We acted for a company that designs, manufactures and supplies electrical equipment and components around the world, in connection with the alleged supply of a defective product to an oil rig.
Our client entered into a contract with another company (“the Buyer”), under which the Buyer ordered a large piece of expensive industrial electrical equipment. Our client had sourced the equipment from a US supplier.
The equipment was supplied to the Buyer for installation and use on an oil rig. Shortly after delivery to the Buyer, the equipment suffered a catastrophic failure causing damage to the oil rig. The Buyer instructed solicitors who wrote a letter before action to our client, demanding a refund of the purchase price and setting out a claim for damages running to hundreds of thousands of pounds.
The matter was handled by Douglas Skilton, who provided a full and coherent response to the letter of claim, rejecting the claim on technical grounds (including liability and causation), and refuting the factual allegations and assumptions made by the Buyer.
We made reference to and placed reliance on, the client’s standard terms and conditions of sale, which restricted the Buyer’s rights and placed certain exclusions and limitations on the client’s liability.
Arguments challenging the quantum of the threatened claim were also presented and requests for disclosure of relevant documents were made.
In addition, a number of tactical devices were deployed in our letter to deter the Buyer from pursuing its claim. This included a threat that we would make an immediate application to the court for security for costs, which would require the Buyer to pay a large sum of money into court to protect our client against the risk that it would win at trial and be awarded its costs, but then not be able to enforce a costs order against the Buyer because they were based out of the jurisdiction of the English courts.
The Buyer’s solicitors did not respond to our letter; instead, the Buyer made a direct approach to our client, seeking a commercial settlement of the dispute.
After further input from Douglas Skilton, who drafted correspondence for the client to send putting forward a proposal for settlement, the threatened claim was withdrawn and a compromise was reached on terms which were unexpectedly favourable to the client.