Introduction
A contract can be defined as a relation between two parties, who enter into an agreement that will be bidding to them and enforceable by law. The consent of the parties should be a voluntary affair. There are various categories of contracts. The following cases studied below fall under the category of a sale of goods contract. For a sale of goods contract to be legally binding to the two parties, it must fulfill all the legal requirements of a valid contract. This means that there should be adherence to the requisite elements which include an offer, an unequivocal acceptance, and intention between the parties to create legal relations, consideration as the price to the promisor’s promise, capacity, legal formalities, free consent, lawful object and the possibility of performance.In case one component of a contract is not fulfilled then no valid contract exist. For example, in the English case of Esso petroleum v commissioner for customs and exercise duties, the court held that, despite the petrol station promise to give all customers fuelling at their station coins with the likeness of a footballer, there was no intention to create legal relations and, therefore, no binding contract between the two parties. A legal contract implied the station would be liable to pay taxes. A sale of goods contract, therefore, must conform to these requirements. This contract can be defined as the transfer of title from one person known as a seller to another person known as a buyer for a price, which acts as the consideration. It is governed by the sale of Sale of Goods Act 1979 and the Unfair Contracts Act 1977. The provisions of these Acts of parliament act as facilitative law. However, when a court of law enforces them they become command law.
The main parties to this contract are Greg and Sprewfit. The fact that they have been doing business dealings together on a number of occasions is critical. Moreover, this is a commercial activity. The law of contracts operates under two main presumptions. These are that when parties engage in commercial activities they have an intention of being legally bond and parties to a domestic agreement have no intention of being legally bond. Therefore, the Greg and Sprewfit agreement will be enforced by law despite any express intention to be legally bond from any of the parties. In the circumstances of this case, there are two main contracts. One is for the sale of under floor heating pipes, and the other is for plaster. This paper will advise Greg on his rights and obligations under both contracts beginning with the contract for under floor heating pipes followed by the contract for plaster.
The terms of contract for under floor pipes were that Sprewfit was to provide 1000 meters of the pipe for Abby’s kitchen and 8 bathrooms. The pipes were supposed to be 10 millimeters and able to withstand high temperatures. Delivery of the pipes was to be done on February 20th. In return, Greg was to pay the price as the consideration of the pipes at the cost of $ 50 per meter. However, despite the delivery of the pipes being made on 20th of February the goods did not conform to the goods agreed under the contract. When the goods were due for use, some problems got noticed. 5% of the pipes were bent and unusable while 20% measured 15milimeters and were, therefore, bigger than required. This is prima facie breach of contract. However, there are more additional facts and points of law that require examination before such a declaration. Section 34, provides that where a buyer has not been afforded time to examine the goods, he is not deemed to have accepted them until he has been afforded a reasonable time to examine them. The examination is supposed to reveal whether the goods conform to the contract. In the circumstances of this case, Greg gave the goods a quick look and signed the delivery note. However, the buyer is protected such that examination cannot be used to excuse the seller of goods of the wrong quality or quantity. The seller will only be excused from defects that such an examination must reasonably have revealed.
Therefore, Greg can argue that, despite examining the goods within a reasonable time as stipulated in section 59, it would have been impossible for him to discover that about 5% of the pipes were bent and, therefore, unsuitable for use and that 20% of the pipes were 15 millimeters in diameter and not 10 as agreed under the contract. Section 13 (1) provides that where a sale of goods in made by description, as was made in this case, there exists an implied term that the buyer shall receive goods that he described to the seller during negotiations. In Grant V Australian Knitting Mills, Grant wanted to purchase underwear. They were displayed before him on a counter, he picked one by it was infected with chemicals. The chemicals should have been removed before the underwear was sold, and this was not done. The court held that there had been a sale by description. However, in the case of Andrew Bros V Singer & Co there was a contract for supply of ‘new singer cars’. However, one car was not new as the seller had used it for quite some time. Therefore, the court held that Singer cars had breached a fundamental condition of the contract and Andrew Bros was entitled to repudiate the contract.
Another significant fact determining whether there was a breach of the pipes contract was the implication of the delivery note signed by Greg. The delivery note contained a statement at the bottom stipulating that signing of the note indicated that he had examined the goods and that they conformed to the contract. Moreover, article 10 of the standard terms and conditions stipulates that the seller excludes all liabilities for any claims for loss arising from alleged breaches of any implied contracts under the sale of goods law. Therefore, the right of Greg to treat this contract as repudiated following the breach is denied by these provisions. Moreover, section 55, stipulates that where a liability, duty a right was implied by the law of contracts or any other law relating to the governance of contracts, the parties to the contract can decide to expressively negative it by inserting a term in their contract. However, such a clause is only enforceable if it is in line with the Unfair Contract Terms Act 1977. This means that the implied conditions relating to quality, fitness and description cannot overrule the delivery note and section 10 of Sprewfit standard terms and conditions. However, section 6 of the Unfair Contracts Terms Act of 1977 deals with the sale of goods contract. It states inter alia that a party to a contract of consumer sales can never exclude liability relating to fitness of purpose, description, sample or quality. This means that despite the fact that Greg signed the delivery note and bought the pipes under the Sprewfit terms he is still entitled to treat the contract as repudiated for breach of contract.
With regards to the pipes contract, this paper advises Greg that he has a valid action to maintain an action for the price paid. This is provided for under section 49 of the sale of goods act. He is also entitled to lodge a claim for damages. He can only maintain an action if he has suffered damage. The loss of time and resources of fitting the pipes is sufficient damage to entitle him to damages caused.
The second contract of sale concerns the provision of plaster of 3000 litres of plaster to be delivered on 21st of July. In consideration, Greg was to pay a total cost of $2500. However, Sprewfit delivered the plaster on July 28th, which was seven days late to the day agreed. Sprewfit also supplied the wrong quantity of the plaster by provided for 3000 gallons instead of the agreed 3000 litres. Moreover, Sprewfit delay caused losses to Greg because he was unable to start his work on time leading to the loss of $50,000 because of a renegotiated contract. In addition, the plaster was also of the wrong quality because, after completion, Greg noticed cracks on the interior walls. A surveyor who inspected the building confirmed this to Greg. Section 14 stipulates that there is no implied condition or warranty on the fitness of purpose of any goods sold. However, there is an implied condition as to the fitness of purpose for purchased goods. It applies whereby the buyer makes known to the seller either expressively or by implication the particular purpose that the goods shall be used. The buyer must show that he relied on the knowledge, experience and judgment of the seller. Moreover, in order for the seller to be liable such goods must be the similar to those that he usually sells. Greg informed Ajax that he wanted plaster for use in a listed building. Ajax recommended the plaster provided for under the contract. This is a definite breach of contract and entitles Greg to treat it as repudiated, maintain an action for damages.
Greg is, therefore, advised to go to court to seek damages. This is because, prima facie, he has a strong case against Sprewfit for breach of contract for the supply of plaster. Section 30 of the Sale of Goods act provides inter alia that the buyer has a right either to reject or to accept goods that are delivered of the wrong quantity. The contracts agreed between the parties were in regard to 3000 litres and not 3000 gallons as supplied to Greg. This means Greg has a legal right to reject either the contract or accept it and pay for the contract price. However, Greg is deemed to have accepted the goods because he used them. He cannot then argue that he is repudiating the contract based on the fact that the seller delivered the wrong quantity. However, Greg is entitled to damages to compensate the loss of $50,000 lost during a renegotiation deal caused by the delay. Under the contract, the date of delivery was 21st July. This was a fundamental condition of the contract. This is because Greg was, under an obligation, to finish construction of his buildings within a specific time frame in order to fulfill his obligations under other contracts. Moreover, the time of delivery was categorically set which implies that it was of the essence. Therefore, having failed to meet the deadline Sprewfit caused Greg a loss of $ 50,000. Greg has a right to recover this amount from Sprewfit. Section 10 (2) of the Sale of Goods Act provides that time can only be important if the contract recognizes it. The terms of this case stipulated that the 21st of July should be the day of delivery. An attempt by Sprewfit to escape liability by calling to say that the goods will be late by three days is immaterial. Furthermore, the plaster was late by 7 days.
In conclusion, Greg has a right to treat the two contracts of sale as repudiate because of fundamental breach. He is entitled to recover damages for both of them.
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