Supply Chain Contract

SUPPLY CHAIN CONTRACT

Melbourne Builders plc asked Sydney Paintworks Ltd

Discussion Case -1

Melbourne Builders plc asked Sydney Paintworks Ltd to quote for the redecoration of new office premises which it had just acquired. It stated in its letter requesting the quote that it required the work to be done by 1 March. Melbourne Builders’ letter, dated 4 January, enclosed its standard terms of business, which state that ‘Time is to be regarded as of the essence, and Melbourne Builders plc reserves the right to terminate any contract which is not performed within the agreed schedule.’ On 6 January Sydney Paintworks Ltd submitted a quote for the work, at a price of £7,000. On 13 January, having carried out a fuller survey of the premises, it submitted a revised quote, at a price of £7,800. Both quotes had printed on the back Painters Ltd’s standard terms and conditions, which state that ‘While every effort will be made to carry out work within agreed timescales, a delay in completion of up to 10 working days is not to be regarded as a breach of contract.’ They also state that 50 per cent of the price is to be paid before work starts and 50 per cent on completion. On 20 January Melbourne Builders plc wrote to Sydney Paintworks Ltd stating, ‘Thank you for your quotation of 6 January, which we are pleased to accept. Please note that this contract will be subject to the terms set out in our letter of 4 January.’ No further written communications took place between the parties, but a telephone conversation between relevant managers led to an agreement that work would start on 8 February. In advance of this, Sydney Paintworks Ltd requested a payment of £3,900, which Melbourne Builders plc sent on 5 February. Work started on 8 February, but was delayed because of illness amongst Sydney Paintworks Ltd’s employees. On 2 March, when it appeared that the offices would not be ready for at least another week, Melbourne Builders plc informed Sydney Paintworks Ltd that it was...