Essential Characteristics of Contract of Sale Essay Example

Essential Characteristics of Contract of Sale Essay Generally â€Å"a contract of sales of goods is a contract, whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called price.† Section 2(1) Sale of Goods Act 1893 United Kingdom. Thus contract for sale includes both present sale of goods and a contract to sell the goods at a future time and a sale consists in the passing of title from the seller to the buyer for a price. The essential characteristics of a contract for the sale of goods are: 1.1 Goods: Section 2(4) defines the contract of sale as â€Å"Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contact is called a sale.†Hence the existence of goods is a prerequisite for a contract to be termed as a contract of sale. Under section 5 (1) â€Å"the goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured or acquired by him after the making of the contract of sale, in this Act called future goods†. Therefore the contract of sale included all existing and future goods. We will write a custom essay sample on Essential Characteristics of Contract of Sale specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Essential Characteristics of Contract of Sale specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Essential Characteristics of Contract of Sale specifically for you FOR ONLY $16.38 $13.9/page Hire Writer 1.2 Transfer of Property: Section 2 of the Sale of Goods Act 1979 contains the essential elements forming part of a contract of sale. According to subsection (1) of Section 2 the foremost essential element for any contract to be regarded as ‘sale’ is the transfer of property in goods to the buyer for an agreed consideration. The agreement to transfer the property will also be regarded as sale. There are many implied and express terms under which the property transfers from the seller to the buyer. 1.3 Price: The transfer of property in the goods take place for an agreed consideration called ‘price’ Price is another important characteristic feature of a sale of contract. The term ‘price’ is described under Section 8 (1) of the Sale of Goods Act 1979. According to this section â€Å"The price in a contract of sale may be fixed by the contract, or may be left to be fixed in a manner agreed by the contract, or may be determined by the course of dealing between the parties† Contact of Sale and 2.0 Distinction between the Contract of Sale and Other Commercial Contracts: As against a contract of sale the commercial contract contains the following elements: â€Å"intention the parties must intend and communicate their intention to enter into contract under the law; offer and acceptance there must be an offer and an unqualified acceptance; consideration money or moneys worth must be exchanged for goods or services provided; capacity to contract the parties must have capacity to enter into the contract; consent this must not have been obtained by means of fraud, deceit, duress or misrepresentation, whether deliberate or unintentional; legality the contract must not be for an immoral or illegal purpose, and performance the obligations under the contract must be capable of performance by the parties.†[1] While for a commercial contract the above conditions are essential to make the contract valid the contract for the sale of goods implies the existence of certain conditions which are peculiar to the contract of sale of goods only. The implied conditions relate to various aspects like description, quality and conformity to the quality of the samples. The implied condition also ensures that the buyer will have a quite possession and enjoyment of the goods sold under the contract. The contact of sale also assumes that the seller has the right to sell the goods, whereas the contractual capacity is external to the contract in the case of other commercial contracts. 3.0 Implied Terms of Contract for the Sale of Goods: The following are the implied terms of the contract of sale of goods under the Sale of Goods Act 1979 include: â€Å"the seller has the right to sell the goods; the goods are free from any security interest; the buyer will have quiet enjoyment of the goods; where the goods sold by description, the goods will conform with the description; where the goods sold by sample, the goods will conform with the sample; the goods are of satisfactory quality unless  defects are brought to the notice of the buyer prior to the contract or a reasonable inspection would reveal the defect; the goods are reasonably fit for the purpose stated by the intended buyer or implied by the buyers statements and conduct;† [2] The essential implied term in a contract of sale is the capacity of the parties to the contact to buy and sell the goods. Section 3 (1) of the Sale of Goods Act says â€Å"Capacity to buy and sell is regulated by the general law concerning capacity to contract and to transfer and acquire property.† Further under section 12 the implied terms applicable to a contract of sale are described in detail. Section 12 (1) stipulates that there is an implied term about the sellers’ right to sell the goods. This section further adds that in the case of an agreement to sell the contract implies that the seller will acquire the right when the property in the goods is to pass. As regards to the quite enjoyment of the goods subsection (5) of section 12 lays down the provisions. According to this section: â€Å"In a contract to which subsection (3) above applies there is also an implied term that none of the following will disturb the buyers quiet possession of the goods, namely— (a)  Ã‚  Ã‚  Ã‚  Ã‚   The seller; (b)  Ã‚  Ã‚  Ã‚  Ã‚   In a case where the parties to the contract intend that the seller should transfer only third person may have, that person; (c)  Ã‚  Ã‚  Ã‚  Ã‚   Anyone claiming through or under the seller or that third person otherwise than under a charge or encumbrance disclosed or known to the buyer before the contract is made† Section 13 deals with the implied term about the sale of goods by description and sale by sample. In both the cases of sale there is an implied condition that the bulk shall correspond to the description and the sample. Similarly section 14 implies that the goods shall possess a satisfactory quality. Section 14 (2B) specifies â€Å"For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods— (a)  Ã‚  Ã‚  Ã‚  Ã‚   Fitness for all the purposes for which goods of the kind in question are commonly supplied, (b)  Ã‚  Ã‚  Ã‚  Ã‚   Appearance and finish, (c)  Ã‚  Ã‚  Ã‚  Ã‚   Freedom from minor defects, (d)  Ã‚  Ã‚  Ã‚  Ã‚   Safety, and (e)  Ã‚  Ã‚  Ã‚  Ã‚   Durability.† 4.0 Purchase of Laptop by Janet: The purchase of a laptop on the basis of the description as it is new is a case falling under sale of goods with an implied condition under section 14 of the Sale of Goods Act 1979. â€Å"Terms of satisfactory quality, fitness for purpose and correspondence with description are implied by implied by statute into contracts for the sale of goods (Sale of Goods Act 1979 ss.13, 14(2), 14(3))† (Robert Bradgate)[3] As noted earlier, all contracts for the supply of goods include implied terms that the goods supplied should (a) where sold by description, correspond with that description (Sale of Goods Act 1979 s.13); (b) be of satisfactory quality (Sale of Goods Act 1979 s.14(2)); and (c) where the buyer makes known the purpose for which the goods are required, be reasonably fit for that purpose (Sale of Goods Act 1979 s.14 (3)). The terms are implied into all contracts for the supply of goods, and apply to all goods supplied in purported performance of the contract. In Beale v Taylor (1967) it was shown that the plaintiff had relied on the description of the car he purchased as being a 1961 Triumph Herald and when it turned out to have been two different years welded together he was entitled to reject the car and claim his money back. The firs thing one must see is that whether the laptop forms part of ‘goods’ under the Sale of Goods Act. It is an established fact that the computer hardware should be regarded as goods. In the case of Amstrad plc v Seagate Technology Inc[4] it has been held that the computer hardware is classified as goods and it is further submitted that the supplier will still be liable under the contract even if the defect is due to the computer has failed due to an error in the real time clock or due to the failure of the ‘embedded’ software. The second aspect to be considered is the description on which the customer depended. The legal requirement under the implied conditions is that the goods must correspond with description applies where the contract of sale is effected by description. In the case of Ashington Piggeries Ltd v Christopher Hill Ltd [5] it has been held that in this context description is limited to those words which identify essential commercial attributes of the item sold. For the purpose of deciding on ‘description’ as applied to the implied condition the courts will consider whether the descriptive words form part of the description and such description has influenced the customer to rely on them and purchase the goods in question (Harlingdon Leinster v Christopher Hull Fine Art Ltd[6]) Normally under sale of goods by description, a statement with regard to the description will be regarded as a term of the contract and the seller is bound by such term. When the goods do not correspond to the description the seller would become liable even if he is unaware of the non-compliance of such goods to the description. This is so if the seller has prescribed the description in the promotional literature or in any other form. In the instant case Janet purchased the laptop on the basis of an advertisement which claimed that the computer is new and a model of that year which description later proved to be false. Hence the laptop sold by description has not corresponded to the description. In view of the legal positions discussed above the seller is liable to compensate Janet. Since there is a clear breach of the implied term of the sale Janet is entitled to claim damages and since the breach is material she can reject the laptop supplied under the sale of contract and repudiate the contract itself. â€Å"These provisions apply where the buyer is a consumer. Within six months beginning at the time at which the goods were delivered, the buyer can require the seller to repair the goods, reduce the price, or rescind (cancel and return property and money) the [[contract] where buyer claims that the goods were not in accordance with the contract at the time of delivery.†[7] 5.0 Purchase of Carpet Cleaner Set by Janet: The sale of the carpet cleaner under the television ad falls under the sale of goods by description which falls under section 14 (2B). Under this section the quality of the goods shall cover all the following aspects of the business: Fitness for the purpose for which the goods are commonly supplied Appearance and finish Freedom from minor defects Safety and Durability. â€Å"There is no case law on this definition of quality under the legislation. This definition of satisfactory quality was introduced by the Sale and Supply of Goods Act 1994. Prior to this the definition was merchantable quality and all relevant case law is with regard to the old definition of quality.†[8] However with the change of time there are increased quality expectations from the consumers and that is the reason the 1994 Act dealt with â€Å"reform of the domestic quality term it is intended to reflect that consumers require more than mere functionality from the goods they buy.† This is the precise reason that section 14(2B) Sale of Goods Act has set the above list of factors which are, in appropriate cases†, aspects of the quality of goods. Thus s14 (2B) spells out the consumers expectations and insofar as it refers only to the public statements of the seller and producer it might be read as suggesting that the consumer has no general minimum quality expectations but the following conditions also apply: The seller’s and the manufacturer’s public statement about the goods The seller is liable for the public promotional claims The implied condition under section 14 (2B) in essence implies â€Å"The goods show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods and taking into account any public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling.i[9] In accordance with the legal position discussed above Janet would be entitled to claim damages form the supplier of carpet cleaner. She can claim the remedies as outlined in S 48B Sale and supply of Goods to Consumer Regulations 2002

10 Metals and Minerals for Metaphors

10 Metals and Minerals for Metaphors 10 Metals and Minerals for Metaphors 10 Metals and Minerals for Metaphors By Mark Nichol Metals and minerals sometimes inspire associations with human characteristics or with circumstances, as in the case of the examples below: 1. Adamant Few people realize that this word, which in adjectival form means â€Å"insistent† or â€Å"unyielding,† has a lustrous origin: It comes from a Greek noun by way of Latin and originally referred to a diamond or any hard metal. In English, it also is a noun referring to the same materials or any similarly adamantine substances (yes, adamantine is a variant adjective). 2. Brassy From an association with the stridency of brass musical instruments, this adjective has come to refer not just to a quality of sound (as well as a description for the metal compound) but also to bold, clamorous, or unruly behavior. 3. Bronze The comparison of deeply tanned skin with the color of the metallic compound has resulted in the use of bronze to refer to a person with dark skin, either due to genetics or to extensive tanning, as in the reference to a physically imposing man with this hue as â€Å"a bronzed god.† 4. Flinty This term meaning â€Å"stern, unyielding† comes from the hard variety of quartz known as flint, which sparks when struck by steel and has therefore been used for millennia to start fires (though the â€Å"flint† in cigarette lighters is actually an iron alloy). The word skinflint, a synonym for miser, evokes the image of someone attempting to peel a layer off of a hunk of flint (a futile gesture because of its hardness). 5. Golden The value placed on the element gold has led to the use of the adjective golden for various figurative references. Among these, a golden musical tone is a mellow, resonant one; someone or something that is or is expected to be excellent, popular, or otherwise remarkable is marked, for instance, as a golden boy; an age or era might be described as golden; and a favorable occasion is often referred to as a golden opportunity. 6. Iron The word for this fundamental metallic element has been appropriated as an adjective denoting strength (â€Å"iron will†), robustness (â€Å"iron constitution†), relentlessness (â€Å"iron determination†), and firmness (â€Å"iron grip†). The rarely used noun form of these figurative senses is ironness. 7. Leaden Lead, because of its density and its dull color, is associated with literal (â€Å"leaden trudge†) and figurative (â€Å"leaden skies†) heaviness, as well as with dispirited or unsubtle characteristics. 8. Ossified This term literally denotes changing into bone and figuratively refers to becoming set in one’s ways. (Although bone is not strictly a mineral, it is largely composed of various minerals, hence its inclusion on the list.) 9. Silver The adjective form of the noun silver refers to soft or dulcet sounds (as of chimes), or to eloquent persuasion (â€Å"silver tongued†). Glossy gray hair is often referred to as silver, and that description leads to connotations of mature elegance (â€Å"silver-haired dignity†). 10. Steely This adjective referring to strength and hardness is best known as part of the clichà ©s â€Å"steely determination† and â€Å"steely resolve.† Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Expressions category, check our popular posts, or choose a related post below:Bare or Bear With Me?Acronym vs. InitialismAdverbs and Hyphens

An Understanding of Managment Tools The WritePass Journal

An Understanding of Managment Tools An Understanding of Managment Tools IntroductionReferencesRelated Introduction With some 740 stores in 54 countries, the Spanish clothing retailer Zara has hit on a formula for supply chain management that works by challenging conventional wisdom. This excerpt from a recent Harvard Business Review profile on how Zara’s supply chain communicates, allowing it to design, produce, and deliver a garment in fifteen days. Zara’s history began in 1963 when Amancio Ortega Gaona opened Confecciones GOA in La Coruà ±a, to manufacture women’s pyjamas and lingerie products for garment wholesalers. In 1975, after a German customer cancelled a sizable order, the firm opened its first Zara retail shop in La Coruà ±a. The original intention was simply to have an outlet for cancelled orders. However, the experience taught the firm the importance of a ‘marriage’ between manufacturing and retailing a lesson that has guided the evolution of the company ever since. From a starting point of six stores in 1979, the company established retail operations in all the major Spanish cities during the 1980’s. In 1985, Confecciones GOA created Inditex as the head of the corporate group. In 1988, the first Zara store outside Spain opened in Porto, Portugal, followed shortly by a store in New York City in 1989 and Paris in 1990. However, the real ‘step-up’ in foreign expansion took place during the 1990s when Inditex entered 29 countries in Europe, the Americas and Asia. In parallel with its overseas expansion, Inditex diversified its retail offering by another adjacency expansion with new brands like Pull and Bear, Massimo Dutti, Bershka and Stradivarius to meet new customer segments. However, Zara still count for eighty per cent of Inditex’s revenue. Each of Inditex’s brands operates independently, but shares the commitment to supply fashion at affordable prices and all employ similar management models for the control of the total supply chain to maximize speed to market. Fig 1 illustrates Inditex’s expansion. The figure imitates the stem of a tree, which gain a new circle for every year that goes by. The circles indicate the different expansion Inditex has accomplished, moving from being a fabric to opening its first store and to opening other clothing chains. These types of expansions justify as adjacency expansion. Adjacency expansion draws the skills in the core business to build a competitive advantage in a new adjacent competitive arena in order to target different customer segments. This adjacency expansion has lead to the need of changing Inditex’s core business. Inditex has shifted from being a fabric working towards several retailers, to becoming a big concern covering most parts of the production as well as the final sale. To grow into a new adjacency around a once-successful core business is the critical factor in 75 per cent of today’s total business disasters. The American grocery chains Wal-Mart and Kmart illustrate an example on difficulties in adjacency expansion. They both open their first grocery store in 1962. Wal-Mart successfully moved into adjacency such as Sam’s Club, electronics and Mexico, one by one. Kmart however, struggled more with the expansion. They moved from books to sporting goods and even to a chain of department stores in Czechoslovakia. This drifted Kmart into bankruptcy. Showing that even though they started out equally, the different choose of steps in adjacency expansion lead one to be a big failure and the other to be one of USA most respected companies. Another example is Nike versus Reebok, which in 1990 had almost equal revenue. While Nike had a clear strategy, consisting of a repeatable process it had developed and refined over a decade, to attack one sport after another with the help of different famous athletes, Reebok’s path was a mystery to those covering the company. They expanded in different directions and as their core shoe business was doing badly, they kept on expanding into new unconnected arias. In addition, Nike’s strong adjacencies expansion made it even harder for Reebok to increase the total sale and ended up decreasing its revenue. It is not easy to know which expansion that is the right expansion. However, after studying adjacencies expansion in over 100 companies, Chris Zook presents primary six ways to expand the boundaries of business .Fig 2 illustrates these expansions. This is trough new businesses, forward integration, new geographies, new channels, new customer segments or new products. In parallel to Inditex’s, Zara has accomplished several adjacencies expansions during its history. One of two main expansions is by moving from selling women’s underwear and pyjamas to regular clothes, shoes, handbags and even make-up. This signifies product adjacencies by marketing a new product or service to core customers. This is one of the most commonly pursued and highest potential adjacencies. The other main growth is by expanding into selling men’s wear and children’s wear. These customer adjacencies modifying a proven product or technology to enter a very new market segment and are a major adjacency move for most companies. In addition, Zara continuously expand their business by successfully opening new stores around the world and at the same time enlarge their local industry by expanding the focused production in Spain. Geographic adjacencies move into new geographic areas, is a type of adjacency expansion that companies consistently underestimate in complexity. Zara has also achieved new business adjacencies by opening Zara Home, a store that sell accessories to the home like kitchen wear and bedclothes. With this, it builds a new business around a strong capability and essentially repositioning it. This is the rarest form of adjacency move, and the most difficult to achieve success with. In addition, Zara has also expanded with channel adjacencies by offering a small proportion of its collection on Internet sale. Although this is more for promotion, it is still a channel adjacency expansion. All of Zara’s different expansion fits into the primary six ways to expire the boundaries of business. Fig. 3 illustrated that Zara has expanded in every direction. Finding a repeatable method of moving into new adjacencies, one after the other has a clear benefit in the learning curve. This contributes to competitive advantage making the adjacencies better and faster each time. Zara’s supply chain In an interview with CNN, Jose Maria Castellano, chief executive at Inditex, talked about Zara’s supply chain and indicated its unusual structure by saying: Investment banks used to say that this model did not work, but we have shown that it gives us more flexibility in production, sales and stock management, At a Zara store, customers can several times a week find new products. The whole collection is in limited supply and they achieve a tempting exclusivity by only displaying a few items, even though the stores are spacious. It makes the customer think, This green shirt fits me, and there is only one on the rack. If I dont buy it now, Ill lose my chance. Zara has built a concept around ‘fast fashion’. Moving away from the traditionally one collection per session, Zara continually design, produce and deliver new styles. They base their business on demand instead of forecasting. Picking up what people wear on the street, at the university or at a nightclub, Zara’s designer’s catches ideas for new styles and can present them in a Zara store only two weeks later, while most of the competitors has a lead-time over three months. This makes Zara always able to offer the latest fashion in it store, leading to more sale and fewer discounts. Such a retail concept depends on the regular creation and rapid replacement of small batches of new goods. Zara’s designers create approximately 40,000 new designs annually and select 10,000 of them for production. Some of them resemble the latest fashion design creations. Zara often beats the high-fashion houses to the market and offers almost the same products, made with less expensive fabric, to much lower prices. This fast fashion system depends on a constant exchange of information throughout every part of Zara’s supply chain. From customers to store managers, store managers to market specialists and designers, designers to production staff, buyers to subcontractors, warehouse managers to distributors, and so on. Most companies insert layers of bureaucracy that can bog down communication between departments. Zaras organization, operational procedures, performance measures, and even its office layouts, all are designed to make information transfer easy. Zaras single, centralized design and production centre is in Inditex headquarters in La Coruà ±a. It consists of three spacious halls, one for each of the three clothing lines, women, men and children. Unlike most companies, which try to remove unnecessary labour to cut costs, Zara makes a point of running three parallel, but operationally distinct, product families. Though it is more expensive to operate three channels, the information flow for each channel is fast, direct, and unencumbered by problems in other channels, making the overall supply chain more responsive. Each clothing line has separate design, sales, and procurement and production-planning staffs. A store may receive three different calls from La Coruà ±a in one week from a market specialist in each channel; a factory making shirts may deal simultaneously with two Zara managers, one for mens shirts and another for childrens shirts. In each hall, floor to ceiling windows overlooking the Spanish countryside reinforce a sense of cheery informality and openness. Unlike companies that sequester their design staffs, Zaras cadre of 200 designers sits right in the centre of the production process. The designers are usually in their twenties and got the job because of their enthusiasm and talent, no prima donnas allowed. Split among the three lines, they work next to the market specialists and procurement and production planners. Large circular tables play host to spontaneous meetings. Racks of the latest fashion magazines and catalogues fill the walls. A small prototype shop has been set up in the corner of each hall, which encourages everyone to comment on new garments as they evolve. The physical and organizational proximity of the three groups increases both the speed and the quality of the design process. Designers can fast and easy check initial sketches with colleagues. Market specialists, who are in constant touch with store managers and many of whom have been store managers themselves, provide quick feedback about the look of the new designs (style, colour, fabric, and so on) and suggest possible market price points. Procurement and production planners make preliminary, but crucial, estimates of manufacturing costs and available capacity. The cross-functional teams can examine prototypes in the hall, choose a design, and commit resources for its production and introduction in a few hours, if necessary. Once the team selects a prototype for production, the designers refine colours and textures on a computer-aided design system. If the item is to be made in one of Zara’s factories, they transmit the specs directly to the relevant cutting machines and other systems in that factory. Bar codes track the cut pieces as they converts into garments through the various steps involved in production, including sewing operations, distribution, and delivery to the stores, where the communication cycle began. Zara manufacture approximately fifty per cent of its products in its own network of 22 Spanish factories, 18 of which are located in and around the La Coruà ±a complex, and use around 500 subcontractors located close to the head office for all sewing operations. Zara closely monitor these sewing operations to ensure quality, compliance with labour laws, and adherence to the production schedule. The subcontractors are responsible for picking up and deliver the production items to the factory. Here each piece is inspected during ironing, placed in plastic bags and sent to the distribution centre. The other half of its products are procured from 400 outside suppliers, seventy per cent of which are in Europe, and most of the rest in Asia. Many of the European suppliers are located in Spain and Portugal, close to the headquarters. Zara exploits this geographical proximity in order to ensure quick response to Zara’s orders. From Asia, Zara procures basic products and those for which the region has a clear cost or quality advantage. Having the factories in and near Spain gives Zara a tremendous amount of control and flexibility. The location of the production can be seen as a cost trade-off with the cost saved on transportation. Although the increased cost in production will not be offset by the cost reduction in transportation concerning the labour cost is on average 17-20 times the cost in Asia. For its in-house production, Zara obtain forty per cent of its fabric supply from another Inditex-owned subsidiary. The rest of the fabrics come from a range of 260 other suppliers, none account for more than four per cent of Zara’s total production in order to minimize any dependency on single suppliers and encourage maximum responsiveness from them. Most of the fabrics are ordered un-dyed and dyed in one of Inditex manufacturing facilities. By having its own dying facility Zara can quicker respond to demands and it gain less inventory by not storing every fabric in a range of colours. Moreover, if one fabric is not used it can easily be used next season independent of the colures of the next trend. All products pass through Zara’s major distribution centre in La Coruà ±a. In addition, it also has a smaller distribution centre in Zaragoza. The trucks, which run on a bus schedule, deliver to the stores twice a week, using a maximum of 24 hours to stores inside Europe and 48 hours in America. All in all this supply chain, as illustrated in Fig 4, is giving a lead-time on two to four weeks, with a price thirty per cent higher than its competitors and a need to discount only 18 percent of its production. Outsource Zara is careful about the way it deploys the latest information technology tools to facilitate these informal exchanges. Customized handheld computers support the connection between the retail stores and La Coruà ±a. These PDA’s supplement regular, often weekly, phone conversations between the store managers and the market specialists assigned to them. Through the PDA’s and telephone conversations, stores transmit all kinds of information to La Coruà ±a, such hard data as orders and sales trends and such soft data as customer reactions and the buzz around a new style. While any company can use PDA’s to communicate, Zara’s flat organization ensures that important conversations do not fall through the bureaucratic cracks. The constant flow of updated data eases the bullwhip effect, the tendency of supply chains and all open-loop information systems to amplify small disturbances. A small change in retail orders, for example, can result in wide fluctuations in factory orders after transmitting through wholesalers and distributors. In an industry that traditionally allows retailers to change a maximum of twenty per cent of their orders once the season has started, Zara lets them adjust forty to fifty percent. In this way, Zara avoids costly overproduction and the subsequent sales and discounting prevalent in the industry. The insistent introduction of new products in small quantities, ironically, reduces the usual costs associated with running out of any particular item. Indeed, Zara makes a virtue of stock-outs. Empty racks do not drive customers to other stores because the shoppers can always choose form new things. Being out of stock in one item helps sell another, since people are often happy to snatch what they can. In fact, Zara has an informal policy of moving unsold items after two or three weeks. This can be an expensive practice for a typical store, but since Zara stores receive small shipments and carry little inventory, the risks are small, unsold items account for less than ten per cent of stock, compared with the industry average of 17 to twenty per cent. Furthermore, new merchandise displayed in limited quantities and the short window of opportunity for purchasing items motivate people to visit Zara’s shops more frequently than they visit other stores. Consumers in central London , for example, visit the average store four times annually, but Zaras customers visit its shops an average of 17 times a year. The high traffic in the stores circumvents the need for advertising: Zara devotes just 0.3 per cent of its sales on ads, while its rivals spend three to four per cent. References ZARA Outsourcing = http://industrialeducation.blogspot.com/2009/08/study-of-supply-chain-zara-fast-fashion.html (31/03/11)