Question

Business Law

QUESTION 1

a) During negotiations, parties to a contract often make statements regarding the quality of the merx being sold or in relation to the terms of the contract. Discuss the four types of statements that one party may make to the other.

b) Set out the requirements which must be met before an invention is patentable.

c) In terms of the Consumer Protection Act 68 of 2008 a consumer has a right to "fair and responsible marketing", which rests on a general prohibition against marketing that is false, misleading or fraudulent. Discuss this right in detail.

Answer 1

a) There are four levels of quality, which can also be the four types of statements that one party may make to another during negotiations

Quality Control - This has to do with the quality metric that is set for specific products. For eg If a tire manufacturer are selling a batch of tires to an automobile manufacturer, the tire manufacturer will receive strict specifications with respect to the quality of the tire right from the type of rubber that's being used, to the manufacturing process, the heating and cooling temperatures, stress and friction tolerance, life space on the tire, optimum, minimum and maximum air pressures that it can operate under, the type of tarmac and terrain that it can operate under, etc. These metrics are included in the quality control parameters which are included in the quality of the merchandise being sold.  

Quality Assurance - Quality assurance has to do with the upper and lower limit of quality, performance and defects on an average per product or per batch of products that are guaranteed by the manufacturer. For Eg, if the Tyre manufacturer assures a 99% quality assurance rate, it would mean that 99/100 tires should be able to meet the automobile manufacturer's quality control parameters.

Quality System - the Quality system has to do with the system that's used to evaluate quality. Quality systems could range from Six Sigma to Total Quality Management or TQM to the ISO 9000 quality management systems.

Quality Audit - Quality Audit has more to do with the parameters of quality checks that are carried out by the buyer post-delivery. For eg the automobile manufacturer and the tire manufacturer may agree that every batch that's delivered will be subject to specific post-delivery tests that include test drives, pressure testing, etc before purchase

b) Set out the requirements which must be met before an invention is patentable.

Here are a few requirements which must be met before an invention is patentable

• Patents can only be awarded to processes, manufacturing methodologies and products. While software can also be patented, it's far easier to patent products over services since they're more tangible and similarities and dissimilarities can be identified or dismissed. With software, however, patents get more complicated. While it's possible to patent an application like Uber, however, what the ride sharing platform can patent is limited to the UX / UI or the User Experience ad the User Interface of the app. However, if someone decides to gain access to the code, rehash modify and redeploy it with a new skin or a new Ux/ Ui, there's not much a patent lawyer can do. Another limitation of patent law is that while Uber can patent its application and its logo, it cannot patent the business of ride sharing. If a competitor like Lyft chooses to launch another ride sharing platform, anti-monopoly laws and fair competition laws permit Lyft to do so as long as they do so with their own application and UX/ UI. In other words, you can't patent a specific service.

• Patents can only be awarded to a something that's absolutely new. A good example of this is the pharmaceutical industry. There are two types of drug manufacturers. Generic and Branded or Non-Generic. Generic drug manufacturers produce drugs that have already been invented by obtaining a license and paying a royalty fee to the inventor while branded or non-generic drug manufacturers produce new formulation and drugs for illnesses or diseases that have never been produced before. For Eg Daraprim is a branded drug that was never invented before. A pharmaceutical patent can only be obtained in a new drug an a formulation that's never been invented before.

c)

This is a law that lays down the framework for what constitutes as fair and responsible marketing practices.

• The act doesn't allow advisers or a firm, business, organization or an individual to discriminate against any individual, group of individuals through an advertisement. For eg a bank's marketing cannot be solely focused on individuals from a specific race or an ethnic group, that would count as discrimination.

• The act also requires businesses to be transparent in the labeling of nutritional information, price, quantity and quality of their products.

• The act does not allow multi-level marketing or pyramid schemes as a medium of sale and marketing of products or services

• The act also prohibits artificial scarcity or the process of mi representing or constraining demand or supply in order to mark up the price of a product. The act also doe not allow a business to oversell their inventory. For eg if a business has 5 products, the vendor isn't allowed to accept payment or money for the 6th product unless he or she has it in their warehouse.