re write it in different words Statement of the Problem The problem began when t
ID: 2545749 • Letter: R
Question
re write it in different words
Statement of the Problem The problem began when the supplier brought a cooling device for the owner's committee approval. The representatives from the owner believed that the cooling device is an ordinary Frigidaire and that the contract sum must be reduced by S 29,600. While on the other hand, the supplier argued that the cooling device is a special industrial Frigidaire bought in Germany from a manufacturer of specialty cooling equipment and they are against the reduction of the item contract price. The problem is basically due to misunderstanding of the contract type by the owner's engineers. Even though the supplier provided the cooling device that functions as per the client requirements still the owner believed the contractor had breached the contractby providing the cooling device of lower cost.Explanation / Answer
Solution: The case study primarily concentrates on the essentials of terms and conditions in the execution of the contract as well as avoidance of misunderstanding if the terms and conditions are clear and crystal. In this case study, there is a contract named " International turnkey project" between two parties and there was a misunderstanding. Some of the brief details of the contract are given below:-
(1) Two parties are involved i.e. An Owner and the supplier
(3) The contract is executed on the basis of the following conditions:-
Condition 1: The material will be supplied by the contractor as per the specifications of the owner.
Condition 2: The material or device supplied will be examined and approved by the owner's committee of experts before giving final acceptance.
(4) The basic premise of the case study is to ensure the quality of the material which can be examined through physical inspection and acceptance.
(5) There is a misunderstanding in the case with regard to the quality of the cooling device which is supplied by the contractor to the owner's committee. According to the supplier/contractor, the cooling device which is supplied ensure good quality i.e. special industrial frigidaire but as per the perception and observation of the owner's committee, the cooling device quality is not up to the mark i.e. ordinary frigidaire and on that grounds the committee thinks that due to quality differentiation the price of the contract should be reduced by $29600 which is not acceptable to the supplier.
(6) To avoid the misunderstanding the main essence to solve the case depends on the specifications demanded by the owner and it is clearly mentioned that despite the degree of the quality of the cooling device. The cooling device is meeting the specifications and requirements of the client. On the contrary, the owner's committee is not satisfied with the quality and wants to reduce the contract price in proportion to the decrease in quality according to their expectations.
The case highlights the importance and relevance of the content of terms and conditions of the contract between the two parties. If the terms and conditions are not clear and crystal then it always leads to dispute and misunderstandings and it is always detrimental to both the parties. Some of the interesting facts about the case,
Fact 1: The supplier has upper hand in winning the case on grounds of the cooling device is meeting the basic requirements as desired by the client and the quality content is not mentioned in the case or terms and conditions.
Fact 2: The owner has upper hand in winning the case on grounds of the other condition i.e. the consent of the owner's committee which is taken on the basis of the interest of the stakeholders.
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