Clear Laundry Ltd company question 2 assignment

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Clear Laundry Ltd company question 2 assignment

Question 2

Alex works for Clear Laundry Ltd as sales staff. She visits the headquarters of Appliances for Everyone (AfE) Ltd, a company that sells appliances to members of the public. Alex informs AfE Ltd that Clear Laundry Ltd would be willing to sell to AfE Ltd washing machines for a price of £150 per item wholesale if AfE Ltd was willing to order at least 2000 units. As AfE Ltd has 400 stores, it ordered 10 units per store (total 4000 units). They negotiated a reduced price of £120 per unit wholesale.

Secondly, Clear Laundry Ltd does not manufacture its own products as it is more cost-effective to allow a third party to manufacture them. Clear Laundry Ltd ordered 4000 units from Electrowash Supplies Ltd. Delivery in instalments was to commence on 1 May 2019 to AfE Ltd.

On 1 May 2019, delivery of the orders commenced directly to AfE Ltd, with the goods bearing the brand Clear Laundry. AfE Ltd was please with the sales of the washing machines. There was a high customer demand for this product, and on 1 August 2019, AfE Ltd ordered another 4000 units to be delivered on 1 December 2019.

Unfortunately, the drain pumps used in these washing machines were faulty and also caused the washing machine to malfunction. This meant that the washing machines were often leaking after a few uses. AfE Ltd issued a product recall of all units sold by 1 September 2019. AfE Ltd refunded all customers for their purchase costs plus additional amounts for time, travelling and inconvenience.  Additionally, AfE Ltd also cancelled the order for the additional 4000 units placed on 1 August 2019.

Also, AfE Ltd wrote a letter to Clear Laundry Ltd demanding compensation not only for the amounts that it had paid to its customers but also for the damage to its reputation. Clear Laundry Ltd notified Electrowash Supplies Ltd that it intended to sue the company for any loss that it would have to pay AfE Ltd. The contract between AfE Ltd and Clear Laundry Ltd made no special mention of the quality of the goods supplied.

Advise Clear Laundry Ltd concerning its position towards AfE Ltd and also its possible claims against Electrowash Supplies Ltd (Approx. 1500 words)

Total mark (Q1 50% + Q2 50%) 100%


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