Negotiation:

Main page:Preface
Extract 1 : The skills and plan
Extract 2 : Practical exersice and claimant
Extract 3 : Transcript & Analysis

Practical exersice and claimant:

Introduction
What follows is an exercise that it is typical of that given to students undertaking the BVC. This exercise will tie in the advice that has been proffered so far. It will set out the papers given in the case, an example plan for the Claimant, and then a dialogue of the negotiation between the parties. It should be borne in mind that the dialogue of the exercise is a high standard negotiation, but it also covers mistakes that are often made as well. Finally a commentary follows which identifies the parts of the negotiation that were most successful, and exactly what errors were made.

Brief
To obtain the greatest benefit from this exercise you must read the brief before looking at the example plan and the transcript of the negotiation. You are acting for the claimants. Take the date of the brief to be the 12th of February 2003. First read the brief to familiarise yourself with the facts. Then read it again, word for word to check that you have not misinterpreted any of the facts. This process is essential. On your third reading you will be well aware of your clients and opponent's likely objectives in the case. You can now begin to formulate your plan. Prioritise these objectives at the beginning of the plan. Identify the contentious issues in the case, and now pick through the brief carefully and note down all the legal and evidential points that are in your favour for each of the items (individual sums sought) to be negotiated. After doing this on your fourth reading note your opponent's legal and evidential arguments, on each article of contention. Don't forget to reference your plan so you can refer to the information contained in it whilst negotiating. After doing this you are in a position to set monetary boundaries for each article of contention. Remember at the same time bear in mind any limits set out by your client.

Now compare with your plan with the example that has been set out. You should find that you have identified a lot of the points contained in it. This comes with time. You should practice with as many different scenarios as possible to ensure that you are identifying the correct legal and evidential issues. Ascertaining the relevant points is equally important in ascertaining your opponent's likely arguments. If you are prepared for these then you will be better prepared to offer counterarguments to them. A good idea is to address the brief as if you were acting for the other side on at least one reading.

Instructions to Counsel
Counsel is instructed on behalf of the Claimant. Counsel is asked to negotiate this matter on
behalf of the Claimant Quick Art Ltd. The company was instructed to initiate proceedings on
the 12th of January. The negotiation is to take part at the defendant solicitors premises on the
12th of February. Please find the address enclosed. Please find enclosed all relevant papers.
The Claimant has instructed us that he will not accept less than £10,000 for the covers yet he
is willing to pay out for some of the Defendants losses as you sit fit. Of imperative importance
is quick payment of at least some of the debt as the claimants worry that they are going to
have cash flow problems.

Costs to date excluding Counsel's fee are £400.
Fred Blacker - Partner in Jeeves and Smith, Solicitors for the Claimants
IN THE GREENWELL COUNTY COURT Claim No. GW268

BETWEEN

QUICK ART LIMITED Claimants And SCALIBER FURNISHINGS LIMITED
Defendants

PARTICULARS OF CLAIM
1. The Claimants are and were at all material times a company carrying on a design business. The Defendants are a furniture production company.
2. Through an oral agreement on the 23 of July 2002, Ian McKnight, a sales person for Quick Art, and Sally Hertz, a buyer for Scaliber Furnishing, agreed that the Claimants would design and print 500 sofa covers for the sofa for a range offered by the Defendants known as Arabian Delight. The agreed price was £15,000 plus VAT.
3. It was an express term of the contract that delivery would take place within 8 weeks form the date of agreement. It was also an express term of the agreement that the Defendants had to give the go ahead for any deign before the Claimants began to produce the goods. The Defendants have consistently refused to pay for any of the goods.
4. In accordance with this agreement the Claimants showed the defendants the pattern that they purposed to design and then, subject to some minor alterations they produced the covers in accordance with the Defendants specifications. The Claimants delivered the 500 sofa covers 2 weeks earlier then planned on the September the 12th 2002.
5. Pursuant to the contract the Claimants delivered the products with an invoice 'QASFLtd001' for the sum of £15,000 plus VAT to the Defendants at their premises in 4 Lake Lane, Lando, and Newportshire.
6. The Defendants have failed to pay the Claimants the said sum of £10,000 plus VAT or any part thereof.

AND the Claimants claim:
1) The sad sum of £15,000 plus VAT
2) Interest thereon under section 69 of the County Courts Act 1984 at the rate of 8% per annum on £15,000 from the date of 1 month after the invoice, amounting to £300 and continuing to settlement
Dared this day 12th of January 2002
The Claimants believe that the facts stated in this Particular of Claims are true.
Fred Blacker - Partner in Jeeves and Smith, Solicitors for the Claimants
IN THE GREENWELL COUNTY COURT Claim No. GW268

BETWEEN

QUICK ART LIMITED Claimants And
SCALIBER FURNISHINGS LIMITED
Defendants

DEFENCE AND COUNTERCLAIM

Defence
1. Paragraphs 1, 2, and 3 of the Particulars of claim are admitted
2. It is denied that the goods were produced in accordance with agreed specifications of the Defendant, save as aforesaid paragraph 4 is admitted.
3. There was an implied term in the contract that the goods would be of satisfactory quality and fit for purpose. There was also implied term that the covers would be exactly as specified.
4. In breach of the aforesaid implied terms the covers were not produced in compliance with the Defendants design, and furthermore the covers were not of satisfactory quality.
5. Paragraphs 5 and 6 are admitted.
6. Further or alternatively, if contrary to its Defence, the defendants are held liable, then the Defendants will seek set off against the Claimants claim, through the matters set out in the Counterclaim herein, in extinction and diminution thereof.

Counterclaim
7. Paragraphs1 to 6 of the Defence herein are repeated.
8. As a result of the aforesaid matters the Defendants have suffered loss and damage.

Particulars
Loss of the contract to supply Akea Furniture £6,000 plus VAT retailers with 300 Arabian Delight sofas
Loss of the supply to Zammo Ltd of 200 sofa covers £1,200 plus VAT
Cost of repair of 500 covers due to tears £1,000 plus VAT
9. The defendant claim interest on the damages, under section 69 of the County Courts Act 1984, at such rates and over such period as may be just.

AND the Defendants counterclaim,
1) Damages in excess of £5,000
2) Interest to be assessed
Dated this day 26th of January
The defendants believe that the facts stated in this defence and counterclaims are true.

Jim Gott
Jim Gott, Partner in Gott and Gott, Solicitors for the Defendants.
Gott, Solicitors for the Defendants of 156A Lake road, Newportshire at which the address they will accept service of the proceedings.
To the Court Manger and the Claimants
IN THE GREENWELL COUNTY COURT Claim No. GW268

BETWEEN

QUICK ART LIMITED Claimants
And
SCALIBER FURNISHINGS LIMITED
Defendants

REPLY AND DEFENCE TO COUNTERCLAIM
Reply
1. Save insofar as the same consists of admissions the Claimants join issue with the Defendants upon the Defence and Counterclaim.
2. It is denied that there was an implied term of the contract that the covers would be exactly as specified by the Defendants. Save as foresaid paragraph 3 of the Defence is admitted.

Defence to Counterclaim
3. No admissions are made as regard to paragraph 8 of the counterclaim. The defendants are required to prove that the loss and damage claimed was suffered.
4. If the Defendants have suffered any loss and damage, which is denied, the defendants have failed to mitigate their loss.
Dated this day 5th of February 2002
The Claimants believe that the facts stated in this Particular of Claims are true.
Fred Blacker - Partner in Jeeves and Smith, Solicitors for the Claimants
IN THE GREENWELL COUNTY COURT Claim No.GW268

BETWEEN

QUICK ART LIMITED Claimants And

SCALIBER FURNISHINGS LIMITED
Defendants
WITNESS STATEMENT OF GEORGE SMITH
I, GEORGE SMITH, designer at Quick Art Limited of 15 Tallhouse Lane, Newportshire will say,
1. On the 3rd of August 2002 I finished the initial design for the company Scaliber Furnishings Ltd, located at 4 Lake Lane, Newportshire, for their sofa design Arabian Delights. This was in accordance with an initial instruction that they had supplied to us over the telephone. I contacted them and arranged a meeting with their representative Angela Stewart. We me at the Lords Public House on the lunchtime of the 4th of August. I showed Angela Stewart the design, and she appeared pleased with the overall effect. She did however specify that she would like blue diamonds placed in between the red diamonds and created a sketch of this and gave it to me. The sketch was completed on a piece of Angela's note paper. There is now shown to me a true copy of the sketch marked exhibit AS 1.
2. I expressly informed Angela that there was a possibity that the colours may not be exactly the same as specified due to the technicalities of the printing process. However she seemed rather absent minded, and didn't seem to acknowledge this. When I prompted her she said "yes that's fine."
3. On the 23rd of August I finished the design and sent it to our printing department. I have the final say as to the quality of the final product and I was more than satisfied that the design would meet the requirements of Scaliber.
4. I did not inspect the entire batch only 1 per 100 and the quality of the actual cover besides the design seemed in order.
5. My manager, Bill Frasencsa has informed me that Scaliber alleges the goods were not of satisfactory quality because they were torn. I was instructed to obtain a quote and duly contacted Rapido Fix Ltd to obtain a quote on the checking of 500 sofa covers. There is now shown to me a true copy of the quote they supplied marked exhibit RF1.
5. The contents of this statement are true to the best of the knowledge and belief.

Signed: George Smith Dated 15th February

Exhibit AS 1
Exhibit QASFLtd001
INVOICE QUICK ART
Work For Scaliber Furnishings Ltd
500 Covers designed and Printed @ £15, 000 (not inc VAT)
Payment Due in full on or before October 12th 2003
Exhibit RF 1

RAPIDO FIX LIMITED

Dear Sir,

Thank you for your request for a quote on the checking and repair of the sofa covers.
For checking and repairing 500 sofa covers the basic cost would be £500.
However I must stress that this may be higher depending on the extent of damage
and the amount of covers damaged.
I look forward to hearing from you.

FRANK PHIPPS
Sales Manger

IN THE GREENWELL COUNTY COURT Claim No. GW268

BETWEEN

QUICK ART LIMITED
Claimants
And
SCALIBER FURNISHINGS LIMITED
Defendants

WITNESS STATEMENT OF GREGG HART

I, GREGG HARTE, managing director of 4, Lake Lane, Newportshire will say,
1. We contracted with a company called Quick Art Limited on the date of July for the designing and printing of 5000 sofa designs for our design The Arabian Delights sofa. The design was to be in accordance with the design that we supplied to them this was given over the phone by myself to the designer George Smith. I stipulated that we wanted the background to be plain white and the blue diamonds placed in a standard four corner design. The background had to be white because Zammo wanted 200 white covers from us. I can't remember if I told Quick Art of this.
2. I sent Angela Stewart to meet George and confirm the design, she told me that she wanted to alter the design by intersecting red diamonds between the blue and I agreed as this was her department. Upon returning she told me that the changes had taken place. I have spoken to Quick Art on the phone and they tell me that there representative George Smith told Angela that the product may not be the exact same colors as on the design.
3. I was not aware of this. Therefore I have refused to pay for the goods. Likewise the Claimants have refused to give a refund. Angela Stewart has since left the firm on good terms and is now traveling the world.
4. I inspected the first 200 or so of the batch of 500 and the quality of the actual covers was poor. There were numerous rips in the covers. Of greater dismay to me was the fact that the covers where not even white as agreed, but they were a more of an off white cream colour.
5. Due to this we had to employ the services of Gold Fix to inspect and repair the covers. There is now produced to me and shown a true copy of the invoice for that work, exhibit GF 1. These repairs were taken out before the goods were seen by Akea or Zammo.
6. Furthermore because the covers were not of the correct colour we lost the contract with the company Akea to sell of our Arabian Delights sofas. We have had some 20 plus similar arrangements with them and nothing like this has ever happened before. There is now produced to me and shown a copy of the letter they sent to me, exhibit AK1.
7. In addition we lost a contract to supply to Zammo Ltd, who had specified that they needed 200 white covers. There is now produces and shown to me a true copy of the letter, exhibit ZM1. Since then Zammo have refused to do business with us.
8. The contents of this statement are true to the best of my knowledge and belief.

Signed: George Harte Dated 15th February

Exhibit GF1
Gold Fix

Dear Sir,

Please find enclosed an invoice for the checking and repairing of the sofa covers that you sent to us.
£1,000 plus Vat
Checking of 500 @ £1 each = £500
Repairing of 100 @ £5 each = £500
Thank you For Your Business

Kelly La Roque
Managing director

Exhibit AK 1
AKEA FURNITURE

Dear Sir / Madam,

We regret to inform you that you that upon our inspection of a sample of one of your sofas we do not regard your product as suitable to fulfill our need for a contract of 200 sofas.

Akea Furniture
Exhibit ZM 1

ZAMMO LTD

Dear Gregg,

After inspecting a sample of the covers we regret that we can not enter into the proposed contract with you as the covers we need must be white to suite our purposes. Unfortunately as your covers are cream we can not use them. We would however be interested in dealing with you if there was a substantial reduction in price.

Many Thanks,
Bobby Jo Plan (Claimant)

QUICK ART LIMITED AND SCALIBER FURNISHINGS LIMITED
(PLAN FOR THE CLAIMANT)

Claimants Objectives
¢ To recover as much of the 15,000 plus VAT for the supply of the covers as possible.
¢ To rest the counterclaim of the Defendant as far as possible.
¢ To recover a portion of the money owed as soon as possible.
¢ To recover costs
¢ To recover interest on the money owed

Defendant's Likely Objectives
¢ To recover the amounts on the counterclaim
¢ To resist our claim as far as possible
¢ Costs/Interest?

Contentious Issues To Be Negotiated
¢ The fact that the court may hold that the items have been accepted
¢ The quality of the covers, and fitness for purpose the effect on their value (if any)
¢ The effect on the alleged lack of quality and fitness for purpose and reasonable care on the dealings with Akea.
¢ The effect of the alleged lack of quality and fitness for purpose, and reasonable care
on the dealings with Zammo.
¢ Mitigation by the defendants.

Acceptance

Our Arguments
¢ Under section 35A of the Sales of Goods Act 1979, if a reasonable time has expired after the delivery of the goods then the court may hold that the Defendants had accepted them, thus can not reject the goods.
¢ Whilst they said they wanted to return the goods (see GH para3) Yet it seems there has been no physical effort was made to do so.
¢ Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220 the courts held that three weeks was a reasonable time to infer acceptance. (4 months here)

Their Likely Arguments
¢ Evidence that the defendants attempted to return the goods/intimated that they were rejecting them, see witness statement GH para 2.
¢ Case of Rogers v Parish Ltd [1987] QB 33 - 6 month was held to be not long enough to constitute acceptance.

The Quality of the Covers

Our Arguments
¢ There is an implied term that the goods were of satisfactory quality under14(2)
and that they will be fit for purpose under section 13 of the Sales of Goods Act. Yet this is subject to the de minimis principle under 15a of the SGA.
¢ There is evidence that the breach of the implied terms of quality and fitness for
were so slight that there will only be damages available to the Defendant. (off colour which was stated could occur, and 20% damaged- costing £5 each to repair) see GW 1
¢ No implied term exists that the must be exactly the same as the contract as the Defence claims at para 3. (no statutory authority)
¢ Also whilst the goods were not exactly as stipulated in regards to the design, a representative of the Defendants was informed of this, see - witness statement of George Smith para 2.
¢ As regards the tears in the covers only 100 were torn see exhibit GF1. Therefore only a fifth of the consignment was of unsatisfactory quality or not fit for purpose.
¢ There is evidence that the work by GF is too costly for the job - see exhibit RF1, which was procured by the Claimants. This supports the assertion that the damage was not as significant as is been maintained.
¢ As regards fitness for purpose there seems to be no express stipulation that the goods needed to be white for purposes of resale. The D was given the opportunity as they were told that the colour may differ. GH can't remember (se GH para 1)
¢ Thus there are strong arguments that they were fit for purpose in regards to design.

Their Likely Arguments
¢ There is an implied term that the goods are of satisfactory quality and fit for purpose.
¢ The tears and wrong design mean that the goods were not of satisfactory quality. Satisfactory quality under 2B(c) includes freedom from minor defects. And under 2B (b) appearance and finish.
¢ 100 had to be repaired and the goods were specifically requested to be white. See GH witness statement para 2. May have told the Claimants why (resale) para 1 GH.
¢ The goods were not acceptable for resale see AK1 and ZM1.
¢ Thus the goods were thus of unsatisfactory quality and can be rejected.

Akea

Our Arguments
¢ Exhibit AH1 does not give any reasons to why AK decided not to enter into the contract. As well the goods that were looked at by Akea included the sofa as well, and these could have been responsible for the loss of the business.
¢ There is no evidence that a contract would have been entered into, regardless of the colour of the design.
¢ Presumably the covers state had no bearing on the possible contract as it seems only one cover was used on the sample.

Their Likely Arguments
¢ Evidence of a likely contract - past dealings 20 plus and "nothing like this has ever happened before." See GH para 6.
¢ Therefore Akea didn't want to enter into a contract because of the lack of quality of the covers.

Zammo

Our arguments
¢ Arguments previously as to evidence that the Claimant said the covers may vary in colour.
¢ Zammo are willing to accept the goods under a reduction. See ZM1. Therefore there has been a failure to mitigate; furthermore the goods still have resale value to someone that doesn't need a white cover. There is no evidence that there has been an effort to find another seller, again a failure to mitigate.

Their Likely Arguments
¢ Zammo had specified that the covers had to be white, and that they told the Claimant they had to be white - see witness statement of GH para 1
¢ Zammo have thus rejected the goods because they are not fit for purpose.

Mitigation

Our Arguments
¢ As the Defendants still had a market open to them they failed to mitigate their loss.
¢ The Defendants have the offer of a buyer for the goods in Zammo which they have not taken up.
¢ In repairing the tears on the covers there is evidence that they have not mitigated in a reasonable way as they have used an expensive service, see GF 1 and RF 1
¢ Thus as there has been a failure to mitigate the defendants should have any damages reduced accordingly.

Their Likely Arguments

¢ Mitigation by employing GF to repair the goods.
¢ The offer for resale was due to a severe reduction see ZM 1.

Main page:Preface
Extract 1 : The skills and plan
Extract 2 : Practical exersice and claimant
Extract 3 : Transcript & Analysis

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