In advising Angletown Council, we must determine whether or not the illegible terms and conditions contained in the fax

message sent by Datachip have been incorporated into the agreement between the two parties. Further, it must be ascertained if any terms have been implied into the agreement. The validity of the limitation and exclusion clauses in the list of terms and conditions sent by Datachip in view of the Unfair Contract Terms Act 1977 must also be established. Finally, it must be determined whether or not Angletown Council can claim damages for the defective goods provided by Datachip and whether or not they can claim compensation for the damage caused by Crispin to the offices of the Council and the injury to Barrie. A preliminary question which arises is whether or not a contract was concluded between the parties as the reply slip was posted, but got lost in the post. This would partially depend on whether or not the postal rule of acceptance is in play. For this to be so, the post must have been understood to be the mode of communication between the parties. Further, both parties must be at a distance from each other for the post to become a reasonable means of communication. Te rule is to be excluded if it is not reasonable. On the facts, the post was not the agreedupon mode of communication between the parties Datachip sent their list of terms and conditions to Angletown Council by fax. Further, we are told that Angletown Council has contacted local computer specialists. Ostensibly, this means are not at such a large distance from one another so as to make the use of the post reasonable. Hence, the postal rule is not valid in this situation. Thus, on the facts, the acceptance is not valid acceptance. However, it must be noted that a contract was formed by conduct when Crispin began installing the system on behalf of Datachip. Thus, it can be concluded that here was a valid, binding contract between the parties. The first issue is whether or not the terms contained in the fax sent by Datachip to the Council have successfully been incorporated into the agreement between the parties, taking into account the fact that Barrie

signs the return slip without fully understanding what he is agreeing to as the text in the fax was illegible. The law was laid down in the case of L Estrange v Graucob. In this case, the Claimant purchased a cigarette machine manufactured by the Defendant from two travelling salesmen. She signed a Sales Agreement which contained an exclusion clause which stated that any express or implied condition, statement or warranty, statutory or otherwise is excluded. The Claimant failed to read the document. She was to pay for the machine in instalments, but after the machine was delivered, it got jammed and did not work, in spite of repairs. She then refused to continue paying for the machine and brought a suit against the D for the sum already paid, arguing that the machine was not fit for its purpose. The D contended that any warranties for fitness were expressly excluded by the agreement she signed. At first instance, the court found for the Claimant. However upon appeal, Scrutton LJ held that when a document containing contractual terms is signed, then, in the absence of fraud or... misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not . Applying this to the facts of our case, it can be seen that Barrie and the Angletown Council will be bound by the terms contained in the illegible fax. We must also consider whether or not any terms have been implied into the contract between the two parties by law. This is mainly done via the Sale of Goods Act 1977. In our case, the relevant sections are s14(2) and s14(3). Section 14(2) states that in the case of sellers selling goods in the course of a business, there is an implied condition that the goods supplied under the contract are of satisfactory quality whereas s14(3) states that the goods supplied under a contract must be reasonably fit for that purpose. On the facts of our case, it is clear that Datachip is in violation of s14(2) as the goods were definitely supplied in the course of a business yet fail to be of satisfactory quality, as evidenced by the fact that the software malfunctioned and resulted in complications for the buyers. Further, Datachip is also in violation of s14(3) As the software supplied is

obviously not suitable for its purpose as it could not cope with the demands of the Council. Thus, unless they have successfully contracted out of liability for the above matters, Datachip is likely to be liable for the financial damage caused as a result of their faulty software. Now, what must be taken into account are the exclusion clauses which have been incorporated into the agreement between Datachip and the Angletown Council. In this instance, it is necessary to take into account the effect of the Unfair Contract Terms Act 1977. S12 of UCTA defines what is meant by a consumer. On the facts of our case, Angletown Council is definitely not acting as a consumer. This is mainly because of the decision of R&B Customs Brokers Ltd v United Dominions Trust where it was held that a contract is made in the course of a business where it is integral to the business or it forms part of the regular course of dealing of that business. In our case, the collection of taxes is definitely integral to the working of the Council and as such, they are dealing in the course of a business. The limitation clause i.e. clause 2 seeks to limit the losses for which Datachips is liable to 25000. S11(4) of UCTA deals with clauses which limit liability to a set sum. The Act states that in assessing the reasonableness of the clause, the resources available to the person putting forward the clause and the possibility of covering the liability by insurance must be taken into account. In general, the more resources that are available and the greater the opportunity for insurance, the less likely the clause is to be reasonable. On our facts, we are not told whether Datachips is a large corporation with large funds available to them. We are told that Datachips is a local computer specialist. This creates the impression of it being a relatively small company with limited funding. If we were to go based on this assumption, the clause would be reasonable. Regardless, the case of St. Alban s Council v International Computer Ltd needs to be considered. In this case, the D appealed against a decision awarding the council GBP1.3 million in damages for breach of contract

due to faulty computer software supplied by their company. Held, that since the loss was directly caused by the faulty software, the D s were liable for a reduced sum of damages because but for the faulty software, the errors causing a discrepancy would not have occurred. Further, the court decided that s3 of UCTA applied to the limitation clause which sought to limit damages payable in the event of breach of contract to 100 000 as it was part of the standard terms of the D company and failed to satisfy the requirement of reasonableness as per s3(2) of the Act. It is submitted that the St Alban s case is fundamentally different from the case at hand because International Computer Ltd was a large company capable of paying extremely large figures out as damages. In our case, it is submitted that Datachip may not be in as strong a financial position, rendering the clause reasonable. As regards Crispin s outburst, it must be noted that this falls within the ambit of s1(1)(a) of UCTA, as negligence means the breach of any obligation arising from the express or implied terms of a contract to take reasonable care or exercise reasonable skill in the performance of the contract. Hence, Crispin was negligent as he carelessly hit the computer when he was unable to solve the problem. Further, s1(3) states that sections 2 to 7 apply to business liability i.e. breach of obligations or duties arising from things done by a person in the course of a business (s1(3)(a)). As s2(1) states that a person cannot exclude liability for death or personal injury resulting from negligence, it can be seen that it is likely that Datachip may not be able to rely on clause 3. Section 2(2) states that one cannot exclude liability for other losses or damage unless it is reasonable for him to do so. The test of reasonableness is outlined in s11 of the Act. S11(3) states that it should be fair and reasonable to allow reliance on the exemption clause in question, taking into account all the circumstances where the situation arose. On the facts of our case, damage was caused due to Crispin s outburst. It is submitted that it is not fair for Datachip to exclude liability

for damage so clearly caused by one of their employees especially since, but for Crispin s actions, nothing would have been damaged. Hence, it can be concluded that Datachip may not be allowed to rely on clause 3. Thus, it can be seen that Datachip is likely to be liable for the injuries suffered by Barrie and the damaged computer equipment and wrecked office, in spite of the incorporation of exclusion clauses protecting them from such occurrences. However, it is likely that their limitation clause will be accepted as being reasonable and as such, they may only be required to pay out a maximum of 25000 in damages.