AIR WORKS PLC

Air Works Plc

Air Works Plc

Introduction

This report considers the legal implications of Air Works Plc dealings with Sale of goods act, advises on any possible legal liability and how to avoid liability in the future. Legal implications arising from dealings with Air Works plc will be covered by the Sale of Goods Act 1979 (SoGA 1979) and the Supply of Goods and Services Act 1982 (SoGSA 1982).

Formation of the Contract

A contract of sale of goods is defined by SoGA 1979 Section 2(1) as a 'contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price'.

As Air Works Plc supplied a machine to Gordon there must have been some form of contract entered in to. The first issue therefore is to identify on what terms (both express and implied) the contract to supply the machine were made.

Following negotiations and discussions with Gordon, a specification and order were sent to the company that included information on delivery and price (express terms). However, as delivery and price are not disputed, these issues are irrelevant. At this point an offer was made to Gordon for them to consider.

To complete the contract on this offer would require Gordon to accept the offer as it stands, with any terms that may be attached. Such acceptance may be in the form of words, spoken or written and the telephone call received from their Managing Director 10 days later appeared to agree with the specification and the impression is that Air Works Plc. deemed this to be absolute agreement.

However, while verbal acceptance is considered by statute to provide suitable means of communicating acceptance, the problem of using such communication for this type of business dealing is that there are no witnesses to the act and either party could interpret the result of the conversation in different ways i.e was the conversation meant to be binding or was it subject to confirmation by return of the completed order form. It is therefore not considered good practice to rely solely on such communication as acceptance of such business orders. In addition, there is a view that as Air Works Plc. supplied an order for Gordon to sign and return, it can be considered that Air Works Plc, by doing this, stipulated the method by which acceptance can be made and therefore no other method can be effective. It is also assumed that it is standard practice for Air Works Plc to accept orders upon return of an order rather than a simple verbal instruction.

Using the returned signed order as acceptance however presents another problem. The crux of the matter appears to be in the contents of Clause 12, notably part [c] that was returned deleted by Gordon by hand. Rather than constitute acceptance of the terms of the offer, such action is deemed merely a counter-offer. In this instance, the terms that apply to the contract will be those belonging to the party that fired the final ...