Pontificia Universidad Catlica de Chile

Facultad de Derecho

THE MUSIC FESTIVAL CASE

SERNAC

MEMBERS OF THE GROUP:

Josefina Borquez
Maria Belen Fuenzalida
Valentina Mendoza
Catalina Montero
Clementina Pumpin

Daniela Tapia
The Music Festival Case
SERNAC or Servicio Nacional al Consumidor is a Chilean State Institution, a
public service that depends on Ministerio de Economa, Fomento y Turismo. Its
mission consists in the protection and satisfaction of the consumers rights.
I.- LIABILITY OF THE PARTIES:
Its liability relies under those bases before mentioned, following a determined
procedure in concordance with la Ley de Proteccin al Consumidor 19.496:
The procedure consists in a series of events; firstly SERNAC acknowledges the
claim from the consumers. Secondly, the petition is studied in a global
perspective, considering the contract, the circumstances, the facts, and the
breach among others. Once, the claim is admitted, SERNAC notifies the
suppliers of goods and services about the case and requests a possible solution
for the consumers petition. This phase is known as the mediation.
If a solution is not provided, an individual sue or a class action (if there is more
than one consumer affected) is presented to Chilean Courts resulting in a
judicial resolution and the case will be determined under the Chilean law.
This service is provided for free, given its public nature, and therefore being an
instance of real protection for the consumer and their rights.
In this particular case, the consumers Rights that are affected are the following:
1.- The breach of the contract between MusicTown Inc., and the consumers
existing in the purchase of the concerts tickets.
2.- The breach of the contract a result of the poor performance by the artist
EIMY GUAINJOUSE.
3.- The non satisfaction of the terms expressed on the advertisement of the
Music Show, creating high expectations levels.
Given the fact that the requirements are fulfilled, the consumers (ticket buyers)
have the right to claim back the value of the ticket and nominal damage, due to
the importance and emotional interest of this particular concert for the fans,
given the fact that this was considered EIMY GUAINJOUSE last concert.
Therefore SERNAC filled a class action against the partner PETER BULL on
behalf of MusicTown Inc. found liable to the consumers. Nevertheless, he has
the right to claim liability regarding other parties that signed contracts with him
due to the fact that all these contract were related, their breached produced a
chain reaction to MusicTown Inc. and their obligation towards consumers.

However, the breached of all other parties does not exclude the liability of Peter
Bull towards the consumers, in our representation, the SERNAC.
It is also important to clarify that although some consumers were upset and
became violent resulting in destruction of buses and public property, this action
can only be prosecuted by the D.A. against the specific individuals that had a
criminal behavior, these actions do not affect the amount of compensation that
the consumers must receive from Peter Bull in representation of MusicTown Inc.
Therefore Sernac cannot be blamed, due to the fact that it does not hold any
responsibility towards these events.
In the following litigation we will argue and prove how every particular party is
reliable for their breach in their contract and therefore reliable for damages
caused to the consumers.
II.- THE PETER BULL CASE:
A.- Applicable Law, Actions and Competent Court:
In the matter regarding Peter Bull on behalf of MusicTown Inc., who is directly
involved and liable for the non proper performance and the non sufficient
fulfillment of the terms in the proposal. This is a case where the main objective
of the contract occurred, but not under the conditions and terms offered to the
consumers.
SERNAC intended to mediate and come to a friendly agreement, but it was not
accomplished due to the fact that MusicTown Inc., did not assume its
responsibility and blamed other parties for its breach of the contract.
Due to the fact that the parties have Chilean nationality, we shall apply the
purcase agreement law established in the Civil law (COMPRAVENTA). The
article 1553 clearly states:
Art. 1553. Si la obligacin es de hacer y el deudor se constituye en mora, podr pedir
el acreedor, junto con la indemnizacin de la mora, cualquiera de estas tres cosas, a
eleccin suya:
1.a Que se apremie al deudor para la ejecucin del hecho convenido;
2.a Que se le autorice a l mismo para hacerlo ejecutar por un tercero a expensas del
deudor;
3.a Que el deudor le indemnice de los perjuicios resultantes de la infraccin del
contrato.

As the article states, the consumers (represented by SERNAC) have a

compensatory action for the non-fulfillment of the contract in the terms
established in the agreement signed by both parties.
Hence, Peter Bull shall pay the damages that the consumer suffered by
refunding the price of each ticket to each consumer. Secondly Peter Bull shall
compensate for all nominal damages caused due to the fact that this was their
opportunity to witness EIMY GUAINJOUSE performing live which in the

particular case happened to be her last concert. The situation was aggravated
by the increased publicity and media attention that drew high expectations
towards the concert. As a result these nominal damages should be remunerated
to a total amount of 10 Chilean Unidades de fomento (UF) per buyer.
This conflict should be resolved, by the Chilean Jurisdiction, on the first
instance courts of Chile (Juzgados de Letras Civiles).
B.- Prevention of the risks:
Peter Bull can clearly be held responsible for the breach in the agreement made
and the service provided to the consumers. He holds responsibility for the
damages, even though there were prior obligations breached by other parties
that celebrated contracts with him given by the fact that he could have not
prevented them by other means. Nevertheless, as a possible prevention Peter
Bill could have transferred the risks of breaching the contract to an Insurance
Company, making them liable for all compensatory damages.
Hiring an Insurance Policy can be considered necessary and essential in these
types of enterprises, given the fact that multiples of services (parties) were
involved, and the outcome of the breach of one of the parties can results in a
domino effect.
III. - The YUNIVERSAL RECORDS INC, and EIMY GUAINJOUSE Case:
A.- Applicable Law, Actions and Competent Court:
The parties are considered liable for their obligations according to what each
contract states, either to several obligations or a subsidiary or even an
independent obligation.
Therefore, YUNIVERSAL RECORDS INC shall compensate the damages
towards Peter Bull since the an International service agreement exists among
them. On behalf the consumers, SERNAC does not have a direct action to
claim compensations, because no contract have been celebrated with them, but
this does not exclude that Peter Bull is the competent counterparty, therefore he
has an action against Yuniversal Records Inc. and EIMY GUAINJOUSE but he
still has to refund the consumers.
The United State legislation can be considered the applicable law and will
therefore be the competent court for this contractual relation, due the fact that
Yuniversa Records Inc. was created in there, in addition Eimy Guaijouse stated
in one of the agreements that all legal and unpleasant details of her show shall
be followed directly with the record company Yuniversal Records Inc. base in
the United States
B.- Prevention of the risks

It would have been convenient if these parties had established a liability clause
among them, applicable in the event that a breached of a specific obligations
was made it would then not affect all other parties, preventing therefore the
domino effect created. As an example if Yuniversal Records Inc. planned a
Concert for Eimy Guanjouse, and she did not arrived to performed, she as the
artist would have to compensate the damages cause as the result of not
performing, her breach of contract.
Furthermore, the company could state a liability waiver in case that the artists
hired by them would not fulfill their obligations because of a personal reason.
Then, Yuniversal Records Inc. would not have to respond or compensate for the
damages caused by the breach of their artists obligations.
Nevertheless, it is important to clarify that the obligations that Eimy Guainjouse
has are Intuito Personae, thus, when not complying with them, there will be a
necessary breach of the contract and there will never be a way to coerce the
artist to perform in concordance to the American legislation. Hence, once the
damage is produced no complete compensation can be reimbursed.
IV. -BEST MUSIC EQUIPMENT INC. (TAIWAN)
A.- Applicable Law, Actions and Competent Court:
The liability that shall be brought against BEST MUSIC EQUIPMENT INC is due
to the breach of contract between Peter Bull and the company. This is the result
of an agreement signed regarding the coordination of the purchase of materials
to build the music equipment that was designed by Mr Pink. The latter should
be made in England with the imported materials from Taiwan.
Peter Bull signed two different agreements that are contradictory with the two
binding parties. The first agreement was with Peter Bull acting on behalf of
Musictown inc, which established that the coordination of the purchase of
materials with an Incoterm CIF Valparaso. At the same time, a second
agreement was performed with the Danish designer Mr Pink. This agreement
established the same obligation but with an Incoterm FOB Liverpool. These
contradictory responsibilities clearly demonstrate that there had to be a breach
of contract.
The applicable law between these parties; BEST MUSIC EQUIPMENT INC,
Musictown inc and Mr Pink, was previously established by the parties that
agreed that any disputes should be solved by arbitrarion in the UK and pursuant
to the English law.
SERNAC does not have a direct claim with BEST MUSIC EQUIMENT INC,
however, Peter Bull does have an action due to their breach.
B.- Prevention of the risks
BEST MUSIC EQUIMENT INC. can be considered liable for the breach of
contract with Peter Bull in representation of Musictown inc. due to the incorrect

transportation and delivery of the materials. The agreement clearly stated that
the materials should have arrived to Valparaiso using CIF as incoterm.
However, in spite of the breach on this particular agreement, the instructions of
Eimy Wainhaus were followed as stipulated in the contract between MusicTown
inc and Yuniversal Records. To prevent thee breach the company had to
distinguish between their instruction and the agreements made between the
parties.
V.-BING AND OLAFSEN (Mr Pink)
A.- Applicable Law, Actions and Competent Court:
BING AND OLAFSEN did not incurred in a breach of contract due to the fact
that their main obligation was to follow the singers instructions. One of these
instructions declared that all musical equipment should be designed by them
(Mr Pink for BING AND OLAFSEN brand) and built in England with materials
specially imported from Taiwan. However it was within Peter Bulls obligations
to coordinate the purchase and delivery of materials. According to this
obligation Peter Bull celebrated an agreement with BEST MUSIC EQUIPMENT
stating that the materials should be delivered in Chile; Valparaso, although it
goes against the singers primary requirements.
The applicable law between these parties; BEST MUSIC EQUIPMENT INC,
Music Town inc and Mr Pink, was previously established by the parties that
agreed that any disputes should be solved by arbitration in the UK and pursuant
to the English law.
B.- Prevention of the risks
In order to prevent these events the Designer should have notified Musictown
inc considering the error regarding the place of delivery of the materials to
prevent a breach of contract between Peter Bull and BEST MUSIC
EQUIPMENT.
MARSHALL SPEAKERS inc.
Regarding MARSHALL SPEAKERS inc. there was a breach of contract due to
the fact that Eimy Guainjouse clearly specified that the speakers needed to be a
specific color: pink. Due to the exact determination of the color of the speakers,
which the singer established in the contract, the unfulfillment of this obligation
results in a infringement of the contract. The parties have not previously agreed
upon the applicable law. However, Chilean law establishes that if the jurisdiction
has not been previously determined in the contract, the applicable law should
be resolute by the place of fulfillment of the obligation. With this in
consideration, this breach of contract is preliminary subject of Chilean
jurisdiction.
To prevent these events, the parties should have given the needed importance
to the color of the speakers as it was determined in the contract.

VI.- BIRGIN AIR and VESSEL TRANSPORT COMPANY inc.

A.- Applicable Law, Actions and Competent Court:
According to the contract between Musictown inc and the company BIRGIN AIR
and VESSEL TRANSPORT COMPANY inc, their main obligation includes all
transportation service. This transportation included the equipment, the artist, the
group of musicians and all of Eimys 33 pets, including her favorite snake
Spicy.
This company did not incurred in a breach of contract, however there were
some problems:
1)

2)

The equipment did not enter Chile, after being informed by SAG that
the main material of the equipment did not meet SAG regulations. And
this is a right that is endowed to SAG by 5th clause of the ACUERDO
SOBRE LA APLICACIN DE MEDIDAS SANITARIAS Y
FITOSANITARIAS DE LA ORGANIZACIN MUNDIAL DEL
COMERCIO, which establishes that countries can strictly regulate the
access of merchandise in order to minimize the risk of plague entrance
to their territory.
According
to
MANUAL
DE
PROCEDIMIENTOS
DE
IMPORTACIONES PECUARIAS, regarding the entry of live animals
and fertile eggs to the country it is clearly stated that to obtain
authorization to access Chile the importer of such merchandise must
comply with all of SAGs regulations. The animals have to go through
a process of inspection when they arrive and then be authorized to
enter quarantine or sent back to their origin country if a potential health
or zoosanitary (animal health) risk is found. Then if the quarantine is
authorized the animals should remain in under the surveillance of SAG,
and according to the procedures if the animals are safe their entrance
will be allowed.

All of the regulations are available on their webpage (www.sag.cl).

APPLICABLE LAW
Since it is an obligation that consists in transport of goods from one country to
another, both the country of origin and the country of destinations norms should
be applicable. However, the difficulty was originated in the country of destination
of the goods (Chile). The goods were held in customs by SAG in compliance to
a legal procedure that is mandatory to follow in the entry of animal and organic
origin goods, therefore, the applicable law should be Chilean.
B.- Prevention of the risks
Since Birgin Airs primary activity consists in transportation of goods and
passengers, it is their duty to make sure that the transported goods comply with
all regulations and documentation needed before transporting them, from both
destination and origin countries. Therefore, Birgin Air should have informed

MusicTown inc. about the regulations regarding the entry of organic and animal
products to the country of destination of the goods (Chile).
However, Birgin Air is not to be held responsible for the retention by Chilean
customs office of the transported goods (speakers and pets). Peter Bull, in
representation of MusicTown inc. incurred in negligence when arranging the
transport for the items specified in the contract, specifically, pets and speakers.
Since MusicTown inc. is in charge of managing all legal aspects of the transport,
as stated in the contract, it was Peter Bulls responsibility to do the proper
research of the necessary documents and regulations regarding the transported
goods. Therefore, MusicTown inc. is liable for the retention of the goods. It is
part of their duty as legal advisor to research and make sure that all legal
regulations are met in the fulfillment of the contracts obligations.
Since it is part of SAGs normative to quarantine animal and organic origin
goods, Peter Bull should have been informed of this measure by doing the
proper research. And hence, should have arranged for the transportation of both
speakers and pets beforehand in order to meet the contracts obligation
opportunely. He should have foreseen that the animals would be held in
quarantine, as it is part of a public health norm, and in consideration of this
obligatory part of the entry process, should have arranged for transportation of
the pets with more anticipation. Regarding the speakers, due to the fact of their
primary material (wood), Peter Bull should have investigated about the entry
process for this type of goods, however, it may have not been possible for him
to foresee that the wood was infected. Therefore, Peter Bull is not liable for the
fact that the goods are damaged, but he is responsible for his negligence in
arranging the proper safety conditions of the entry and transportation of the
speakers.
VII.- FINAL CONCLUSIONS: Drafting a satisfactory contract
In conclusion due to the problems that rose, it would have been convenient to
establish certain clauses in the tickets sold to the buyers.
Regarding the fact that a purchase agreement may or may not be written, and
in our legislation there is no need for formalities for these to be perfected
(unless dealing with real state contracts) we find that a possible solution would
have been to include certain conditions in the tickets themselves and in the
advertisement of the show, such as the following:
a.- Regarding the ticket itself:
I. The price of this ticket is refundable given the breach produce by any
cause with the exception of Force Majeure.
II. The time, place and form in which the show shall be performed. This
clause will persist unmodifiable.
III. This ticket shall be issued only by MusicTown Inc., and any other that
intends to reproduce it will be prosecuted by the Chilean law.

IV. The issuance and validity of this ticket will be regulated by the Chilean
law under the law 19. 496.
V. The layout of the seats in the show facility shall not be modifiable unless
prior notice with a couple of hours of advance. If there is an urgent and
determinating circumstance that justifies the modification of the seats,
refunds will apply.
b.- Regarding the advertisement:
All the clauses in the ticket apply to the advertisement of the concert, and the
ones that follows:
I. The terms advertised shall be strictly comply, and will not be subject to
variation. If not comply, it shall be understood that there is a breaching of
the contract with all its legal consequences.
II. The offer of the tickets will be susceptible to end when these are out of
stock.
III. The individualization of the seller including the name of the producer and
the contact information.
IV. Payment methods and discounts.
V. Any other term or condition that might apply.
SERNAC only had a legal claim again Peter Bull in representation of Music
Town Inc. Therefore it does not have any direct action towards any of the other
parties in this event.