Question
Custom Conveyor Ltd. was a manufacturer of con- veyor systems for use in warehouses and shipping facilities. Most systems were custom designed to cus- tomer
Custom Conveyor Ltd. was a manufacturer of con- veyor systems for use in warehouses and shipping facilities. Most systems were custom designed to cus- tomer specifications, but used standard components or units manufactured by the company. Conveyor systems were sold locally by authorized dealers, who assisted the customer in the design of the system for the customer's needs.
Custom Conveyor Ltd. advertising brochures stated:
"The design of the conveyor system is a team effort between us and our local dealer to ensure that the conveyor system will perform efficiently and trouble-free in your facility."
Max Warehouse Ltd. contacted Ace Conveyor Installations Ltd., a local dealer for Custom Conveyor Ltd. systems with a view to replacing its existing conveyor system with a new system. Ace Conveyor examined the warehouse facility, and designed a new conveyor system for the warehouse. Ace Conveyor advised the president of Max Warehouse Ltd. that the proposed system would be 50% more efficient than its existing system and would be trouble-free. The cost was $175,000, and included installation.
Max Warehouse Ltd. signed an Ace Conveyor Ltd. purchase order form for the conveyor system which contained a banner across the top of the order form that read: "We work for you to ensure your success." The conveyor system was eventually delivered and installed in the warehouse by Ace Conveyor Ltd., but failed to work in a satisfactory manner. Break-downs were frequent, and the system required constant ser- vicing to operate as was intended. Discuss the nature of the relationships established by the parties. If Max Warehouse Ltd. should decide to take legal action, speculate as to the arguments of the parties, and the possible outcome of the case.
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