Part A:

 

Donovan and Delaney Accountants have recently contacted you for advice regarding a number of contract law issues that have arisen within the firm:

 

• The firm had been considering updating its photocopier, and Lyle, the officer manager was tasked with this project. After doing some research on the internet Lyle saw an advertisement placed by Cormorant Copy Solutions in which a high volume, multi-function colour photocopier, the MF2000, was available for €14,500.  He rang Cormorant Copy Solutions and spoke to one of their sales representatives about the features of this machine and following discussions and some negotiation regarding the price he agreed to purchase the machine. Payment was made electronically through Cormorant Copy Solutions website and the machine was delivered the following day.   Upon delivery of the photocopier Lyle was asked to sign a delivery docket, which he did.  However, within a week of delivery there were numerous problems with the machine, which kept breaking down.  They contacted Cormorant Copy Solutions about this problem – and they informed Lyle that they did not employ service agents, but gave him a list of service agents that they recommended.  One of these agents called to the offices of Donovan and Delaney Accountants to have a look at the machine and told them that the rollers in the machine were faulty and would need to be replaced at a cost of €2,300.  Donovan and Delaney Accountants refused to pay this sum and contacted Cormorant Copy Solutions demanding that they repair the defective machine.  However, Cormorant Copy Solutions have denied liability and have highlighted a clause on the back of the delivery docket that was signed by Lyle, which states:

 

“Cormorant Copy Solutions reserves the right to repair or replace any defective goods at its absolute discretion.  Under no circumstances will Cormorant Copy Solutions accept liability for the quality of any goods supplied if any unauthorised repair or inspection of the goods had been made.”

 

The company also highlighted the fact that this same clause also appears on their website. Donovan and Delaney Accountants have contacted you for advice regarding the validity or otherwise of this exclusion clause and any options available to them in this situation.

 

 

1. Review the law in relation to exclusion clauses and determine whether or not this clause will allow Cormorant Copy Solutions to avoid liability in this situation.

(25 marks)

 

1. Based on the fact that the machine is defective Donovan and Delaney Accountants want to send the machine back to Cormorant Copy Solutions and obtain a refund on the purchase price.

 

Advise Donovan and Delaney Accountants as to the nature of the breach that has arisen, commenting specifically on whether rescission of the contract is possible in this situation.

(15 marks)

 

1. Furthermore, Donovan and Delaney Accountants were in the middle of a client financial review when the photocopier broke down. The need for repair resulted in the work being delayed and the client has since informed Donovan and Delaney Accountants that he is terminating his business with them – as they are obviously unreliable in complying with deadlines.

 

Advise Donovan and Delaney Accountants as to the likelihood of this loss being recoverable against Cormorant Copy Solutions.

(10 marks)

 

• Donovan and Delaney Accountants have a number of trainee accountants working for the firm. The firms pays the education costs of these trainees, who are undertaking ACCA examinations, but one of the conditions of this payment is that if a trainee does not take the exams that they are studying for in the relevant exam sitting, or takes these exams and fails them, then they are required to reimburse the firm the tuition cost.

 

In the last sitting of ACCA exams one of the trainees, Howard, failed to sit an exam, as he was hospitalised the night before the exam with a suspected heart attack.  However, following tests it was discovered that Howard had suffered a panic/anxiety attack and he was released from hospital the following morning.

 

In addition, Carson, another trainee, scored third in Ireland is one of the exams that he was taking.  In a celebratory mood, the managing partner of Donovan and Delaney Accountants told him that he would pay him a bonus of €1,000.  Unfortunately, when two other trainees heard about this bonus they contacted the managing partner and informed him that they both had been placed first and second in certain ACCA subjects in previous exam sittings.  They queried whether they should also have been paid the bonus.

 

The managing partner has contacted you for advice as to whether he can reclaim the tuition fees from Howard and cancel the proposed bonus with Carson.

 

1. Examine the law in relation to contractual discharge and based on this examination advise Donovan and Delaney Accountants as to whether they can require Howard to reimburse them his cost of tuition.

(25 marks)

 

1. Discuss the law in relation to contract formation and assess whether Donovan and Delaney Accountants is legally obliged to pay Carson the bonus of €1,000.

(15 marks)

 

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