Breach Of Contract Exclusion Of Liability Ii - International Commercial Law

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 9,870 plus VAT. To be delivered on or before 14^th September.

Confirmed by Buyer by Fax dated 9^th 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 13^th 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.

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

Prep task 2