What are the Seller’s Obligations as to Description and Quality?

What are the seller’s obligations as to description and quality? • S 17(1): in a contract for the sale of goods by description, the seller has an implied condition that the goods correspond with that description a. 17(2): in a sale by sample even if the goods correspond with the sample but do not match the description, it’s still a breach of this implied condition b. Bruce: “correspond” generally has some give to it – does not have to be absolutely exact – can make clear what the expectations are in the contract though c. Have to categorize which statements were representations, and which are terms, or even just puffery i. This distinction changes the remedies that are available (Leaf) ii. Breach of a term can lead to damages, termination, or specific performance iii. Misrepresentation can lead to right to rescind d. General rule: any representation or term that is part of the description necessarily makes s 17 apply – the statute ousts the common law and they all become conditions i. Common law misrepresentation rules will apply for omissions to say something ii. The law of misrepresentation has not been eliminated by S 17 (Frey v Sarvajc) iii. Facts: car was sold as a homogenous vehicle, but was previously a total loss car, with parts from 3 vehicles that had vastly different mileage; breach of s 17, but 15(4) - only remedy available is damages e. The general rule is caveat emptor: where there is no fraud, no representations, the buyer cannot complain of defects in a product that he had an opportunity to inspect before the purchase i. Latent defect: if there is a hidden defect that the seller ought to know about, but an ordinary inspection of the goods would not show it, then the seller is responsible to disclose that latent defect a. If they do not disclose, could be a misrepresentation b. Dependant on circumstances and parties; works best if the buyer has no expertise ii. Patent defect: discoverable by a reasonable inspection and normal buyer vigilance (caveat emptor) • Have the parties tried to contract out of s 17-19? a. S 20(2): in the consumer context for new goods, the parties cannot contract out of the implied terms in 17-19 i. New goods: goods that on a reasonable inspection do not appear to be used, or goods that are not described / represented by the seller to be used goods b. Hart-Parr Company v Jones: The court is reluctant to uphold exclusion clauses contracting out of s 17, especially if it is generic and absolute i. To contract out of 17-19 you need to draft a specific exclusion clause ii. Facts: P bought a tractor, seller said engine was new, but it was just repainted to look brand new; property cannot pass until inspection here; court says reasonable inspection cannot have happened because you would have to wait for paint to come off to reveal the defect • How does s 17 work in the context of specific goods? a. The problem with 17 and specific goods is that 23(2) says that property passes immediately and 15(4) says that for specific goods in which property has passed, the buyer loses the right to terminate the contract and reject b. Beale v Taylor: If a thing is sold corresponding to a description, then it is sold by description, even if a specific good i. Facts: 1961 Herald Convertible that the buyer saw and sat in, but turns out was made of two cars, was a sale by description but buyer kept too long – only remedy is damages ii. Key: buyer saw the specific goods, and was still a sale by description c. Varley v Whipp: If a buyer has not seen the specific goods, and the description motivates the buyer to purchase, then it is a sale by description for the purposes of 17 i. In a sale by description for specific goods, property does not pass when the contract is made, it passes when the buyer verifies that the implied condition that the goods correspond with their description has been met ii. Therefore, a buyer retains his ability to reject the goods and terminate up until he has accepted the goods iii. Facts: reaping machine said to be nearly new, inspected from across the field, rejected when it turned out to be quite old, 17 applied d. Taylor v Combined Buyers: specific goods sales are sales by description insofar as the thing is expressly sold of a certain kind/class/species, BUT, statements made to the quality or other unessential attributes of the thing are not part of the description, but merely representations i. Facts: P bought car from D and now wants to reject it as either a breach of condition or fraudulent misrep ii. For unascertained goods, anything said about the goods is part of the description for the purpose of S17 – renders all terms into conditions instantly and includes mere representations into the contract iii. For specific goods, only what the contract says about the goods (essential quality/character/conditions) is the description for S 17 – preserves the common law iv. Bruce: says distinction is likely better described as seen vs unseen • How does the implied condition in 17(1) interact with the implied condition of “merchantable quality” in 18(b)? a. 18(b): implied condition that goods are of “merchantable quality” if the seller deals in goods of that description i. But, if the buyer inspects the goods, condition doesn’t apply to defects the examination should have revealed b. Breach of 17 is not dependent on a breach of 18 – just because the good supplied is perfectly suitable for the purpose or of merchantable quality, the buyer is entitled to reject the goods if they do not conform with the description (Arcos Ltd v EA Ronaasen) i. Facts: there was a contract for wood with precise dimensions to make barrels – the delivered wood didn’t conform exactly with the description, even though it was fit for purpose – court allowed rejection c. Goods can meet a description even if they are not fit for use or of merchantable quality (Ashington Piggeries) i. Facts: contract for animal feed of “the best quality”, which ended up killing the minks – still meets the description of herring meal even though there is a bad chemical in it ii. If a contract contains an express statement of quality, intention dictates whether it is a condition or warranty – can approach like an intermediate term • Implied condition under s 18(b) of “merchantable quality” a. Courts have given a broad scope to “merchantable”, reducing the usefulness of this section for buyers (above) b. 20(2): in consumer context for new goods, the parties cannot contract out of the implied terms in 1719 c. Bartlett v Sidney Marcus: Goods are not of merchantable quality if they are of no use for any purpose for which such goods would normally be used i. Facts: car bought with clutch that would need bleeding after a few weeks, still of merchantable quality d. As long as the seller supplies something that meets one possible use, it does not matter that this particular buyer cannot use it – it will still be of merchantable quality (Kendall v Lillico) i. Facts: contract for a Brazilian nut that had toxic mold, caused pheasants to die – court says still of merchantable quality because another buyer would be content with them; do not kill all animals ii. 18(b) is not about knowledge or fault at any point in time, just clear objective question of merchantability a. Does not matter what is known at contract formation, as long as a buyer would be content with it b. Price is irrelevant (dissent disagrees) iii. Dissent: 18(b) requires that the goods should be in such a state that a buyer, fully acquainted with the facts and, therefore, knowing what hidden defects exist, and not being limited to their apparent condition, would buy them if in reasonably sound order and condition and without special terms e. Price can be relevant, only if it is such a high price that you necessarily have to imply a particular quality constraint into the description (BS Brown & Sons v Craiks) – must be VERY far out of proportion i. The best thing for sellers to do is make a more detailed description to reduce the number of purposes the goods could be used for – if someone could still use it for other purposes, it is still merchantable quality ii. Facts: contract for rayon to make clothing that was not suitable for that clothing, only suitable for industrial uses; court says price not far enough out of proportion to reject based on price – cannot let parties use this as a way to get out of a bad bargain f. No guarantee of merchantable quality if seller does not deal in goods of that description (Hartmann v McKerness) i. Facts: expensive family heirloom watch sold on Ebay turns out not to have been manufactured by company stated; seller not covered by 18(b) – sold some things on Ebay but never watches consistently a. Misrep argument not valid as well because buyer’s expertise, did not rely on claims to purchase ii. Bruce: must be some repetition involved in that class of item; first transaction is covered if seller intends to continue to sell in the future g. Even if the complaint is small and easily mended, if no buyer would want the good with that defect, the buyer is entitled to reject the good (IBM v Shcherban) i. Facts: glass on a dial shattered on a machine – even though it is trivial, no one would buy machine like that ii. Dissent: says this is trivial (de minimus), should not be allowed to reject on that basis • Inspection: If the buyer examines the goods before accepting them, seller is not liable for defects that a ‘reasonable examination’ ought to have revealed (Thornett & Fehr v Beer & Son) o Key: Once you start examining, make sure you do a full ‘reasonable’ examination o Facts: vegetable glues in barrels that were not of merchantable quality, but buyer had superficially examined • Implied condition under s 18(c) of “durability” a. S 18(c): There is an implied condition that the goods will be durable for a reasonable period of time having regard to the use to which they would normally be put and to all the surrounding circumstances of the sale i. Applies to everybody (do not need to be a certain kind of seller/buyer) – sellers want to K out of it ii. Problem with 18(c) / 15(4) – how can you know goods are not durable if you haven’t already accepted them? b. 18(b) also can be argued to have some forward looking protection: c. Mash & Murrell v Joseph Emanuel: implied condition of quality under 18(b) continues at least until delivery i. Even if the goods were in good condition when shipped, if when they are delivered it cannot be said that they could be used by any buyer then the implied condition is breached, buyer can reject § Facts: a bunch of potatoes went bad during shipment; but risk had passed after they were placed on boat; court says breach of 18(b) - must persist until they get to buyer (1 day later would’ve been fine) d. Buckley v Lever Bros: as long as the goods are of merchantable quality at the time the contract is entered into, or at least when the property passes, the fact that they do not last much longer is of no relevance to 18(b) i. Facts: clothespins shattered and injured buyer; but, nothing showed when they were delivered that there was anything wrong with them – court says no breach • Implied condition under s 18(a) of “suitability for a particular purpose” a. If the buyer is (i) buying goods for a particular purpose and (ii) either explicitly or implicitly make this known to the seller, and (iii) the buyer is relying on the seller’s skill or judgment to provide goods that are suitable for the stipulated purpose, and (iv) the goods are of a description that is in the course of the seller’s business THEN there is an implied condition that the goods are reasonably fit for that purpose (whether seller is manufacturer or not) i. (i) Buyer must buy goods for a particular purpose ii. (ii) Purpose must be known to the seller (conveying purpose) iii. (iii) Seller knew / ought to have known that the buyer was relying on the seller’s skill to select the goods iv. (iv) goods are of a description that they are in the business of supplying b. 18(a) is generally more useful to buyers than (b) or (c), even though there are several hoops to jump through c. Expands misrepresentation to include opinions – if someone relies on your judgement as seller, could be liable i. Also relates to all goods supplied, not even all goods purchased (beverage and rented bottle example) d. If the goods do not last for a reasonable time and break soon after purchase, that is evidence which goes to show they were not reasonably fit for the purpose at the time it was sold (Crowther v Shannon Motor) i. so depending on the purpose, there can be some ongoing protection (cars purpose is to be driven) ii. Facts: used car that broke down after only 2000 miles; court found breach of 18(a) iii. Bruce: very generous in terms of timing – magnitude of repairs needed may have affected decision e. Kendall v Lillico: If a purpose is broad enough to cover different qualities of the good, then price can imply to the seller what the buyer’s particular purpose is (might be the seller’s only clue) i. If the seller recommends a product, there is a presumption of reliance of the buyer on the seller f. Baldry v Marshall: For the purposes of the proviso in s 18(a) relating to sale under a trade name, the mere fact that a good is described in the contract by its trade name doesn’t necessarily make it a sale under a trade name i. Test: Did the buyer specify it under its trade name in such a way as to indicate that he is satisfied, rightly or wrongly, that it will answer to his purpose, and that he is not relying on the skill or judgment of the seller, however great that skill or judgment may be? ii. Facts: contract for Bugatti that didn’t fulfill buyer’s purpose; seller argues trade name exception and fails • Is the buyer’s complaint excepted from the scope of s 18(a)? a. Allergic reactions are not subject to the usual strict liability imposed on the seller by s 18(a) i. The law expects idiosyncratic users to disclose these peculiarities to the seller ii. Esborg v Bailey Drug Co: In order to rely on an allergy/hypersensitivity, a buyer will have to show that this reaction was not uncommon: that it wasn’t unique/peculiar/isolated iii. Test: buyer must show (i) the product contains a harmful ingredient, (ii) which is harmful to a reasonably foreseeable and appreciable class of people or potential users of product, and (iii) buyer has been innocently injured in the use of the product in the manner and for the purpose it was intended to be used b. Griffiths v Peter Conway: The buyer must make the seller aware of any peculiarities that affects the buyer in using the goods for the purpose in which the buyer is intending to use it, If the seller in unaware then the seller cannot exercise their skill and judgment in relation to the suitability of the goods that they are selling i. Facts: P bought tweed coat and developed dermatitis, but didn’t tell seller about her abnormality, no breach c. Ingham v Emes: The burden is on the buyer to tell the seller about their known abnormality or allergy in order to claim the protection of 18(a) i. Facts: had her hair dyed; did a patch test which was fine, but after full dye, developed dermatitis – P knew she had skin reaction to Inecto in the past and did not tell hairdresser – P loses ii. Particular purpose made known by P was dying hair of person with normal reaction to Inecto