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IMPLIED TERMS
Cookum Bakery buys from Linman Ltd what is called in the sale contract ‘a conveyor
belt suitable for use in the manufacture of all types of food products’, having seen one of
these machines at a trade fair. After delivery it becomes clear to Cookum that the
machine is several years old. Cookum installs the conveyor belt to convey bread from its
ovens. Eight months after the installation of the conveyor belt there is a fire at
Cookum’s factory, which was caused by particles of bread becoming trapped in the
conveyor belt. The problem would not have arisen if Cookum had cleaned the
machinery regularly, but Linman had not given instructions that this was necessary.
It emerges that there had been reports of fires through similar causes in conveyor
belts used by other bread makers, and that many bakers avoided this by making simple
adjustments to prevent bread particles from falling into the machinery. As a result of
the fire Cookum’s factory is destroyed and the firm loses orders from supermarkets for
bread and an order to supply bread to a royal banquet, which would have brought
great publicity to the firm’s products.
Discuss.
Waterloo Ltd is a furniture dealer and wishes to buy some delivery vans from Pancras
Ltd, a dealer in such vehicles. Waterloo’s authorised buyer says to the Pancras
salesperson, “We want to keep our running costs down, so we only want vans that do
not use a lot of fuel.” The salesperson recommends the Vanno. Waterloo buys ten
Vannos.
After using the vans for a while, Waterloo discovers they are not suitable for carrying
furniture because only small items will fit in, and their consumption of fuel is above the
average for similar vans available from other dealers. Some of the vans are also found
to suffer from a defect in the gearbox which only becomes apparent after they have
covered
5,000 miles.
Discuss.
# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
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Discuss.
Introduction
Jackie will want to repudiate contract, reject the goods and sue for damages in
this contract for sale of goods defined under S2(1) SGA 1979-why? Will Jackie
have lost his right to reject- S34 and S35 SGA
How will Jackie achieve this- is there a breach of contract?
Is Jackie as a consumer or non consumer- R&B Custom Brokers v UDT(1988)
How will this be a contract for a sale by description?- see Beale v Taylor(1967)
No-13 covers consumer and non- consumer sales where the seller is not necessarily selling
in the “course of business”. The Caveat Emptor rule!
Wallis v Russell(1902)-FitzGibbons LJ-If it is not a sale by description then the buyer must
beware.
Sale by description applying to - Sale of identifiable goods (specific good)- Grant v AKM
Ltd(1986), Beale v Taylor(1967.)
Conclusion.
S14(2) Where the seller sells goods in the course of business, there is an implied
term that the goods supplied under the contract are of satisfactory quality.
and relevant factors to be taken into consideration..S14(2)(B)(a) fit for all common
purpose.
When the seller sells goods in the course of business, it is an implied term that the goods
supplied under the contract be reasonably fit for the purpose for which the buyer has
purchased them…having expressly or impliedly brought to the sellers attention the purpose
for which the goods are being bought for.
• Sale in the “course of business”
• Purpose for which goods have been purchased
Common purpose/singular purpose-impliedly brought to sellers attention
• Wallis v Russell(1902)- Boiled crabs
• Priest v Last(1903)-Hot water bottle
• Frost v Aylesbury Diary Co(1905)- contaminated milk with typhoid germs
# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
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Ted owns an automobile museum specialising in Fantari sports cars. On 1st January, he
sees an advertisement in Moto magazine, which has been placed by Kwality Kars Ltd. It
states: “1936 Fantari Speedster, £200,000.” On 2nd January, he goes to Kwality Kars
Ltd and buys the car. He arranges for the car to be delivered on 10th January. In the
meantime, he enters into a contract with Film Props Co., promising to hire the car to
Film Props Co. for use in a film between 15th and 20th January.
The car is duly delivered on the date agreed and Ted signs a note which states, “Car
delivered as described and in good condition.” The following day he discovers the car’s
original engine was replaced recently with an engine from a 1930 Fantari Tourer which
had been modified to meet the specification of the engine originally supplied with the
1936 Fantari Speedster. He also discovers that the gearbox is defective in that only two
of the four gears operate correctly.
He does nothing because he wishes to fulfil his contract with Film Propos Co. However,
on 21st January, when Film Props Co. return the car, Ted immediately contacts
Kwality Kars Ltd, stating that he intends to reject the car and demanding return of the
money paid.
Discuss.
# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
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Colour Co. (‘Colour’), a manufacturer of paint, orders a quantity of cans from Tinny Co.
(‘Tinny’) for a new brand of paint that Colour is planning to make and sell. Each can is
to have a capacity of 1 litre, and Tinny agrees to deliver them in packs of 100 tins. The
cans are delivered on 1 January. Some of the packs contain 120 cans and 10% of the cans
have a capacity of 1.1 litres. Colour does not realise that there are these discrepancies
until the cans are filled with paint on 10 January. On 17 January, Colour discovers that
a chemical reaction between the paint and the material from which the cans have been
made has caused the paint to deteriorate. Tinny knew that this reaction might happen as
the result of the chemicals used in some paints, but not all paints contain these chemicals.
Tinny was unaware that Colour’s paint contained the chemicals and did not
mention the chemical reaction to Colour at the time of the contract.
CC may want to repudiate the contract, reject the goods and sue for damages- why- but
in order to do so they must prove the breach is serious S15A- basis that both parties are
acting as non consumers.
But can Tinny Co argue that CC had accepted the goods and lost its right to reject them
under S35 SGA 1979?
17/1 chemical reaction with paint causes paint to deteriorate. TC was aware that
that this might happen to some paints but was unaware that CC paint contained
chemicals that would react but did not mention this to CC either.
The relationship between CC and TC is one for sale of goods-S2(1) SGA 1979.CC will argue
breach of implied terms under S13(1), S14(2) and S14(3) SGA 1979.
Conclusion.
# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
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What is the possibility of the buyer having lost his right to reject?
S35 Acceptance
(1) the buyer is deemed to have accepted the goods [subject to (2)]
(a) When he intimates to the seller that he accepts them
(b) when the goods have been delivered to him and he does any act in relation to them
which is inconsistent with the ownership of the seller.
(4) …the buyer is also deemed to have accepted the goods when after a lapse of
reasonable time…he retains the goods without intimating to the seller that he is rejected
them.
Consider the decision of Judge jack QC in Truk (UK) Ltd v Tokmakidis GmbH
(2000)
Conclusion.
Q6 Zone A 2008
EITHER
(a) Gardens-‘N’-You Ltd (‘Gardens’) sells bags of ‘Compo’, an artificial compost. This
product is made up by Acme Ltd (‘Acme’), a manufacturer of chemical products,
according to a recipe provided by Gardens. This recipe stipulates the use of
particular constituent elements in the compost. The recipe also permits Acme to
use ‘a stabiliser’, but does not specify what this should be. The stabiliser used by
Acme is a chemical product known as Blixo. Unfortunately, Blixo, while harmless to
other garden flowers, is poisonous to roses when mixed with the other elements
specified in the formula by Gardens. Gardens is unaware that Blixo has been used.
Janet, a professional rose grower, buys some Compo and digs it into her rose beds.
As a result, she loses her crop of roses.
Discuss.
What difference might it have made to your answer if the bags of Compo have a
label stating they contain Blixo and the possible effect of Blixo when used in some
types of artificial compost has been mentioned in trade newspapers circulating
among those in the garden industry, but Janet has not seen these newspapers?
OR
(b) ‘The provisions on satisfactory quality in the Sale of Goods Act add nothing to the
rights that a buyer has under section 14(3).’
Discuss.
# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
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‘Brightgate bricks’ are made not of clay, like other types of brick, but of
compressed paper. In respect of the bricks used on the front of the houses, which
face the sea, a chemical reaction caused by contact with significant amounts of sea
salt renders them porous so that damp enters the houses. The bricks used on the
walls at the rear and sides of the houses, which do not come into contact with
seawater, do not allow damp into the house.
As a result of the damage to the front walls, the houses are unfit for human
habitation and Hamlet has to demolish them.
Advise Hamlet.
To sue Macbeth(M) for breach of contract under S 13(1), S14(2) and S14(3) SGA
1979 on the basis that the “Brightgate bricks” were not suitable for use in the said
construction of the houses resulting in them having to be demolished.(no longer fit for
human habitation)
Contract is defined under S2(1) SGA 1979 between HL and M.
Conclusion- possible breach S14(2) and S14(3) SGA 1979- can the buyers repudiate the
contract, reject the goods and sue for damages?
# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
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Q5-2006(A)-Implied Terms
John is an accountant and wishes to do some of his work at home. He sees a notice in
the window of Charz Ltd, a furniture shop: ‘Tables ₤100. Suitable as dining table or
desk for the home office. Self assembly.’ On the notice is a photograph of a yellow
table. The table is much cheaper than equivalent tables sold in nearby shops. John
points to the notice and tells Yasmin, the sales assistant, ‘I will buy a desk.’ He then
adds, ‘I will also need a chair.’ He selects a chair from a photograph of a range of
chairs sold by Charz. It is agreed that the items will be delivered to John’s home.
The table and chair are delivered packed in sealed cardboard boxes. John is asked to
put his signature to a delivery note, which he does. The note includes a clause: ‘The
goods have been delivered to me in good condition and as ordered.’ When later he
unpacks and assembles the furniture he discovers that the table is blue. He had
particularly wanted yellow because that is the colour of the decoration in his home
office. The table has a scratch on the surface, which could be easily removed by the
use of a special polish. In addition, the table is too small for his home computer and
too low for the chair he bought from Charz.
Advise John.
Issue: whether John is able to repudiate the contract, reject the goods and sue for the price
paid.
This is a contract for the sale of goods regulated under S2 SOGA 1979.
The remedies is afforded pursuant to SOGA 1979 and via the common law (S62(2)
SOGA 79)
In order for John to establish liability, he must be successful in proving breaches of any
provision in relation to implied terms:
In relation to the table, what was represented to him was that the table was suitable as
a dining table or a desk for home office.
But the table that was actually delivered to him was too small for his home computer.
Therefore, would this amount to a breach of S13 SOGA 1979?
John must prove that the table does not correspond with the description on the notice
in the window of Charz Ltd.
The description was: “…Suitable as dining table or desk for the home
office…” and the colour of the table was yellow in the photograph.
To succeed, John must prove:
Firstly, the description must be a term of the contract between the
parties.
Contractual Cartography: Lord Moulton; Heilbut, Seymons v
Buckleton:
o Schawel v Reade: reliance on the seller’s statement.
o Routledge v Mackay: the intention has to be reduced
into writing.
o Bannerman v White: importance of the statement made
by the representor.
o Oscar Chess v Williams: the maker’s special knowledge
of the subject matter.
# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
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# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
13 | P a g e
o Priest v Last: it is impliedly brought to the seller’s attention of the purpose for
use.
o However, it is important to note whether all tables for home office would
easily fit a computer.
o This is because, if the usage of a home office table does not necessary imply
the fitting of a computer, then it is the duty on the part of John to inform or
enquire whether the table is suitable to fit a computer – which would oust the
rule in Priest v Last.
Q: was the table reasonably fit for its purpose?
o OTF: the table was not able to fit a computer and furthermore it was too low
for the chair.
o Bristol Tramsway Carriage v Fiat Motors (1910) & Kendall v William Lilico
(1969):
States that the goods must be reasonably fit for the purpose for which it
was bought.
In Bristol: the plaintiff ordered 7 buses for burdensome passenger work
in heavy traffic in Bristol, a hilly district.
The buses proved not to be robust enough and had to be
reconstructed.
Held: the buses were not fit for the particular purposes stated
by the plaintiffs.
o OTF: John did not subject the table to any peculiar use but has subjected it to
its common purpose and therefore, Charz Ltd is liable for the defective article.
o Consideration of reliance on the seller’s skill and judgment and the
reasonability of such reliance can be determine from a consideration of the
following cases:
Teheran Europe v ST Belton (1968):
The buyer bought a consignment of portable air compressor;
they made it known to Belton, the sellers that they were for
resale in Persia.
However, the compressor proved unsuitable for sale in Persia
and the buyers sued claiming that the goods were not fit for the
stated purposes.
Held: the buyers did no more than make the purpose known.
To come within S14(3) they must do more: they must know
reliance on the skill and judgment of the sellers.
Here the sellers knew nothing of the conditions in Persia;
however the buyers did.
The buyers relied upon their own skill and judgments.
Bristol Carriage Tramsway v Fiat Motors (1910)
Ashington Piggeries v Christopher Hill (1972)
# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)
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# prepared by reuben de rozario for the Commercial Law Department. This is only a guide produced to
facilitate the learning process. IMPLIED TERMS (BAC 2017)