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Contract Law Essay

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Contract Law Essay

Introduction

The case, as set out, concerns two companies, Smart Co (hereinafter S Co) and Bright Co (hereinafter B Co). S Co needs to be advised as to whether it can claim compensation under the breach of the contract, which can exceed the 50£ limitation, which limitation is included in the contract under a clause. In simple words the validity and therefore the effectiveness of the limitation clause is to be considered under the Unfair Contract Terms Act 1977 . For the purposes of the examination of the effectiveness of the contractual clause in this case, the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR) is deemed unsuitable. This is made clear under section 3(1) of the UTCCR : “3 Interpretation

(1)In these Regulations-
...
“consumer” means any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession;…” Given that S Co buys computer for the private and business use of one of its directors, it acts for purposes, which are within its business, it is obvious that UTCCR cannot apply to this case.

Furthermore this examination requires the consideration of three key issues, which are as follows: 1) the incorporation of the clause into the contract, 2) its scope of effectiveness over the breach of terms in this case, in McKendrick’s words whether “the exclusion clause, as a matter of construction, is effective to exclude liability for the loss that the claimant [here S Co] has suffered” . 3)third issue weather the contract could be considered as a breach of warranty, or breach in Sale of goods act 1979 of satisfactory good. Main Part

As far as the incorporation of the clause is concerned, the facts of the case along with principals on incorporation can provide useful information. It appears that, “S Co has made a number of similar computer purchases from B Co in the past”. In addition, B Co normally asks its customers to sign its...