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Breach Of Contract Exclusion Of Liability Ii Notes

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ICL Workshop 3

Breach of Contract + Exclusion of Liability Prep Task 1

1. What are the relevant terms which may impose liability on the seller? (p.82) Express terms in the contract: An oral contract between S and B for S to supply 220 thirty-litre capacity polyethylene drums (Catalogue ref: 9007.6309) for the price of PS9,870 plus VAT. To be delivered on or before 14th September. Confirmed by Buyer by Fax dated 9th September 2012. Confirmed by Seller by Fax dated 12 th September 2012 (enclosing the T&C) (This qualifies as a counter-offer as the Seller has included the T&C in his fax.) Delivered on 13th September 2012. (Acceptance happened on this date when Floidex accepted delivery of the goods without complaining about the T&C incorporated by the Seller) Rejected by Buyer and notified to S by letter dated 15 September 2012. (Notified within terms under clause 7.2 of the Seller's T&C) 6 MONTHS have passed since the BREACH Implied terms under SGA 1979: s.13 SGA Sale by Description. s.13(1) where there is a contract for the sale of goods by description, there is an implied term that the goods will correspond with the description.

2. Have the terms been incorporated? (p.82) Yes, the terms have been incorporated by notice during the transaction. However, the Buyer may argue that the notification with respect to the Seller's T&C was given after the contract terms had been agreed. Nevertheless, the Seller will state that the T&C were brought to the buyer's attention before delivery of the goods or before any invoice was sent to the buyer.

3. Have the terms been breached?
Yes, both the express terms and the implied terms have been breached. The goods do not correspond to the description under the contract (or the catalogue by which the order was placed). The drums are smaller than described.

4. What is the remedy sought?
s.13(1) is a condition under s.13(1A). Under s.11(3) the Buyer may repudiate the contract and claim damages if the Buyer suffered loss. Thus, rejection of the goods +
not to pay for them.

5. Consider ss.15A/s35 SGA if appropriate s.15A in a Business to Business contract, was there a slight breach? If so, would render the term a warranty rather than a condition (no right to reject/terminate if the condition mutates into a warranty). On facts, difference in volume is no more than slight. s.35(4) No question of acceptance on the facts.

6. Has Liability been excluded? (p.82)

1. Clause Incorporated in contract?: By Clause 7.1 of the Seller's T&C the seller is excluding liability for QUALITY of the goods with reference to the SGA 1979.

ICL Workshop 3

2. Validly Construction of the Clause? (p.84): This clause however fails to cover the breach by the Seller to the Buyer as it refers to QUALITY and not to the DESCRIPTION of the goods. The breach is for the DESCRIPTION of the goods not their QUALITY.

3. Is the Clause invalidated by UCTA? (p.85): ss. 2, 3 & 6 + s.11&Schedule 2 s.13UCTA states that a clause excluding liability either for Description of the goods or Quality and Fitness for Purpose of the goods in subject to the reasonableness test under s.11 UCTA. If the Buyer can demonstrate that it qualifies as a Consumer under UCTA s.12 the exclusion clause will be VOID. s.3The contract is under the Seller's Standard Terms and Conditionsor s.6(3) No exclusion unless it is reasonable. S.11: States that the contract terms are subject to the reasonableness test under Sch 2 Sch 2: Guidelines for the application of the Reasonableness Test.

7. Conclude We can reject the goods and does not have to pay for them

ICL Workshop 3

Prep task 2 Structure

Express term

Implied term


s.12 to pass good title s.13 description

Relevant Terms

Breach of clause

7.1(d) which is fit for the particular purpose of the supplier (Robin said that it can resist flash fires up to 600 degrees.

s.14(2) Satisfactory quality s.14(3) Fitness for purpose

That the oil would resist 600 degrees.

s.15 Sample s.29 S to deliver the goods s.27 B to accept Delivery & Pay s.30 Delivery of wrong quantity Time of Deliver (Hartley v Hymans)

Are the terms incorporated? Either by: Incorpora tion P.82


Remedy Sought

(say: incorporation happened when contract was signed/because of notice/previous course of dealings &
therefore the terms have been property incorporated)SignatureNoticePrevious Course of dealings

Say which relevant terms of the contract (condition or warranty) have been breached and remedy:
? Breach Condition: Repudiate Cont + Recover Price + Damages(Hadley v Baxendale)
? Breach Warranty : Damages but NOT right to repudiate ContractWhat does the Claimant actually want?
Breach - Damages may be awarded + interests under: Law Reform Act + Late Payment of Commercial Debts Act + Late Payment of Commercial Debts Regulations. (S wants own i rate to avoid having to rely on these)(incentivise B to pay quickly by giving an early payment discount) Contractual damages (Hadley v Baxendale) Damages for breach of contract or for misrepresentation Breach of Contract

It is a condition of the contract that the oil would resist the 600 degree. The Buyer relied on the representation and entered into the contract as a result.

Remedy Available

Slight Breach /
Acceptan ce?

s.15A = B's right to reject is lost where the sale is not a consumer sale and the breach is so light that it would be unresonable for B to reject the goods. Applyes only to ss.13 to 15, NOT to a stipulation concerning time of delivery. s.35 = B'slost of right to reject when B: tells S it has accepted the goods, or does something inconsistent with S's ownership after the goods have been delivered to it. s.35(4) = B losses right to reject it retains the goods beyond reasonable period under s.34(B's right to inspect the goods)

Is liability excluded:

Clause 8.2 the total liability should not

s.7.5 all implied terms excluded as far as

Clause 14(2) Non reliance

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