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Caselaw - Merchantable Quality Caselaw - Merchantable Quality
Caselaw - Merchantable Quality Caselaw - Merchantable Quality
Stevenson v Rogers [1999] 1 All ER 613
Court of Appeal
The defendant was a fisherman. He sold his fishing boat to the claimant. The claimant
brought an action against the defendant based on breach of S.14 of the Sale of Goods Act as
the boat was not of satisfactory quality. S.14 only applies to the sale of goods sold in the
course of a business. The defendant argued that the sale of the boat was not in the course
of his business. His business was catching fish and selling them, he was not in the business
of buying and selling fishing boats.
Held: The sale was in the course of the business and therefore the defendant did have to
ensure the boat was of satisfactory quality.
Geddling v Marsh
o Mineral water was sold in bottles which were returnable to the manufacturer, who
retained ownership of them throughout
o A defective bottle burst and injured the plaintiff buyer
o Held: the bottle was supplied under the contract of sale and so S14(2) applied to the
bottle as well as the water
Priest v Last (1903)
This case is demonstrates the principle if the buyer told the seller the particular purpose
which he/she is purchasing the goods, then it is an implied condition that the goods are
reasonable to for the purpose. From this case, the buyer who bought a hot-water bottle
from the seller was a chemist. His wife uses the hot-water bottle and then after 5 times, the
bottle burst and the wife was scalded. Evidence shows that, the bottle was not fit for use as
a hot-water bottle. The buyer claimed for breach of section 14(3). The seller stated that, the
buyer had not made known the purpose for the hot-water bottle would be used. However,
this was rejected by the court. The court held that, the seller has entitled to recover the
expenses in the treatment of the buyer’s wife injuries. It is because the buyer relied on the
seller’s judgment and he had in fact used the hot-water bottle for the usual purpose.
Cehave v Bremer
This case involved contracts to sell citrus pulp pellets on GAFTA terms. Cl 7 of the contract
said that the shipment was to be "in good condition". The buyers were to use the product in
animal feedstuffs. On arrival in Rotterdam , there was major damage to 1260 metric tons and
minor damage to a further 2053 tons. The buyers rejected the shipment and claimed the return
of the price which had already been paid. The sellers refused to repay the money, and the
goods were sold to X for £33,000. The goods were then resold to the original buyers for the
same reduced price. The goods were then used for cattle food. The contract price was for
£100,000 and the market price at the time was about £86,000.
HELD Denning MR- To what extent can a party in breach call upon the other side to perform
their part? At one time it was thought to depend on the nature of the stipulation rather than
extent of breach or the consequences. Whilst the Sale of Goods Act 1893 used the language
of condition and warranty, it cannot have been intended to rule out the intermediate terms, the
cases upon which were legion.
The Act expressly preserved the rules of the common law which were inconsistent with the
Act. The Hong Kong shipping case drew our attention to this vast body of law, and showed
that if there is a breach which goes to the root of the contract, the other party may consider
they are discharged, but otherwise not. In my opinion, those cases apply to Sale of Goods. So,
1) is the provision a condition? 2) If the answer to that is "no", then we must look to the
extent of the breach.
We should also add anticipatory breach - if one party in advance indicates that they will not
perform in a vital matter, the other party may consider themselves discharged. This clause is
like one as to quality. If a small portion of the goods were not up to scratch then commercial
people would deal with it by an allowance off the price. Buyers cannot reject goods unless
the defect is serious and substantial.
On the facts, I do not think the buyer was entitled to reject the shipment. The goods cannot
have been so bad if they were actually used for their intended purpose.
James Elliot v Irish Asphalt
Irish Asphalt supplied infill to Elliott Construction for use in building works. When defects
appeared in the building, Elliott Construction brought proceedings against Irish Asphalt,
claiming that the infill caused the defects. During the proceedings, an issue arose as to
whose terms and conditions the parties had contracted on. Why did this matter? Irish
Asphalt’s terms and conditions contained an exemption clause which significantly limited its
liability for any loss arising from the supply of defective material. Its liability was limited to
the cost of replacing the defective material. Irish Asphalt said that its terms and conditions,
including the exemption clause, had been incorporated into the contract in at least one of a
number of ways: » by signature: delivery dockets signed by Elliott Construction’s site
foreman referred to its terms and conditions. » by actual notice: its terms and conditions
were set out on three credit notes provided to Elliott Construction. » by reasonable notice:
Elliott Construction’s site foreman had reasonable notice of its terms and conditions. » by a
consistent course of dealing between the parties. » by reference to trade custom. On each
ground, Irish Asphalt failed.
Mash and Murrell v Joseph Emmanuel
- Seller in Cyprus sold potatoes
- Although potatoes were sound when they left Cypurs, but had deteriorated by the time
the ship reached Liverpool.
Held: S had breached the merchantability requirement because the goods should have sen
loaded in 'such a state that they could endure the journey and be in a merchantable
condition on arrival'
the speed with which it might have been discovered, are irrelevant to the concept of
reasonable time in s 35 as drafted. That section seems to me to be directed solely to what is
a reasonable practical interval in commercial terms between a buyer receiving the goods
and his ability to send them back, taking into consideration from his point of view the nature
of the goods and their function, and from the point of view of the seller the commercial
desirability of being able to close his ledger reasonably soon after the transaction is
complete. The complexity of the intended function of the goods is clearly of prime
consideration here. What is a reasonable time in relation to a bicycle would hardly suffice
for a nuclear submarine.’
Clegg v Olle Anderson
The claimant agreed to purchase a yacht from the defendants with a keel to the
manufacturer’s standard specifications. The keel actually installed was rather heavier. After
correspondence, the claimant rejected the yacht and required the return of the the
purchase price. The respondent said the exercise of a right of rejection was unreasonable,
given that the manufacturer had offered to correct the defect.
Held: Though a repair had been undertaken the right to reject had not been lost. The buyer
had maintained his demand for information about the defect. Whether or not a buyer has
had a reasonable time to inspect the goods is only one of the questions to be answered in
ascertaining whether there has been acceptance in accordance with subsection (4).
Subsection (6)(a) shows that time taken merely in requesting or agreeing to repairs for
carrying them out, is not to be counted. The purchasers’ failure to mitigate their loss
became irrelevant when the right of rejection was used. There is no requirement that the
exercise of the right of rejection should be subject to any condition of reasonableness.
Thornett v Beers & Son
In Thornett v Beers & Son , B went to T’s warehouse to buy some glue. The glue was stored
in barrels and every facility was given to B for its inspection. B did not have any of the
barrels opened, but only looked at the outside. He then purchase the glue but later found
that the glue was defective. The court held that B could not complain of the defect or
breach of merchantable quality because he had all the time and opportunity to inspect and
test the glue but had chosen not to do so. In such a case, the buyer cannot later complain
that the goods were bad and not what he wanted.
Wren v Holt
In the case of Wren v Holt, a customer went to a restaurant and ordered some beer to drink.
The beer given to him had been contaminated with arsenic and because of this the
customer fell ill. He sued the owner of the restaurant for having supplied goods (beer) that
was not ‘fit for the purpose’ and was also ‘not merchantable’. The court agreed and
awarded him damages
Ashington Piggeries v Christopher Hill
The facts of the case as follows whereby U who seems to be an expert in mink nutrition
approached the defendants on the claimants behalf asking them to compound a food which
was expressly made known that it was for mink which was to be made up with U’s formula.
It was later found, after heavy losses of mink, that the hearing meal used by the defendants
contained highly toxic to the mink. This was unknown to the parties. The defendants had
customary supplied food for animals but not for mink before. The herring meal had been
taken from a third party, who had stipulated that the food were to be taken” with all faults
and defects, damaged or inferior, if any, to be arranged mutually or by arbitration”.
The Queen’s Bench Division held inter alia that the mink food in its contaminated form did
not comply with the description that the direct, foreseeable and natural consequences of
the breach of contract was the death of the mink. Therefore, the claimant will be liable to
the defendant for damages. The main question of the contamination changing the
description of the product shows that the quantity and quality of the contaminating
substance could be relevant considerations. The sellers of the product to the claimant could
be held liable as they were aware that the product was substantially used by mink farmers
and had not delivered an ingredient of “fair average quality” as contracted, was in breach of
their contract.They are liable to the claimants for substantial damage. Milmo LJ added that
the wording Section 14(1) of the Sale of Goods Act 1893 means “definite” and not the
opposite of “general” and that the use of a substance for inclusion in animal food
compounds is a “particular purpose” within Section 14(1) of the Sale of Goods Act 1893. He
also went on to say that where animal foodstuff is sold as such without reservation as to the
species of animal to which it is to be fed then the vendor impliedly warrants and that it will
be fit for any reasonable purpose to which it might be put. [3]
The Court of Appeal held that the herring meal which was contaminated can still be
described as a herring meal. There was no implied obligation to supply a feeding stuff which
was suitable for mink as distinct from a feeding stuff compounded to a specified formula.
The feeding stuff did “correspond with the description” under Section 13 of the Sale of Good
Act 1893. The defendants did not rely on the skill and judgement of the claimants as to the
suitability for mink of the herring meal. The compounded feeding stuff for the mink was not
of a description which was in the course of the claimants business supply. This means that
although the feeding stuff was bought by description but it was not bought from a seller
who deals with goods of that description. Therefore, there was no condition of
merchantable quality could be implied in such a contract under Section 14(2) of the Sale of
Good Act 1893. The claimants succeed in their claim from the Court of Appeal. [4]
The appeal went to the House of Lords. Lord Diplock’s dissenting judgement where his
lordship states that the word “description” by which unascertained goods are sold confined
to those words in the contract which were intended by the parties to identify the kind of
goods that were meant to be supplied. The test whether the buyer could fairly and
reasonably reject the physical goods that were offered to him on the ground that the failure
to correspond with that part of what was said about them in the contract makes them
goods of a different kind from those he had agreed to buy. The key to Section 13 of the Sale
of Goods Act 1893 is identification.
Griffiths v Peter Conway Ltd
Facts: P has abnormally sensitive skin. She bought a coat without telling the salesman her
condition. She subsequently contracted dermatitis from wearing the coat.
Held: P had failed to disclose her condition. Thus unable to recover for breach of fitness for
purpose because there was nothing in the cloth that would have affected the skin of a
normal person.
Slater v Finning [1996] 3 All ER 398, HL(S)
A camshaft was supplied by the defendant for use in the claimant’s fishing boat, which failed
because of excessive torsion resistance, caused by some unknown external factor. The
claimant sued under s.14(3) of the Sale of Goods Act 1979. The claimant’s argued that since
they had specified that the camshafts were to be installed in that particular vessel, the
defendants were obliged to supply goods fit for use in that vessel with all its peculiarities.
The House of Lords agreed with the Court of Session in dismissing the claim: they said since
the defendant had not been made aware of the vessel’s peculiarities, they could not
exercise the necessary care and skill to deal with them. There was no breach of the implied
condition of fitness for purpose.