Fulfilment of Obligations for a Contract

Fulfilment of Obligations for a ContractJacks purchase of the machine from Jim of country Supplies Ltd is one for a specific purpose. The ingest with ASDA allow for no query reap substantial reward. The machine is a fundamental part of that agreement, as Jack cannot fulfill his obligations without it. The brilliance of the machine being able to produce vegetables that comply with the bourns of the contract with ASDA was brought to the attention of Jim at the date the contract was entered into.The question of whether Jack can date from anything beyond the price of the machine after it fails to provide will initially depend upon the interpretation of the elimination clause. The contract specifically excludes liability for any important injury whatsoever. This would include the loss of proceeds to be suffered by Jack as a outcome of ASDA summarily terminating their agreement. Such hurt are however subject to the Unfair Contract Terms be tolerate 1977, and more specifica lly s. 31, and the test of intelligentness contained within s. 11. There is a standard requirement that the term is fair and reasonable2 exclusively what amounts to this will be a question of fact in each en suit. not only will it look at the extent of what the clause is attempting to exclude, precisely also the bargaining opinion of the parties. As twain are essentially acting in the course of a business there is a suggestion that there is an equal footing and the greater the equality, the more likely that an exclusion clause will be considered reasonable3.What is fair to infer from the facts of this showcase, is that Jack is not an experienced businessman with an understanding as to the operation of a clause that would exclude liability. He may well have noticed its presence, but requires firm clarification as to what he can actually recover in the event of a breach. It is Jims response that leads to the exclusion clause probably becoming unenforceable. The clause is attem pting to limit the liability of rustic Supplies Ltd but Jim, a company Director contradicts this position and assures Jack that any consequential losses will be covered in the event of a breach. S 11(1) UCTA 1977 states that the term may be considered reasonable having regard to the circumstances known to, or in the contemplation of the parties when the contract was made. It would be harsh in this case to deny Jack the ability to rely upon Jims assurances. Certainly there is a unshakable argument that Jims statement will become a term of the contract, overriding the earlier exclusion clause. It was the parties true intention and to allow the exclusion clause to stand would not only be unreasonable, but an inaccurate reflection of that intention4. Assuming therefore that the exclusion clause itself does not prevent a allege in principle for losses beyond the defective machine, we can consider the issue of lost wage arising from the agreement with ASDA.It has traditionally been th e accepted practice of assessment of damage in the area of contract, that lost cyberspace following a breach are subject to tests of designer and mitigation. While the superior general approach pattern in contract law is to put the claimant in the same position as if those terms had been fulfilled5, it is still indispensable for the Court to assess such damages in monetary terms. In Jacks status he has an expectation interest which is defined as the benefit the claimant expected to m new(prenominal)(a) from the completion of the promised exercise of the other partys obligation, but which were in the event prevented by the breach of contract pull by the defendant6. The difficulty here is that while there is a definable loss i.e. the profit from the contract with ASDA, there is no knowing how long that contract would continue for or how much Jack would receive per annum. Where significant loss has been sustained, the Courts will look to the available evidence to assess qua ntum7. But whether this alone would service is debatable. The difficulty is causation to what extent was this breach of contract the effective or dominant cause of the loss8?The case of Headley v. Baxendale (1854)9 laid down the rule regarding recovery of losses that were allegedly too far. In modern terms it is stated to be A type or kind of loss is not too remote a consequence of a breach of contract is, at the time of contracting (and on the arrogance that the parties actually foresaw the breach in question) it was within their reasonable contemplation as a not unlikely result of that breach10. It would certainly appear therefore that such contemplation was well within the mind of both Jack and Jim at the time of entering into the contract. Indeed, Jack showed Jim a copy of the agreement with ASDA and his statement that Agricultural Supplies Ltd would see to it that Jack is compensated for any loss he incurs certainly seems to suggest an acceptance of the types of loss i.e. f uture profit, which Jack would now seek to recover.The recent judgment of the House of Lords in Transfield transport Inc v. Mercator Shipping Inc (The Achilleas) (2008)11 has however thrown such assumptions wide open. This case concerned the hire of a ship for a certain period. The defendant failed to return the ship on time and as a result, the claimant lost a contract with a third party. While the defendant accepted that in the trade compensation would have to be paid, the disputed that they were liable for the loss of profit under the second contract. The arbitrators at first grammatical case and the Court of Appeal12 found for the claimant. The House of Lords however reversed that decision finding for the defendant.The issue of assumption of righteousness was at the forefront of the Lords considerations in this matter. While the defendants accepted that some losses would be sustained for which they may be liable, the Court felt that the busy kind of loss was not jolly contem plated. As Lord Hope of Craighead stated13a party cannot be expected to assume responsibility for something that he cannot control and, because he does not know anything about it, cannot quantify. It is not enough for him to know in general and on open-ended terms that there is likely to be a follow-on contractWhat has been established by the case is a second limb to the test in Headley v. Baxendale. A claimant will not necessarily recover losses that were not unlikely to occur in the usual course of things, if the defendant cannot reasonably be regarded as having assumed responsibility for losses of the particular kind suffered14. No longer can it be said that such losses were likely, probable or foreseeable alone, the particular type of loss mustiness have been contemplated by the defendant and he nevertheless accepted the put on the line in the event of a breach. While this issue of a certain type of loss is not a new phenomenon15, the conspiracy with the test in Headley v. Ba xendale has redressed the scope of recovery in contract cases and particularly the issue of aloofness of damage. Baroness Hale16 has referred to this annexe as adding a novel dimension to the way in which the question of remoteness of damage in contract is to be answered. What this case has done is establish a negligence type assessment for causation in contract. While the issue of remoteness, and whether the kind of loss was not unlikely to occur remains a question of fact, the issue of whether it was reasonable to assume the defendant accepted responsibility for that particular type of risk is a question in law17. Whether this will assist Jack is not clear.It has been suggested that the effect of The Achilleas upon Sale of Goods spot 1979 claims (as is Jacks) may have relevance. S. 52(2) of the SGA 1979 states thatThe measure of damages is the estimated loss directly and naturally resulting, in the commonplace course of events, from the sellers breach of contract.If such loss of profit from the agreement with ASDA is to be not unlikely to occur, then Jack may have to establish that Jim assumed responsibility for that particular type of loss. In Chitty on Contracts18 it is submitted that the House of Lords see their decision as a separate rule when applicable to sale of goods contracts. It should be noted that the facts of The Achilleas related to shipping contracts and the House noted that lack of case law considering this specific issue. While not limited to this area of law, the decision as opposed to other areas i.e. sale of goods, needs to be watched with trepidation.Ultimately there are reasonable prospects for Jack to secure damages beyond the cost of the machine. It can certainly be argued that Jim accepted the risk of the particular type when he was referred to the contract with ASDA. The loss of profit resulting from the termination of that agreement is not the only possible pecuniary impairment Jack could suffer i.e. damages claimed by ASDA, r eturned goods through poor quality etc. This coupled with the hesitation as to the duration and net value of the contract makes quantum an almost impossible task. It should be noted that such losses have been recovered in Victoria Laundry (Windsor) v. Newman Industries (1949)19, and more specifically for lost profit arising out of defective equipment under a contract of sale in H Parsons (Livestock) Ltd v. Uttley Ingham Co Ltd (1978)20. however the particular circumstances of Jacks contract are quite unique, and the possible extension of the remoteness rule will not appear to be a help.BIBLIOGRAPHYChitty on Contracts Thirteenth Edition 2008, pleasant Maxwell PublishingPeel, E. Remoteness Revisited, L.Q.R. 2009, 125(Jan), 6-12Poole, J. Casebook on Contract Law, Ninth Edition 2008, Oxford University labourMcKendrick, E. Contract Law Text Cases and Materials Third Edition 2008, Oxford University PressTamblyn, N Damages Under fibril Contracts for Sale of Goods, J.B.L. 2009, 1, 1- 14Rose, F. Blackstones Statutes on Contract, Tort Restitution 2008-2009, Nineteenth Edition 2008, Blackstone Presswww.westlaw.co.uk as accessed on 22nd December 20081Footnotes1 UCTA 1977 s. 3(1) This section applies as between contracting parties where one of them dealson the others written standard terms of business Chester Grosvenor Hotel Co Ltd v. Alfred McApline Management Ltd 1991 56 Build LR cxv2 UCTA 1977 s. 11(1)3 Watford Electronics Ltd v. Sanderson CFL Ltd 2001 All ER (D) 290 CA4 This section can be expanded upon to include additional cases on exclusion clauses in any text book. There is also an argument for rectification by fault i.e. Joscelyne v. Nissen 1970 2 QB 86 (CA)5 Golden Strait Corp v. Nippon Yusen Kubishika Kaisha 2007 UKHL 126 Chitty on Contracts Thirteenth Edition, Volume I, at para 26-0027 Tai Hing Cotton Mill Ltd v. Kamsing Knitting Factory 1979 A.C. 91, 106.8 Ibid fn 6 at para 26-0329 1854 9 Ex. 34110 Ibid fn 6 at para 26-054 see also Koufos v. C. Czarni kow Ltd (The Heron II) 1969 1 A.C. 35011 2008 UKHL 4812 2007 Lloyds repp 55513 Ibid fn 11 at para 3614 Ibid fn 6 at para 26-100A15 Victoria Laundry (Windsor) v. Newman Industries 1949 2 K.B. 52816 Ibid fn 11 at para 9317 Ibid at para 22 per Lord Hoffman18 Ibid fn 6 at para 26-100G19 Ibid fn 1520 1978 Q.B. 791