana Manwar Nawrin

ID: 1925134660

Course Name: Business Law and Ethics

Course Code: (Bus 518)
Section: 3
Case: NSU organized a cricket tournament, but apart from the match itself, nothing was in
order due to the fault of the food, carpet and trophy suppliers. NSU entered into a contract of sale
of goods with Lexicon, a manufacturer of Trophy, to supply some Trophies for the NSU Cup
Cricket Tournament. Lexicon agreed that they will supply trophies with their logo printed
properly. However, due to their heavy workload, Lexicon appointed Pelicon, another renowned
Company, as their agent to make the trophies within the deadline. Pelicon then asked NSU to
visit the shop and examine the trophies before delivery, but NSU officials did not have any time
to do so. While distributing them to the participants, one trophy just broke down on its own. It
was quite embarrassing in front of the Chief Guest. After the distribution of the trophies, when
the guests were having foods, it was found that the seller supplied Beef snacks, while NSU
actually ordered chicken snacks, which was clearly stated in the receipt. Therefore, many guests
having allergies to beef could not have them. Besides, the carpeting which was procured by the
NSU officials on sale or return basis to organise the closing ceremony was also stolen. NSU
refused to take responsibility of such stealth and did not go for any legal action on the ground
that they have not yet approved the sale and therefore the ownership has not yet been transferred
to them. Identify the responsibilities of sellers of trophy, food and carpeting and also NSU as the
buyer of those items in accordance with the Contract Act of 1872 and Sale of Goods Act of
1930.

Issues: Is the product is in merchantable quality or not, also whether the bailee examined
the goods or had reasonable opportunity to inspect the goods before purchasing. Is the sale of
good act meet with the contract for any specific goods or not, and here is the intention meet with
the terms of the contract. After supplying the product is bailor disclose about the faults of goods.
As a Bailee is NSU perform their duty properly? What is the liability of buyer for neglecting or
refusing delivery of goods?

Rule: According to the Sale of Goods Act 1930, the goods sold must be of merchantable
quality. Merchantability quality means that the goods are of such quality and in such condition
that a reasonable man acting reasonably would accept them under the circumstances of the case.
Section 16(2) of the Act provides that where goods are bought by description from a seller who
deals in goods of the descriptions, whether he is a manufacturer or not, there is an implied
condition that the goods are of merchantability quality i.e. fit for sale. If the goods sold are not of
merchantable quality, the buyer can reject the goods. There is an exception that if the buyer had
examined the goods or had reasonable opportunity to inspect the goods before purchasing, then
no implied condition with regard to defect which such inspection would have revealed.
According to sale of good acts 1930, sec 19(1) and (2) of the Act provides that where there is a
contract for the sale of specific goods, ownership passes when parties intend to pass it. The
intention must be determined from the terms of the contract, the conduct of the parties and the
circumstances of the case. According to sale of good acts 1930, sec 150, the bailor is bound to
disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which
materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he
does not make such disclosure, he is responsible for damage arising to the bailee directly from
such faults. According to sale of good acts 1930, sec 151 in all cases of bailment the bailee is
bound to take as much care of the goods bailed to him as a man of ordinary prudence would,
under similar circumstances, take of his own goods of the same bulk, quality and value as the
goods bailed. According to Sale of Goods Act 1930 sec 44 when the seller is ready and willing to
deliver the goods and requests the buyer to take delivery, and the buyer does not within a
reasonable time after such request take delivery of the goods, he is liable to the seller for any loss
occasioned by his neglect or refusal to take delivery and also for a reasonable charge for the care
and custody of the goods.

Responsibilities: Obligations of venders according to Contract Act of 1872 and Sale of

Goods Act of 1930.
 To make the game plan for move of property in the products to the purchaser.
 To determine and suitable the merchandise to the agreement of offer
 To pass an outright and viable title to the merchandise, to the purchaser.
 To get it done as per the provisions of the agreement
 To guarantee that the merchandise provided adjust to the suggested/express conditions
and guarantees.
 To put the merchandise in a deliverable state and to get it done as and when applied for
by the purchaser.
 To take care of business inside the time indicated in the agreement or inside a sensible
time and a sensible hour.
 To bear all costs of and accidental to making a conveyance (for example up to the phase
of placing the products into a deliverable satisfy
 To take care of business in the concurred amount.
 To take care of business in portions just when so wanted by the purchaser.
 To orchestrate protection of the products while they are in transmission or guardianship
of the transporter.
 To mastermind protection of the products while they are in transmission or care of the
transporter.
Obligation of Buyer -
 To acknowledge the conveyance of products, when the vender will make the conveyance
according to the agreement
 To address the cost in return for ownership of the products
 To apply for conveyance of the merchandise.
 To interest conveyance of the merchandise at a sensible hour.
Analysis: If we looked at the first scenario we will find that NSU entered into a contract
with a manufacturer of Trophy. Here Seller asked NSU to visit the shop and examine the
trophies before delivery, but NSU officials did not have any time to do so. So when they were
distributing them to the participants, one trophy just broke down on its own. So here this scenario
can be under Conditions as to merchantability. If NSU inspect the product before delivery, then
there was no implied condition as to merchantable quality of goods because the inspection would
have revealed the defective goods.
Here the seller of the trophy bears no responsibilities because here NSU failed to inspect the
trophies before they were delivered. So here NSU bears the responsibility for falling to check
the product. NSU can't take any legal action against the seller of the trophy.

In the second scenario NSU ordered chicken snacks and the receipt showed chicken snacks were
delivered. But the seller supplied Beef snacks. On the other hand, few of the snacks contained
small pieces of bones inside and one guest got injured during eating.
As per as stated condition, here the food was supposed to match with the description, but it was
not. So the seller bears all the responsibilities for the food and also liable for as one guest injured
during eating snakes. So NSU and guest can sue the food seller.

In the third scenario carpeting company send carpet NSU on sale or return basis. But after the
ceremony it was stolen, and NSU refused to take responsibility and also not go for any legal
action. Here the ownership has not also been transferred among themselves. Even if the sale was
not approved, they have to either return the carpet to the seller or purchase it. Here the carpet was
stolen from the NSU, when NSU had the title of ownership. Though here the sale was not
approved, either NSU have to return the carpet to the seller or purchase it. As it was stolen, when
NSU had the title of ownership. So here NSU is responsible to paying the seller of the carpeting.
Because they were not enough careful for taking care of it.

Conclusion: Here the seller of the trophy will bear no responsibilities of the trophies
because NSU bears the responsibility for falling to inspect. The seller of the food has to bears all
the responsibilities. Here NSU and the injured guest can sue the food seller and the injured guest
also should get compensation from the food seller.
In the carpeting scenario here NSU was taking responsibilities as the Bailee. As they do not take
proper care of the carpet that's why they have to give compensation to the carpeting company? If
they don't agree to give them then the carpeting company can sue them.