What is Merchantable Quality?

(1) Basically, there are variety pronouncements about the definition of ‘merchantable quality’. According to Section 16(1)(b) of Sale of Goods Act 1957, there is an allusive condition that the goods sold need to be merchantable quality when the goods are bought from the seller based on the description made regardless he is the manufacturer or producer. It is provided that when the buyer has been examined the goods, there is no any implied condition about the defects. In this extent, the seller has the obligation that to make sure the goods that they sold are of merchantable qualities while the buyers are responsible to examine the goods that they buy are in good condition or merchantable.

According to the Probert Encyclopedia of Money, the ‘merchantable quality’ term refers to an implied condition regards about the state of goods which sold in the field of business. The goods that sold should be regard as to fit the common purpose of the buyers, as well as the descriptions of the goods need to take into account. This also includes price if it is relevant and all the other related and relevant circumstances. If the buyer has checked the goods that sold by the seller when the contract is made, the condition is not applicable to the defects that specifically drawn to the buyer’s attention or the defects that the buyer has realized or noticed. So, in general, it means that the goods that sold to the buyers are required to fit for the particular purpose to the extent that they were sold. However, the goods are failed or unable to perform the purpose when they have been sold, they are considered as unmerchantable.

By referring to David Jones v. Willis (1934) 52 CLR 110 cases, the plaintiff has been purchased a pair of shoes from the defendant. Defendant is the retailer distributor of the shoes but not the manufacturer. However, when the plaintiff wears the shoes to walk down from the stairs on the third event, the heel came off. This cause the plaintiff fell over and injured. She are tried to sue for damages from the defendant. The court held that there was a breach of the conditions where by the shoes are unmerchantable and didn’t fit for the purpose as according to the Section 16(1)(b).

In Henry Kendall & Sons v. William Lillico & Sons Ltd (1969) 2 AC 31 case, wholesale dealer make an agreement to buy the ground nuts which the description of ‘Brazilian ground nut extraction’ through Brazilian ports shipment. Some of the members from the same trade association are bought the ground nut extraction and the purpose of compounding into the cattle and poultry food. The extraction contained poison and it was unfit for this purpose. Many pheasants fed on the extraction are died. The wholesale want to claim the damages due to the breach of warranty and condition from the defendant. However, the court held that the ground nut extraction was to be merchantable or satisfactory quality which is commonly has been in feeding animals. This is because the extraction was sold under the ordinary description and it was of merchantable quality for the purpose of Sale of Goods Act 1893, although it was contaminated but the question is that whether the contaminated quality was merchantable quality being determined during the trial date.

Not only that, in Australian Knitting Mills Ltd v. Grant (1933) 50 CLR 387 at 418 case, the appellant who contracted dermatitis of external origin as a result of wearing a woolen garment where he purchased from the garment retailer. The woollen garment was in a defective condition due to the existence of sulphites when it was found that negligently left in the manufacturing process. He alleged that it is in breach of warranty the underwear was not fit for the purpose and was not of merchantable quality. Thus, he claimed the damages from the retailers. However, the retailer denied the liability. The court held that the retailer was liable for this breach of warranty or condition.

Furthermore, in this merchantable quality, if the goods are merchantable especially there is an essential difference; price can be one of the relevant consideration. This can be shown in BS Brown & Sons Ltd v. Craiks Ltd (1970) 1 All ER 823 case. This case is mainly about the price of cloth between the appellants who are textile merchants and the respondents who are cloth manufacturers. The order was made to produce rayon cloth to a detailed specification. However, the sellers were misunderstands about the purpose of the cloth being ordered by buyers. The seller thought the cloth was for industrial use but the buyer wanted to make dresses. After the delivery, seller realizes it is for making dresses and they rejected the order if they had known that. The appellant sue for damages. However, if the contract price is suitable for getting a better quality cloth, the seller should be entitled to tender a lower quality cloth because it is more commercially saleable. He has fulfilled the contract. The court found that the price is much too indefinite to support this case. Thus, the court held that the buyers doesn’t clearly show their purpose to the sellers and the seller had been proved that the cloth delivered was not of merchantable quality, so their claim was dismissed by court.

However, in Barlett v. Sidney Marcus, plaintiff took the second-hand car from the defendant’s salesman for a trial run when he was planning to buy the car from defendant. The plaintiff was informed by the salesman that the car was some problem exists in the clutch and the oil pressure. The plaintiff were trading in his car was offered the car at £575 or £550 if he had to repair the clutch himself. Plaintiff was agreed to buy the car for £550 and expense was to bear by him. There was a written agreement. After that, the plaintiff drove it for four weeks and travelled about three hundred miles without any doubt. However, when the car was sent to a garage for repair and maintenance, plaintiff found out that defect in clutch was far more serious than either plaintiff or defendant’s salesman had imagined. The court found out there was no breach for the implied conditions as to fitness of purpose and merchantable quality. This is because the plaintiff should expect that a secondhand car is expect to meet the purpose which is driving along the road in safety even though it is not perfect as a new car.

Furthermore, there is an implied condition as to merchantable quality although the goods are sold to buyers under their trade name or patent. However, the implied condition as to fitness for particular purpose is excluded in this extent. This can be shown in Wilson v. Ricket, Cockerall & Co. Ltd (1954) 1 All ER 868 case. Plaintiff who is a housewife has ordered a trade name ‘Coalite’ coal from the defendant, coal merchants. When the coal was put on fire in an open grate in plaintiff’s house, plaintiff was injured due to the explosion that occurred in plaintiff’s house. So, plaintiff want to claim for the damages that caused by the breach of warranty in the Sale of Goods Act 1893(c71)(repealed) s 14.

Therefore, the court was held that the defendant was liable for this consignment where by the whole consignment including the explosive piece are not of merchantable quality as required by Section 16(1)(b).

(2) According to Section 15 of Sale of Goods Act 1957, sale by description refers to there is an allusive condition about the goods that are going to sell need to correspond with the description when there is a sale of goods by description contract exists between sellers and buyers. It is hard for the majority of the goods to fulfill with the description if the sale of goods sold is by sample and by description as well. The term ‘sale of goods by description’ must applicable to all cases where by the buyer have not seen the goods but it is relying solely on the description alone when the contract is made. So, in this condition, the obligation of the seller under this section is absolute and it is no defense that the defect in goods is latent. It would most frequently apply to unascertained goods but it may also be applicable to the specific goods where there is no identification otherwise than by description.

Sale by description may be divided into:

i. Sales of unascertained or future goods as being of a certain kind or class, or to which otherwise a ‘description’ in contract is applied

ii. Sales of specific goods, bought by the buyer in reliance, at least in part, upon the description given, or to be tacitly inferred from the circumstances and which identifies the goods.

Unascertained goods mean goods identified by description only when the contract of sale is made. Therefore, for all contract of sale of unascertained goods are sales by description and in respect of specific goods, it is applicable particularly when the buyers have not seen the goods such as mail order, sales from telephone and sales from a catalogue or brochure.

By referring to the Varley v. Whipp (1900) 1 QB 513 case, plaintiff was agreed to sell a reaping machine to the defendant. Plaintiff stated that the reaping machine was new in the previous year and still has been used to cut for 50 or 60 acres only but the defendant never seen the reaping machine beforehand. Then, the machine has been delivered to the buyers. Later on, defendant has written the letter of complaining to the court as the machine doesn’t correspond with the description being stated by the plaintiff. Defendant decides to return the machine to the plaintiff after further correspondence. Therefore, the court held that existence of the sales of goods by description has been incurred between plaintiff and defendant that being stated in the Sale of Goods Act 1957. Plaintiff was failed to claim back the money as the machine is not accepted by the defendant and the property was not transfer to the defendant. This can show that sale of goods by description is very important to the sellers when they want to make a contract of sale with the buyers.

In Nagurdas Purshotumdas & Co. v. Mitsui Bussan Kaisha Ltd (1911) 12 SSLR 67, there is a previous contract exists between the parties about the sale of flour during last time when the buyer ordered from the seller. The flour with the well-known trade mark had been sold in the bags to the buyers in the previous time. When the buyer plans to order the flour from the seller again, the order was described as ‘the same as our previous contracts’ in the new contract. So, the flour which is identical in the quality was delivered to the buyer but it did not bear the same well-known trade mark as previous flour, so it was said that the goods that has been sold to the buyer did not correspond with the description.

By looking at both cases, sales by description is very important where by the seller needs to comply what they has showed in the description on the label or packaging when want to make a contract of sale with the customers. Not only have that, trade marked of a product also very crucial in sale by description. If the seller has promised to the purchaser that he or she will get this brand of product, thus the seller needs to comply what has promised to their customers although the buyer purchase the product solely on the description. If the goods that the purchaser obtains are not identical with what they order, they have the authority to sue the seller and claim back what they have loss.

However, as for specific goods, it means that the goods are identified or agreed when the contract of sales is made. Hence, there still have sale by description exists although the specific goods have been seen by the buyers when the contract of sale is made. In the Grant v. Australian Knitting Mills Ltd (1936) AC 85 case, appellant was purchase woollen garment from the retailers. Appellant was not realized that the woollen garment was in a defective condition and cause the appellant contracted dermatitis of an external origin. This is because he has wear woollen garment which is defective due to the presence of excessive sulphites which is found that had been negligently left in the process of manufacture. Thus, appellant want to sue and claim damages from both the retailer and manufacturer. After that, the court held that the retailers were liable for this issue because it has been breach of the implied condition and warranty that being stated in the Sale of Goods Act 1957.

From the above case, The Privy Council has their view on this kind of issue. Even though the buyer is buying something which is displayed in the shelves before him on the counter, there is a sale by description. Goods that were sold to the customer not merely as the specific, it is considered as sale by description as long as it is complied with the description. Hence, in a self-service shop such as hypermarket, where the goods are selected or can be examined by the customers, it still can be classified as a sale by description provided that the goods are described in another way either on the label or the package.

There are some cases of failure of goods correspond with the description falls into two categories which can be shown in the following cases.

If the goods were considered substantially what is required, but existence of a small discrepancy has occurred in the contract. This kind of situation can be shown in the Moore & Co. and Landauer & Co. (1921) 2 KB 519 case. In this case, seller entered into a contract of sale with the buyer about the sale of quantity of cases of Australian canned fruit. In the contract, there is a sale of 3,000 tins of canned fruit that packed in the cases which consists of 30 tins each case. The seller supplies the quantities that the buyer has ordered. However, the buyer is refused to accept the delivery of the canned fruit because the buyer found out that about one-half of the cases only consist of 24 tins only but not 30 tins. The dispute has occurred between the seller and buyer and it is referred to arbitration. The umpire found out that the market value was not affected and no difference although it is packed in 24 tins in each cases. However, the goods tendered to the buyer are not fulfilling the description and thus there is a breach of contract. The Court of Appeal held that notwithstanding there was no loss the buyer needs to bear, but the buyer still can reject the whole consignment although total quantity has been met because the seller does not comply the implied condition of sale of goods must correspond with the description in the Sale of Goods Act 1957.

Another case was Acros Ltd v. E A Ronaasen & Sons (1933) AC 470 where by the buyer agrees to buy certain Russian redwood and whitewood staves from the seller. Buyer responds that the goods delivered are not satisfy with the description and this issue had been referred to arbitration. Suppose that the staves that the buyer ordered should be half inch thick, but only 15% comply with the requirement and the remaining was nearly all of the staves less than 9/16 inch thick. The arbitrator found that the staves were merchantable and commercially sold within the contract specification when the staves were shipped. Although the goods were reasonably merchantable and fit for the purpose, but the court held that the buyer entitles to reject the seller as the goods doesn’t correspond to the description at the point of sale.

Throughout 2 cases show in the above, there is a similarity which is the purchaser has the power or authority to reject the seller’s goods when the goods are not corresponds with the description. Not only that, quantity also takes into consideration when the contract of sale has been made. This can be shown in both case where by description is considered not correspond when the quantity doesn’t met the buyer’s requirements. Hence, we can conclude that no matter quality or quantity, the sellers need to correspond to the description that they made to the customers or buyers.

When the goods were stated in a more general way without the particular commercial details description, it was considered as breach of contract because fails to comply with the description as being stated. So, a small considerable discrepancy has to be occurred before it can cause a breach of contract. This can show in the Beale v. Taylor (1967) 1 WLE 1193 case. A ‘Herald convertible white, 1961, twin carbs car’ has been advertised by its owner for sale to the public. The buyer reacts to the advertisement and went to the seller’s home to have a try on the car. The buyer is satisfied with it and buys the car from the seller. When the contract of sales is made, both the buyer and seller are not realized that front half part of the car was earlier model while the rear half part of the car was 1961 Herald convertible car. This 2 part has been joined together to form the car that sold by the seller. However, the buyer has discover about this and thus brought an action to court to claim for the damages as the seller has breach the condition which implied by the Sale of Goods Act 1957 about the sale of goods by description. Therefore, the court was held that the buyer is able to claim for the damages although the description of the car that advertised was not the false of the seller because the seller was not knowledgeable about the structure of the car. However, in fundamentally the seller was selling the car with the description that mentioned in the advertisement which is Herald convertible car, so there is a breach of condition on sales by description.

Through this case, as there is a small discrepancy occurred when the car sold is not wholly same as the Herald convertible car due to the car has been welded by two different model, so it is considered as breach of contract. Thus, we can conclude that although there is a misunderstanding exists between the seller and buyer, the buyer still able to claim for the damage although the seller is lacked of knowledge about what he or she was sold by description.