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14 Jan

CT 2.4E IMPLIED TERMS (FITNESS FOR PURPOSE AND MERCHANTABLE QUALITY)

FITNESS FOR PURPOSE AND MERCHANTABLE QUALITY.

FITNESS FOR PURPOSE.

Section 14 starts with the caveat emptor rule (i.e. buyer beware) and then puts the exception thus: Except

Where the buyer, showing reliance on the seller’s skill and judgment, tells him the purpose for which the goods are required… and the description of the goods is that which is in the course of the seller’s business to supply (Except patented or trademarked goods).

Simply note that, for the condition of fitness for purpose to avail the buyer, the following requirements must be met:

  • The buyer must have indicated the purpose for which the goods are needed.
  • He must have relied on the seller’s skill and judgment.
  • The goods must be of a description which is in the course of the seller’s business to supply.

The requirements shall be discussed below.

  1. Indication of purpose:

The buyer must make known to the seller, the purpose for which the goods are required. ***Except there is only one obvious use. In Priest V. Last the court held that a hot water bottle is fit for one purpose, keeping hot water. Also in Chaproniere V Mason, the court held that where a person buys food it presumed that it shall be reasonably fit for eating.

*** where the goods can be used for different purposes, the buyer should indicate the particular purpose intended.

In Adeola V. Henry Stephens; the plaintiff went bought flour. He intended to use it to bake cake but did not inform the seller. He later discovered that the flour can only be used to bake biscuit. The court held that the seller was NOT in breach- Similar position was taken in D.I.C industries V. Jimpat Nigeria Ltd.

Also, in Khalil V Mastronikolis, the court held that the buyer should have told the seller that he needed the oil for internal combustion engines.

*** Peculiarities of the buyer must be disclosed to the seller.

In Griffiths V. Peter Conway Ltd, a woman bought a coat and got dermatitis from we3aring the coat because her skin was sensitive to the material. She sued for damages, but it was held that such condition was peculiar to her and a normal person could wear the coat. She thus had the obligation to communicate the peculiar circumstances to the seller. Also, Heil V Hedges.

  1. Reliance on the seller’s skill and judgement.

Where there has been no reliance, or it is unreasonable to construe reliance, there is no liability. The reliance can be partial it does not need to be full. In Cammell Laird and Co V Manganese Bronze and Brass Co Ltd, it was held that construing reliance is a question of fact and the circumstances of the case.

In Ijeoma V Mid-Motors ltd, the plaintiff bought a mini bus from the defendant for carrying passengers. The bus could not complete a single trip without failing. The court held that the plaintiff did not communicate the purpose to the defendant in a way to show reliance. In my opinion, reliance ought to have been inferred.

Lord Wright in Grant V. Australian Knitting Co, held that the reliance will seldom be express and can arise from the circumstances of the case. Partial reliance can suffice.

In Ashington Piggeries V Christopher Hill, the court held that reliance can be construed where the seller is given specifications but left with discretion as to skill and judgment to exercise. However, where it can be shown that there was no reliance or it is unreasonable to rely, then there is no liability. Similar position was maintained by Lord Reid in Henry Kendall and Sons V William Lillico.

  1. The goods must be of a description which is in the course of the seller’s business to supply. Meaning that the seller must deal in goods of that description.

“Description” in this sense means “kind”. Thus, it does not matter that the seller is dealing with the goods for the first time so long as it is of the kind which he deals in. For example electronics, mobile phones, and so on.

Private sale is not protected and an order under patent or trademark would not be protected. Because it shows that the buyer is satisfied that the goods would fit his purpose and he is not relying on the seller’s skill or judgment. For example, if a buyer requests for “peak milk”, the seller would not be liable if the milk cannot properly be used to bake bread.

However, the mere fact that an article is described by its trade name does not imply a sale under patent or trade name. In Baldry V Marshall, the plaintiff told the defendants that he wanted a comfortable car for touring. They recommended a “Bugatti” 8 cylinder car and he bought one. It turned out to be uncomfortable and unsuitable for touring. His claim for a breach of purpose succeeded. In this case, the seller recommended.

BT Tramway co V Fiat Motors Ltd.

MERCHANTABLE QUALITY.

Merchantable Quality was not defined in the Act.

Section 14 starts with the Caveat Emptor Rule. However, by Section 14(2):

Where goods are bought by description from a seller who deals in goods of that description, there is an implied condition that the goods shall be of merchantable quality, except the buyer had examined the goods and such examination ought to have revealed the defect.

From the above, the following points should be noted:

  1. The goods must have been bought by description.
  2. The seller must deal in goods of that description- Ashington Piggeries V Christopher Hill. In British Overseas Credit ltd V Animashaun, failure to show that the sellers dealt in the tin tomatoes was fatal to the case.
  3. There would be no protection where the buyer conducted an examination which ought to have revealed the defects in the goods.
  4. Whether or not the buyer relied on the seller’s skill and judgement is IRRELEVANT.

There has been confusion and ambivalence as to the true meaning and nature of “Merchantable Quality”.

According to Farewell LJ in British Tramways V Fiat Motors, the question to ask is whether a reasonable man in the position of the buyer would accept the goods after full examination. In Shine V General Guarantee Corp, the plaintiff purchased a second-hand car. He later discovered that the car had been submerged in water and refurbished. The court held that the plaintiff thought he was buying and paying for a second hand car in good condition… but what he got was that which no reasonable person would touch.

In Rogers V Parish, the court noted that the question to ask was whether the goods live up to the reasonable expectation of the buyer. In this case, the plaintiff bought a new range rover from the defendants. It developed series of problems and defects and was uncomfortable and unsatisfactory for use. The court found that the buyer’s reasonable expectations of a new range rover had not been met and the plaintiff had not received value for money.

In Henry Kendall and sons V William Lillico and sons, Lord Reid stated that the question should be; whether the goods in question can be used by a reasonable man for any purpose. In this case, the court held that even though the feed which the plaintiff bought was not suitable for feeding his poultry, it could be used for feeding cattle.

In Plastic Manufacturing Co V Toki, the defendant purchased plastic containers from the plaintiff for use in storing their products. The defendants did not tell the sellers the composition of their chemical. When put in the containers, their chemicals changed colour.

*** Goods cannot be unmercahantable merely because they are not commercially sellable at the contract price. To be unmerchantable, the true price must be substantially lower than the contract price.

In Brown V Craicks the buyers ordered cloths from the sellers. They did not tell them that they wanted it for dressmaking. The sellers supplied cloth suitable for industrial purposes. The House of Lords held that the goods were still merchantable. Except they were sold at a throwaway price.

In H. Becham V Francis, where the goods were resold at a throwaway price (when compared to the contract price). The court held that they were not merchantable.

***A lower standard is expected for second-hand goods.

*** Section 14(2) (Merchantable quality) would not apply where the buyer has been told/ has knowledge of the defect in the goods.

In Bartlett V. Sydney Marcus, the plaintiff bought a second-hand car from the defendant. He was informed that the clutch was defective. Nevertheless, he elected to purchase the car. The clutch turned out to be more defective than imagined. The court held that from the facts of the case, there was no breach.

Knowledge of the defect may be implied where a reasonable man ought to have known of the defect/peculiarities of (in) the goods.

In Heil V Hedges, the plaintiff bought pork chops which gave him a tapeworm infection. He then sued on the basis that it was not merchantable. The court held that his claim must fail because it was a well-known fact that pork chops are meant to be boiled properly… this, the plaintiff failed to do.

*** The goods must be merchantable at the time of making the contract and on arrival of the goods-Beer V Walker.

*** The provision would not apply where the defendant has carried out an inspection which ought to have revealed the defect in the goods.

In The British and Overseas Credit V Animashaun, after (to the knowledge of the defendant) the health authorities inspected 1000 tins of tomatoes in the defendant’s premises and seized 300 cases for being unfit for consumption. He went ahead to purchase the remaining 700 tins and started selling them. The health authorities inspected his store again and destroyed 311 more cases. The court held that since the defendant had full opportunity of examining the goods and was aware of the defect in some tins, he must be taken to have examined them within the meaning of Section 14(2).

This principle may still apply even where the examination was hasty/careless. In Thornet and Fehr V Beer and sons, where the buyer had examined the gallons of glue in a hurry without checking the internal contents (even when he was offered the opportunity to do so)… the court held that there has been examination.

In conclusion, the application of merchantable quality in Nigeria has been uncertain. Due to its ambiguity, it has been repealed in the UK… the same is suggested for Nigeria. Nevertheless, the discussion above has (at least to a little extent) extracted some salient principles of this implied term.

Isochukwu

Quite eccentric really

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