Implied Terms UOL 2019/2020 Intake

2019 ZA Q3
Bonnie purchased a used car from Sellars’ Garage Ltd for her personal use. The car was one-year-old
and had covered only 4,000 miles. It was an upmarket saloon and cost £50,000. Bonnie paid a
deposit and she settled the balance in full before taking delivery of the car on 1 February 2019.

In the course of the first two weeks of her ownership, Bonnie experienced a number of faults. On
two occasions, the engine has cut out while driving at high speed. Investigations show that this is
likely to be caused by an intermittent fault with an engine sensor but could also be caused or
exacerbated by excessive levels of impurities in the fuel being used by Bonnie. On one occasion, the
‘auto locking’ feature, designed to automatically secure the car when the driver walks away with the
key, had locked the car with the key inside it. Various pieces of interior trim, on closer inspection,
also seemed to be looking very worn for such a new and lightly used vehicle and the cars upholstery,
a form of manmade leather, appears to have been discoloured as a result of being in contact with
certain of Bonnie’s clothes.

On 1 April, Bonnie took the car to Sellars’ who agreed to make good the defects. Bonnie collected
the car on 3 April. Sellars’ explained that they had cured the fault with the engine and locking
system, although they declined to explain the nature of the faults, but claimed that the wear to the
interior and any discolouration of the upholstery were entirely the result of her use of it and did not
amount to any sort of defect.

The engine fault recurred. On 27 April, Bonnie once again returned the car to Sellars’ for inspection.
Sellars’ claimed to find no evidence or cause of the faults and reasserted that the interior showed no
premature wear.

The problems have not been remedied. Bonnie has continued to use the car as she has no other
means of transport but is very unhappy with it. She has not raised the continuing problems with
Sellars’ since 27 April.

Advise Bonnie

Answer Draft;
Intro;
• B is a consumer – facts state she is buying the car for her personal use & thus provisions of
CRA 2015 shall apply to govern this contract

• B is faced with 4 main problems in respect of this car;

➢ Engine cuts out at high speed – facts indicate this is either due to the fault with the
car’s engine sensor itself or its due to the fuel selected by B for the car which
contains a high level of impurities
➢ Auto lock feature – locked car with key inside
➢ Interior trim
➢ Car upholstery – reaction with B’s clothes
 • Possible breaches of S9 (SQ) & S10 (Fitness for Purpose) shall be discussed

• B will be advised to repudiate the contract & reject the car in accordance with S20 CRA
which must be read together with either;
➢ Short term right to reject under S22 & either seek refund of £50,000 under S20(15)
or sue S Ltd for damages under S20(19)
➢ The final right to reject under S24 & either seek refund of £50,000 under S20(15) or
sue S Ltd for damages under S20(19)
➢ Right to price reduction under S24

Body;
1) Possible breach of satisfactory quality, S9 CRA;
• S9(1) – Every contract to supply goods is to be treated as including a term that the quality of
the goods is satisfactory

• S9(2) – Goods are of satisfactory quality where they meet the standard of a reasonable man
having regard to the description, price & other relevant circumstances of the goods

• In relation to price of goods – B is advised to argue that even though this is a 2nd hand car, it
is no ordinary 2nd hand car, given that it is priced at an upmarket rate of £50,000. Per
L.Wright, Grant v AKM, where the buyer has paid a relatively high price for goods, he is
entitled to expect a higher quality from those goods. Price & quality commensurate with one
another. Furthermore, the specifications of the car stated to be only 1 year old & only with a
mileage of 4000 miles further substantiates the assertion that this is a relatively new item &
shouldn’t be classified amongst regular category of 2nd hand cars

• S9(3)(a)- fitness for common purpose;

➢ B is advised to argue the problem with the engine cutting out at high speeds is a
concern that the car is no longer fit for its common purpose ie to be capable of being
driven @road-worthy. If B were only able to purchase a vehicle and drive it at a low
speed, then this car serves no purpose as a car is bought to be driven at certain
higher speeds upon reaching highways or on long journeys etc.
➢ In the event S Ltd raises the issue that this defect is not due to the fault in the engine
sensor but due to the choice of fuel selected by B which contains high levels of
impurities, B will be advised to argue that S Ltd should’ve provided notice to B with
regards to type of fuel that can be used. The seller is in a better position of knowing
its products & notice/instructions should’ve been provided to buyer & failure to do
so would mean that the fault of satisfactory quality is traced back to the seller, Grant
v AKM applied, Heil v Hedges distinguished
(NOTE – these 2 cases above can be used even under S9 CRA given that the buyers in
those cases were consumers)
• S9(3)(b) – Appearance & finish;
➢ Clearly the issues with the interior trim & the upholstery are issues dealing with the
appearance & finish of the vehicle. Further as asserted earlier, S Ltd cannot argue
that given B is buying a 2nd hand car, such wear & tear is to be expected, for reasons
advanced earlier
➢ Further even if S Ltd would seek to argue that the upholstery discolouring was
caused by a reaction with B’s clothing, as argued above, per cases Grant v AKM,
L.Wright stated where the seller fails to discharge its duties in providing sufficient
notice/instructions relating to its goods, goods which are otherwise of satisfactory
quality will be rendered of unsatisfactory quality

• S9(3)(c) – freedom from minor defects;

➢ The fact that the auto lock feature locks keys inside the car indicates that the signal
between the auto lock magnetic system & the keys are not functioning well, which is
clearly a defect, in fact a hidden defect per cases Ashington Piggeries/Henry Kendall
given that it is not discoverable until the defect emerges upon usage of the item.
➢ Furthermore, in Bernstein v Pampson Motors it was held that the buyer is entitled to
expect goods are free from minor defects not just in relation to the functional
aspects of the goods but also in relation to the non-functional aspects of those
goods

• S9(3)(d) – Safety – clearly if the car is going to cease to function at a high speed, it will not be
safe for B to drive in it, potentially putting her life & the life of other road users at risk at the
same time. Where goods are not safe to be used, it is clearly an issue of quality, Ashington
Piggeries

• S9(3)(e) – the car is clearly not durable as well given that it has cost B sufficient problems in
seeking to have it repaired & cannot enjoy the usage of the car for the price that she has
paid for it; Mash & Murell v Joseph Emmanuel applied

• Defences available to the seller under S9 @ S9(4);

➢ S9(4)(a) – defects drawn to the buyer’s attention – unlike in Bartlett v Sydney
Marcus, S Ltd has not drawn B’s attention to any of the defects listed above either
before/at the time B entered into this contract with S
➢ S9(4)(b) – B is advised that firstly B has no duty to conduct a reasonable inspection
of the goods under this subsection, Thorntonett & Fehr v Beer & Sons reversed. If
however B did conduct an examination, which is not indicated otf, only defects that
could be discovered by the kind of examination conducted by B. Here arguably the
problems with the engine sensor & the auto lock feature wouldn’t be discoverable if
B had merely had a cursory glance of the vehicle, but the fact of the interior trim will
be questionable given that any reasonable person conducting a cursory glance
wouldve been able to discover the wear of the interior trim. Nevertheless B needn’t
worry as B has not conducted an examination otf
 • Clearly, S9 has been breached & given that S doesn’t have a defence under S9(4), prima facie
S will be liable for this breach

2) Possible breach of goods being fit for the particular purpose for which it was bought, S10;
• S10(1) – buyer’s duty to make known to the seller (express/by implication) the purpose for
which goods being bought. Otf given that B is purchasing a car, B needn’t draw S’s attention
to this fact ie B doesn’t have a duty to expressly notify S the purpose for which she is buying
the car given that it is being bought for the common purpose for which goods of such nature
is bought; notice deemed to be impliedly given, Priest v Last applied

• S10(3) – seller’s duty to ensure goods fit for the particular purpose for which he has been
notified expressly/by implication by the buyer
➢ Clearly with the engine of the car cutting out at high speeds & the fact that the car
cannot perform its basic function of locking the car at the proper time indicates that
the car is not fit for the purpose for which B bought it
➢ Where seller has been notified of the purpose & yet fails to deliver goods that
correspond to the purpose, there will be a breach of its duty to ensure goods are fit
for its purpose; Bristol Tramways v Fiat Motors & Manchester Liners v Rea applied

• S10(4) – there is no breach of S10(3) if the buyer has not relied or its unreasonable for the
buyer to rely on the seller’s skill & judgment
➢ Clearly B has fully relied on S Ltd’s skill & judgment – B is a mere purchaser of a
vehicle whilst S owns a garage, who is in a better position to know of its vehicles;
Cammel – Laird v Manganese Bronze distinguished
➢ Furthermore, unlike in Teheran Europe v ST Belton, here it is clearly reasonable for B
to rely on S’s skills & judgment

• Thus there is also clear breach of S10(3) & prima facie S will be liable for such breach

3) B’s rights as consumer under CRA 2015;

• B will firstly be advised to exercise its right to reject under S20 by indicating clearly to S Ltd
verbally that he is rejecting the car & treating the contract as at an end per S20(5) read
together with S20(6)

• Prima facie, per S20(7), upon B notifying S of his intention to treat the contract at end, S has
a duty to refund B the £50,000 paid by B & B will then have to make the car available for
collection by S & any costs of returning the goods is to be borne by S & not B, S20(8)

• However, it must be analysed now whether B does indeed have the right to reject given that
facts state B took delivery of this car in 1st Feb 2019 & it is now May 2019 that B is seeking
further advice on his rights;
➢ B will first be advised as to his short term right of rejection under S22(3) – B has till
the end of 30 days period beginning from when the car was delivered to B, S22(3)(b)
or from when ownership/possession of car transferred to B, S22(3)(a) – the relevant
starting date from when B obtained ownership, possession & took delivery of the car
is 1st Feb 2019
➢ So B has 30 days starting from 1st Feb 2019 ending in 2nd March 2019 to signify its
right to reject – prima facie B has not given any such notice as required under S20(5)
& the consequences of this is that B has lost its short term right of rejection, S22(1)
➢ However, per S22(6) where the consumer has sent goods for repair, the time period
above will stop running for the length of the waiting period, defined in S22(8) as
beginning from the day B sends the car for repair & ending with the day on which B
receives the car from S
➢ Thus when B first sent the car for repair on the 1st April & received it back on 3rd
April, the waiting period of 3 days (inclusive of 1st April) is not to be taken into
account per S22(8)
➢ However, it is also clear that B sent the car for a 2nd repair ie in 27th April & per
S22(7) where goods supplied by the trader after repair don’t conform to the
contract, the time limit for exercising the short-term right to reject is either 7 days
after the waiting period ends, or if later, the original time limit for exercising that
right, extended by the waiting period
➢ Arguably from the facts it indicates that when B took the car for 2nd repair on 27th
April, S didn’t hold on to it very long & its possible that B took the car back
immediately on the 27th April itself – per S22(7), 7 days after 27th April would mean
time only starts to run after 4th May 2019
➢ Nevertheless B is advised that all the above argument will not avail her in trying to
argue that by sending the car to repair, the time for her short time right to reject has
been extended given that she has clearly lost this right pursuant to S22(1) & S22(3)
after 2nd March 2019

➢ B is advised not to despair as there is still a further chance for her to exercise her
right to reject this car ie under S24, final right to reject or she may alternatively seek
for the right to a price reduction under S24;
▪ Per S24(5), B may exercise her right to price reduction or final right to reject
where the scenario falls in any one of the instances under S24(5). The
relevant subsection otf is S24(5)(a) ie where B has sent goods for repair &
after one repair, the goods still don’t conform to the contract
▪ Otf B first sent the car to repair on 1st April & upon receiving on 3rd April, it
appeared that the problems were not remedied as the engine fault recurred
which necessitated in a 2nd attempt to send the goods for repair on 27th
April, clearly falling within S24(5)(a)
▪ Furthermore, even at the stage of the first repair, facts state that S Ltd had
explained to B that they cured the faults with the engine sensor & the auto
locking feature but refused to explain the nature of the fault – per J&H
Ritchie v Lloyd – it is insufficient for the seller to merely repair the goods
 such that they correspond to the contract & is restored of the quality
expected. The seller must also notify the buyer of the reason/nature of the
faults & what method was used to remedy it. Failure to provide such details
to the buyer would mean that the seller has not discharged its duty in
repairing the goods regardless of the fact that the goods are fully restored
▪ Thus B is advised that she may now exercise her final right to reject this car
▪ Per S24(5) B is advised that she may only exercise one right ie either seek a
price reduction of the car or exercise her right to final rejection
▪ In such instance B is advised the better course for her would be to exercise
her final right to reject this car & seek for the full refund of her monies paid,
S20(15) or where a refund is not possible, then exercise this final right to
reject & seek for damages against S Ltd, S20(19)
▪ In any event, even if B were to opt for the right to a price reduction, B is
advised that the reduction in price could sometimes amount to a reduction
of the full amount of price of the item, S24(2)– ie B can ask S Ltd to reduce
the price of the car by £50,000 which essentially means that S has to return
her the full sum of monies paid which is akin to a refund

Please also see 2019 ZB Q3 – Exact same question with different dates
2018 ZA/ZB Q4
Solent Ltd is a manufacturer of screws & agreed to sell to Brunswick Ltd 50,000 M5
precision machine screws, tolerance (length) not more than 0.5 mm for £100,000 (including
a 20 % discount). The screws were despatched from Solent’s warehouse in Manchester for
delivery to Brunswick in London.

The contract was made on Solent’s written standard terms which include the following
clauses:
a) The seller excludes liability for any & all implied terms or warranties as to the quality,
fitness, durability or suitability of the goods supplied
b) The buyer will inspect the goods & notify any defects to the seller within two
working days
c) The seller will replace any defective goods on a like-for-like basis without charge
(buyer liable for all carriage costs). No replacement goods will be offered where
defects are notified more than five working days after delivery

Solent’s standard terms contain no other express terms as to quality & fitness.

The parties have not previously contracted with each other. Solent did not draw any
particular terms to the attention of Brunswick. Both are sizeable, specialist businesses
dealing regularly in goods of this type.

Brunswick inspected the screws eight working days after receiving them from Solent. Half of
the screws are longer than specified by more than 1 mm & Brunswick wish to reject the
entire order.

Advise Brunswick

Answer Draft;

Intro;
• Provisions of SOGA 1979 shall govern this transaction – B clearly dealing as a non-consumer,
R&B Custom Brokers v UDT distinguished
• Problem faced by B is that half of the screws ie 25,000 are more than 1mm in length
• Possible breaches of S13(1), S14(2) & S14(3) will be discussed
• B has indicated that it intends to reject the entire shipment;
➢ B will be advised whether S can seek to rely successfully on its exclusion clause to
exclude liability for breaches of S14(2)/S14(3)
➢ In the event S cannot rely on its exclusion clause, B is advised that breaches of the
implied terms must first be established before B can indicate an intention to reject
these goods
 ➢ Further, where there are breaches successfully established, it will have to be
analysed whether B has lost its right to reject by virtue of significant lapse of
reasonable time under S35(4) – in relation to this B will be advised as to whether S’s
clause seeking to limit B’s right to inspection under S34/S35(2) to only 2 days will be
successful or this is an attempt by S to contract out of the provisions of SOGA 1979
➢ Finally B will also be advised as to whether S has breached its duty under S30 to
deliver the right quantity of goods

Body;
1) Whether S can rely successfully on its exclusion clause;
• B is advised that for an exclusion clause to be successfully relied upon, S must be able to
prove that the clause has been incorporated into the contract & that the clause satisfies the
requirements of “reasonableness” under UCTA 1977
• Facts clearly state that the main contract contains the exclusion clause – arguably the clause
has been successfully incorporated into the contract & B is advised not to pursue this issue
any further
• However, B will be advised that this clause is not reasonable & thus S Ltd will not be able to
rely on it – S6(1A) provides that S can exclude liability for breaches of S13(1), S14(2)/S14(3)
provided the clause is reasonable. A clause is reasonable if it meets the requirements of
S11(2) read together with Schedule 2
• The relevant factor under Schedule 2 is Schedule 2(a) ie the equal bargaining powers of the
parties relative to each other & Schedule 2 (c) ie whether B knew of the existence & extent
of this term
• Before the issue of relative bargaining powers of parties is addressed, B will first be advised
as to whether S Ltd can seek to exclude liability for breaches of the implied terms by
reference to them as “warranties” – please see the wording of the exclusion clause in S’s
contract
• Per The Mercini Lady, a seller who seeks to exclude liability for breaches of conditions must
clearly express its intention to do so & cannot use vague language. Court held where the
seller uses the term “warranty” to refer to exclusion of liability for breaches of the implied
terms this is not reasonable. Prima facie, B is advised that S’s wording of its exclusion clause
is caught by the decision of The Mercini Lady & the clause is unreasonable
• S Ltd may seek to rely on the case of Air Transworld v Bombardier where the seller used the
term “warranty” to exclude liability for breaches of implied terms & yet the court held the
clause to be reasonable. In that case, The Mercini Lady was distinguished on the basis that in
Air Transworld both parties’ lawyers were present during the negotiations of the contract
terms & actively participated in drafting the terms of the contract. Furthermore, the seller
had put in place a comprehensive regime of repairs/replacements for the buyer in the event
of defect in the goods
• Otf facts state both S & B are sizeable, specialist businesses & that S has put in his contract a
clause allowing B to seek replacement of goods on a like-for-like basis – prima facie it
appears to replicate the facts of Air Transworld
• Nevertheless Air Transworld will be distinguished from the present facts because B is dealing
on S’s standard terms of business, S & B have never dealt with each other before, which
 means B was not given a chance to actively participate in drafting the terms of this contract.
Per Schedule 2(a) both S & B are not of equal bargaining power
• Furthermore, the clause allowing B to seek replacement here is not similar to the
comprehensive regime of repairs/replacements afforded by the seller in the case of Air
Transworld. Here the clause limits B’s right to seek a replacement within 5 working days &
requires B to bear costs for sending goods for repair
• Furthermore per Schedule 2(c), B is possibly not aware of the existence of this term given
that B’s attention was not drawn to it & even if B was aware of it’s existence, B wouldn’t be
aware of the extent of this term given that S has referred to the exclusion of liability for
breach of implied terms using term of “warranty”
• Clearly the clause is unreasonable & S will not be able to rely on it; The Mercini Lady applied,
Air Transworld distinguished

2) Possible breach of sale by description, S13(1);

• Highlight wording of S13(1)
• Statement otf – “M5 precision machine screws with tolerance (length) not more than 0.5mm
long”
• Contractual cartography test per L.Moulton, in Heilbut, Symons & Co v Buckleton
• Definition of “sale by description” via L.Wilberforce in Reardon Smith v Hansen Tangen – not
all words/statements about goods amount to description of the goods, only
words/statements that go directly to the identity of the goods are descriptions whilst
words/statements relating to an attribute/characteristic of the goods are merely for
identification purposes & don’t amount to a description
• Statement about length ie “tolerance not more than 0.5mm long” merely relates to the
specification of the screw & doesn’t go directly to the subject matter of the contract ie not a
statement of “identity” – identify of the goods is “M5 precision machine screws”
• Furthermore, even if the statement of length amounts to the identity of the screws, per
Ashington Piggeries v Christopher Hill where the court held poisonous herring meal is still
herring meal, similarly machine screws which are more than 1mm long are still machine
screws
• However, B can rely on the decision of Arcos v Ronaasen whereby the court took into
account deviations of width of an item as amounting to description of the goods & thereby a
breach of the seller’s obligation to ensure goods matched the description – if this case is
applied otf, then statements about length of goods also amounts to a description of the item
& any deviations in length causes the seller to breach its duty under S13(1)
• B will be advised to argue that given today the insertion of S15A & the fact that Arcos was
decided before S15A, there are chances that this case will be reversed & that minor
deviations will not allow the buyer to reject the goods
• Also take note – court in Ashington Piggeries & Henry Kendall v William Lillico did state that
whilst it wouldn’t accept the case of Re Moore v Landauer, it could still accept the outcome
reached in Arcos v Ronaasen
• If Arcos accepted, then there is breach S13(1), if Reardon Smith & Ashington Piggeries
accepted, then no breach of S13(1)
3) Possible breach of satisfactory quality, S14(2);
• Highlight wording of S14(2)
• Definition of satisfactory quality in S14(2A) – goods are of satisfactory quality if a reasonable
man having regard of the price, description & other relevant circumstances would regard
them as satisfactory
• In relation to price – B is advised to argue that even though the screws were bought at a
discount of 20%, S cannot seek to argue that B should expect a lower quality of those goods
given that goods sold on sale must still correspond to its original quality; Grant v AKM
applied
• Other relevant circumstances under S14(2B) – fitness for common purpose ie S14(2B)(a)
• B is advised to argue that these are not regular screws being purchased but precision
machine screws – any minor deviations in the precise specifications would render the
screws no longer able to be used in accordance with the particular machine & thus will not
be fit for its common purpose
• No defences available to S under S14(2C) & arguably S14(2) has been breached

3) Possible breach of fitness for purpose, S14(3);

• Highlight wording of S14(3)
• Machine screws being bought for common purpose – implied notice per Priest v Last
• B is advised to argue that these are not regular screws being purchased but precision
machine screws – any minor deviations in the precise specifications would render the screws
no longer able to be used in accordance with the particular machine & thus will not be fit for
its common purpose
• Breach of fitness for purpose – Bristol Tramways v Fiat Motors/Manchester Liners v Rea
applied
• Reliance on seller’s skill & judgment – full reliance otf, Cammel Laird v Manganese Bronze
distinguished & clearly reasonable for B to rely on S’s skill & judgment, Teheran Europe v ST
Belton distinguished
• Clearly S14(3) has also been breached

4) Whether B can now reject the entire shipment;

• Raise & dismiss S15A – breaches otf clearly not minor breaches in nature
• B is advised that it would lose the right to reject the screws if acceptance has taken place on
its part – facts state B has discovered these defects after 8 working days & now intends to
reject the entire shipment
• Per S35(1), there are 2 ways for a buyer to signify its acceptance of the contract ie either the
buyer intimates his acceptance to the seller or does anything inconsistent with the
ownership rights of the seller (example by using the goods/subselling them)
• Apart from S35(1), if after a significant lapse of reasonable time, the buyer having discovered
the defects with the goods doesn’t signify his intention to reject the goods, he would lose
the right to reject, S35(4)
 • Truk v Tokmakidis, Judge Jack QC – reasonable time would balance interests of the buyer &
seller & reasonable time could not be less than was required for examining the goods. The
court allowed rejection even after 9 months after delivery
• Rogers v Parish – rejection allowed after 6 months
• Clegg v Olle Anderson – rejection allowed after 12 months
• Fiat Auto Financial Services v Connelly - right to reject had not been lost even though the car
had been used as a taxi for about 10 months, covering about 40,000 miles, because the
buyer had been in regular contact with the seller about the problems with the car and had
delayed making a decision whether to accept or reject while awaiting information from the
seller
• Otf, in light of the cases above, clearly 8 days time period is within the reasonable span of
time for B to signify his right to reject & will not be taken to have lost that right

5) In relation to S’s clause restricting B’s right of inspection to only 2 working days;
• Furthermore, per Truk v Tokmakidis, reasonable time cannot be less than time required for
examining goods
• B is advised that SOGA 1979 affords a purchaser a reasonable length of time for inspection
of defects either under S34/S35(2) – B will require such span of reasonable time for
inspection given that facts state B is a sizeable business. This means that B has multiple
contracts & other business dealings to tend to, apart from its contract with S Ltd.
Furthermore, B has got to inspect a large volume of screws ie 50,000 units & the nature of
the defect ie deviations of length in millimetres is not something that can be easily
discovered
• Thus to require B to inspect within 2 days is clearly not a reasonable span of time under
SOGA & clearly S’s clause otf is an attempt by S to contract out of the provisions of
S34/S35(2) SOGA

6) In relation to whether S has breached its duty to deliver the right quantity of goods under S30;
• Given that 25,000 units of screws clearly don’t correspond to what was agreed upon
between S & B, this means that only 25,000 units of screws were satisfactorily delivered to B
• There is a shortfall of 25,000 screws – please see PS Atiyah, the relationship between
quality & quantity
• Per S30(1), where there is a shortfall in goods, the buyer is allowed to reject those goods
• B is advised that S30(1) must be read together with S30(2A) which provides that if the
shortfall is so slight then the buyer will not be allowed to reject the goods & can only claim
for damages
• The burden of proving the shortfall is so slight lies on S Ltd per S30(2B)
• In Regent OHG Aisenstadt v Francesco of Jermyn Street – court held where there was a
shortfall of 1 suit from a consignment of 7 suits, this shortfall is so minor that the buyer
shouldn’t be allowed to reject the entire consignment of 7 suits
• Otf Regent OHG distinguished, here the shortfall is by 25,000 units ie exactly half of what
was agreed upon under the contract & clearly not a slight deviation
• Even under S30(1), B will be allowed to reject this entire shipment
2017 ZA Q2
Ellen runs a printing business. Her business is not incorporated. Ellen entered into two
contracts with Office Products Ltd, a wholesaler of printing and general office equipment to
purchase:

a) A contract for an office chair support for £1,000. Ellen bought this particular chair
because she suffers from back pain. She uses the chair support at her business premises
during the week but has on occasion taken it home for the weekend when her back pain
was particularly bad. She explained to Office Products Ltd about the specific nature of her
back problems and bought this chair support on their recommendation. Within a week of
starting to use the chair support, her back pain became worse. She has now discovered that
the chair support is totally inappropriate for her particular condition. It is now three months
since she purchased the chair support. The chair support cost £1,000.

b) A contract for a commercial photo printer costing £12,000. The printer is designed to
print very high quality photos in large formats with the added advantage that her customers
can connect mobile devices to it and wirelessly print photos immediately. Almost all of
Ellen’s customers have had difficulty connecting their devices to the printer. When it has
been possible to connect to the printer, the transfer of data has been extremely slow and
large parts of the image are often missing when it is printed. In the course of three weeks,
Office Products Ltd came to Ellen’s premises twice to rectify the fault but were unable to do
so. Last week they took the printer away to diagnose the fault and returned it in working
order. They have refused to tell Ellen what the fault was or what they have done to correct
it. Ellen has now had the printer for a total of four weeks.

Office Products Ltd claim Ellen is not entitled to reject the goods. Advise Ellen.

Answer draft;

Part (a);
• Is E a consumer/non-consumer in relation to the purchase of the office chair?
o R&B Custom Brokers v UDT; when a business can act as a consumer
o Nicholls LJ;
▪ 1) Where a transaction is merely incidental to the carrying on of a
business, a sufficient degree of regularity has to be established; otf
there is insufficient facts as to whether there is a practice/pattern
that E’s company was buying such chairs before this
▪ 2) The transaction must be an integral part of the business; otf is the
office chair in question of such importance to E’s printing business?
o Nicholls LJ’s obiter statement; where a business is not incorporated & the
purchase was made personally by the director in question, for both personal
(domestic) & business use, he will be regarded as a consumer for that
purchase
 ▪ Otf, E’s business is incorporated, E personally bought the chair, the
question is whether she bought it both for personal & business
use/only for business use?
▪ Here take into consideration the fact that she ‘occasionally’ takes the
chair back home when her back pain becomes intolerable

• Is there an issue of S13 here, ‘sale by description’

o Is there any description offered in relation to the goods?
▪ How about the fact E informed them of the problems she face & was
given a recommendation to the type of chair; can this amount to a
‘description’?
▪ Note that ‘description’ of goods can either be given by the buyer
(Ashington Piggeries)/seller
o Otf arguably this is a sale in relation to a specific goods; O Ltd made a
recommendation to E about which chair to purchase
o Can a ‘sale by description’ apply to specific goods; L.Wright in Grant v AKM;
‘so long as it is not sold as the specific thing, but a thing corresponding to a
description’
o Was there a breach of the ‘description’?

• In relation to S14(2), the term on ‘satisfactory quality’ (SQ) of the goods;

o Sale in the course of business; applied to the seller ie O Ltd
▪ consider Stevenson v Rogers
o Goods to be of SQ by reference to the standard of a reasonable man,
S14(2A), Bramshill v Edwards, by looking at the price, description & other
relevant factors
▪ Price; otf E paid £1000 for an office chair; higher end of the price scale
for such an item
➢ See Mustill LJ in Rogers v Parish; where a buyer pays a high
price for an item, he is entitled to expect ‘value for his money’;
functional & non-functional aspects of the goods
➢ Otf, the defect in question seems to go beyond than just the
non-functional aspects of the chair
o Other relevant factors, S14(2B);
▪ Fitness for common purpose; what is the common purpose of the
chair?
➢ Office chair meant for sitting
➢ See Aswan v Lupdine/Jewson v Boyhan
➢ Henry Kendall v William Lillico; the defect was of a limited
character which didn’t render the goods unsatisfactory, as
though the goods were unfit for one purpose, it couldn’t be
said that in the defective form they were of no use for other
purposes
 ➢ Take note that Henry Kendall was dealing with the older
provision of S14(2) where goods only need to ‘fit for one
purpose’
▪ Freedom from minor defect; c/f Bernstein v Pamson Motors, the
defect in question seems to go beyond a minor defect
▪ Safety; otf is the office chair safe for E to use for sitting?
o Any defence for the seller?
▪ S14(2C)(b); E is not bound to carry out an examination
➢ Otf, has E conducted any examination of the goods?
➢ If she has, is the defect in question discoverable; Wren v
Holt/Bramshill v Edwards/Godley v Perry

• In relation to S14(3), the term on ‘fitness for a particular purpose’;

o The fact the office chair has to cater for E’s back pain; is this a common
purpose of buying such chairs/is it a particular purpose E is buying it for?
▪ Wallis v Russell/Priest v Last/Frost v Aylesbury Dairy Co
o E has got to notify the seller expressly the purpose for which she is buying the
chair
▪ Otf has she done this
▪ If she hasn’t then she cannot rely on this section; Griffiths v Peter
Conway/Slatter v Finning
o Reliance; what kind of reliance is E placing on O Ltd?
▪ c/f Cammell Laird v Manganese Bronze & Ashington Piggeries v
Christopher Hill; the reliance in question is full reliance
▪ Reasonability of reliance?
➢ See Teheran Europe v ST Belton

• Remedy E is seeking; repudiation, reject the chair & sue for damages;
o Depends on S15A; is the breaches in question so minor?
▪ Breach of condition to be treated as a breach for warranty, damages
as the sole remedy, S11(3)/S53(1)
o Was there acceptance of the chair by E?
▪ S35(4); lapse of reasonable time;
➢ Otf 3 months since E made the purchase
▪ S35(5); have to take into account whether E had a reasonable time to
inspect the chair
➢ Bernstein v Pamson Motors; 4 weeks; old position, today
overruled by Clegg
➢ Clegg v Olle Anderson; 3 weeks; have to take into account the
nature of the defect & how long it would take to discover such
a defect
Part (b);
• Issue of SQ, S14(2);
o Price; £12,000
o Other relevant factors, S14(2B);
▪ Fitness for all common purposes; Ashington Piggeries v Christopher
Hill; ‘poisonous herring meal’ was not of SQ
▪ Freedom from minor defects; Rogers v Parish/Bernstein v Pamson
Motors/Clegg v Olle Anderson
▪ Durability; Mash & Murrell v Joseph Emanuel/George Wills & Co v
David Pty Ltd
• Issue of fitness for purpose, S14(3); is the photo printer bought for a common
purpose/particular purpose?
• Remedy;
o S15A; minor breaches?
o Acceptance; S35(4);
▪ E had the printer for a total of 4 weeks; consider S35(5)/Clegg v Olle
Anderson
▪ Does the fact that E sent the printer to repair indicate that she has
accepted the goods?
➢ S35(6); NO!
➢ J&H Ritchie v Lloyd;
1) Where the buyer agrees to the repair of the goods & the
repair is properly effected so that goods conform to the
contract, the buyer will lose the right to reject; otf O Ltd has
repaired the printer & it is now in working order
2) But they refused to inform of the defect/what the fault was;
will E still be held to have lost the right to reject?
➢ In J&H Ritchie, where the seller had refused to explain the
defect that was repaired, it amounted to a repudiation of the
contract in whole
2017 ZB Q5
Mo runs a business supplying office equipment. His business is not a limited company. Mo
entered into two contracts with Pulp Products Ltd (PPL), a stationery and office equipment
wholesaler:
a) A contract for ‘1,000 packs, 500 sheets per pack, plain A4 size printer paper, 80g per m2
weight, recycled paper content to be no less than 50%’. The total cost of the paper was
£2,500. PPL delivered 995 packs of plain A4 size printer paper, 500 sheets per pack, all 80g
per m2 weight, 560 of the packs supplied state they are made from ‘100% new pulp’ i.e.
have no recycled content. On many of the packs of paper, the packaging used is dirty and
torn. It is now a week after delivery, all the paper remains in Mo’s warehouse. Mo wishes to
reject the entire delivery.

b) A contract for a colour photocopier, which Mo has bought from PPL for £7,000 in order to
offer a copying service to his customers. Mo has also occasionally used the copier for his
own personal use. In the first week after delivery, the paper feed mechanism broke twice
and caused serious overheating. It was repaired by PPL. The machine broke again three
weeks later. Mo told PPL he would like them to seek advice from the manufacturer before
they repaired it again. Eight weeks later, the manufacturers told PPL they must fit a
redesigned part in order for the machine to work properly and avoid overheating and that a
lasting repair may result in slower performance. Mo has now waited a further six weeks
before deciding to reject the goods. PPL claim he is not entitled to reject the goods under
either contract.

Advise Mo.

Answer draft;

Part (a);
• In relation to description, S13;
o ‘500 sheets per pack, plain A4 size printer paper, 80g per m² weight, recycled
paper content to be no less than 50%’
o Nature of goods; unascertained goods; Arcos v Ronaasen/Re Moore v
Landauer
o ‘Sale by description’?
➢ 560 packs supplied state ‘they’re made from 100% new pulp ie no
recycled content’
➢ Seems to go against statement of percentage of recycled content in
the paper
➢ Does this form the ‘identity’ of the goods/merely an identification of
the goods; Reardon Smith v Hansen-Tangen
➢ What about Ashington Piggeries v Christopher Hill where ‘poisonous
herring meal’ was still held to be ‘herring meal’; no breach of
description of goods
➢ c/f Pinnock Bros v Lewis Peat; proportion of the castor beans was in
such a high quantity that the feed could no longer be identified as
‘Argentina Bolita beans’
 ➢ Apply otf; agreed that the recycled content no less than 50% ie it
should be >50%; does this mean affect the identity of the goods in
that it no longer is ‘plain A4 size printer paper’?

• In relation to S14(2);
o ‘Goods supplied under the contract’; Geddling v Marsh; must also include the
packaging in which the goods are delivered; otf ‘torn & dirty’ packaging
o The fact of the proportion of recycled content whilst may not affect the
description of the goods, could relate to the quality of the paper sold;
Ashington Piggeries v Christopher Hill

• In relation to S14(3); the paper is being bought for a common/particular purpose?

o The fact that the contract agreed between the buyer & seller stipulate for
requirement recycled content to be present in paper, could this indicate that
the buyer is being environmentally cautious & would like to reduce the
impact on the environment from manufacturing of fresh paper without any
recycled content?
o If that is so, is it the duty of the buyer to notify the seller of the particular
purpose for which they are buying the goods?
➢ See Teheran Europe v ST Belton

• In relation to acceptance, S35; facts state that the paper has been in Mo’s
warehouse for a week
o S35(4) & S35(5); reasonable time to reject includes reasonable time to
examine the goods
o Clegg v Olle Anderson; nature of the defect & time taken to discover it
o Dependant on the ‘complexity of the goods’;
➢ Otf the defects in relation to the torn & dirty packaging are obvious
on plain sight
➢ The packs also state on the cover the amount of recycled content of
the paper in relation to the 560 packs
o Arguably, Mo has lost the right to reject, S35(4), 1 week being too long in
relation to the goods in question

• Remedy; S11(4); where the contract is non-severable (arguably otf yes) & the buyer
accepts the goods, breach of condition to be treated as breach of warranty, damages
as sole remedy, S11(3)/S53(1)

• Breach of S30; duty of the seller to deliver the agreed quantity of goods;
o Otf the contract is to deliver 1000 packs of A4 paper, S only delivered 995
packs; 5 packs short
o Where there is a shortfall in delivery, buyer cannot reject if the shortfall is so
slight that it would be unreasonable for him to reject, S30(2A); otf 5 packs
short, is this a very slight breach?
o S30(1); where there is a shortfall in delivery & buyer accepts the goods, he
must pay for them at the contract rate
 o However take note, S11(4) doesn’t prevent the buyer to his right of partial
rejection, S35A; Mo can reject the remaining 5 packs of paper
o Calculation of cost Mo has to pay for acceptance of the 995 packs is £2,500
minus whatever cost for the 5 packs of paper

Part (b);
• Is Mo a consumer/non-consumer in relation to the colour photocopier;
o Dillon LJ’s obiter in R&B Custom Brokers v UDT
o If yes, then provisions of CRA 2015 apply to him; if not, then provisions of
SOGA 1979

• Acceptance?
o Mo waited a further 6 weeks from the date the seller’s provided them with
the requested information
o See Clegg v Olle Anderson per Hale LJ; so long as the buyer is waiting for
information from the seller in order to make an informed choice about
whether they wish to reject goods, the right to reject cannot be lost
o Take note in that case the buyer waited for a further 3 weeks, otf 6 weeks;
would this still amount to a ‘reasonable lapse of time’?
2016 ZA/ZB Q1
Superior Computers Ltd manufactures desktop computers. They supply a variety of national
retailers with high specification computers. They also supply ‘Achilles 2.0’, a computer
operating system. In January, 2015, Bigg PC Ltd, a national retailer, contract with Superior
for a delivery of 30,000 ‘Trojan 1200’ computers. All the computers are to be delivered to
Bigg’s warehouse. Half of the computers are to be loaded with Achilles 2.0. The first
shipment (half pre-loaded with Achilles 2.0, half without operating systems) is to be
delivered in March; the second shipment of the remaining devices is to be delivered in July.
Superior also agrees to allow Bigg to have the right, between March and September, to sell
to its customers a pincode which allows Bigg customers to download Achilles 2.0 from the
internet. The contract between Superior and Bigg also contains the following terms:

‘It is a condition of this agreement that Superior undertakes to provide ‘Trojan 1200’
computers ready for retail distribution and that 15,000 of these computers will have the
Achilles 2.0 operating system preinstalled…
Superior’s terms and conditions of business, as delivered to Bigg, shall prevail. These terms
and conditions of business are subject to change without notice’.

Bigg receives its first shipment in March. The delivery to its warehouse is accompanied by a
shipment invoice which includes the following term on the reverse:
‘No terms are implied as to the condition, fitness or operating quality of Superior’s ‘Trojan
1200’ computers… Any loss arising from the use or re-sale of any ‘Trojan 1200’ computer is
limited to £10’.

A fault in the Achilles 2.0 operating system means that some of the computers delivered to
Bigg do not work properly. Similarly, some of Bigg’s customers, who downloaded the
Achilles 2.0 operating system using a pincode have problems with their computers due to
the fault in Achilles 2.0. Bigg has been compelled to reimburse its customers for the losses
arising from this defect. In addition, 75 of the computers delivered in July were not
installed with Achilles 2.0 but an older version, Achilles 1.0. Bigg rejects the entire shipment,
informing Superior that this is within their rights. Bigg also seeks to recover compensation
for amounts that they have had to pay to customers who had suffered as a result of the
faulty Achilles 2.0 systems sold to them by Bigg.

Advise Superior.

Answer Draft;

Intro;
• Provisions of SOGA 1979 shall govern this transaction – B clearly dealing as a non-consumer,
R&B Custom Brokers v UDT distinguished

• Problem faced by B is;

➢ March shipment – some of the computers out of the 15,000 computers delivered
not working due to faulty Achilles 2.0 software
➢ July shipment – 75 computers out of the 15,000 delivered not installed with Achilles
2.0 but with older version of Achilles 1.0
 ➢ Sale of software – B’s customers who directly downloaded the Achilles 2.0 software
facing problems with the software

• Possible breaches of express terms for description & fitness for purpose will be discussed &
possible breach of implied term of satisfactory quality under S14(2) will be discussed

• B has indicated that it intends to reject the entire shipment & seeks reimbursement for
losses suffered by its customers;
➢ S will be advised to rely on its exclusion clause to exclude liability for breaches of
quality & fitness for purpose
➢ In the event S cannot rely on its exclusion clause, S is advised that breaches of the
implied terms must first be established by B before B can indicate an intention to
reject these goods
➢ Further, where there are breaches successfully established, it will have to be
analysed whether B has lost its right to reject by virtue of significant lapse of
reasonable time under S35(4) – in relation to this discussion, S will also be advised
to argue that these contracts are non-severable in nature under S31(2) such that
acceptance of any part of a contract will amount to acceptance of all other
contracts thereby preventing the buyer from rejecting the contract as a whole
➢ Finally S will also be advised as to whether it has breached its duty under S30 to
deliver the right quantity of goods

Body;
1) Whether S can rely successfully on its exclusion clause;
• S is advised that for an exclusion clause to be successfully relied upon, S must be able to
prove that the clause has been incorporated into the contract & that the clause satisfies the
requirements of “reasonableness” under UCTA 1977
• In relation to incorporation – S is advised that B will seek to raise cases like Thornton v Shoe
Lane Parking, Olley v Marlborough Hotel & Chapelton v Barry UDC to argue that a clause
must be incorporated either before or at the time of the contract, clauses must be
incorporated on documents where the buyer would expect to find such terms & the
sufficient notice must be given to the buyer drawing the buyer’s attention to the existence
of the term
• Otf the clause was inserted not in the main contract but in a subsequent document after the
conclusion of the main contract, the clause is found on an invoice (akin to a receipt) which is
a document whereby the buyer wouldn’t expect to find such terms & that too at the back of
the invoice ie buyer’s attention not drawn explicitly to the existence of the term – prima
facie for all these reasons, B will be able to argue that the clause is not successfully
incorporated into the contract between S & B & thus S cannot seek to rely on the clause
• S is advised to counter-argue that whilst the above is true, nevertheless S has inserted a
clause in the main contract stating that “the terms are subject to change without notice” & B
has agreed to such term given the contract is concluded – thus the insertion of exclusion
clauses in an invoice & that too at the back of it is not a later attempt to introduce new
 clauses into the contract but is consequential to the main contract & has been incorporated
under the main contract
• S is advised that the next hurdle to satisfy before it can seek to rely on this clause is that the
clause must satisfy the requirements of reasonableness per S6(1A) & S11(2) read together
with Schedule 2 UCTA 1977
• The relevant factor otf is Schedule 2(a) ie equal bargaining powers of the parties relative to
each other – otf S is advised that per the cases of The Mercini Lady & Air Transworld v
Bombardier, both parties must be afforded a chance to actively participate in the drafting of
the terms of the contract before it would be held that the parties are of equal bargaining
power
• Otf B is dealing to S’s standard written terms of contract & has not been afforded a chance
to negotiate on the terms to be incorporated into the contract & thus the clause is not
reasonable; The Mercini Lady applied, Air Transworld distinguished
• S will not be able to rely on this clause to exclude its liability

2) Possible breaches of the express terms;

• Otf the contract expressly provides;
➢ “15,000 Trojan 1200 computers that will be loaded with Achilles 2.0” – this is an
express term as to description
➢ “Trojan 1200 computers ready for retail distribution” – this is an express term as to
fitness for purpose. B is buying these computers for the purpose of retail
distribution
• Breach of express term of description – 75 computers contain Achilles 1.0 & not Achilles 2.0
& thus clearly there is a breach of this description
• Breach of express term of fitness for purpose – the fault in Achilles 2.0 has rendered some of
the computers not being able to function & thus clearly not fit for purpose of retail
distribution. Clearly this term also has been breached
• These express terms are stated to be “conditions” – per S11(3), where a condition has been
breached, the buyer is able to repudiate the contract, reject the goods & sue for damages

3) Possible breaches of satisfactory quality, S14(2);

• Given that there is no express term for satisfactory quality, the term in S14(2) will be implied
into the main contract between S & B
• Highlight wording of S14(2)
• Definition of satisfactory quality per S14(2A)
• Other relevant circumstances under S14(2B);
➢ Discuss breach of S14(2B)(a) – faulty computers clearly not fit for the common
purpose of being used & thus cannot be used for retail distribution
➢ Discuss breach of S14(2B)(c) – freedom from minor defects ie the fault with the
software Achilles 2.0 is a hidden defect per cases of Ashington Piggeries/Henry
Kendall
 ➢ Discuss breach of S14(2B)(e) – durability – clearly if new computers cannot be used
& cannot be subsold, computers not durable; Mash & Murell v Joseph Emmanuel
applied
• Raise & dismiss defences available to S under S14(2C) – ie no defects drawn to the buyer’s
attention, Bartlett v Sydney Marcus distinguished & no issue of defects discoverable upon an
examination of the goods given that facts don’t indicate B has conducted an examination of
the computers; today Thorntonett & Fehr v Beer & Sons reversed
• S14(2) clearly breached as well

4) Whether B has lost the right to reject by virtue of S35;

• S is advised to argue that these defects were respectively discovered by B in the month of
March 2015 & July 2015 & it is only now in May 2016 that B indicates an intention to reject
the goods – significant lapse of time of 14 months & 10 months since March & July
respectively
• Per S35(1), there are 2 ways for a buyer to signify its acceptance of the contract ie either the
buyer intimates his acceptance to the seller or does anything inconsistent with the
ownership rights of the seller (example by using the goods/subselling them)
• Apart from S35(1), if after a significant lapse of reasonable time, the buyer having discovered
the defects with the goods doesn’t signify his intention to reject the goods, he would lose
the right to reject, S35(4)
• Truk v Tokmakidis, Judge Jack QC – reasonable time would balance interests of the buyer &
seller & reasonable time could not be less than was required for examining the goods. The
court allowed rejection even after 9 months after delivery
• Rogers v Parish – rejection allowed after 6 months
• Clegg v Olle Anderson – rejection allowed after 12 months
• Fiat Auto Financial Services v Connelly - right to reject had not been lost even though the car
had been used as a taxi for about 10 months, covering about 40,000 miles, because the
buyer had been in regular contact with the seller about the problems with the car and had
delayed making a decision whether to accept or reject while awaiting information from the
seller
• S is advised to argue that unlike the cases above where time was required for the buyers to
conduct an examination of the goods & the defects only emerged after some time, the
present facts the buyer has already discovered these defects & a significant time has lapsed
since then
• Arguably B has lost its right to reject the goods & thus can only sue S for damages – subject
to the discussion below

5) Are the contracts severable/non-severable in nature under S31(2);

• S is advised to argue that the 2 shipments in March & July respectively are non-severable in
nature & so acceptance of any one of the contracts is an acceptance of all shipments
thereafter
 • Per S11(4), acceptance of part/whole of a contract, where the contract is non-severable in
nature, the buyer will not be able to reject the goods & can only sue for damages
• Prima facie, B cannot reject the 30,000 computers & can only sue S for damages
• However, S is advised that S11(4) is subject to S35A ie the buyer’s right of partial rejection of
goods – per S35A(3), B can only exercise this right in relation to those goods that don’t
conform to the contract description
• Ie out of the 30,000 computers, only 75 computers don’t correspond to the description ie
“30,000 Trojan 1200 computers with Achilles 2.0” & thus B can only reject the 75 computers
& in relation to the remainder of those computers, B can only sue S for damages

6) Is there a breach of S30;

• S is advised that B may now seek to argue that there is a breach on S’s part to ensure the
right quantity of goods are delivered
• Given that 75 computers now fall short of complying with the contract description, this
means that S has failed to deliver the exact quantity as agreed upon ie 30,000 units
• Per S30(1), where there is a shortfall in goods, the buyer is allowed to reject those goods
• S is advised that S30(1) must be read together with S30(2A) which provides that if the
shortfall is so slight then the buyer will not be allowed to reject the goods & can only claim
for damages
• The burden of proving the shortfall is so slight lies on S Ltd per S30(2B)
• In Regent OHG Aisenstadt v Francesco of Jermyn Street – court held where there was a
shortfall of 1 suit from a consignment of 7 suits, this shortfall is so minor that the buyer
shouldn’t be allowed to reject the entire consignment of 7 suits
• S will have to persuade the court that a shortfall of 75 units is so slight comparatively to
30,000 units & only if S is successful in proving it, will B be prevented from rejecting the
entire shipment
• Otherwise B would be able to reject the entire shipment

7) In relation to whether B can claim reimbursement of losses suffered by its customers against S;
• S is advised that B can only hold S liable if B can prove breaches of satisfactory quality,
S14(2)/fitness for purpose, S14(3) in the sale of the pincode to its customers
• S is advised to raise the case of St Albans CC v International Computers to argue that where
there is a sale of software not accompanied with a hard disc, to be directly downloaded
from the internet, this is not a contract for sale of goods falling within S1(1) read together
with definition of goods under S61(1)
• Given the contract is not a contract for sale of goods, the obligation of the seller under
S14(2)/S14(3) doesn’t arise & thus S cannot be held liable
• However, S will also be advised that if SOGA doesn’t apply to imply terms into the contract,
nothing will stop the courts from implying a term of satisfactory quality/fitness for purpose
into the contract – ie “statutory implied terms” vs “court implied terms”
• S will still have a duty imposed by the courts to ensure the software is of satisfactory quality
& is fit for its purpose – clearly the software has breached these requirements & S is advised
that it has to reimburse B of the losses suffered by its customers in relation to the download
of the Achilles 2.0 software
2015 ZA/ZB Q8
In January 2013 Supermakers LTD, a manufacturer of machinery, entered two contracts with
Beaubois Ltd, a furniture manufacturer. Each contract was for the sale of an identical wood
planning machine, warranted to produce 500 feet of planed word per hour. One machine
was to be delivered on 2 January 2014 and the other on 2 August 2014. The machines were
priced at £50,000 each; and each contract provided that the price was payable by 12
monthly instalments commencing on delivery, and that property in goods was to pass on
completion of payments. The first machine was delivered and installed, but after it had been
working for a fortnight, it was clear that by reason of its design the machine could only
produce 250 feet of planed wood per hour. Beaubois therefore rejected the second
machine on 1 August 2014. By August 2014 the market price of comparable wood planning
machines warranted to produce 500 feet of planed wood per hour had fallen to £40,000 and
a machine warranted to produce 250 feet of planed wood per hour would likely receive only
£25,000. The delay in Beaubois’s production of planed wood caused it to lose a valued
customer. It also deprived Beaubois of an estimated profit of £10,000 during the month of
February 2014

Answer draft;

Intro;
• Provisions of SOGA 1979 shall govern this transaction – B clearly dealing as a non-consumer,
R&B Custom Brokers v UDT distinguished

• Problems faced by B is;

➢ The wood planing machine is slower than what was purchased – can only produce
250 feet per hour instead of 500 feet per hour
➢ Loss of the valued customer – secondary losses
➢ Loss of estimated profits of £10,000 – secondary losses

• Possible breaches of express terms for description will be discussed & possible breach of
implied terms of satisfactory quality under S14(2) & fitness for purpose under S14(3) will be
discussed

• B has rejected the 2nd machine due in August (which hasn’t been delivered yet);
➢ B will be advised as to whether it can also exercise its right to reject the 1st machine
that was duly delivered & installed in January or whether per S35(4), it has lost its
right to reject due to significant lapse of reasonable time from January 2014 to May
2015, where B is only now seeking for advice
➢ In relation to the 2nd machine, B is advised to argue that the contracts in January &
August are severable from each other under S31(2) such that acceptance of one
doesn’t amount to acceptance of all other contracts
➢ B will also be advised that given the 2nd contract has been rejected even before S
could deliver them, B will have to prove the likelihood of breaches in the 2nd
contract, otherwise failure to establish breach in 2nd contract would render B’s
rejection of it as premature & B could in turn be sued by S for breach of contract
 • Finally B will also be advised as to whether it can claim for the secondary losses in relation to
the principle enunciated in Hadley v Baxendale

Body;
1) Possible breach of express term of description;
• The contract has an express term for the description of the goods – this is because
the machine has been “warranted” to produce “500 feet of wood per hour”
• This means that there is a warranty in the contract ie an express term
• Per S61(1) a warranty is defined as being a term that is collateral to the main
purpose of the contract
• Per S11(3) where there is a breach of warranty, the buyer will only be entitled to a
claim for damages
• Clearly otf there is a breach of the express term for description when the machine
could only produce 250 feet wood per hour – nevertheless B will be advised that
under S11(3) the court has power to hold that a term expressed as warranty could
nevertheless be a condition
• Ie the court holds the power to determine whether an express term is really a
warranty, otherwise the court can convert the term into a condition
• Per the definition in S61(1), B is advised to argue that this term “to produce 500 feet
wood per hour” is clearly not a collateral purpose but the main purpose for which B
has entered into the contract – B knew there were 2 types of machines in the market
ie a machine that can produce 500 feet wood per hour & a machine that can
produce 250 feet per hour. If B chose the machine for 500 feet per hour, this just
indicates that it intends to purchase a machine for its speed requirement, so as to
meet its high production rate, to satisfy the needs of its customers
• This is clearly the main purpose for which B entered into this contract & therefore
the term is most likely to be classified as a condition instead of a warranty
• Per S11(3), where a condition has been breached, the buyer will be able to repudiate
the contract, reject the goods & sue for damages

2) Possible breach of satisfactory quality, S14(2);

• Given there is no express term for satisfactory quality, S14(2) will be implied into this
contract
• Highlight wording of S14(2)
• Definition of satisfactory quality under S14(2A) – goods are of satisfactory quality if a
reasonable man taking into account price, description & other relevant
circumstances would regard the goods as satisfactory
• In relation to price – consider the cases of Beecham v Francis Howard & BS Brown v
Craik where the courts look into the different market prices of same goods & decide
to factor in the requirements of quality where the price difference is so great
• Otf the price difference between a machine that can plane wood for 500 per hour
from a machine that can only plane 250 feet wood per hour is £15,000 (£40,000 –
£25,000) – this price difference is so great & will be factored in to argue that a buyer
who pays a substantial difference in price for goods has the right to expect a higher
 quality from those goods; Beecham vFrancis Howard applied & BS Brown v Craik
distinguished
• Consider the other relevant circumstances under S14(2B)(a) ie fitness for common
purpose, S14(2B)(e) ie durability
• Raise & dismiss the defences available to the seller under S14(2C)
• Clear breach of S14(2)

3) Possible breach of fitness for purpose, S14(3);

• Highlight wording of S14(3)
• Goods being bought for the common purpose ie wood planing machine to plane
wood – implied notice of purpose given per Priest v Last
• Breach of fitness for purpose – Bristol Tramways v Fiat Motors/Manchester Liners v
Rea
• Issue of reliance – B has fully relied upon S’s skill & judgment ie c/f Cammel Laird v
Manganese Bronze & it is clearly reasonable for B to have so relied, Teheran Europe
v ST Belton distinguished
• Clear breach of S14(3)

4) Whether B has lost its right to reject the 1st contract by virtue of significant lapse of reasonable
time;
• The 1st contract was duly delivered & installed in January 2014 & B has already discovered
the defect above within a fortnight ie within 2 weeks still falling within month of January
2014
• B has only now sought advice as to whether it can reject the machine in May 2015 – lapse of
about 14 months since the defect is discovered
• Define acceptance per S35(1)
• Where the buyer, upon discovering the defect in question, doesn’t signify its intention to
reject the goods within a reasonable span of time, the buyer will be taken to lose its right to
reject those goods, S35(4)
• The buyer cannot be taken to lose its right without being afforded a reasonable opportunity
to examine the goods – S35(2)
• Please insert the cases on S35 as indicated in above questions
• B is advised that unlike the decided cases where time was required for the buyers to conduct
an examination of the goods & the defects only emerged after some time, the present facts
B has already discovered these defects & a significant time has lapsed since then
• Thus B has clearly lost its right to reject the 1st machine & can only sue S for damages
• For calculation of damages, please see S53
5) Whether B can nevertheless reject the 2nd contract even before the contract has been
performed by the seller;
• Given the contracts were delivered by separate instalments, B is advised to argue that under
S31(2), these 2 contracts are severable for one another – thus acceptance of the 1st contract
under S35 doesn’t preclude B from rejecting the 2nd contract
• However, B is now advised that before it can reject the 2nd contract, it must be able to prove
that there are breaches in the 2nd contract – B will be advised to rely on the Maple Flock test
• In Maple Flock v Universal Furniture Products, the court laid down the test for determining
breaches in contracts that are severable in nature;
➢ Degree of probability/likelihood of the breach recurring
➢ The ratio the breach bears quantitatively to the contract as a whole
• In that case, the parties had a history of instalment deliveries whereby all the previous
instalments delivered by the seller contained no defect & it was only on a single occasion
that one instalment contained defective goods – the court held that the degree of
probability of the similar breach recurring in future instalments is so low such that the buyer
shouldn’t be allowed to use one defective delivery as grounds to treat all future instalments
as repudiated
• Furthermore, in that one instalment delivery, only 1 out of a total of 4 items in the
consignment contained the defect & thus the courts held the ratio that the breach bore
quantitatively to the contract as a whole is so low that the buyer shouldn’t be allowed to
reject the entire consignment
• Also see Regent OHG Aisenstadt on this point
• Otf B is advised to argue that the facts in Maple Flock are distinguishable from the present
facts – this is because there is a high degree of the similar breach in the January contract to
recur in the August contract – facts state the contracts are for “identical wood planing
machines” – whatever problems faced with the 1st machine will also be faced in the 2nd
machine
• Further, each instalment only contains 1 machine & if that 1 machine itself is defective, then
the ratio that the breach will bear to the contract as a whole so not low
• Maple Flock test satisfied – B will be able to reject the 2nd machine & his act of prematurely
rejecting the contract cannot be taken as an act of anticipatory repudiation by S such that S
can sue B for breach of contract

6) Whether B can claim for the secondary losses of the loss of customer & loss of profits as against
S;
• B is advised that in order to mount a successful claim for secondary losses, the test in Hadley
v Baxendale must first be satisfied
• It must either be shown that the loss in question was a direct & natural consequence of the
breach by the seller, or if that can’t be shown, the loss in question was within the reasonable
contemplation of the parties that if the seller breached its obligations, such kind of loss
would arise
• In relation to loss of profits – this is clearly a direct & natural consequence of the breach by S
& S can even be held to know that such consequence would arise where he has breached his
obligations @within reasonable contemplation of parties
• In relation to loss of valued customer – could this be a direct & natural consequence of the
breach/within S’s reasonable contemplation? If S can argue that this is a little farfetched
given B only lost one customer & that too a valued customer – how can S be taken to have
contemplated of this particular valued customer leaving B’s business in the event of breach
on his part?