Right to refuse?

Thanks to @beamomatic9000 for making this photo available freely on @unsplash 🎁

The COVID-19 crisis continues to throw up some interesting legal questions e.g. employment rights, EU freedom of movement rights, frustration of contract etc.

One area which seems somewhat overlooked is in relation to the actions of many retailers – principally supermarkets and grocery stores – which have been restricting sales of particular items. The items in question include soap, hand gel and sanitiser, bleach, anti-septic wipes, paper towels and even toilet rolls.

The COVID-19 situation has led to panic buying of these essential hygiene items and supermarkets have imposed clear limits on their sale.

Can supermarkets and other retailers impose these sorts of restrictions?

This, of course, takes us back to the basic rules governing the formation of a contract. Retailers are especially guilty when applying the term ‘offer’ to the goods which they stock. It is no such thing: goods on the shelves; on display; or in shop windows are invitations to treat. It is the the customer who is being invited to make the offer (see Fisher v Bell [1961] 3 ALL ER 731 where the English Court of Appeal ruled that a knife displayed in a shop window was not being offered for sale, it was merely an invitation to treat. Lord Parker, the Chief Justice being particularly emphatic on this point).

In the seminal case of Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401, the judges of the English Court of Appeal helpfully distinguished between an offer and an invitation to treat. The case arose as a result of a provision in the Pharmacy and Poisons Act 1933 which stipulated that the sale of certain medicines must take place in the presence of a registered pharmacist.

Boots Chemists operated a self service system whereby it’s customers were able to place the medicines which they wished to purchase in their shopping baskets. The key question was whether Boots was breaking the law by allowing customers to do this. In other words, was the sale completed when the customer placed the medicines in their baskets? Now, if goods on shelves were to be regarded as ‘offers’, Boots would indeed be breaking the law because customers would be deemed to be ‘accepting’ these ‘offers’ by placing the goods in question in their baskets.

If, on the other hand, the sale was concluded elsewhere i.e. at the cash register where there was always a registered pharmacist on duty, Boots would be fully complying with the Act.

The Court of Appeal concluded that it was the customer who made the offer by presenting the goods at the cash register. The sales assistant (properly supervised by the pharmacist) could conclude matters i.e. accept the offer by ringing the sale up on the cash register. Furthermore, it was always open to the assistant to refuse the customer’s offer. Goods on shelves were, therefore, merely an invitation to treat.

In more normal times, a customer’s offer would and should be refused by retailers because they are an underage person who is attempting to purchase e.g. alcohol, cigarettes or video games or DVDs which are age specific.

So, in this way, retailers are generally within their rights to impose strict limits on the numbers of certain items that customers wish to purchase. The customer can offer to buy 20 bottles of hand gel or sanitiser, but the store will have the right to refuse.

Presently, retailers are putting these sorts of restrictions into place in order to protect and promote public health by giving as many customers, as possible, reasonable access to basic hygiene products. If we co-opt the language of the Equality Act 2010, retailers are putting restrictions in place because these are a proportionate means of achieving a legitimate aim. So, hopefully, such restrictions – if fairly implemented and monitored – will not be subject to a legal challenge on grounds of discrimination.

Related Blog Articles:

https://seancrossansscotslaw.com/2019/12/06/tis-the-season-of-special-offers/

https://seancrossansscotslaw.com/2019/03/27/special-offers/

https://seancrossansscotslaw.com/2019/03/14/too-good-to-be-true/

Copyright Seán J Crossan, 26 March 2020

State of emergency

Photo by Markus Spiske on Unsplash

In a Blog published yesterday, I discussed the issue of entitlement to sick pay as a result of the Coronavirus or COVID-19 outbreak.

Related Blog article:

https://seancrossansscotslaw.com/2020/03/04/sick-pay-or-the-coronavirus-conundrum/

State of emergency

Governor Gavin Newsom of the US State of California declared a state wide emergency on Wednesday 4 March 2020 in order to counter the spread of the virus.

Please see a link below to an article in the Los Angeles’ Times concerning Governor Newsom’s announcement:

https://www.latimes.com/california/newsletter/2020-03-05/coronavirus-cruise-emergency-newsletter

How are the recent developments in California linked to events in the UK?

It should be recalled that Governor Newsom signed into law Assembly Bill 5 of 2019 in January of this year. You don’t remember this? Well, Assembly Bill 5 is better known as the Californian Gig Economy law which, in effect, gives thousands of workers employment status. Significantly, this means that many of these affected individuals will now benefit from greater levels of employment protection – including entitlement to sick pay.

Now, think about this: had the COVID-19 outbreak occurred last year, many Californian workers would have had absolutely no entitlement to receive sick pay if such individuals were forced to self-isolate or take time off because they had been infected. No doubt many of these workers turned employees will be breathing a huge sigh of relief that they are now covered by Assembly Bill 5.

Related Blog article:

https://seancrossansscotslaw.com/2020/02/13/california-dreamin/

The UK approach

Turning our attention to the UK, the British Government has taken a less generous approach to the issue of entitlement to sick pay. True, employees and other workers who already benefit from entitlement to statutory sick pay (SSP) should now be able to claim this from day 1 of sickness absence. It should be emphasised that this is a temporary measure justified on emergency grounds.

Previously, statutory sick pay was payable only from day 4 of the employee’s absence until Prime Minister Johnson’s announcement in the House of Commons on Tuesday 3 March 2020.

Jeremy Corbyn, Leader of the opposition Labour Party, immediately asked the PM if zero hours workers and self-employed individuals would have this benefit extended to them. The PM’s response to Mr Corbyn’s question will have disappointed many of these individuals. No entitlement to statutory sick pay for them. The problem for these individuals is that they do not meet the eligibility threshold where they earn £118 per week (the Lower Earnings Limit).

There is also the small fact that employment status (which is linked to entitlement to sick pay) is defined by the Employment Rights Act 1996. Section 230 of the Act defines an employee as an individual who has a contract of service. Many employment rights flow from this status and this means that many individuals who are engaged on a contract for services will simply not be eligible to claim statutory sick pay.

A link to an article in The Mirror newspaper about the exchanges in the House of Commons between PM Johnson and Mr Corbyn about SSP entitlement can be found below:

https://www.mirror.co.uk/news/politics/breaking-new-coronavirus-sick-pay-21629942

An evolving position?

… and yet, the UK Government’s thinking on this issue may be quickly evolving. On the BBC’s Question Time television programme broadcast on Thursday 5 March 2020, Matt Hancock MP, the UK Health Secretary said that people on zero hours contracts and self-employed persons should not be financially penalised for doing the right thing i.e. self-isolating themselves or being honest about having the virus.

It will be interesting to see how the story develops and what changes to UK employment law may follow as a result.

Copyright Seán J Crossan, 5 March 2020

Sick Pay? (or the Coronavirus Conundrum)

Photo by Macau Photo Agency on Unsplash

Coronavirus (COVID-19) isn’t just a potential threat to your health; it could also mean that your earnings take a hit.

How so?

If you have to take time off from work (i.e. self-isolate yourself) because you have (or might have) been infected by the virus, will you be entitled to receive sick pay from the organisation that you are working for?

It depends very much on your employment status …

… if you are a zero hours worker or genuinely a self-employed person, the answer is an emphatic no.

If you are deemed to be an employee (an individual who works under a contract of service) within the meaning of Section 230 of the Employment Rights Act 1996, you may be fortunate in that you have an entitlement to receive either contractual sick pay or statutory sick pay.

Contractual sick pay

If a contractual sick pay scheme applies to your employment, you might receive, at its fullest extent, 6 months full pay and then 6 months at half pay. This generous arrangement, of course, will not apply from day 1 of the employment and employees will have to build up their continuous service in order to be eligible for the maximum level of contractual sick pay. It is probably the case that an employee with just over a year’s service would receive 1 month at full pay for sickness absence and then 1 month at half pay.

An example of entitlement to contractual sick pay arrangements taken from the Collective Agreement (the National Working Practices Agreement) between Scottish Further Education lecturers and their employers can be seen below:

Statutory sick pay

What about statutory sick pay or SSP? This is relevant in situations where employees are not entitled to receive contractual sick pay.

It’s also worth pointing out that contractual sick pay is often much more generous than SSP and, even then, not all employees will be entitled to receive this benefit because they fall outside the eligibility criteria. The current weekly rate of sickness pay (in March 2020) is £98.25 and could be paid by employers for a maximum of 28 weeks.

Ordinarily, it becomes payable only from 4th day of sickness absence, but as of Wednesday 4th March 2020, the UK Government has announced that employees who self-isolate themselves because of suspected Coronavirus infection, will be paid SSP from day 1 of their sickness absence.

This is a temporary measure which will apply only for the duration of the current COVID-19 emergency, but people who are off sick with a medical condition other than the virus will also be entitled to benefit from these changes.

See links below to articles on the BBC website about sickness pay entitlement and COVID-19:

https://www.bbc.co.uk/news/business-51628524

https://www.bbc.co.uk/news/uk-51738837

The change in Government policy will not be extended to the self-employed; and to zero hours workers (who will not be able to meet the threshold conditions for eligibility). Frances O’Grady, the General Secretary of the UK’s Trades Union Congress (TUC) has stated that as many as 2 million workers may not be eligible for SSP under the current system.

There has been some concern expressed that individuals in these categories may continue to go to work – if they have the virus or suspect as much – because they will not receive SSP during their absence.

Eligibility criteria for SSP

In 2019-20, in order to qualify for SSP you must be an employee earning at least £118 per week or £512 per month (before tax). This is known as the Lower Earnings Limit.

In April 2020, SSP will rise to £95.85 per week, but individuals’ earnings must fall within any of the following bands in order to qualify:

  • £120 per week
  • £520 per month
  • £6,240 per year

Again, this will mean that many zero hours contract workers will simply fail to qualify for SSP payments.

More problems …

There is also another complication concerning eligibility for sickness pay which the COVID-19 outbreak has raised:

Let’s assume that you do qualify for either contractual sick pay or SSP, but you have decided to take the precautionary measure of self-isolation so as not to expose your colleagues to potential risk.

It may be that you have recently returned from a destination such as China or Italy where the virus has been particularly prevalent and you decide to play it safe by not going into work. You contact your HR Department or employer to inform them of your decision; you are thanked for being extremely considerate and responsible; and then you are told that you are not entitled to receive sick pay because you haven’t actually been diagnosed with the virus.

Matt Hancock MP, UK Government Minister for Health, thinks that current legislation does cover such situations and individuals who take precautionary measures, as outlined above, should benefit from sick pay provisions.

With all due respect to Mr Hancock, what he thinks and what current legislation or a contract of employment states might be entirely different realities. That said, Mr Hancock does have the support of the highly regarded Advisory Conciliation and Arbitration Service (ACAS) which is recommending that employers pay self-isolating employees who have taken such a precautionary measure (see link below).

https://www.acas.org.uk/acas-publishes-new-advice-on-handling-coronavirus-at-work

Conclusion

Clearly, COVID-19 is presenting a number of challenges to traditional practices or orthodoxies in the field of employment law. This is a serious issue given that recent estimates are predicting that up to 20% of the UK workforce could be in danger of contracting the virus and, consequently, they will be absent from work.

In some respects, the UK Government has been caught napping on the issue of extending employment protection e.g. entitlement to sick pay to people who do not have a contract of service and the COVID-19 outbreak has really exposed this shortcoming.

As Jonathan Rennie of law firm, TLT, had noted (as recently as this week) the UK Government has failed to implement any of the recommendations of the Taylor Review which favoured extended employment protection to workers who did not have a contract of service. It is somewhat ironic that the virus outbreak has forced the Government to break cover and extend some employment protection rights.

A link to an article on the BBC website about the predicted impact of COVID-19 on the UK workforce can be found below:

https://www.bbc.co.uk/news/uk-51718917

Copyright Seán J Crossan, 4 March 2020

Frustration of contract?

Photo by Andre Hunter on Unsplash

In Chapter 2 of Introductory Scots Law, I discuss termination of contractual agreements. One way in which a contract can come to an end – albeit in rather an abrupt or unexpected manner – will be when the agreement is said to be frustrated.

Frustration will often arise when unexpected events intervene. Since the formation of the contract, the circumstances surrounding the agreement may have changed dramatically. The contract may now be impossible to perform or the contract may have been rendered illegal by changes in the law.

Physical destruction of the subject-matter of the contract operates to frustrate the agreement (see Taylor v Caldwell (1863) and Vitol SA v Esso Australia 1988).

Frustration as a practical issue came to mind a few months ago, when I was teaching contract law to two groups of students. Some of the more switched on members of the classes highlighted a story which had received a lot of media coverage.

This story involved the sale of a painting (Girl with Balloon) by the artist known as Banksy. In October 2018, the item was being auctioned at Sotheby’s in London. The successful bidder agreed to pay £860,000 – quite a coup  for Sotheby’s. Unfortunately, for the bidder, the artist had other ideas. The frame contained a hidden device which partially shredded the painting.

https://news.sky.com/story/banksy-reveals-he-meant-to-shred-entire-1m-girl-with-balloon-painting-11528598

The artist made a film of the incident:

https://youtu.be/vxkwRNIZgdY

What would have been the legal position?

Would the contract have been capable of enforcement or was this an example of frustration my students wanted to know?

Banksy’s painting is a unique item i.e. it cannot be replaced with a similar item. Arguably, the bidder would have been entitled to use frustration as a means of withdrawing from the agreement. Clearly, the circumstances of the painting being partially destroyed made performance of the contract very different from that which the bidder originally anticipated.

Imagine, for instance, if two parties had agreed terms concerning the sale of a vintage car. What if the car was stolen before it could be delivered to the buyer? It is later found by the Police on waste ground, completely burnt out by the thieves/vandals. Would the buyer really consider herself to be bound by the terms of the agreement concluded with the seller or would it be reasonable to assume that the contract was terminated due to frustration?

Risk

This area of the law of contract involves risk. The issue of risk relates to any harm or damage caused to the goods and, more importantly, who will have to bear the loss should this happen i.e. the seller or the buyer?

In Chapter 4 of Introductory Scots Law, I discuss the implications for transactions involving the sale of physical/corporeal property and the application of risk.

The question to ask is what kind of category of sale does the transaction fall under?

  • Consumer sale (B2C)?
  • Business to business sale (B2B)?
  • A sale between two private individuals (C2C)?

Section 29 of the Consumer Rights Act 2015 now addresses the issue of risk in relation to consumer contracts of sale before and after the physical possession of the goods has been transferred to the buyer (i.e. delivery has taken place). This is an area of the law which has been much simplified over the years in relation to consumer contracts for the sale of goods (the same cannot be said of business to business contracts of sale). The basic rule is that risk will lie with the trader until such time as s/he is able to transfer physical possession of the goods to the consumer or someone identified by her to take possession of the goods.

Presuming that sale of the vehicle was a consumer transaction, I think most reasonable people would opt for frustration of contract in this situation. Presumably, the seller of the car (the trader) has an insurance policy in place to cover such eventualities as theft and destruction.

In business to business sales and private sales, risk will pass from the seller to the buyer when the parties intend that it should pass or depending upon the classification of the goods (as per Section 18 of the Sale of Goods Act 1979 with its 5 rules).

In the strange environment of the international art world, the semi-destroyed Banksy painting became even more valuable and the bidder was happy to pay the purchase price. This, however, is not normal behaviour for most ordinary people.

Football: it’s a funny old game

On a more tragic note, the issue of possible frustration of contract rose once more in relation to the death of the Argentinian footballer, Emiliano Sala who had completed a transfer agreement to leave the French club, FC Nantes and go to Cardiff City, the English Premier League club.

Before he could play his first competitive game with his new club, Mr Sala was killed in a plane crash over the English Channel. This led to demands by Nantes for payment of the first part of the transfer fee of £15 million from Cardiff City FC.

Such a contract i.e. for personal services could conceivably be discharged by the death of the person who was to perform it. Additionally, the incapacity of a person who is to perform a personal contract may discharge it. However, temporary incapacity is not enough unless it affects the performance of the contract in a really serious way. If an employee is killed or permanently incapacitated, it may be very difficult to argue that the employment contract should be allowed to continue.

Sadly, in the Sala tragedy, it looks as if the lawyers will be the only winners here.

Links to media stories about the Sala dispute can be accessed below:

Nantes demand first slice of £15m Emiliano Sala fee from Cardiff

https://www.theguardian.com/football/2019/feb/06/nantes-demand-transfer-fee-from-cardiff-city-for-emiliano-sala

https://www.independent.co.uk/sport/football/premier-league/emiliano-sala-cardiff-city-nantes-transfer-points-deduction-plane-crash-epl-video-a8769076.html

Conclusion

Frustration can only be used to have the contract discharged in situations where neither party is to blame. When one party is to blame for the failure to perform his obligations under the agreement, this represents a breach of contract and the innocent party can raise the appropriate action.

Copyright Seán J Crossan, 10 February 2019

Related Blog article:

https://seancrossansscotslaw.com/2020/03/18/crazy-days-force-majeure-frustration/