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In October 2011, Western Airways plc (WAP) acquired Cottingham airport, a small regional airport with a few established scheduled flights and some seasonal charter flights. WAP intends to expand the number of flights from the airport, and in order to prepare for this expansion, has embarked upon a major development programme for the airport terminal, as well as entered into negotiations with several airlines to start offering services from Cottingham airport.
In November 2011, WAP entered into a contract with Hull Construction Ltd (HCL) to undertake the necessary construction works. The terms of the contract required that the works had to be completed by November 2012, in time for what was expected to be a busy Christmas travel season. A term in the contract provided for agreed damages payable to WAP if the works were not completed on time (you may assume that this term is enforceable and does not constitute a penalty clause).
(a) HCL entered into negotiations with CarryAway for the supply and installation of two new luggage conveyor belt systems in the main arrivals hall at the airport. On 4th December 2011, CarryAway’s contract manager sent an email to HCL stating that CarryAway would be able to install the conveyor belt systems by September 2012, and that the total cost would be £125,000. There was a signature (automatically added to every email sent by CarryAway) at the end of the e-mail message stating that “All contracts are entered into on the basis of CarryAway’s standard terms and conditions, accessible via this link” (clicking on the word “link” directs the recipient to CarryAway’s website containing its standard terms and conditions). One of the terms stated that “We are not liable for any loss caused by a delay of less than two weeks from the agreed deadline, and any deadline indicated is approximate only unless a firm deadline is agreed expressly.”
HCL responded by a letter dated 6th December 2011, in which they agreed to the price and stipulated 15 September 2012 as the contract deadline. HCL’s standard terms and conditions were printed on the reverse of this letter, including a term which read “The deadline stated for completion of works is a condition.” CarryAway replied by email, indicating their agreement to the price and deadline stated, and commenced work. The systems were built at CarryAway’s factory before September 2012, but CarryAway discovered it was unable to commence installation work before 15 September 2012. On 5 September, CarryAway informed HCL that installation would commence on 20 September 2012 and take approximately three weeks to complete. On 22 September, HCL wrote to CarryAway, purporting to terminate because of the delay. CarryAway has responded that it would not accept the termination, pointing to its terms and conditions.
Advise HCL whether it can terminate the agreement.
(b) HCL entered into a contract with Swifty for the supply and installation of new check-in counters in the departure hall. During the negotiations leading up to the contract, Swifty stated that each desk would be equipped with new technology to speed-up the check-in process and that at least 40 check-ins per hour could be processed at each desk. The total price payable to Swifty was agreed at £345,000. The desks were installed on time. Initial trials have revealed that only about 35 check-ins could be processed per hour, which would still meet the airport’s requirements for the foreseeable future, but HCL thinks that the price for the check-in desks is too high in light of the trial results.
Advise HCL whether there is any recourse against Swifty in this situation.
(c) On 1 March 2012, HCL concluded a contract with QuickDeco for the redecoration of the main passenger lounge, to include the laying of new carpets and painting all the walls. The work was due to be undertaken between 15 and 20 October 2012 when the airport was closed altogether to complete resurfacing work on the main runway. The contract price was £48,000 and QuickDeco workers were due to be on site around the clock to complete the works. Two weeks before QuickDeco was due to start work, they contacted HCL and said that they had under-priced the contract and would need to charge an additional £12,000 in advance to ensure the work was completed on time. HCL objected but was told by QuickDeco that if HCL did not accept this, they would not be able to carry out the work. HCL paid the money.
Advise HCL whether it was obliged to pay the additional money, and if not, whether this can be recovered.
(d) For the re-opening of the terminal, WAP had contracted with Easyfood to supply a buffet and drinks, as well as a suitable number of staff to serve food and drinks, for a price of £8,000. The contract was concluded on Easyfood’s standard terms. However, a week before the opening date, Easyfood contacted WAP and to say that it would not be able to fulfil its contract due to a staff shortage. WAP had to engage Luxureat to step-in at the last minute, at a higher price of £11,000. WAP has written to Easyfood, asking them to cover the additional cost, but Easyfood has refused, pointing to the following term in their terms: “If we are unable to provided the contracted service due to staffing difficulties and we give at least 7 days’ notice of this, then we will only be liable to reimburse the full contract price, but will not be liable for any further losses.”
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