UK Commercial Law
posted by Nikesh Patel on .
You have recently started employment with Marvel Conservatories Ltd (MV) as sales and purchasing manager. MV has only been in business for 6 months. Its main business activity is the design, construction and fitting of conservatories to domestic dwellings.
MV obtains supplies of the plastic material which it uses to construct the frames from Formica plc (Formica).
The managing director of MV, Julie Dixon, tells you that just before you started your job MV refused to pay for a deliver of plastic rails from Formica because some of the rails had been damaged in delivery. Julie tells you that Formica insisted that MV had to pay in full for the delivery because the damage was not notified to Formica until 3 days after delivery. Julie says that she had not read Formica's Conditions of Sale until now and that she does not really understand what the practical implications of these Conditions are for MV.
MV has asked you to prepare a briefing paper for her explaining the main legal effects of Formica's Standard Conditions of Sale.
In no more than 2000 words explain the legal effect of clauses 2 to 3 and 5 to 9 of the attached Standard Conditions of Sale.
Your briefing note should be written in a style that would be understood by a business manager who has no expertise in legal matters. You may wish to use practical examples to explain the legal effect of the clauses.
The briefing paper will be assessed on the following criteria:
•The accuracy of the law which is used to explain the clauses.
•The clarity of the explanation of the clauses.
•The preciseness of the explanation.
•The comprehensive of the coverage of the issues arising from the Standard Conditions of Sale.
•The appropriateness and accuracy of the English used.
•The appropriateness of the structure of the briefing paper.
A first class answer will have the following attributes:
•No errors or only very minor errors in the legal basis of the advice.
•All the main practical issues arising from the Standard Conditions of Sale are commented upon.
•Clearly expressed and logically organised paper.
•Precise and concise information.
•Very high standard of written English with no spelling errors and good use of business English.
A fail answer will have the most of the following weaknesses:
•Substantial errors in the legal basis of the advice.
•Some of the main practical effects of the Standard Conditions of Sale are missed.
•Poorly organised information such as to make the briefing paper confusing and erratic
•Significant spelling errors and/or inappropriate language for a business document.
STANDARD CONDITIONS OF SALE
In these conditions, unless the context requires otherwise:
1.1 'Buyer' means the person who buys or agrees to buy the goods from the Seller;
1.2 'Conditions' means the terms and conditions of sale set out in this document and any special terms and conditions agreed in writing by the Seller;
1.3 'Delivery Date' means the date specified by the Seller when the goods are to be delivered;
1.4 'Goods' means the articles which the Buyer agrees to buy from the Seller;
1.5 'Price' means the price for the Goods excluding carriage, packing, insurance and VAT; and
1.6 'Seller' means FORMICA plc
2 Conditions applicable
2.1 These Conditions shall apply to all contracts for the sale of Goods by the Seller to the Buyer to the exclusion of all other terms and conditions including any terms or conditions which the Buyer may purport to apply under any purchase order, confirmation of order or similar document.
2.2 All orders for Goods shall be deemed to be an offer by the Buyer to purchase Goods pursuant to these Conditions.
2.3 Acceptance of delivery of the Goods shall be deemed conclusive evidence of the Buyer's acceptance of these Conditions.
2.4 Any variation to these Conditions (including any special terms and conditions agreed between the parties) shall be inapplicable unless agreed in writing by the Seller.
3 Price and payment
3.1 The Price shall be the Seller's quoted price. The Price is exclusive of VAT which shall be due at the rate ruling on the date of the Seller's invoice.
3.2 Payment of the Price and VAT shall be due within 30 days of the date of the invoice. Time for payment shall be of the essence.
3.3 Interest on overdue invoices shall accrue from the date when payment becomes due from day to day until the date of payment at a rate of 2% above Barclays Bank plc's base rate from time to time in force and shall accrue at such
a rate after as well as before any judgment.
4 The Goods
The quantity and description of the Goods shall be as set out in the Seller's quotation.
5 Warranties and liability
The Seller warrants that the Goods supplied will at the time of delivery correspond to the description given by the Seller. Except where the Buyer is dealing as a consumer (as defined in the Unfair Contract Terms Act 1977 Section 12 as amended and/or the Unfair Terms in Consumer Contracts Regulations 1999 Regulation 3(1)) all other warranties, conditions or terms relating to fitness for purpose, quality or condition of the Goods, whether express or implied by statute or common law or otherwise are excluded to the fullest extent permitted by law.
6 Delivery of the Goods
6.1 Delivery of the Goods shall be made to the Buyer's address on the Delivery Date.
6.2 The Goods may be delivered in advance of the Delivery Date upon the giving of reasonable notice to the Buyer.
6.3 The Buyer shall make all arrangements to take delivery of the Goods whenever they are tendered for delivery.
7 Acceptance of the Goods
7.1 The Buyer shall be deemed to have accepted the Goods 24 hours after delivery to the Buyer.
7.2 After acceptance the Buyer shall not be entitled to reject Goods which are not in accordance with the contract.
8 Title and risk
8.1The Goods shall be at the Buyer's risk as from delivery.
8.2In spite of delivery having been made property in the Goods shall not pass from the Seller until:
8.2.1the Buyer shall have paid the Price plus VAT in full; and
8.2.2no other sums whatever shall be due from the Buyer to the Seller.
8.3Until property in the Goods passes to the Buyer in accordance with clause 8.2 the Buyer shall hold the Goods and each of them on a fiduciary basis as bailee for the Seller. The Buyer shall store the Goods (at no cost to the Seller) separately from all other goods in its possession and marked in such a way that they are clearly identified as the Seller's property.
8.4Notwithstanding that the Goods (or any of them) remain the property of the Seller the Buyer may sell or use the Goods in the ordinary course of the Buyer's business at full market value for the account of the Seller. Any such sale or dealing shall be a sale or use of the Seller's property by the Buyer on the Buyer's own behalf and the Buyer shall deal as principal when making such sales or dealings. Until property in the Goods passes from the Seller the entire proceeds of sale or otherwise of the Goods shall be held in trust for the Seller and shall not be mixed with other money or paid into any overdrawn bank account and shall be at all material times identified as the Seller's money.
8.5The Seller shall be entitled to recover the Price (plus VAT) notwithstanding that property in any of the Goods has not passed from the Seller.
8.6Until such time as property in the Goods passes from the Seller the Buyer shall upon request deliver up such of the Goods as have not ceased to be in existence or resold to the Seller. If the Buyer fails to do so the Seller may enter upon any premises owned occupied or controlled by the Buyer where the Goods are situated and repossess the Goods. On the making of such request the rights of the Buyer under clause 8.4 shall cease.
8.7The Buyer shall not pledge or in any way charge by way of security for any indebtedness any of the Goods which are the property of the Seller. Without prejudice to the other rights of the Seller, if the Buyer does so all sums whatever owing by the Buyer to the Seller shall forthwith become due and payable.
8.8The Buyer shall insure and keep insured the Goods to the full Price against ‘all risks' to the reasonable satisfaction of the Seller until the date that property in the Goods passes from the Seller, and shall whenever requested by the Seller produce a copy of the policy of insurance. Without prejudice to the other rights of the Seller, if the Buyer fails to do so all sums whatever owing by the Buyer to the Seller shall forthwith become due and payable.
8.9The Buyer shall promptly deliver the prescribed particulars of this contract to the Registrar in accordance with the Companies Act 1985 Part XII as amended. Without prejudice to the other rights of the Seller, if the Buyer fails to do so all sums whatever owing by the Buyer to the Seller shall forthwith become due and payable.
9 Remedies of Buyer
9.1Where the Buyer rejects any Goods then the Buyer shall have no further rights whatever in respect of the supply to the Buyer of such Goods or the failure by the Seller to supply Goods which conform to the contract of sale.
9.2Where the Buyer accepts or has been deemed to have accepted any Goods then the Seller shall have no liability whatever to the Buyer in respect of those Goods.
9.3The Seller shall not be liable to the Buyer for late delivery or short delivery of the Goods.
10 Proper law of contract
This contract is subject to the law of England and Wales.
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