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From: trainee@lawfirm.com
To:
1 client@xltd.com
CC:
BC:
2
Date: 1 December 20XX
Subject:
3 Recovery of £X plus VAT from Y
4
Dear [Recipient] 5
I trust that you are keeping well and that business continues to be busy. In consultation with my supervisor, […], I have now had an opportunity to consider the present position in your case. I am writing to explain this position, as I said I would when we last met.
Your instructions
On [date] you instructed us to act on behalf of your company, X Limited (‘X’), to recover from Y Limited (‘Y’) the sum of £Z plus VAT, arising out of a contract where X would manufacture and sell [goods] to Y.
According to my instructions the chronology of the case is as follows:
[…omitted for the purposes of this work]
Your objective
X is seeking to recover in full from Y the sum of £Z plus VAT.
The legal issues
There is a valid contract between X and Y. The legal basis of X's claim against Y is breach of that contract, as the amount to be paid to X by Y under the contract remains outstanding.
However this position must be considered against the reasons Y have put forward for their refusal to pay, namely that the [goods]:
- did not correspond with the description that you had given during the pre-contract representations
- were not of satisfactory quality, and
- were not fit for purpose.
I will now consider each in turn each of these grounds.
The relevant law and how it applies to the facts of the problem
- Correspondence with description
Y maintains that the [goods] which X delivered to it did not correspond with the description that X had given during the pre-contract representations. The law (s13 Sale of Goods Act 1979) requires that goods sold in the course of a business must correspond with the description that you, as Seller, gave to Y, as Buyer.
I note that in your sales literature you claim that the [goods …]. This may be significant in determining the understanding and intentions of Y during the negotiations with X, about the precise suitability of the [goods to …], before X and Y entered into the contract.
- Satisfactory quality
Y also maintains that the goods were not of satisfactory quality. The law (s14(2) Sale of Goods Act 1979) states that where the goods are sold in the course of business there is an implied condition that the goods are of satisfactory quality. The key issue is what is regarded as satisfactory quality. The assessment is made objectively, so it is based on what a reasonable person, rather than Y itself, would consider to be satisfactory quality, taking into account the description of the goods, the price and all other relevant circumstances. For example, more expensive goods should be of higher quality than would be expected of cheaper alternatives.
There is an expert report providing […’s] guidance about whether the [goods] were of satisfactory quality. […omitted for the purposes of this work]
- Fitness for purpose
Finally, Y maintains that the goods were not fit for purpose. The law (s14(3) Sale of Goods Act 1979) requires that goods sold in the course of a business should be reasonably fit for the purpose for which the buyer (Y) intended.
Once again, the representations made by both X and Y in the negotiations before X and Y entered into the contract will be relevant. If Y can evidence it made clear to X the precise purpose for which it intended to use the goods, then X may find it difficult to dispute this. The expert report appears to support that Y’s argument would have some weight if the matter proceeds to litigation.
Conclusion and advice
Any and all representations that may have been made by X to Y before entering into the contract for the sale of the [goods] is emerging as a key issue. It will be helpful if we can meet to discuss this further, and also your view as to how X might be able to argue against the three reasons Y has given for its refusal to pay, or not.
In light of those reasons Y has put forward, I would advise that it is not in X’s interests to consider issuing court proceedings against Y right now.
Next steps
- We need to arrange a further meeting to discuss this case further. I am free Monday and Tuesday of next week. Please let me know which you prefer, or suggest a few alternative dates in the following week.
- Before we meet, can you give some thought to the pre-contractual representations, and in particular send me any evidence of them you can find.
I look forward to discussing this matter further with you when we meet.
Kind regards.
Yours sincerely
Name of Lawyer
Firm
Firm’s address
Telephone number
Website 6