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Rejection Of Services

Rejection Of Services

Postby Peter and Luke » Tue Jan 10, 2017 11:34 am

Interesting position.....

A B2B contract (services) provides that without prejudice to any other right or remedy available, the Buyer may terminate and claim as damages

all charges paid and wasted as a result of a Material Defect - the amount to be agreed between the parties (acting reasonably) if they cannot agree, then meditation (and finally court).

(£"X")

The termination trigger here is for rejection of the services.

I know under Sales of Goods Act and at common law that rejection leads to an automatic right to a refund.

Could it be argued by a clever QC that in addition to £X being recoverable (as damages) a refund of the same amount is recoverable (albeit implied under the contract) perhaps based on quasi-contractual principles (restitution)?

Or do the members think that is a little far fetched?

I suppose I am wondering if the right to reject services leads automatically to a refund which is different to a damages claim.

I think I will just go with the standard "as sole and exclusive remedy" the amount of £x will be refundable. problem solved?

All responses warmly received as usual....

Peter and Luke
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Re: Rejection Of Services

Postby atticus » Tue Jan 10, 2017 12:28 pm

I dare say a clever junior barrister could also argue the point.

There may be a risk of seeking double recovery, which will not be permitted.

Ultimately the measure of damages for breach of contract is the sum necessary to put the innocent party in the position he would have been in had the contract been performed - Hadley v Baxendale.
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Re: Rejection Of Services

Postby Peter and Luke » Tue Jan 10, 2017 1:12 pm

Thanks atticus.

Actually it is Robinson v Harman (1848) but let us not quibble:)

Granted there is always the double recovery principle.

The key words are the "charges paid...."

If those charges are refunded then under the double recovery principle this precludes ANY further damages claim for the same type of loss (using the same words) i.e. if I refund you £x you cannot then claim £x as damages. But you could claim damages of £y after the refund and argue that these are additional wasted charges not previously taken into account...

Perhaps I am just being overly-cautious here.

Thanks and regards

P&L
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Re: Rejection Of Services

Postby atticus » Tue Jan 10, 2017 1:20 pm

You may argue; but to succeed, you need to prove.
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Re: Rejection Of Services

Postby Peter and Luke » Tue Jan 10, 2017 1:47 pm

Indeed so.

Would you agree that the objective of "acceptance" is that the right to reject is lost? And further that the right to reject means money paid in advance (not a deposit) has to be refunded?

If so, then it follows (I think) that the rejection of services should lead to the same conclusion i.e. a similar refund. Otherwise, what purpose does rejection achieve?
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Re: Rejection Of Services

Postby atticus » Tue Jan 10, 2017 1:53 pm

In a B2B case I would always start with the contract.

Acceptance may take place before the goods can be inspected. And how does this apply to services, which is how this thread started?
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Re: Rejection Of Services

Postby Peter and Luke » Tue Jan 10, 2017 2:51 pm

There are no goods - I only used that as an example of acceptance>rejection>refund and whether the position in respect of services is the same.

Absent an express right to a refund I wondering if services are rejected whether by implication it could be argued that a refund for amounts paid in respect of those services is justifiable.
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Re: Rejection Of Services

Postby atticus » Tue Jan 10, 2017 2:57 pm

The argumen would be strong.
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Re: Rejection Of Services

Postby Peter and Luke » Tue Jan 10, 2017 3:09 pm

Yes, I agree.

And then afterwards, say in a month or six months, a claim in damages could be brought for further charges paid which the Buyer is alleging should have been recoverable as part of that refund but were missed inadvertently.

So the refund (if any) would have to be drafted as sole and exclusive remedy, to avoid that eventuality.

Thank you atticus.
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Re: Rejection Of Services

Postby atticus » Tue Jan 10, 2017 3:12 pm

Further damages would not be 'part of' a refund of sums paid to the provider of the services. That would be a claim for additional heads of loss.

It is common in B2B service contracts to see provisions limiting the liability of the service provider to repayment of sums paid under the contract.
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