Galaxy Events Ltd (“Galaxy”) recently purchased a disused warehouse on the outskirts of Cottingham, with the intention of turning it into a nightclub and live music venue. Various issues have arisen in the early stages of the venture.
- On 1 May 2019, Galaxy entered into a contract with Dino’s Builders Ltd (“Dino’s”) to carry out most of the fitting-out work for the new venue, with a contract price of £1.2 Under the terms of the contract the fitting-out was due to be completed by 1 February 2020 and if Dino’s were late in completing the work they were due to pay a daily charge of £5,000 per day until the work was complete (you can assume that this clause is enforceable). Dino’s subcontracted the aspects of the work relating to plumbing to Rapid Plumbers Ltd (“Rapid”) with work to commence on 1 December
2019 and completion due by 28 January 2020. The contract price was £40,000. On 20 December 2019 Rapid got in touch with Dino’s to explain that due to an unusual level of staff sickness in the first half of December very little progress had been made on the plumbing work and they would not be able to complete the work by 28 January 2020 unless they paid around 10 of their workers double-time to work over the Christmas and New Year period. The only way they could do this was to increase the contract price from £40,000 to £60,000. When Dino’s explained they felt this was unreasonable and that the proposed increase of £20,000 was in any case excessive to cover the overtime, Rapid responded: “if you want the job done on time you will agree to the extra £20,000”. Having already paid half of the £40,000 sum due under the original contract to Rapid and knowing that the whole fit-out needed to be completed by 1 February 2020 to avoid late payment charges becoming payable to Galaxy under the main contract, Dino’s reluctantly agreed to increase the price to £60,000. Rapid proceeded to complete the plumbing work by 25 January 2020, but Dino’s then refused to pay the final £20,000 that they had previously agreed to pay. Rapid are now demanding immediate payment of the additional £20,000.
Advise Dino’s if they are legally obliged to pay the additional £20,000 being demanded by Rapid, explaining the relevant law.
- In the months before the new venue opened, Galaxy started booking live music acts to perform in the first few months and promoting the regular themed weekly clubbing nights they planned to hold at the With a view to managing ticket sales, Galaxy were approached by Sell Out Ltd (“Sell Out”), the owners of a ticket operating software system and phone-app known as “Hot Ticket”. Sell Out’s representative, Joe, explained that Sell Out worked with the operators of “major sporting and live music venues across the UK”, that the Hot Ticket system could handle “very big levels of web traffic” and that the app used a “secure, major international payment handling system” to manage online payments. Impressed by this sales pitch, Galaxy entered into a one- year licence at a cost of £25,000 to use the Hot Ticket system, with the licence fee being paid up-front. Within a short time of tickets for events going on sale, it became evident that the system had significant problems. When tickets for the first few live music events went on sale, the system crashed within minutes and in subsequent days many customers got in touch to say that they had had trouble downloading the phone app and booking tickets. Other users complained of the payment system taking multiple payments from their debit or credit cards. Galaxy were very worried about how the problems with Hot Ticket were affecting ticket sales as well as the damage that this was doing to the venue’s reputation before it had even opened so they stopped using Hot Ticket and started using a completely different provider instead. It transpires that the Hot Ticket system is less than six months old and that the only sporting and live music venues that actually use the system are an English non-league football club with average crowds of 200 and two small live music venues in the Manchester area. Contrary to using a “secure, major international payment handling system”, Hot Ticket uses a fairly obscure payment system, with questionable security. Despite Galaxy having switched to a completely different system, Sell Out are refusing to return the
£25,000 fee that Galaxy paid up front, taking the view that Galaxy are still legally bound.
Advise Galaxy on their contractual position with Sell Out and what remedy or remedies may be available to them.
- For the sound system for the new venue, Galaxy approached a number of potential providers but ultimately decided to give the job to Crystal Clear Ltd (“Crystal”) as Crystal were offering to provide and install the sound system for considerably less than any other company that Galaxy spoke Crystal emailed Galaxy on 19 October 2019 offering to do the job for £40,000 subject to their standard terms of business, which were contained in a 6-page PDF document attached to the email. Galaxy responded to Crystal’s email on 21 October 2019 accepting the offer. Installation of the sound system was completed on 20 January 2020.
Although initial testing of the sound system did not reveal any problems, during the first week of events there were some issues with an unpleasant screeching sound from the sound system. Then two weeks later, during rehearsals for the first big live music event
– a performance by a renowned band known as “Third Millennium” – the sound system broke down and the event had to be cancelled at the last minute. This was most unfortunate. Attracting “Third Millennium” to the venue had been a real coup, as the band would not normally play at a venue as small and unestablished as this. They had only agreed to do so because their drummer originally came from the local area.
£15,000 worth of tickets had been sold for the concert, which Galaxy had to refund to customers. Galaxy were also contractually obliged to pay a £10,000 fee to “Third Millennium” for the event, which they were not able to avoid due to the late cancellation.
It transpired that one of the speakers provided by Crystal was faulty and the breakdown in the whole system had been caused by a power-surge that resulted from wiring that had been defectively installed by Crystal.
Galaxy claim that Crystal should pay for the cost of a replacement speaker (£2,000), the cost of fixing the defective wiring (£3,000) as well as covering the losses incurred by Galaxy as a result of having to cancel the event featuring “Third Millennium.” Crystal refuse and point to the following term in their standard terms of business: “any defects in the work carried out by us must be notified to us within 25 days of installation work being completed, failing which the customer shall be deemed to be completely satisfied. Under no circumstances shall the company (Crystal) be liable for any losses resulting from the carrying out of the installation work beyond the costs of remedying any defects with the work itself.” Crystal add with regard to the costs of cancelling the concert that “in any case, if you choose to hire expensive bands, that has nothing to do with us.”
Advise Galaxy on (i) whether Galaxy can pursue Crystal in respect of the losses Galaxy have incurred as a result of the defective speaker and faulty installation work and (ii) the principles that would apply in assessing what damages could be claimed from Crystal.
Other important information:
The Problem Question is worth 80% of your mark in this module and the word limit is 4,000 words.
Useful resources:
Grading descriptors for problem questions: https://canvas.hull.ac.uk/courses/51080/files/1463135?module_item_id=182318
Referencing and substantiation:
When referring to legal sources and academic material, please remember to reference as you would do for any other piece of written work. Please pay particular attention to the referencing and avoiding plagiarism guides on Canvas (https://canvas.hull.ac.uk/courses/51080/pages/law-school-guidance-on-the-development- and-submission-of-assignments-and-essays?module_item_id=248649).
