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Analysis of Contractual Terms and Performance

  • 4 Pages
  • Published On: 27-11-2023
Material facts to establish basis for the relevant contractual terms in respect of the leisure centre system (“the Reservations System”)
30 October 2019 phone call

Cheryl Drake informed Vivien Wood of S&P’s requirements for a suitable system for its leisure centre including the gym, studios, pools and the pitches, namely to:

(a) accurately record what is happening at any point in time for each individual facility; and

(b) create electronic accounts for customers from the details they supply when booking.

Vivien Wood told Cheryl Drake that HST’s hardware and software system known as “Reservation System” is what we want and we precisely need.

Material facts establishing the oral contract (“the Contract”)

The deal for the hardware and software installation of both the Restaurant Catering 1AV system and the Reservations System was agreed:

(a) at a total of £70,000;

(b) with the promise of completing the installation and making it live by the end of the first week in December; and

(c) for payment on completion.

Express terms of the Contract that are relied on by S&P

Cheryl Drake relied on the representation by Vivien Wood, namely:

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(a) that the “Restaurant Catering 1AV” would meet all of S&P’s requirements; and

(b) that “Reservation System” is what S&P wants and precisely needs.

In the alternative, implied terms of the Contract that are relied on by S&P

That the Restaurant Catering 1AV system and the Reservations System are of satisfactory quality.

That systems will be able to perform for the purpose of booking and management system for which S&P acquired them.

Material facts to establish the purported performance of the Contract by HST

Over the next few weeks after the 30th October:

(a) large numbers of HST staff visited S&P’s site;

(b) both the systems were installed;

(c) hardware including as a new server and computer terminals were supplied

(d) software was loaded onto S&P’s existing restaurant and leisure facilities systems; and

(e) by 3 December 2019 both systems were ready to go live

Material facts to establish payment made by S&P

On 3 December 2019, Cheryl Drake handed a cheque to Vivien Wood for £70,000 made payable to HST.

Material facts to establish the breaches of Contractual terms by HST

Both the systems did not function properly after their installation. The following are the proofs of these breaches:

Restaurant Catering 1AV system

Derek Goodyear’s emails:

(a) 6 December 2019: Failure to transfer bar tabs to customer’s table number.

(b) 15 December 2019: Failure to allocate loyalty reward points to customer’s electronic accounts on settling their bill.

(c) 17 December 2019: read as follows: Failure to properly track table availability.

Reservations System

Patricia Evan’s emails:

(a) 8 December 2019: Failure to transfer customer’s details recorded at the time of booking to their new electronic account.

(b) 11 December 2019: Problems with current time reports for all facilities. They consistently show some facilities booked when they are not.

(c) 15 December 2019: Continuing problem with the current time reports despite numerous assurances from HST’s staff.

Material facts to establish the consequences of the breaches of Contractual terms by HST and rejection of the Systems by S&P

Due to improper function of the system, S&P was required to fall back on the original manual system of booking and management. It was required to employ additional staff to handle the original manual system.

Restaurant Catering 1AV system

Derek Goodyear’s emails:

(a) 15 December 2019: re-introduction of previous paperbased customer loyalty reward card scheme

(b) 17 December 2019: employment of an additional reservations manager to supervise the reservations

Reservations System

Patricia Evan’s emails:

(a) 8 December 2019: Manual recording of all details.

(b) 15 December 2019: Employment of an additional facilities manager to check all the bookings for the foreseeable future.

Material facts to establish the damage and loss suffered by S&P

Because of the improper functioning of both the systems, S&P has incurred loss in terms of its staff time in addressing issues due to the systems, installing new system and employing additional managers for the leisure centre and the restaurant. The following are the facts to establish the damage and loss suffered by S&P.

Restaurant Catering 1AV system

Derek Goodyear’s email

(a) 6 December 2019: Total amount lost through unaccounted for bar tabs is £1,298.34

(b) 14 May 2020: Cost of new IT booking system is £39,451.50. Due to problems with HST’s system, estimated loss is £3,300.00 in staff time related to going back and using the paper-based customer loyalty reward card scheme.

(c) 26 June 2020: Cost of labour for the additional reservations manager is £3,478.90.

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Reservations System

Patricia Evan’s email

(a) 3 June 2020: Cost of new IT booking system is £51,265.55 is working well. Cost of labour for the additional facilities manager is £4,197.30.

(b) 26 June 2020: Estimated loss is £3,925.00 in staff time to address issues caused by the system and mainly, to manually create customer electronic accounts

Loss of profits due to problems caused by both the systems

Daniel South’s email of 19 June 2020:

(a) leisure centre: £41,295.00 based on the number of facilities undersold and loss of custom

(b) restaurant: £54,200.00 based on the number of tables undersold and loss of custom

Do any issues of remoteness of damage potentially arise and why?

There does not seem to have any issue that may meet remoteness criteria.

(a) HST as per the contract between knew that S&P needed new software and hardware.

(b) They supplied some hardware such as a new server and some computer terminals.

(c) It should have been foreseeable to them that by not replacing the original hardware, problems are bound to occur.

Do any issues of mitigation of loss potentially arise and why?
Restaurant Catering 1AV system

6 December 2019: Problem with the bar tab occurred at the initial few days after 3 December.

17 December 2019. S&P continued using the system with the problematic bar tabs until 17 December when an additional reservations manager was employed. This is also the time when the reporting was not working that led to booking problems.

This means S&P continued with the faulty system despite knowing that it was causing loss of business. Likewise, the same practice went on with the Reservation System.

Reservations System

11 December 2019: A week of the new system, S&P could see serious problems with current time reports for all facilities. Instead of continuing with the system, they might have stop using the system and prevented further loss such as the unused outdoor astro-turf pitches and the pitch.

Since reasonable steps were not taken, there may be potentially issues of mitigating loss.

From what date does the limitation period for this claim start and expire and why?

The contract in question is a simple contract. Section 5 of the Limitation Act 1980 applies.

Limitation period stated on the date of breach of contract, which is 6 December 2019.

It ends six years from this date.


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