Contract Law: The Case Of A Transaction For The Purchase Of A Computer And Monitor

The case relates to a transaction for the purchase of a computer and monitor and is subject to the Sale of Goods Act 1979 (SGA). The parties involved are Rachel – Director of Student Rental Co (SRC) the purchaser and Computer World (CW) the seller.

The issues that arise are; is there a contract in place, when was it formed. What type of contract exists, Business to Consumer (B2C) or Business to Business (B2B). The type of contract would determine the statutory rights that might apply. As stated, the SGA applies, but with consumer contracts, the Consumer Rights Act 2015 (CRA) would also apply. B2B contracts are governed by the Unfair Contract Terms Act 1977 (UCTA) and this could have a significant bearing on our case with regards to the clause on the invoice.

S12 of UCTA 1977 defines when a party is dealing not in the course of business but as a consumer. Rachel could argue this is a B2C contract and could potentially claim under CRA 2015 s.9(2) and s.10. Rachel is a director for the company; however, her intentions would imply that she is acting not on the behalf of the company but as a consumer. Furthermore, the email from SRC stipulates the goods are delivered to the company and that CW sent SRC the invoice for payment, these could be seen as the terms of the contract. SRC agree to pay for the goods on receipt of the invoice, the funds being drawn from the SRC company bank account and this the consideration element of the contract. This activity could be interpreted as being conducted in course of SRCs business and Rachel seen to be conducting herself on behalf of SRC. Even though Rachel could argue she purchased the items for her domestic use, she would have a weak case arguing this.

Rachel could claiming under CRA 2015 s.9(2) for satisfactory quality, as the goods supplied should meet the standards a reasonable person would expect taking into account any description, the price and all other relevant circumstances. A reasonable person would think a brand-new computer and monitor would last longer than 4 months, especially when only being used for domestic reasons. Rachel could also claim under CRA 2015 s.10 fitness for purpose, arguing that as she was unable to run certain software programs the goods were not fit for purpose.

Furthermore, it could be argued this transaction is a B2B contract; Rachel a Director of SRC places an order via the company email with CW to purchase a computer and monitor, the email represents an offer from SRC.

Attention should be given to the timeliness of the contract’s formation. Arguably a contract was formed when CW accepted the offer (email order) by supplying the goods and invoice.

The invoice itself is not a legally binding contract but merely a request for payment, it is questionable if the clause on the invoice forms part of the contract.

For B2B contracts, which are governed by UCTA 1977 for an exclusion clause to be enforceable, it must be incorporated into the contract and implemented in a way which blocks the claim and must not fail on account of statutory control. The exclusion clause must also comply with the conditions. Rachel has grounds to argue that the clause was not incorporated into the contract and therefore could not be enforced.

S.6(2) of UCTA deals with the attempt to exclude liability under sections 13-15 SGA 1979. In a trader to trader transaction, such an attempt is void on the basis of ‘reasonableness’. However, Rachel could argue the clause was not in the contract but in the invoice, which was not legally binding.

If the clause is void and Rachel can prove that her computer and monitor had some defect, although somewhat useable for the usual purpose, she could claim that it was not of merchantable quality and below the expectations of the buyer of new goods as cited in Rogers.

CW could claim the contrary that by adding the clause to the invoice it had formed part of the contract and that SRC making payment was also acceptance of clause. Rachel could cite the case of L’Estrange, where the courts held that as the contract had been signed then this bound the parties to the contract including exclusions clauses which were enforceable. Rachel had not signed any such agreement containing exclusions, she could argue that CW could not enforce the clause added to their invoice. In support of their case CW could cite the case of Nicholas, as informal acceptance by exchange of emails can satisfy the contract. The courts decided that the parties had actually signed contracts by inserting their names at the end of the emails and that sending emails back and forth can constitute a single legal document.

In conclusion, my advice to Rachel would be that she has a weak case in trying to establish that this is a B2C contract, however she could strongly argue that the exclusion clause did not form part of the contract and therefore not enforceable. Rachel could also strongly argue that the clause was not in the contract and was an invoice that was not legally binding and therefore allowing her to claim under SGA sections 13-15.