COMMERCIAL LAW LECTURE 2

Key Topics

Statutory implied terms

I. Satisfactory quality

II. Fitness for Purpose

III. Misrepresentation

IV. Exclusions of the seller’s liability

 Recommended reading

• Stokes, Commercial Law, 2017 or 2022, chapter 7

• Baskind/Osborne/Roach, 2016, chapter 15
• Twigg-Flesner, “The relationship between satisfactory
quality and fitness for purpose”, C.L.J. 2004: 22-24
• Brown, “Sales of Goods in the Course of a Business”,
L.Q.R. 1999 115(July) 384-389
• Mitchell, “The Development of Quality Obligations in Sale
of Goods”, L.Q.R. 2001 117 (October) 645-663
• Ervine, “Satisfactory Quality: what does it mean?
J.B.L. 2004 684.
 I. Satisfactory quality
• Sec. 14(2) SOGA: Implied terms about quality

• Where the seller sells goods in the course of a business, there is an

implied term that the goods supplied under the contract are of
satisfactory quality.

• Goods are of satisfactory quality if they meet the standard that a

reasonable person would regard as satisfactory, taking account of any
description of the goods, the price and all the other relevant
circumstances.

• S. 9 CRA echoes Sec. 14(2) SOGA

The consumer rights act has equivalent words in section 9.
 Sale in the course of a business
• Stevenson v Rogers [1999] 1 QB 1028
(a sale of the fishing boat by a fisherman was regarded a sale in the course of a business)
Facts: The seller, a fisherman with more than 20 years of experience in the business, listed his trawler,
Jelle, on the market since he was replacing it with a brand-new boat. Due to Jelle’s failure to meet the
standard of satisfactory quality, the buyer filed a lawsuit under Section 14(2) of the Sale of Goods Act of
1979.
The seller claimed that Section 14(2) did not apply because this was a private sale. He didn’t deal in
used trawlers; that was not his line of work. He contended that he did not engage in the business of
purchasing and selling fishing boats; rather, capturing fish and selling them was his primary source of
income.
Issue: Was the seller liable for breach of Section 14?
Judgment of the Court in Stevenson v Rogers
The Court of Appeal disagreed with the seller’s contention, recognizing that because this sale was
closely related to the seller’s commercial activities, it should be classified as a business sale covered by
Section 14(2).
Given that it appeared that the requirement of satisfactory quality had been violated, the buyer had the
right to question the seller under Section 14.

Section 61 (1) SOGA: Business’ includes a profession and the activities of any government department,
Relevant factors under sec. 14(2A) SOGA :
Description
• Bartlett v Sydney Marcus [1965] 1 WLR 1013
The court highlighted the level of quality depends on the circumstances (e.g. second-hand
goods cannot be expected to be in perfect condition (e.g. defective clatch).

However, if the defect is sufficiently serious a second-hand car can be of unsatisfactory quality:
• Shine v General Guarantee Corporation [1988] 1 All ER 911
A 20-months-old car was regarded of unsatisfactory quality because it had been submerged in
water before the sale (without the knowledge of the buyer) and had been treated as a “write-
off” by its insurer. Therefore, the court decided the good was of unsatisfactory quality. Where
the contract is a consumer sale the courts apply the acceptability test. This asks would a
reasonable purchaser have accepted the goods at the stated price knowing of the fault. Clearly
in this case a reasonable purchaser would not have accepted the goods and therefore the
seller was in breach. Even though the car was still pretty new, the court said it wasn't good
quality. They use a test to see if a normal buyer would still buy it at that price if they knew
about the problem. If not, the seller broke the deal.

Price
• Brown (BS) & Son Ltd v Craiks Ltd [1970] 1 All ER 823
(the buyer of industrial fabric found it unsuitable for making into dresses. This good was
regarded as merchantable quality because it was suitable for other industrial purposes and
could be sold without any substantial reduction of the price)
 Relevant factors under sec. 14(2B) SOGA

The quality of goods includes their state and condition, and

the following (among others) are in appropriate cases aspects
of the quality of goods—

(a)fitness for all the purposes for which goods of the kind in
question are commonly supplied,
(b)appearance and finish,
(c)freedom from minor defects, shouldn't have minor
problems or defects.
(d)safety, and
(e)durability, goods should be able to last for a reasonable
amount of time without breaking.
Fitness for all purposes for which goods are commonly
supplied/appearance and finish/freedom from minor
defects
• Rogers v Parish [1987] QB 933
• A new Range Rover had minor defects to the engine and
bodywork. For motor vehicles the purposes include not merely
the purpose of driving, but doing so with the appropriate
degree of comfort, ease of handling and pride in the vehicle’s
appearance. The appropriate degree varies with the price, the
description and other factors (e.g. for a vehicle sold as new, the
performance and finish to be expected are those of a model of
average standard). Defects in appearance can render a vehicle
unmerchantable. That means if there are noticeable flaws in
how a vehicle looks, it might not be considered suitable for sale.
 Safety and durability
Safety
• Lee v York Coach and Marine [1977] RTR 35
A second-hand car which is not safe to be driven on the road
(e.g. brakes don’t work) is not of satisfactory quality (except if it
is only sold for scrap)

Durability ( the courts assumes that goods must be of

satisfactory quality for a reasonable period of time after delivery)
• Mash & Murell v Joseph Emmanuel [1962] 1 All ER 77
If goods have to be despatched to the buyer by carrier, it is
reasonable to expect the goods to be of such a quality as to be
able to withstand a normal journey.
Seller not liable for defects in goods sec. 14(2C)

• Buyer made aware of defects – sec. 14(2C)(a):

There are three exceptions that seller is not liable for the the defects
of goods, if first the buyer was aware of that. The second exception
was is if the inspection of the goods.
 The following exceptions apply where the defect has been
specifically drawn to the buyer's attention before sale and where the
buyer examines the goods before sale and the examination ought to
have revealed the defect.
• Inspection of the goods by the buyer – sec. 14 (2C)(b)

• Bramhill v Edwards [2004] 2 Lloyds Rep

653

• Defect apparent on examination of sample – sec. 14(2C)(c)

 Must goods be fit for immediate use?
• Heil v Hedges [1951] 1 TLR 512
(The plaintiff bought pork chops and in consequence of eating
them when they were not cooked through contracted trichina
spiralis. The court held that the pork was not properly cooked
according to accepted and known standards but fit for human
consumption and merchantable if cooked).

• Australian Knitting Mills v Grant (1933) 50 C.L.R. 387

(The plaintiff buyer contracted dermatitis as the result of
wearing a woollen garment which, when purchased from the
retailers, was in a defective condition (excess sulphites). Breach
of the merchantable quality and fitness for purpose).

Article: “Examination prior to purchase: a cautionary note: Twigg

-Flessner: LQR 2005 (Apr) 205-206
II. Fitness for purpose (s. 14(3) SOGA)
The good must fit for purpose.

Key topics

• Communication of purpose

• Reliance by buyer on seller’s skill and judgment

(s. 10 CRA corresponds to section 14 (3) SOGA)

 Fitness for purpose
Where the seller sells goods in the course of a business
and the buyer, expressly or by implication, makes known
to the seller any particular purpose for which the goods
are being bought, there is an implied term that the goods
supplied under the contract are reasonably fit for that
purpose, whether or not that is a purpose for which such
goods are commonly supplied, except where the
circumstances show that the buyer does not rely, or that it
is unreasonable for him to rely, on the skill or judgment of
the seller or credit-broker.
It only apply to something that is related to a business.
 “particular purpose”
• Preist v Last [1903] 2 KB 148
• Griffiths v Peter Conway [1939] 1 All ER 685
• Slater v Finning [1997] AC 473
• Ashington Piggeries Ltd v Christopher Hill Ltd [1972]
AC 441
• Hamilton v Papakura District Council [2002] UKPC 9
• BSS Group Plc v Makers (UK) Ltd [2011] EWCA Civ
809
• “Thus, the courts have refused to hold that the word “particular”
purpose conveys the opposite of general: instead, they have
construed “particular” as signifying a specified purpose, which may
be very general, for example a bicycle to ride on the road”
Per Lord Steyn in Slater v Finning (supra) at 486
 Communication of the purpose
1. The goods have only one use and are bought for that purpose/have more
than one normal use

• If a good has only one normal use the mere fact of purchase will, by implication, make it
know that this is what the buyer wants it for (e.g. a hot-water bottle)
• “There are many goods which have in themselves no special or particular efficacy for any
one particular purpose but are capable of general use for a multitude of purposes. In the
case of a purchase of goods of that kind, in order to give rise to a warranty it is necessary to
show that although the article sold was capable of general use for many purposes, in the
particular case, it was sold by reference to a particular purpose. But in a case where the
discussion begins with the fact that the description of the goods, by which they were sold,
points to one particular purpose only, it seems to me that the first requirement of the
subsection is satisfied, namely, that the particular purpose for which the goods are required
be made known to the seller.”

Per Collins M.R. in Preist v Last (supra) at 153

For example, if you come to the pharmacy and buy a hot water bottle, and you want to use, and you
don’t use it for the normal purpose. But if you get burned , the good, could be defective because it is
not a satisfactory quality, but it could also mean in addition that there is a breach of fitness for purpose.
2. The goods are bought for an unusual purpose
• The seller needs to be informed about goods for unusual purposes
• (e.g. the purchaser of a tweed coat contracted dermatitis from wearing it,
but had not informed the seller of the abnormally sensitive skin. Therefore,
she could not benefit from s. 14(3))
• “It seem to me that if a person suffering from such an abnormality requires
an article of clothing for his or her use, and desires to obtain the benefit of
the implied condition, he or she does not make known to the seller the
particular purpose merely by saying “The article of clothing is for my own
wear.” The essential matter for the seller to know in such cases with regard
to the purposes for which the article is required consists in the particular
abnormality or idiosyncrasy from which the buyer suffers. It is only when
he has that knowledge that he is in a position to exercise his skill and
judgment, because how can he decide or exercise skill and judgment in
relation to the suitability of the goods that he is selling for the use of the
particular individual who is buying from him unless he knows the essential
characteristics of that individual.”
Per Greene MR in Griffiths (supra) at 691
3. Goods are required for a specific application of a wider
normal use.

• Ashington Piggeries Ltd v Christopher Hill Ltd [1972]

The buyer relied on the seller to compound mink food to the

buyer’s specifications made up using herring meal. It was later
found, after heavy losses of mink, that the herring meal used by
the seller contained a substance highly toxic to mink.
Is the seller liable or not?
The court held that a failure by the seller to ensure that those
ingredients are of a suitable quality constitutes a breach of SOGA,
as it was unfit of the specific purpose.
 Reliance by the buyer
“Reliance will seldom be express; it will usually arise by
implication from the circumstances, thus in a purchase from a
retailer the reliance will in general be inferred from the fact
that a buyer goes to the shop in the confidence that the
tradesman has selected with skill and judgment.”

Per Lord Wright in Grant v Australian Knitting Mills

[1935] 1 All ER 209 at 215
Strictness of seller’s duty
Although the words “reasonably fit” do not require the goods
to be of the very best quality, they do impose upon the seller
an absolute obligation. So it is of no defence that that the
seller acted reasonable if the goods are not reasonably fit
(Dobson/Stokes)

• Frost v Aylesbury Dairy [1905] 1 KB 608

Milk was sold containing typhoid germs. It was no defence
that the sellers had taken all reasonable precautions as to
hygiene.

In essence, sellers must ensure their goods are fit for purpose
regardless of any other precautions they may have taken.
Differences between sections 14(2) and 14(3) SOGA:
• In order to succeed in a claim under section 14(2), it is not necessary for the
buyer to show that he has communicated his purpose to the seller. By
contrast, the communication of the buyer’s purpose, whether express or
implied, is an essential prerequisite for a successful claim under section 14(3).

• Provided the buyer has communicated his purpose, section 14(3) does not
require that the purpose is one for which the goods are commonly supplied,
as does section 14(2).

• Jewson Ltd v Boyhan [2003] EWCA Civ 103

Article
“The relationship between satisfactory quality and fitness
for purpose”: Twigg-Flesner: C.L.J. 2004: 22-24
 The buyer needs to communicate the special requirement.
 Key consumer rights under a goods contract
(CRA 2015)
S. 9-17 contain requirements which the goods supplied, or
the trader must meet. The sections of the Act correspond
to SOGA’s provisions when it comes to implied contract
terms for satisfactory quality, description and fineness for
purpose.

• 9.Goods to be of satisfactory quality

• 10.Goods to be fit for particular purpose

• 11.Goods to be as described
 I. Satisfactory quality of goods:
Consumer Rights Act (s. 9 CRA)
(1)Every contract to supply goods is to be treated as including a term that the quality of the goods is
satisfactory.

(2)The quality of goods is satisfactory if they meet the standard that a reasonable person would
consider satisfactory, taking account of—
(a)any description of the goods,
(b)the price or other consideration for the goods (if relevant) (…)

(3)The quality of goods includes their state and condition; and the following aspects (…) are in
appropriate cases aspects of the quality of goods—
(a)fitness for all the purposes for which goods of that kind are usually supplied; (b)appearance and
finish; (c)freedom from minor defects; (d)safety;
(e)durability.

This section corresponds to section 14 SOGA, regarding satisfactory quality, but CRA only relates to
trader to consumer contracts.
 Limitations
Section 9 (4) CRA provides that a defect of the good will not give ground for
finding the goods to be unsatisfactory:

(a) if the consumer is made aware of a particular defect before making the
contract, If the consumer knows about a specific defect before buying
the item, that defect won't be a reason to consider the goods
unsatisfactory.

(b) where the consumer examines the goods before the contract is made
and the defect should have been revealed by a reasonable examination,

(c) in the case of a contract to supply goods by sample (and a reasonable

examination should have revealed the defect).
 II. Goods to be fit for particular purpose:
Section 10 Consumer Rights Act
• if a consumer acquires a good for a specific purpose

• and has made this purpose known to the trader

beforehand (expressly or by implication),

 the goods must be fit for that purpose

 unless the consumer does not rely on the skill or judgement

of the trader (or it would be unreasonable for the consumer
to rely on it).

• Section 10 corresponds to section 14 (3) SOGA, but CRA only

refers to trader to consumer contracts
III. Misrepresentation
• If a seller makes a false statement in relation to the supply of goods, the
buyer may be able to bring an action for misrepresentation and for a
breach of a term (e.g s. 13 SOGA)
• Misrepresentation: a false statement of fact made by one party which is
intended to and does induce the other party to enter the contract
(Dobson/Stoke, ch. 6, p. 109)
• S. 2(1) Misrepresentation Act: Damages for misrepresentation
Where a person has entered into a contract after a misrepresentation has
been made to him by another party thereto and as a result thereof he has
suffered loss, then, if the person making the misrepresentation would be
liable to damages in respect thereof had the misrepresentation been made
fraudulently, that person shall be so liable notwithstanding that the
misrepresentation was not made fraudulently, unless he proves that he had
reasonable ground to believe and did believe up to the time the contract was
made the facts represented were true.
IV. Unfair Contract Terms Act 1977 (UCTA)
UCTA restricts exclusions of the seller’s liability to the buyer

Sections 6 UCTA
(1) S. 12 SOGA (seller’s implied undertakings as to title, etc.) cannot be excluded or restricted by
reference to any contract term.

(1A)Liability for breach of the obligations arising from—

• (a)section 13, 14 or 15 of the 1979 Act (seller's implied undertakings as to conformity of goods
with description or sample, or as to their quality or fitness for a particular purpose); (…)
• cannot be excluded or restricted by reference to a contract term except in so far as the term
satisfies the requirement of reasonableness.

(5)This section does not apply to a consumer contracts (but see s. 31 CRA).

Schedule 2 UCTA: contains guidelines for assessment of reasonableness of exclusions in contracts

for the sale of goods

Effect of UCTA: clauses are void or need to pass the test of reasonableness
 S. 31 CRA: Liability that cannot be excluded

A term of a contract to supply goods is not binding on the consumer to

the extent that it would exclude or restrict the trader’s liability arising
under any of the following provision:

(a)section 9 (goods to be of satisfactory quality);

(b)section 10 (goods to be fit for particular purpose);
(c)section 11 (goods to be as described);
(d)section 12 (other pre-contract information included in contract);
(e)section 13 (goods to match a sample);
(f)section 14 (goods to match a model seen or examined); (…)
(j)section 28 (delivery of goods);
(k)section 29 (passing of risk).