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Fine Technical Institute (FTI) wants to increase its market share in the provision of online postsecondary learning services to distance learners. With a view to doing so, FTI decides to upgrade its learning management system. During the sales presentation, Masters of Education Inc.’s (MEI) Sales Manager, Dwayne Carmichael, boasts that the learning system will easily support double the number of students currently enrolled at FTI (4500). FTI purchases the new learning management system from MEI based, in part on that presentation about what its learning management system can do, and in part, on the ambitions of senior management for the future of the institute. FTI intends to significantly increase enrollment over the next three years and projects that it will, indeed, double the number of students currently enrolled in distance education courses within two years of implementing MEI’s new system. FTI also implements an aggressive and expensive marketing campaign, advertising itself as the cutting edge institution for online learning. The new learning management system is implemented over the winter term. During implementation of the new learning management system, there are frequent problems with MEI’s servers breaking down. MEI assures FTI that these problems are temporary, and are part of the implementation process. In the spring term, enrollment numbers for distance learners’ increase by 25% and much of that increase is attributed to the advertising campaign. However, the problems with the MEI learning management system continue. There are frequent breakdowns in service, and during the mid-term exam week, due to heavy use, the servers fail completely. As a result, distance learners cannot write their exams, and regular students cannot get their grades online. FTI receives a lot of negative coverage in the press. Its enrollment numbers drop by 35% for a period of at least a year. The next year the enrollment numbers have improved, but FTI’s enrollment is still only at 3750 students. |
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i) Applying the relevant and correct principle(s) of law discuss FTI’s legal options, and the remedies it may seek. 6 marks Under the UCC, the buyer has several rights and remedies when the seller provides non-conforming goods. In a contract for the sale of goods, there is implied condition that the goods correspond to the description given by the buyer, and that they will perform sufficiently. A contract may be breached in two ways: by incomplete performance, or improper performance. During the sales presentation, the MEI sales manager makes a misrepresentation by claiming that the learning system can support double the number of students enrolled. The description played a role in FTI’s intention to agree. FTI may pursue legal actions against MEI on the following basis. The description provided by MEI formed a part of the contract, that was made either negligently. FTI will need to establish a duty of care, breach of duty, causation, and damage. MEI owed FTI a duty of care to its clients, to act with reasonable care to provide as much accurate information as possible. MEI breached the duty of care and caused damage to FTI’s reputation. The remedy would be a rescission or payment of damages. The court may order MEI to cover for the damages caused by its negligence. Under remoteness of loss, FTI may recover damages for the loss suffered by the non-conforming goods, that aims to put it in the position it would have been in the learning system worked as described. According to Hadley v Baxendale (1854) Exch. 341, this remedy applies to any loss that flows naturally from a breach and all loss that was in contemplation of FTI and MEI at the time of making the contract.
Bibliography Factors Affecting the Contractual Relationship. (PowerPoint slide). Slide no. 4-6 End of Contractual Relationship – Breach and Remedies. (PowerPoint slide). Slide no. 24-29. Samantha Cotton, PLC (1999). Remedies for breach of contract. Retrieved From: https://uk.practicallaw.thomsonreuters.com/7-101-0603?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1 Marked as spam
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