Commercial Law

| April 18, 2014

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Costly Coffee Ltd is a small chain of caf?s specialising in a range of interesting and unusual
coffees. These are sold as ?Costly Coffee DeLuxe?. It also sells well-known types of coffee,
such as Americanos, Espressos, Cappuccinos and Lattes, as its ?Costly Coffee Regular?
range. Costly Coffee has four outlets in Hull and has been operating successfully in the city
for a few years. In response to the recent increase in regeneration activity in the city centre,
Costly Coffee has decided to refurbish its caf? on Jameson Street. Costly Coffee has always
used TurboSteam coffee-makers in its caf?s, which have worked well for the ?Regular? range
of drinks. According to some of Costly Coffee?s frequent customers, the TurboSteam
machines are less successful in bringing out the full flavour of ?DeLuxe? coffees. Alan, Costly
Coffee?s manager, has therefore been looking for a coffee-maker which would be more
suitable for its ?DeLuxe? coffees. He has tested several top-line TurboSteam machines, but
decided that none of them was suitable for the ?DeLuxe? range. In early September, Alan
contacted a number of other manufacturers of coffee-makers, and was recently visited by
Celia, the owner of Moccacia Ltd, a small manufacturer specialising in coffee-makers for
unusual and delicate types of coffee. Celia demonstrated the ?Moccacia 2013? coffee-maker,
which seemed ideal for the Costly Coffee ?DeLuxe? range. Alan was keen to acquire one for
the refurbished Costly Coffee caf? and asked Celia whether the machine would cope with
frequent use in a busy city-centre caf?. She said that the Moccacia coffee-makers had an
excellent reliability record and that there was no reason why the machine should not be
suitable for the caf?. Alan ordered a ?Moccacia 2013? machine for ?4,500, to be delivered on
1 October 2013, a week before the scheduled re-opening of Costly Coffee?s Jameson Street
Alan also wanted to acquire new crockery for Costly Coffee. He contacted Grindcrock, a
manufacturer of high-quality crockery, and ordered 400 mugs in Grindcrock?s unique
?Humber? design. These were to be collected on 5 October. Grindcrock completed the
production of the required number of mugs, and placed them into boxes marked ?Costly
Coffee order?, ready for delivery, and informed Alan about this on 3 October. Alan called at
Grindcrock?s premises that evening and asked if he could leave the boxes there until the 5th
because there was nowhere to store them before then. Grindcrock agreed.
On 4 October, Grindcrock received an urgent order from Noracaf (a regular customer) for
500 mugs, required the next day. Grindcrock could only make 100 mugs a day, so decided
to use the 400 originally intended for Costly Coffee and make a further 100 by the following
day. When Alan arrived on 5 October, he was told that the mugs had been given to Noracaf
instead, but that there would be 400 mugs ready in time for 8 October. Unfortunately, the
production plant developed a major fault on 6 October and Grindcrock was unable to
continue production for a fortnight. Alan contacted Noracaf to demand that they hand over
400 mugs, but they refused.
The re-opening on 8 October 2013 was a huge success. The ?DeLuxe? range of coffees was
extremely popular and many customers commented that the flavour of the coffee was much
better than previously. However, by 10 October, problems began to occur with the the
Moccacia-2013 machine. At first, there was a problem with the steam-pressure, which
resulted in coffee being rather weak and low in flavour. Celia immediately sent out
Moccacia?s chief engineer, who managed to fix the problem and the machine worked without
problem for a further week until 18 October. Then, the same problem re-occurred. Moreover,
on 16 October, Rita, one of Costly Coffee?s employees, was badly scalded on her hand
when the mechanism used for producing hot steam to heat up milk developed a small leak and steam escaped. Moccacia?s engineer took the machine away for repairs. By then, Alan
was beginning to get concerned about the suitability of the Moccacia-2013, having read a review of the Moccacia-
2013 in a trade magazine. Moreover, it has transpired that the machine cannot cope with
very hard water, which is the type of water supplied in Oxford. He therefore contacted Moccacia to reject the machine on 25 October. However, the machine was repaired that day, and was ready to be returned to Costly Coffee. Celia immediately telephoned Alan to discuss his concerns and insisted that he take back the machine. Alan insisted that he did not want the machine and demanded a full refund. Celia refused.
Advise Costly Coffee on both issues.
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Category: Commercial Law

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