(1) Smiths Interconnect Group Ltd (2) Kaelus Communications Equipment (Shanghai) Co Ltd v Quintel Technology Ltd (2018)
The claimants were entitled to summary judgment on invoices for goods supplied where the defendant had failed to show any realistic prospect of defending the claim on the basis that the goods supplied were deficient in quality, thereby giving rise to a cross-claim.
The claimants applied for summary judgment on their claim for $2.3 million in respect of antenna products supplied by the second claimant to the defendant.
The parties had entered into a manufacturing agreement and a supply agreement which were due to terminate in September and December 2016 respectively, pursuant to termination notices which had been given by the second claimant. To wind down the supply arrangements between the parties, they had entered into a further agreement in June 2016. The second claimant had assigned its rights under the latter agreement to the first claimant, which was formerly its sole shareholder. The defendant said that the products supplied after June 2016 had suffered a high rate of failure giving rise to losses which the defendant was entitled to set off against the debt claimed on the relevant invoices. The defendant relied on warranties as to quality contained in the supply agreement and the manufacturing agreement. The claimants relied on the June 2016 agreement which provided that products sold from May 2016 onwards would be sold on an "as is and where is" basis with no warranty responsibility on the second claimant and with a corresponding reduction in price.
The claimant was entitled to summary judgment for the sums outstanding on the invoices. It was clear that the 2016 agreement involved a material rearrangement of the bargain between the parties in exchange for a reduction in the price. It was clear from the "as is, where is" wording in the 2016 agreement that, thereafter, the defendant took the items as they were, whether or not they were deficient in quality. Its putative cross-claim related to goods supplied after that date. There was nothing in the context to indicate that the words were intended to have any other meaning or that their impact was meant to be cut down. The parties could not have intended the warranty provisions in the other agreements to continue. They must have intended to replace them. In the circumstances the defendant did not have a cross-claim with a realistic prospect of success. It was not necessary to consider whether such a cross-claim could have been set off against the claimants' claim on the invoices.
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20 Dec 2018
Queen's Bench Division (Comm)
Robin Knowles J
LTL 21/12/2018 EXTEMPORE :  12 WLUK 435