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Question: Contract Law Problem Question

Alice wished to buy an automatic dishwasher for use in her small teashop in Whitstable. She visited the showroom of Nixons Ltd, an electrical goods shop. She bought a Washrite 666 dishwasher for £750, which came with free installation. Alice signed the three-page contract provided by Nixons without reading it. The machine was delivered the next day and installed in the kitchen.

Alice was impressed with the quality of the service that Nixons had provided her, especially the speed of delivery and installation. She told her friend Parvi about this and Parvi, who needed a new washing machine and tumble dryer, decided to buy them from Nixons. At Nixons’ store, Parvi told the assistant that she needed machines that could cope with large loads of washing, as she had a big family, including her four sons who played football regularly. She ended up buying two machines, each of which said on the front and in their respective operating manuals ‘10kg load efficient’.

Five weeks later, Alice’s dishwasher started to make a loud noise and water leaked from it, causing damage to the kitchen’s floor, which she found would need to be entirely replaced, at a cost of £2000. She reluctantly did this so the teashop could reopen as normal as soon as possible. Replacing the damaged floor required her to close the shop for two days, causing Alice to lose profits. Alice called a plumber to look at the dishwasher, who told her that he could not be exactly sure what the problem was – the machine had either not been properly installed or was missing an essential part. He said that it would cost Alice £200 for him to investigate the problem further by looking in the machine itself, and up to £500 to fix it.

Alice returned to Nixons to ask them to pay for the damage to her floor, to compensate her for the profits she would lose, and to give her either the cost of having the machine fixed or a full refund for the machine so that she could buy a new one from elsewhere. She was told by the manager that paying the full cost of the replacement floor was not possible, nor a full refund for the machine available, nor compensation for her lost profits, because of the following terms of the contract:

“Clause 38: In the event of a machine or its installation being faulty, Nixons will provide a replacement product or service only. This clause will be invalidated if the customer has attempted to (or has employed someone outside of Nixons to) fix the item in question.”

Clause 39: Nixons will only pay damages of up to £200 for property damage caused by failure of its goods.

Clause 40: Nixons is not liable for any other loss or damage (including indirect or consequential loss, financial loss, loss of profits or loss of use) arising from the contract or from the goods or their use, even if we are negligent.

Parvi had no problems with her washing machine, but found that after three weeks of regular use, the tumble drier took far longer to dry her washing than she expected and regularly overheated when loads above 8kg were in it, causing it to cut out until it had cooled enough to restart. An electrician who she called to look at the machine could not identify the problem. She returned to Nixons and asked them to replace the tumble drier with an equivalent model of the same value. However, the manager refused to do so, pointing to clause 38, because the back of the tumble drier had been taken off and the heating elements inspected by the electrician. On her way out of the store, Parvi noticed a large sign on the wall that stated in bold print ‘all contracts entered into are subject to Nixons’ terms and conditions of business. Customers should be asked to sign a set of these terms at every transaction*.’ Wondering what the asterisk was for, Parvi went closer to the sign and saw, in small writing near the bottom ‘*This does not affect your statutory rights’. Parvi had not been asked to sign the contract.

Advise Alice and Parvi.


[Second-year, Contract Law, 2.1. UK LLB]

Answer: Alice Liability From the details provided in the PQ, we can surmise that Nixons is potentially liable for up to £2750 + compensation for Alice’s lost profits, due to a breach of contract. Issues The most important issues in this PQ are the construction and incorporation of the contract and exemption clause, and if the exemption clauses are valid according to the UCTA 1977. An exemption clause is a term which can be written into contracts to reduce the rights of one or both parties to contract, or limit one of the party’s liability in a particular set of circumstances, often due to negligence or breach of contract. In our case, we see Nixons create three limitation clauses, whereby they attempt to limit the amount that can be claimed by Alice, even if they are negligent. Fo......(short extract)

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Details: - Mark: 65% | Course: Contract Law | Year: 2nd/3rd | Words: 2136 | References: Yes | Date written: February, 2016 | Date submitted: December 02, 2016 | Coursework ID: 994

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