Electra Ltd ('Electra') is a large company selling cookers and other electrical equipment to commercial caterers. Paul, the Managing Director of Electra, would like your advice.

In February, Electra provided a quotation to Francesca for a new oven to be used in her small bakery business, Homebake Ltd (Homebake). The quotation is attached as Document A. Francesca accepted the quotation and Electra delivered the oven on 15 March. Francesca made her own arrangements for installation.

On 14 April, the oven broke down and Francesca immediately informed Electra. Upon investigation, it was found to be a manufacturing fault, and Electra eventually replaced the oven. However, Homebake was without an oven for several weeks and is claiming from Electra net loss of profit amounting to 4,000.

Paul wants to know whether Electra can refuse to pay, relying on the exemption clause in the quotation (Document A). Francesca told Paul that she did not notice the clause when she read the quotation.

Advise Electra, explaining its legal position in relation to Homebake.

1.Parties. Who are the parties to the contract

2.Breach(es)Identify the type of contract e.g. sale of goods or work and materials.Identify any terms (express and/or implied) that have been breached e.g.s14 (2) and 14(3) Sale of Goods Act

3. Remedies. Can the customer terminate the contract, or is the only remedy damages?

. Incorporation.Is the clause in a signed contractual document? (If so likely to be incorporated provided legible and not misrepresented.)

Have reasonable steps been taken to bring the clause to the other party's-attention before/at the time of the contract (Parker v SE Railway)? Consider such things as:the nature of any document containing the clause-

Whether the clause is unusual or onerous(more than you expect-burden )

4.Construction. Does the clause cover the breach and damage alleged

5. The Unfair Contract Terms Act 1977.Which sections apply? What is the effect of UCTA 1977?Is the reasonableness test in UCTA 1977 relevant?-If so, state the test (s 11) and relevant guidelines (e.g. Sch. 2) and apply them to the facts

6. Third party liability. Is it possible to bring an action against a third party(e.g. an employee) in the tort of negligence? If so, can that person rely on the exemption clause by virtue of the Contracts (Rights of Third Parties)Act)

Answer rating: 100% (QA)

Subject Legal Advice Electra Ltds Contractual Dispute with Homebake Ltd Dear Paul I have reviewed the details of the contractual dispute between Electra Ltd Electra and Homebake Ltd Homebake regarding ... View the full answer