Business Law Advice - Assignment Example

Swarna1 Word Count: 1532 ID 5448 Order 222022 d 24th April 2008 Business law QUESTION Advice William Doors with regard to the relevant formation of the contract legal issues and using relevant cases explain whether the price variation clause is part of the contract with Hard Water Co. Any contract formation has to be followed very accurately according to the terms defined in the contract (Richard Taylor and Damian Taylor, 2007). The time frame decided for submission of servers to the Doors was already fixed according to the initial contract. However, the time frame followed by the Hard water co, couldn’t be accepted by the Doors due to its incompletion of server room. Hence it is not the fault of Hard Water Co. The main point of debate arises when the price hike was decided by the Hard Water Co. due to price change clause. The price quoted by the Hard water Co was £15,000 which was changed to £10,000 in the terms and conditions defined in Door’s Software and it was signed by the Hard Water Co. Hence it should be accepted by the Hard Water Co. Similarly, the time frame mentioned in the terms and conditions of Hard Water Co was only 3 months which was modified to 5 months in the terms and conditions of Door’s Software and was also acknowledged and signed by the Hard Water Co and hence the final validity of the contract reflects 5 months as the main time frame. At the same time, the price variation clause put by the Hard Water Co was not mentioned in the terms and conditions of Door’s Software and hence it cannot be made liable for its application. As Hard Water Co agreed to the terms and conditions of Doors Software, the price variation cannot be given effect. Moreover, this doesn’t come under Unfair Contract Trade Act of 1977 (UCTA, 1977) and Sale of goods act (1979) and hence it cannot be challenged legally. (1) According to Part II of Sale of goods Act (1979), it was mentioned that any contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. It also stated that an agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. Here in this conext, Doors Software didn’t violate the norms of the contract law and hence need not be liable for the price variation. QUESTION 2 Assuming that software products are goods and referring to the proper statutory instruments, explain whether the software provided by Doors’ Software to Islington District Council was of satisfactory quality. No. The software provided by the Door’s Software to Islington District Council was not of satisfactory quality. It was reflected in the form of disproportionate printing matter when printing instruction was given. This has violated the statutory instruments and hence legal action can be initiated. Moreover, it led to wrong estimation of population and corresponding under charging of residents resulting in huge monetary loss (£1,314,846). Under Part I 1(4) (Unreasonable indemnity clauses) of Unfair Contract Terms Act (1977), it was postulated that a person dealing as consumer cannot by reference to any contract term be made to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract, except in so far as the contract term satisfies the requirement of reasonableness. It is clearly evident from this case study that the Door’s software breached the contract to some extent by providing poor quality software which resulted in the errors while printing the main document. According to the guidelines mentioned in the formalities of the contract formation in Sale of Goods Act (1979), where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract is made, the contract is void. In this case, the poor quality and inaccurate supply of software provided by Doors Software comes under violation of the contract. At the same time, Part I (5) of UCTA (1979) stresses about the guarantee of quality of goods from supplier to the consumer under a valid contract which was violated by Door’s Software. It was mentioned under UCTA (1979) Act that in the case of goods of a type ordinarily supplied for private use or consumption, where loss or damage (a) arises from the goods proving defective while in consumer use; and (b) results from the negligence of a person concerned in the manufacture or distribution of the goods, liability for the loss or damage cannot be excluded or restricted by reference to any contract term or notice contained in or operating by reference to a guarantee of the goods. This was clearly violated by the Door’s Software. It also violated section 13, 14 or 15 of the 1979 Act which mentioned that seller’s implied undertakings should be in conformity of goods with description or sample, or as to their quality or fitness for a particular purpose.   Part I (11) of UCTA was also violated by the Door’s Software by not satisfying the "reasonableness" test. It was mentioned under this clause that in relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act, section 3 of the Misrepresentation Act 1967 and section 3 of the Misrepresentation Act (Northern Ireland) 1967 is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made. Door’s Software also didn’t satisfy the following guidelines mentioned under Schedule 2 of UCTA (1979).         (a) the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the customer’s requirements could have been met;   (b) whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having to accept a similar term;   (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties);   (d) where the term excludes or restricts any relevant liability if some condition is not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;   (e) whether the goods were manufactured, processed or adapted to the special order of the customer. Hence Door’s Software may be instructed to pay compensation for supplying poor quality software to Islington District council. QUESTION 3 Using relevant case law, explain whether the exclusion and limitation clause that Doors’ Software inserted into the contract with Islington District Council satisfies the requirement of reasonableness established in UCTA 1977, and, accordingly, whether Doors’ Software would be liable for the total loss of £1,314,846. The part 1 of Unfair Contract terms Act (1977) postulates that “negligence” means the breach of any obligation, arising from the express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the contract. This clearly reflects that if any one of the parties doesn’t obey the terms of the contract, it will be treated as unfair and reasonable care has not been taken. In the present case, Door Software certainly violated the terms of the contract in terms of reasonableness and hence it would be made liable for the total loss of £1,314,846. Moreover, it was also stated in the Part I (4) that in relation to any breach of duty or obligation, it is immaterial for any purpose of this Part of this Act whether the breach was inadvertent or intentional, or whether liability for it arises directly or vicariously. In the present case, Door Software may be considered as part of intentional nature of violating the terms of the contract. It has also violated the liability for breach of the obligations arising from (a) section 12 of the Sale of Goods Act 1979 (seller’s implied undertakings as to title, etc);  (b) section 8 of the Supply of Goods (Implied Terms) Act 1973 (the corresponding thing in relation to hire-purchase).   As Doors Software violated the norms of Supply of Goods Act (1973) clearly it has to pay compensation of £1,314,846 for providing poor quality and inaccurate software.   References: Sale of goods Act. 1979. C. 54. The UK Statute law database. http://www.statutelaw.gov.uk/content.aspx?ActiveTextDocId=1837068. Supply of Goods (Implied terms) Act. 1973. C. 13. The UK Statute law database. http://www.statutelaw.gov.uk/content.aspx?LegType=All+Primary&PageNumber=54&NavFrom=2&parentActiveTextDocId=1411209&activetextdocid=1411215. Richard Taylor and Damian Taylor. 2007. Contract law directions. Oxford University press. ISBN-10: 0199299994. P:388. UCTA (Unfair Contract Terms Act). 1977. 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