Contract Law questionWatch
Business A produces packaged meals to be sold across the UK. Their business is growing and have recently purchased 20 industrial ovens for their factory, from Business B. These new ovens will triple their production capacity and the agreed delivery date on the contract is 1st March 2020.
But, on the 10th of February, Business B notified Business A that they cannot deliver the ovens until the 1st June 2020. As a result, Business has projected that they have lost out on profits of £30,000 over the three month period.
Advise Business A if they can recover the £30,000 from Business B.
I've been struggling on the components of the contract. I believe that the contract is valid (i.e. the components have been met: offer and acceptance, intention, consideration). I think the terms are express terms, but there are also relevant implied terms e.g. CPA 2015.
I've been struggling on whether it is a condition or a warrant, I've been leaning to conditions since the date of delivery on the contract has been broken, and a result profits have been lost. A warrant I think would only be the case if the core component of the contract hadn't been broken - which to me is delivering 20 ovens on the due date, but this has been broken hence condition?
And to answer the question on whether the £30,00 can be recovered, I'd really appreciate any advice!
Yes, you're right to assume that all the core elements of the contract are there. It's a time clause and time clauses are considered to be an essential condition of a contract.
Looking at a definition for timing clause i found this: 'in clauses where ‘time is of the essence’, failure to perform an obligation in the time specified by the clause will put the defaulting party in breach of contract and entitles the innocent party to terminate the contract and claim damages.'
So from this it would suggest that because Business B failed to perform their obligation in the time specific by the clause(? does this mean the 1st of March), this will put them in breach of contract and entitle A to terminate the contract+claim damages or go through with the contract+claim damages.
In terms of the £30,000 is the idea of putting them in the position that they would have been in if t he breach didnt happen mean that they would be entitled to the full £20,000 subject to things like industry standards/evidence of the £20,000?
Apologies, I'm just quite confused
'in the event of delayed delivery for any reason, B will only be liable for damages up to a maximum of £250 per week”.
I'm kind of struggling on a starting point. I've broken down the requirements for an exclusion clause but am debating on the second condition of whether it covers the breach or not. To some extent I believe it does and it isn't ambiguous.
There's also the UCTA 1977 and the requirement for reasonableness. Since the reasonable test (in my notes) cover 4 key areas, I think the circumstances of the case make it unreasonable hence the clause is not legally enforceable. Since £20,000 worth of profits have been lost, but B deems that they're only liable for £250 per week, it is an unreasonable figure to use in this context.