CONTRACT LAW

Contract Law

Contract Law

A) Advise Greentech as to whether there is a valid contract or contracts with ESL and whether any such contract or contracts include the 12 week delivery date.

In order to answer the question, it is essential to give an overview of the case and discuss what a contract is along with subject to contract. This will help in identifying the factors, which bind parties to a contract according to law.

Overview of the Case

The issue pertains to the an agreement between Greentech Ltd and Electrical Solutions Ltd. Greentech is under the agreement with Sunergy Ltd to manufacturer solar panels for 5 years, which includes a 16 week delivery date from the date of order. As a result, Greentech needs to have an agreement with a supplier, which can deliver the electrical components within 12 weeks to comply with the agreement with Sunergy. Greentech sent a fax to Electrical Solutions (ESL) after negotiations for the supply of electrical components for the solar panel. The fax stated that Greentech agrees to purchase the electrical components from ESL for a period of 5 years or as long as Greentech continues to supply Sunergy with solar panels whichever is the longer. In addition, the fax also stated that the quantities and prices will be agreed from time to time and Sunergy would require delivering the supplies within 12 weeks. One of the significant aspects of this fax was the header, which stated “subject to contract”.

ESL replied to the fax by posting a standard form sale contract. The contract incorporated that ESL agreed to supply the electrical components to Greentech for a period of 5 years. However, the contract did not mention the time of delivery or any reference to 12 weeks delivery period. When the purchasing manager at Greentech received the letter, he put it in his drawer and did not bother to look at it. One of the significant factors of this case is the awareness of ESL about the agreement between Greentech and Sunergy for the manufacture and supply of the solar panels. Greentech started to order the electrical components after the company received the letter and contract from ESL, and subsequently received the quotations from ESL.

Subsequent to that, Greentech started to send the purchase orders to ESL, which included the quantities required and the quoted price. The order also had a clause that stated delivery time of maximum 12 weeks. However, ESL replied and acknowledged the purchase order, but did not include details about delivery dates. Furthermore, the acknowledgement contained a clause stating ESL was not responsible for late deliveries. Nonetheless, ESL managed to deliver the electrical components within 12 weeks, but the issue took place after 2 late deliveries beyond the 12 week period. As a result, Greentech decided to withdraw from the agreement due to breach of contract as ESL did not comply by it. According to ESL, the standard terms did not include a delivery time and the company was not responsible for late ...