Topic: commercial law
GUIDANCE FOR STUDENTS
Read the scenario below and then answer each of the questions that follow. Your objective should be to
demonstrate a sound understanding of the principles of contract/commercial law that apply to the
situations that follow, AND, where appropriate, highlight the difference between the default position
(common law plus statute), and the position that would prevail if the parties had adopted the standard
form contract below, to the outcome of any dispute.
Refer to the standard form contract is to the standard form contract that has been referred to
throughout the module (and is included in the Handbook and on the Moodle site).
U22142 Commercial Law Handbook 2015-16
Evans Furniture Ltd. [Evans] manufacture office furniture, which they sell to a number of trade outlets.
They also have a showroom which is open to the public and they sell a small amount of stock direct to
the public in this way. They decide to end production of one particular type of desk and to “clear out”
the remaining 120 desks which remain in stock. On 1st. December, the Sales Manager sent a copy of a
letter to each the company’s four major trade customers: It stated.
“Please be advised that we are ending production of the above model. We have only one hundred and
twenty desks remaining in stock and in order to clear this line we are prepared to offer them at the
reduced price of £570 per desk.”
This was a particularly attractive offer as the usual trade price for each desk was £750 and the
recommended retail price was £895. Westway Office Equipment [Westway] replied on the 4th December
“Thank you for your letter of the 1st December. We would be pleased to take 60 desks at the price
mentioned by you.
This letter was posted the following day (5th. Dec). The next day (6th December) the manager of
Westway Office Equipment telephoned Evans Furniture and advised one of the sales team that they
were buying 60 desks and that a letter had been posted and would be with them soon. The sales
manager at Evans Furniture instructed the warehouse staff to immediately move 60 desks from the
warehouse to the loading bay, ready for collection by Westway Office Equipment, as agreed.
On the 7th December, the senior buyer of one of the other trade customers (Higgins Office Store) called
at the premises of Evans Furniture Ltd, and offered to buy one hundred desks for £50,000. The
Managing Director of Evans Furniture immediately accepted this offer, unaware of the earlier telephone
conversation with Westway, and also unaware that the showroom had already sold and delivered 20
desks to retail customers who had visited the showroom earlier in the week.
That night, (7th/ 8th Dec.) a fire in the loading bay destroys the 60 desks that were stored there. The
other 40 desks in the warehouse survive in tact. On the 8th December the surviving 40 desks were
delivered to Higgins Office Stores. On the 9th December the letter from Westway Office Furniture
ANSWER ALL THE FOLLOWING QUESTIONS
WITH REFERENCE TO THE STANDARD FORM CONTRACT …
1. Explain the legal issue that clause 1 of the standard form contract is addressing and what it is
aiming to achieve. Do you think it would be effective? [5 marks]
2. Explain the legal issue that clause 9 of the standard form contract is addressing and what it is
aiming to achieve. Do you think it would be effective? [20 marks]
WITH REFERENCE TO THE EVANS FURNITURE SCENARIO …
3. Has a contract for sale of goods been formed between Evans Furniture and Westway Office
Equipment? If so, comment on when title to the goods passed. [10 marks]
4. Describe the legal significance, if any, of the fact that 60 desks (ordered by Westway) were sent to
the loading bay before the fire occurred. [10 marks]
5. Higgins Office Stores are demanding compensation for the fact that they have only received 40 of
the 100 desks ordered by them. Advise them. [15 marks]
6. Higgins Office Store may have possession of 40 desks, but do they have title to them ? Explain the
legal basis for your conclusion. [10 marks]
7. Higgins Office Stores advise Evans Furniture that of the 40 desks received – 10 have handles which
are slightly loose or missing. They wish to use this as an opportunity to repudiate the contract and
recover the purchase price of all 40 desks. What is the legal basis for such a claim and would it be
likely to succeed? [10
8. Westway Office Equipment had arranged a sub-sale of the 60 desks which they had expected to
receive. The sub-sale was at a price of £900 per desk. Comment on the principles that will apply in
calculating any damages claim that they may wish to make. [10 marks]
9. Some of the retail customers have complained that the desks have slightly loose handles on the
drawers and one or two very small scratches on the sides. They are demanding a full refund of the
money paid. These complaints are received more that one month after date of sale. What is the
legal basis for such a claim and would it be likely to succeed? [10 marks]
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