1. 1
Business Coursework 2 April 2014
This essay will seek to advise Simon in each of the four scenarios involving his commercial agency
agreement with McNally’s, disputes with Alan and Francesca and his position regarding the equipment
he purchased off the internet. These situations will assessed with the help of common law, statutes and
academic opinions.
The first relationship to be assessed is that of Quickpart and McNally’s of Donegal (‘McNally’s’). As
stated, McNally’s operates as a commercial agent for Quickpart in the Republic of Ireland under an
express agreement1
as it is a written contract citing the law of the UK as its authority. There appears to
be no issue with calling McNally’s a ‘Commercial Agent’ as they fit the necessary criteria required to
qualify under the Commercial Agents (Council Directive) Regulations 19932
. Explained by Roach3
,
these requirements include the presence of ‘continuing’ or ‘long term’ authority, the need to be self-
employed and not a subdivision of the principle company, the processing of sales and purchases relating
to goods and the power to reasonably negotiate4
as, most likely, inferred under the ‘reasonable steps to
promote…in the Republic of Ireland’ clause of the contract.
The first issue in relation to McNally’s is regarding the larger than agreed share of the turnover they
have been collecting. This is a bit of vague situation as Godfrey (1830)5
clearly states a duty to obey
upon the agent, which McNally’s has not followed. The instruction to deduct 10% was clearly written
in the agency agreement. Prima Facie, if this amount was insufficient as to cover their expenses on
Quickpart’s account they should have consulted Simon, renegotiating the terms and commission or
setting out a new, lower impact promotion strategy. However, an agent who incurs additional expenses
is entitled to reimbursement or indemnity from the principle6
. It appears to be a battle between the
1
Chaudrhy v Prabhaker [1988] 3 All ER 718
2
Commercial Agent (Council Directive) Regulations 1993
3
Lee Roach, Card & James’ Business Law for Business, Accounting and Finance Students 2nd
Edition (OUP,
Oxford 2012) 806
4
(n 3) 806-807
5
Bertram, Armstrong & Co v Godfray [1830] 1 Knapp 381 (PC)
6
(n 3) 826

2. 2
agent’s entitlement to the money and the agent’s duty to obey the principle. This seems to be a question
of whether or not McNally’s took the correct approach to reclaiming the money.
The second issue arises when Simon requests to see McNally’s books showing transactions pertaining
to his company. McNally’s refusal appears to breach regulation 3(2b) of the Commercial Agent
(Council Directive) Regulations 19937
. This section requires commercial agents to ‘communicate to the
principle all the necessary information available’8
, a duty usually required of all agents but is often
stricter in its application to commercial agents9
. By law, Simon is entitled to information related to
company.
The final area of concern is McNally’s dealings with Speedypart Limited. As Quickpart’s rival
company, this will most likely be viewed as a conflict of interest10
. In Parker v McKenna11
, Cairns
states that an agent cannot operate for another party in a manner that may prove to be harmful to the
principle or may influence the agent’s dealings with the principle in an unfavourable way12
. Any
potential conflicts of interest must be disclosed to the principle13
so they may decide whether or not to
continue dealing with the agent14
. Should Simon choose to cease dealings with McNally’s, he will be
entitled to stop the agreement, claim any owed profit15
and possibly refuse to pay any commission for
the period that the agency was in breach of this duty if the Obiter of Kelly v Cooper16
is followed.
Due to being selected for redundancy, Alan may attempt to bring a claim of unfair dismissal. Under
s.94(1) of the Employment Rights Act 199617
, an employee has ‘the right not to be unfairly dismissed
by his employer’18
. Alan appears to be eligible to make a claim like this as he qualifies as an employee
7
(n 2)
8
Eric Baskind, Greg Osbourne, Lee Roach, Commercial Law (OUP, Oxford 2013) 137
9
(n 8) 137
10
Armstrong v Jackson [1917] 2 KB 822
11
Parker v McKenna [1874] LR 10
12
(n 3) 823
13
(n 8) 137
14
(n 3) 823
15
(n 3) 823
16
Kelly v Cooper (1993) AC 205 (PC)
17
Employment Rights Act 1996, s.94(1)
18
(n 17) s.94(1)

3. 3
under s.23019
, would have been dismissed20
and, from the wording of the brief, appears to have worked
continuously for two or more years21
. Redundancy is shown not to fall within any of ‘automatically
unfair’ reasons for dismissal, catalogued in s.108(3)22
from various sections of the act23
. Listed in
s.98(2)24
, redundancy based on a fair selection process25
is part of a list known as ‘prima facie fair’26
.
This means that, whilst the burden of proof is on him27
, Simon will allowed to launch a counter argument
and fight the claims28
.
In order to avoid unfair claims, it would be best for Simon to follow the Employment Appeal Tribunal
(EAT) guidelines for fair redundancy. These are not legally binding, but will be influential evidence in
deciding the fairness of the dismissal29
. These outline some reasonable steps an employer should take
in these scenarios, including giving as much notice as possible, using an objectively fair and preselected
criteria for selection30
, offering alternative employment or seeking other solutions when possible and,
if necessary, consulting with the employees or unions that will be effected31
. Whilst case law indicates
that consulting is only required when dealing with twenty or more employees32
, cases such as Heron33
and Mugford34
show that failing to consult properly can be fatal to the defence so it may be best to
consult with Alan anyway as an act of due diligence. Some reasonable alternatives that Simon may be
best to explore before resorting to redundancy include restricting the recruitment and training of new
staff35
. Another reasonable step which would be highly recommended for Simon to take would be, if
possible, offering some form of alternative employment, providing it comes with the same terms, such
19
(n 17) s.230
20
(n 3) 782
21
Chris Turner, Key Facts: Employment Law 3rd
Edition (Hodder Education, Oxford 2011) 117
22
(n 17) s.108(3)
23
(n 17)
24
(n 17) s.98(2)
25
(n 21) 121
26
(n 3) 784
27
(n 3) 782
28
(n 3) 782
29
Williams v Compare Mxam Ltd [1982] ICR 156
30
(n 3) 787
31
(n 29)
32
Scotch Premier Meat Ltd v Burns and others [2000] IRLR 639 EAT
33
Heron v Citylink Nottingham [1993] IRLR 372
34
Mugford v Midland Bank PLC [1997] ICR 399 (EAT)
35
Allwood v William Hill Ltd [1974] IRLR 258

4. 4
as pay rate, status and hours36
. Should Alan chose to refuse it he may make himself ineligible for
redundancy pay37
as stated under s.14138
There are several reasons for making redundancies that have been proven acceptable in practice,
stemming from a mixture of statute and common law. Statutory reasons include ceasing or intending to
cease to do business39
, ceasing or intending to cease to do business in the place where the employee
operates40
and any decline or reduction in the demand for work which warrants a headcount reduction41
,
as seen in Hindle42
. This reason has been expanded further in the case of Murray43
, showing that it does
not even have to be the employee in question’s department which is suffered the cutbacks. Due to a
process known as ‘bumping’ or ‘transferred redundancies’44
, an employer can lose an employee in one
department in order to save a more valuable employee from another compromised department45
. To
ensure the redundancy is seen as fair, Simon should preferably be able to prove his actions were a result
of one of the above reasons.
The area that appears to be the biggest concern for Simon is the selection process. As stated in the EAT
guidelines46
, the process must be fair and, arguably the most important condition47
, not discriminatory
in any way48
. It is stated that a tribunal will not make a judgment based on who they would have picked
but rather focus on how they would have chosen who to nominate for redundancy49
. Prima facie,
Simon’s criteria appears to be acceptable. However, Alan has claimed that he feels that he was
victimised and discriminated against by Simon and the company. Discrimination on grounds of
disability is prohibited under s.15 of the Equality Act 201050
. Disabilities can be both physical and
36
Taylor v Kent County Council [1969] 2 QB 560
37
Fuller v Stephenie Bowman Ltd [1977] IRLR 87
38
(n 17) s.141
39
(n 17) s.139(1)(a)(i)
40
(n 17) s.139(1)(a)(ii)
41
(n 17) s.139(1)(b)(i)
42
Hindle v Percival Boats [1969] 1 WLR 174
43
Murray v Foyle Meats [1999] IRLR 56 HL
44
(n 43)
45
(n 43)
46
(n 29)
47
Clarke v. Eley (IMI) Kynoch Ltd. [1983] ICR 165 (EAT)
48
Clyde Pipeworks v Foster [1978] IRLR 313 (EAT)
49
(n 21) 132
50
Equality Act 2010, s.15

5. 5
mental in nature51
. Mental disabilities have been defined as a disease which effect day to day activities52
and usually lasts for twelve months or could reasonably be expected to last for 12 months53
. This also
applies to cases were it ceases but is likely to reoccur54
. Depending on its severity, there is a possibility
that Alan’s depression will be accepted here as some cases of the illness do match this criteria. Although
Simon has not discriminated directly against Alan’s ailment, Alan could attempt to claim that there has
been an indirect discrimination made under s.19(2)(b)55
as part of the criteria used in the selection
process reviews the employees sickness record, meaning someone with a condition such Alan would
be more likely to be flagged up by it as his illness could lead to more days off work than someone
without this condition. Indirect discrimination may be unintentional, such as in Price56
when an age
range was specified for a promotion, selecting an age when the average woman may become pregnant
and require leave, rendering her incompatible for the position57
. Simon may also have to disprove the
victimisation claims made by Alan, as this is prohibited under s.2758
, with subsections (2)(b) and (2)(d)
specifically mention victimisation as a result of giving evidence during proceedings and from making
claims of discrimination respectively.
In order to correctly assess the situation regarding Francesca, it is important to first establish her true
employment status. Whilst she is labelled as a self-employed worker, her actual status would be
determined by way of a tribunal59
assessing the facts of the scenario60
. It is established that, providing
they work continuously for the same employer who enjoys sufficient control, an agency worker may
become an employee61
. Case law has determined that 12 months service may be sufficient to imply a
contract of employment with the hirer62
. To help decide on whether or not her status has changed, the
51
(n 21) 78
52
(n 21) 79
53
(n 21) 78
54
Richmond Adult Community College v McDougall [2008] IRLR 227
55
(n 50)
56
Price v CSC (1978) IRLR 3
57
(n 56)
58
(n 50) s.27
59
Autoclenz Ltd v Belcher [2011] 4 All ER 745
60
Dacas v Brook Street Bureau (UK) Ltd [2004] ICR 1437
61
Motorola Ltd v Davidson [2001] IRLR 4
62
(n 60)

6. 6
courts will look to use one of several tests. With many being developed over the years, such as the
‘Indicia’63
and the ‘Self-Description’ test64
, there are often many different elements to be considered.
Currently, the courts tend to use a combination of the four most prominent tests65
. The first is Lord
Kenyon’s ‘Control’ test66
which looks for a servant/master relationship with the ‘employee’ owing
obedience. Francesca passes this test, answering to one of the Quickpart managers and no one else.
Another is the ‘Organisation’ test67
which reviews the subject’s role in the company to see how integral
they are to the business’ functioning. This test was, however, shunned by Mackenna J who stated it
raised more questions during the proceedings than it answered68
before going on to begin to form the
‘Multiple’ or ‘Economic Reality’ test69
which consisted of four main points of consideration; whether
the employee and employer agree to provide and complete work, whether there was an implied or
express submission to control, whether there was anything significantly inconsistent with regular
employments and where did the financial risks lie70
. Applied to Francesca, the agreement to complete
work and the company’s agreement to supply work may potentially be evidenced by her fixed 28 hours
in the contract whilst the fact that she answers to the resource manager shows that submission to control.
As she wears uniform, works on site and answers to one of the managers, she will likely pass the third
criteria as she acts like any other employee. Whilst it can’t be ascertained from the text, the financial
risks will probably lie with the company as she works in one of their departments. The final popular
test is the ‘Mutuality of Obligations’ test71
which expands on the obligation to supply and complete
work by looking for any element that allows the employee to decline any work72
, a factor which does
not appear to present here, further supporting the possibility that Francesca may be found to be an
employee.
63
Short v Henderson [1946] 174 LT 417
64
Withers v. Flackwell Heath FC Supporters' Club [1981] IRLR 307
65
(n 3) 677
66
Limland v Stephens [1801] 3 ESP 269
67
Cassidy v Minister of Health [1951] 2 KB 343
68
(n 3) 678
69
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance. [1968] 2 QB 497
70
(n 21) 11
71
Carmichael v National Power plc [1999] 1 WLR 2042 (HL)
72
Prater v Cornwall County Council [2006] IRLR 362

7. 7
Francesca’s status of employment will determine both her right to action and decide whether or not
Simon acted in an appropriate manner. If Francesca was found to be employee, than s.86 would dictate
that, as she was employed for 5 years, she was entitled to 5 weeks’ notice or pay in lieu of73
. This would
mean that Francesca would be entitled to damages, usually amounting to wages of the weeks’ notice
she was denied74
.
With regards to the sport equipment Simon purchased on the internet, his issues seem to lie under s.13
and 14 of the Sales of Goods Act 197975
. The Sales of Goods Act 1979, like the 1893 act it replaced,
has been described as a codification act76
and remains virtually unchanged from the original act77
. The
running machine does not appear to fulfil the description supplied by the seller, this would be a breach
of the terms implied into sales contracts under s.1378
, more specifically s.13(1) which declares that all
goods sold should correspond with the description that accompanies them. The essence of this section
is best displayed by the case of Beale v Taylor79
which featured the sale of a car which was not as
described. Whilst not all words in the description of the goods can be held as binding under s.1380
, the
courts have imposed no restriction on the complexity of the description. They have been shown to
accept both simple descriptions, such as “Underpants”81
, and more complex and technical ones82
. The
only crucial requirement is that the description must prove to have been influential in the sale, as
explained in Reardon83
. When applied to Simon’s case, it is very likely that Simon could argue that the
running machine being described as ‘suitable for all athletes’ whilst only featuring two very separate
performance settings, appearing to be suitable for two athletic ability levels creates a false representation
of the machine’s abilities which would be likely to have influence Simon’s decision to purchase the
equipment. Whilst it seems a minor fault, Simon should also be entitled to reject the running machine
73
(n 17) s.86(1)(b)
74
(n 21) 114
75
Sale of Goods Act 1979
76
James Marson, Business Law 3rd
Edition (OUP, Oxford 2013) 206
77
(n 76) 206
78
(n 75) s.13(1)
79
Beale v Taylor [1967] 3 All ER 353
80
Re Moore & Landauer [1921] 2 KB 519
81
Grant v Australian Knitting Mills [1936] AC 85 (PC)
82
Ashington Piggeries v Hill [1972] Ac 441
83
Reardon-Smith Line Ltd v Yngvar Hansen Tangen [1976] 1 WLR 986 (HL)

8. 8
over the missing ‘chrome finish’ that was supposed to be applied, again under s.13(1)84
as it is not
consistent with the advertisement. Arcos85
showed a buyer being able to reject wood purchased for
manufacturing barrels due to the measurement being slightly out, despite the wood still being perfectly
fine for this use. This decision has, however, been criticised86
and may not still represent the view point
of the court87
.
The rowing machine, whilst still falling under the same act, focuses on a different section. Section 14
pertains to the quality and the fitness for purpose of goods sold88
. This section has been identified as
one of the key sections of the Sales of Goods Act, some going as far to describe it as the ‘central plank’89
.
Whilst this section only applies to retail sales, from a company to a consumer90
, it appears to apply to
Simon’s case as the product came with a warranty, not something commonly included in private sales.
Section 14(2A)91
identifies this section to be objective, stating that the ‘quality’ of the goods should
meet the standards of the ‘reasonable person’92
. ‘Quality’ is defined in the following section, s.14(2B),
to include several different factors. Of these factors, the two most relevant to Simon’s case are that of
(2B)(a) fitness for purpose93
and (2B)(e) durability94
. Whilst Simon’s friend is providing a more expert
opinion as an engineer, it is unlikely that the reasonable person would view the usage of a belt not
suitable for this type of machine as satisfactory. The consumer would expect the product to be able to
perform the duty it was purchased to do for a reasonable amount of time95
, even after the warranty has
expired. However, when deciding if these factors are satisfactory, some of the products details must be
84
(n75) s.13(1)
85
Arcos Ltd v EA Ranaason & Sons [1933] AC 470 (HL)
86
Mike Semple Piggot, ‘Analysis in Contract & Sale of Goods Implied Terms’,
http://www.insitelawmagazine.com/analysisimpliedterms1.htm 28/02/2014
87
David Kelly, Ann Holmes & Ruth Hayward, Business Law 5th
Edition (Cavendish, London 2005) 197
88
(n 75) s.14
89
Margret & Ivor Griffiths, Law for Purchasing and Supply 3rd
Edition (Pearson, Hampshire 2002) 102
90
Stevenson v Rogers [1999] QB 1028 (CA)
91
(n 75) s.14(2a)
92
(n 75) s.14(2a)
93
(n 75) s.14(2b)(a)
94
(n 75) s.14(2b)(e)
95
Rogers v Parish (Scarborough) Ltd [1987] QB 933

9. 9
taken into account, such as the retail price96
. How cheap or expensive Simon’s machine was will
determine whether it lasted a less than acceptable amount of time.
In conclusion, Simon’s commercial agents would probably have been entitled to the money they
withheld but there may be some debate as to whether they should have applied for reimbursement rather
than just retaining it. When asked, McNally’s should have disclosed all information pertaining to
Quickpart and should have discussed arising conflict of interest they experienced when representing
their rivals, with their failure to do so rendering Simon able to terminate the contract and possibly avoid
payment for the conflicting period. As for Alan, the reason for his dismissal, redundancy, does not
qualify as an ‘automatically unfair’ reason so he should be afforded the opportunity to challenge the
claims and justify his decision by proving that his selection was not the result of any form of
victimisation or discrimination. To strengthen his position, it may be beneficial to consult with Alan
about the process and he should be wary of any indirect discrimination claims as a result of Alan’s time
off due to depression. Depending on the outcome of the tests the tribunal choose to use, Simon may
find that he owes Francesca damages amounting to the weeks’ notice he failed to give her. For the
products he bought online, the two incidents of false descriptions for the running machine and the
apparent unsuitability of the rowing machine’s belt would probably allow him to reject the products
providing that they were not sold for an exceptionally low amount.
96
Jewson Ltd v Kelly [2003] EWCA Civ 1030

10. 10
Bibliography
Eric Baskind, Greg Osbourne, Lee Roach, Commercial Law (OUP, Oxford 2013)
Margret & Ivor Griffiths, Law for Purchasing and Supply 3rd Edition (Pearson, Hampshire 2002)
David Kelly, Ann Holmes & Ruth Hayward, Business Law 5th Edition (Cavendish, London 2005)
James Marson, Business Law 3rd Edition (OUP, Oxford 2013)
Mike Semple Piggot, ‘Analysis in Contract & Sale of Goods Implied Terms’,
http://www.insitelawmagazine.com/analysisimpliedterms1.htm 28/02/2014
Lee Roach, Card & James’ Business Law for Business, Accounting and Finance Students 2nd Edition
(OUP, Oxford 2012)
Chris Turner, Key Facts: Employment Law 3rd Edition (Hodder Education, Oxford 2011)