Question

George Company Limited (GCL) is desirous of purchasing ventilator machines to enhance its operations of its employee’s medical service company, due to the increase of the Covid 19 related illnesses in Trinidad. The Operation Manager of GCL has located an ideal ventilator machine in China from Wuhan Machine Services Limited (WMSL). GCL has dealt with WMSL over the last 10 years on several business matters, but never with respect to ventilator machines.

Mr. Noitall from GCL, developed specifications of the ventilator which they required and emailed it to WMSL. WMSL submitted an offer to GCL which consist amongst other information the following,” the ventilator will be of the same type submitted to other companies in Trinidad and Tobago” It also included information on price, freight on Board etc.

GCL accepted WMSL’s offer via official letter dated the 3^rd March 2020.

Mr. Noitall on a subsequent visit to Jetson Incorporated saw that they had the same ventilators that GCL ordered from WMSL and requested from Jetson’s management to take a closer observation at its engineering capabilities. However, to his amazement, it was of a very poor standard and he subsequently reported that fact, to his executive management. GCL immediately decided via email to inform WMSL that they are no longer interested in purchasing the ventilator machines.

WMSL responded shortly thereafter to GCL’s email and advised GCL that they had a valid agreement with WMSL and they will treat any decision by GCL not to proceed with the transaction as a breach of contract.

Question

State what type of contract this is and explain why

Kindly advise GCL whether or not they can avoid this agreement.                

Answer 1

Here, GCL is a long time customer of WMSL. However, they never had a business together for the ventilator machines. So, GCL has inquired, and WMSL responded to it by sending an offer, most importantly with an ambiguous statement that the ventilator they are intended to supply will be of the same quality like they are providing to other customers in Trinidad & Tobago.

Initially, GCL has accepted this offer, and eventually, they found that the product they have been offered is of substandard quality and the company has decided to cancel the order.

In this scenario both the companies have made a valid contract. But, there is an important concern. Ventilator machines are used for those patients who are facing critical health conditions in hospitals. So, a low-quality machine could have risk the life of a patient who relies on it.

Moreover, as per the law, a product being sold must be having a merchantable quality. When a supplier tries to provide products that are not fit for purpose, then the buyer has no legal obligation to accept it. Hence, GCL can cancel this order.

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