The relevant law here is the contract of law.
Business to business contractual relationship between Tom and QC Ltd:
Tom has entered in the contract for goods with Quality Containers Ltd. The property in the vegetable boxes has been transferred to Tom. It triggers the Sales of Goods Act (1979) to fall under this circumstance. Tom and QC are acting in the course of businesses.
The bottom of the box gave way:
The SGA 1979 implies a term into the contract that where the property in goods is transferred the goods will be of satisfactory quality (s.14(2)). The test for satisfactory quality is the standard that a reasonable person would regard as satisfactory, taking into account of any description of the goods, the price (if relevant) and all other relevant circumstances. The boxes were described as “heavy duty…”. A reasonable person would expect that the boxes would be strong enough to hold vegetables. Therefore, a box that caused vegetables to fall onto the floor suggests that this term has been breached. Also, the SGA 1979 implied a term that the goods will be fit for the buyer’s (Tom’s) purpose (s.14(5). It is relevant the boxes are described as vegetable boxes. Therefore, even if Tom has not expressly indicates the purpose for which he has bought the boxes, the purpose of the boxes is to contain vegetables. Tom puts the boxes to their usual purpose so there is an implied term that the boxes will be fit for the storage of vegetables. A breach of these terms would constitute a breach of condition.
However, in this case, Tom is acting in the course of his business, the implied term will not always be given the status of condition, instead they may be treated as warranty. If the breach was so slight as to make Tom’s rejection unreasonable Tom will only be able to claim damages. Also, in any cases, when consumer accepts the goods, he/she will not be able to treat the contract as repudiated. Here, Tom has used the boxes to deliver vegetable so he will not be able to reject them. The remedies open to Tom will be damages.
The company’s name was not on the box:
It is clear that QC Ltd breach the contract because they did not print the name of the company on the boxes. Tom had provided consideration for this by paying extra money. Therefore, it is likely that Tom could claim damages to compensate for his losses. However, an express term in the contract excludes QC’s liability for loss and damages. The term expressly states how Tom should deal with a defect in quality and Tom has not complied with the contract because he has not notified QC of the fact that the boxes do not have the name printed on and started to use the boxes. Therefore, it looks like Tom will have to pay for the goods in full and QC will not be liable. As this express term seeks to limit liability for damages in the contract, the UCTA 1977 is relevant here.
The court will consider whether the term was communicated before or at the time the contract was formed and notice was given that the term was incorporated into the contract. It will be difficult to establish that the clause was never incorporated into the contract. Tim has signed the standard terms to say that he had read them. A signed document is strong evidence of term being communicated and accepted no matter Tom had read them or not (L’estrange v Graucob). The document was headed “standard terms” so this looks like notice and the term will be deemed to be part of the contract. However, the UCTA 1977 will subject the term to a reasonableness test. If it fails it will be void.
In interpreting the clause, the courts will apply the contra proferentem rule. If the term is ambiguous it will be interpreted strictly against the party trying to rely on it. Tom could argue that the fact that the name is not printed falls outside the meaning of “quality and condition of the goods” and that therefore the clause 4.1 of the standard terms does not apply to that. If so, the
