Commercial Law: Evans Furniture Ltd

Write a report (word limit 2500 words) that addresses the legal issues that are raised by the questions. Ensure that your answer includes a response to each of the questions set out

below. There is no prescribed layout but try to avoid one long continuous essay. Use headings that relate to the legal issues or the factual issues in order to make your report

clear for the reader.

Refer to the Sale of Goods Act 1979 (as amended) and the standard form contract that has been referred to throughout the module (and is included in the Handbook and is on the

Moodle site). You are reminded that you will be assessed on your ability to organize and present information and arguments logically and coherently, and to communicate clearly and

accurately, taking into account grammar, punctuation and spelling.

 

Evans Furniture Ltd. [Evans] manufactures office furniture, which it sells to a number of trade outlets. They also have a showroom which is open to the public and they sell a

small amount of stock direct to the public in this way. They decide to end production of one particular type of desk and to “clear out” the 120 desks that remain in stock. On 1st

December, the Sales Manager sent a copy of a letter to each the company’s four major trade customers: It stated…

“Please be advised that we are ending production of the above model. We have one hundred and twenty desks remaining in stock and in order to clear this line we are

prepared to offer them at the reduced price of £570 per desk.” This was a particularly attractive offer as the usual trade price for each desk was £750

and the recommended retail price was £895. Westway Office Equipment [Westway] replied on the 4th December as follows:

“Thank you for your letter of the 1st December. We would be pleased to take 60 desks at the price mentioned by you, on the assumption that you will be responsible for delivery as per our usual arrangement.” This letter was posted the following day (5th Dec) and on that day Westway telephoned Evans to advise that they agreed to buy 60 desks. That day the Sales Manager instructed the warehouse staff to move 60 desks into a loading bay pending delivery to Westway Office Equipment. Meanwhile, the Evans’ showroom advise that they have sold 20 desks to members of the public at the full retail price, (thus reducing the stock to a total of 100 desks) The next day (6thDec.), the senior buyer of one of the other trade customers (Higgins Office Store) called at the premises of Evans Furniture Ltd and offered to buy all one hundred and twenty desks for £60,000. The Managing Director of Evans Furniture immediately accepted this offer, unaware of the earlier telephone conversation with Westway and unaware of the sales that had been made by their showroom staff. 

That night a fire in the loading bay destroyed the 60 desks that were stored there. The remaining 40 desks, which were in the warehouse and were untouched by the fire, were

delivered to Higgins Office Stores the following day (7th Dec).

ANSWER ALL THE FOLLOWING QUESTIONS

1. Explain the legal issue that clause 1 of the standard form contract is addressing and what it is aiming to achieve. Do you think it would be effective?

2. Explain the legal issue that clause 9 of the standard form contract is addressing and what it is aiming to achieve. Do you think it would be effective if Evans Furniture

attempted to rely on it as part of a defence to claims in this scenario.?

3. Has a contract for sale of goods been formed between Evans Furniture and Westway Office Equipment? If so, comment on when title to the goods passed.

4. Describe the legal significance, if any, of the fact that 60 desks (ordered by Westway) were sent to the loading bay before the fire occurred.

5. Higgins Office Stores are demanding compensation for the fact that they have only received 40 of the 120 desks ordered by them. Advise them of their potential remedies.

6. Higgins Office Store may have possession of 40 desks, but do they have title to them? What if Westway argue that the 40 remaining desks belong to Westway? Explain the legal basis for your conclusion.

7. Higgins Office Stores advise Evans Furniture that of the 40 desks received – 10 have handles which are slightly loose or missing. They wish to use this as an opportunity to repudiate the contract and recover compensation. What is the legal basis for such a claim and would it be likely to succeed?”

8. Westway Office Equipment had arranged a sub-sale of the 60 desks which they had expected to receive. The sub-sale was at a price of £900 per desk. Comment on the principles that will apply in calculating any damages claim that they may wish to make.

9. Some of the retail customers have complained that the desks have slightly loose handles on the drawers and one or two very small scratches on the sides. They are demanding a full refund of the money paid. These complaints are received more that one month after date of sale. What is the legal basis for such a claim and would it be likely to succeed?

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