Insured: Software Developer & Consultancy
Scenario: The Insured entered into a contract for the design and development and supply of software. Two years later the software was incomplete and contained numerous errors.
Problem: The third party rejected the software and dismissed the insured. The third party abandoned the software altogether and engaged another party to develop a fresh solution.
Outcome: Proceedings were brought for breach of contract, claiming repayment of the contract price ($600,000) and damages for wasted expenditure.
The insured relied on a clause limiting its liability to $25,000 in respect of each contract, the third party claimed the terms were unreasonable and therefore unenforceable.
Breach of Trade Practices Act Section 52
Breach of the Fair Trading Act Section II
Breach of Contract
Claim: $1,400,000
Paperless Comment: When entering in contract always ask your legal adviser to review contract documents and explain all possible thing that can happen if case you underperform.