Qantas Airlines Ltd signs a contract with Airbus Corporation Ltd for Airbus to build a new aeroplane. On average, Qantas would make $ 800 000 profit per day from using such an aircraft.
The contract has 545 terms. Term 56 says that the plane must be able to travel 10 000 km at 800 km per hour. Term 455 says that the aircraft must have an in-flight video system capable of showing 36 channels of entertainment to passengers.
After the contract is signed, Airbus sends to Qantas a package containing a large number of documents, including the contract itself and examples of the colour scheme that will be used. In the middle of these documents there is also a new document headed ‘Limitation of Liability’, the key part of which states as follows:
The liability of Airbus Corporation Ltd for breach of contract is capped at $ 300 000.
When the plane is delivered, its engines are as required, but, due to confusion at the factory, the wrong software has been loaded into the entertainment system, which has only 34 channels. It would take a week to re-configure the software. Advise Qantas Airlines fully as to what its legal position is, citing relevant case law.