hi, i have this contract question that i really need help with
Pritti Kumar visited the Ealing store and created a considerable fuss in the store, on being told that the Pear notebook was really priced at £450 The Manager insisted that UEL had no legal obligation to sell at the advertised price but that “as a goodwill gesture” agreed a sale to Pritti at £350 “in the exceptional circumstances” but with “absolutely no UEL guarantee whatsoever.”
Pritti signed an order form to which the following clause had been added.
“In view of the large discount offered in exceptional circumstances, these goods are sold on the understanding that they carry no warranty or guarantee whatsoever from UEL. UEL accept no liability for any fault or malfunction in the goods. This clause does not affect any rights that the customer may have against the manufacturer only, which are subject to the terms and conditions in the manufacturer’s guarantee.”
In drawing up the clause, the manager had followed the example of a clause in the contract of sale between the manufacturer, Pear Corp. Inc. and UEL. UEL had negotiated a 30% discount for bulk purchase of the notebooks, and on the basis of a clause added to their contract, which stated:
“in view of the discount for bulk ordering, the goods are supplied as seen, and the Pear Corp.Inc. can accept no liability for any fault or malfunctions in the goods.”
Pritti’s notebook developed a fault within the12 months covered by the Pear guarantee, which is included in the packaging of the notebook. That guarantee requires the consumer to return the goods to the Pear Corp.Inc.in the United States at the customer’s own risk and expense, which Pritti is loath to do. UEL are relying on the special clause in Pritti’s contract and refusing to help her in any way. Pritti has now discovered that all her files on the notebook, including her most recent back-up files, have been corrupted.
In the meantime hundreds of the notebooks sold by UEL at £850 have also malfunctioned within 12 months of purchase. UEL have suffered considerable losses giving customers free repairs or replacements and want reimbursement from the Pear Corp.Inc.
Advise Pritti and UEL
what are the main issues at work here? i'd appreciate any help
contract law Watch
- Thread Starter
- 11-12-2010 12:38
- 11-12-2010 19:56
I don't know if you've studied the Sale of Goods Act and/or Consumer Protection legislation? I'm proceeding on the basis that you haven't and so you aren't expected to consider them, but these are very important if they do form part of your course.
Does the store have an obligation to sell at £450? No b/c goods on a shelf are not offers. In any event, is the contract priced at the displayed price rather than the stated £350? No, but think about why
More importantly, establish what some basic implied terms are (with reference to the Sale of Goods Act if its part of your course). Then think about whether the exclusion clause is valid. There is case law on ridiculously wide exclusion clauses.
Regarding the fault, Pritti has no remedy against the manufacturer in contract b/c she has no contract with the manufacturer. She wants to claim against the store. So look at said exclusion clause.
If the exclusion clause is not valid and Pritti has a claim, think about what her remedies are. How do you assess damages for the corruption of files? What if Pritti hasn't suffered economic loss but has just lost access to music and games and stuff - can she claim damages for loss of enjoyment?
Concerning UEL, again you need to think about whether the exclusion clause is valid. Also you need to think about the wording of the clause. What do you think "the goods are supplied as seen" means in a bulk order whether the buyer has probably never actually seen the goods?
Also think about how UEL's damages are assessed. Reimbursement for the free repairs is reliance loss rather than expectation loss. It may well be the case that the difference in value between an operational £450 notebook and a malfunctioning one is less than the value of the repairs. Think about what measure of damages a court would use and why.