Westcoast Transmission v. Cullen â BREACH OF CONTRACT ...
Westcoast Transmission v. Cullen – BREACH OF CONTRACT & DAMAGES Facts: Failure of two generators supplied by third party Kato Engineering International, Inc., to the defendant Cullen Detroit Diesel Allison Ltd. for incorporation with motors provided by third party Cooper Energy Services Ltd. into natural-gas driven power units (gensets) for use as an electrical power source for a natural gas processing plant being built by plaintiff, Westcoast Transmission Company Limited. Cullen settled claim against Westcoast, third party claim by Cullen against suppliers. Breaches in warranties of Issues: 1. What were the final decisions of the judge? 3. Should the judge allow a claim for reimbursement of costs incurred by Westcoast in renting portable power units when ‘gensets’ were under repair? Decision: 1. Units failed as a result of faulty manufacture by third party Kato. Kato liable for defective goods, but not liable for consequential loss. 2. The judge shouldn’t allow claim for reimbursement of costs incurred by Westcoast Reasons: 1. Breaches of the warranties of reasonable fitness for the purpose and of merchantable quality implied by s. 18a and b of the Sale of Goods Act. Judge awarded as damages costs incurred in repairing 2. These rental costs couldn’t be said to have been foreseeable as arising naturally from breach of contract, nor could they reasonably be supposed to have been in contemplation by Kato at time that contract was made Liability for such ‘consequential’ damages excluded by a term of Kato’s printed contract of sale Legal Principles: SGA S. 18 – implied CONDITION of merchantability & fitness of purpose (defective generators) •
Therefore judge awarded damage costs incurred in repairing
SGA S. 20 – exclusion clauses: K is NOT LIABLE for consequential damages •
NEW good sold to BUSINESS
•
Losses incurred by Westcoast Transmission were NOT FORESEEABLE (consequential) to Kato at the time of K with Cullen
WESTCOAST TRANSMISSION V. CULLEN Issue: Is Cullen liable to Westcoast for consequential damages, having to rent replacement power generator? SGA S. 18 – implied CONDITION of merchantability & fitness of purpose (defective generators) SGA S. 20 – exclusion clauses: K is NOT LIABLE for consequential damages (New goods sold to business)
Since units failed because of faulty manufacture by third party Kato (breach of SGA s. 18), judge awarded damage costs incurred in repairing machines. BUT losses incurred by Westcoast Transmission were NOT FORESEEABLE (consequential) to Kato at the time of K with Cullen. Kato liable for defective goods, but not liable for consequential loss. The judge didn’t allow claim for reimbursement of costs incurred by Westcoast.
Therefore judge awarded damage costs incurred in repairing
SGA S. 20 – exclusion clauses: K is NOT LIABLE for consequential damages •
NEW good sold to BUSINESS
•
Losses incurred by Westcoast Transmission were NOT FORESEEABLE (consequential) to Kato at the time of K with Cullen
WESTCOAST TRANSMISSION V. CULLEN Issue: Is Cullen liable to Westcoast for consequential damages, having to rent replacement power generator? SGA S. 18 – implied CONDITION of merchantability & fitness of purpose (defective generators) SGA S. 20 – exclusion clauses: K is NOT LIABLE for consequential damages (New goods sold to business)
Since units failed because of faulty manufacture by third party Kato (breach of SGA s. 18), judge awarded damage costs incurred in repairing machines. BUT losses incurred by Westcoast Transmission were NOT FORESEEABLE (consequential) to Kato at the time of K with Cullen. Kato liable for defective goods, but not liable for consequential loss. The judge didn’t allow claim for reimbursement of costs incurred by Westcoast.
