INSTRUCTIONS

Answer the following question.

QUESTION

Rina had just opened a café and wanted to buy an oven. She went to Good Chef Bhd (GCB)
which sells various commercial ovens and bakery equipment. She told the seller at GCB that
she wants a convection oven for her café which could be used to bake cakes and cookies in
large volumes as she gets many orders daily. She also wanted an oven which could be used
for grilling as her café also has grilled chicken and lamb on the menu. The seller at GCB
suggested to Rina to buy the industrial oven from the ‘Happy Baker’ brand as the oven is
multipurpose. Rina bought two ‘Happy Baker’ industrial ovens for her café as she was
convinced with the explanation of the seller and because GCB supplies various baking
equipment. Rina used one oven for baking and the other oven for grilling. However, she
discovered that the ovens could not be used for grilling even though she followed the
instructions correctly and could only bake a limited number of cakes at one time. Rina is upset
as the ovens could not fulfill her needs for her café. GCB refused to let her return or exchange
the oven as the oven can still be used and is not damaged.

Advise Rina based on the Sale of Goods Act 1957 and relevant cases.

(20 marks)
ANSWER

The issue in this question is whether the seller has breached the implied warranty as
to fitness for a particular purpose.

From the above question, a contract for the sale of goods is defined as "a contract
whereby the seller transfers the property in the items to the buyer for a consideration" under
Section 4(1) of the Sales of Goods Act. For a contract of sales of goods there are three
elements to exist which are goods to be transferred to the buyer, seller agrees to transfer
property in goods to buyer and the price for the said transfer. Based on section 12 of sale of
goods and may be either in the term of “condition” or “warranty”. A condition is defined as "a
requirement necessary to the principal purpose of the contract, the breach of which gives rise
to a right to regard the contract as repudiated" under Section 12(2). The party not in default
has the right to revoke the agreement and reject the goods if a condition is broken. In addition,
a warranty is a term that is "collateral to the essential purpose of the contract, giving rise to a
claim for damages but not a right to reject a thing and regard the contract as repudiated,"
according to Section 12(3). If a warranty is broken, the party who is not in default cannot end
the contract instead, they can only seek compensation for their losses.

Implied terms in the sale of products are intended to enable the exclusion of such terms
and conditions by formal agreement, consideration that they are present, or custom. Sale of
Goods Act 1957 provides for seven implied terms in a contract of sale. However, based on
Section 62 of Sales of Goods Act allows the exclusion of the implied terms and conditions by
express agreement or by previous dealing or by usage. The basic rule is that a buyer has to
exercise caution while making a purchase since only she is aware of the intended use of the
products. The caveat emptor principle, which means "buyer beware," regulates this situation.
The caveat emptor general rule is preserved under Section 16(1) of the Sales of Good Act
1957. The implied requirement that the items be sufficiently suited for a buyer's particular
purpose is based on Section 16 (1)(a). The caveat emptor principle does, however, include
some exceptions under Section 16(1)(b), in which the buyer may have a claim against the
seller if specific requirements are fulfilled. However, if the buyer wants to sue the seller for
breach of this implied condition, there are four conditions which must be fulfilled by the buyer.

The first condition is disclosure of purpose. It means that the buyer must inform the
seller his purpose when buying the goods. As it shows from case Griffiths v Peter Conway
Ltd, the buyer did not inform the seller of her exceptionally sensitive skin when she purchased
the coat, despite the fact that it could be worn by any other reasonable person without any

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issues. However, if the goods have only one purpose, then there is no disclosure of purpose
is required. It was held in Priest v Last, the plaintiff bought a hot water bottle from the
defendant, but later, the bottle burst while the plaintiff’s wife was using it and caused her burns.
The court held that it was not fit for its particular purpose. While in this situation, Rina already
told the seller at Good Chef Bhd (GCB) the particular purpose she requires for the oven that
she wants for her café which could be used to bake cakes and cookies in large volumes and
also for grilling purposes. Rina has clearly fulfilled the first condition. The situation is similar to
the case of Sunrise Bhd & Anor. v L&M Agencies Sdn Bhd where the plaintiff bought two
brand-new tower cranes from the defendant to build two condominium projects, but then the
cranes regularly broke down. The plaintiff claimed that the tower cranes were either of inferior
quality or were not suitably equipped for the intended use. The cranes were declared
inappropriate for the specific purpose for which they were acquired, and the court determined
that there had been a violation of implied condition and accepted the evidence.

The second condition that must exist if the buyer wants to sue the seller for breach of
this implied condition is reliance on the seller’s skills and judgement. In this condition, the
buyer must have relied on the seller’s recommendation as to which goods to buy. The Good
Chef Bhd (GCB) supplier recommended Rina to purchase an industrial oven since it is
multifunctional and perfect for her needs. Rina trusted and was persuaded by the merchant's
justifications while choosing the oven for her café. Applying to the relevant cases from Grant
v. Australian Knitting Mills, reliance typically results from the circumstances implicitly. For
instance, in a purchase from a store, the reliance will be inferred from the fact that a customer
walks to the shop with faith that the seller has picked his product with skill and judgement. As
related, in Manchester Liners Ltd v Rea Ltd, the direct disclosure of the reason for which
the items were required, which the court found to be evidence of reliance on the seller's ability
and judgement, was helpful. Rina fulfilled the second implied condition as to fitness for
particular purpose in this occasion.

The third condition is the goods supplied are of the description which the seller’s
business to supply. That means the goods bought by the buyer must be the kind which is in
the course of the seller’s business to supply. From this situation, Rina went to Good Chef Bhd
(GCB) which sells various commercial ovens and bakery equipment since she wants to buy
an oven for her café. Applying relevant cases from Spencer Trading Co. Ltd v Devon, an
adhesive produced from gum resin for manufacturing flypapers had previously been provided
to the plaintiff on special order by the manufacturer. The manufacturer, who occasionally
employed synthetic raw materials in place of the natural substance previously used, was given
a second supply order from the plaintiff the following year for the same usage. Similarly, in

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another case from Ashington Piggeries Ltd v Christopher Hill Ltd, the seller was a
manufacturer and dealer in animal feed. Although this was made known to the buyer, the seller
consented to create this compound using the buyer's method. The question was whether the
compound fit the description that the vendor was supposed to furnish as part of his or her line
of work. The product was believed to be a feeding component. The third condition of implied
condition as to fitness for particular purpose also fulfilled by Rina in her situation.

The fourth condition is the goods must not have been bought under patent or trade
name. If a buyer purchases items under a patent or trade name, it appears that he does not
trust the seller's ability and judgement. He cannot thereafter claim that the items are unsuitable
for the purpose he requested. As it shows in relevant cases from Panglima Aces Sdn Bhd v
Highway Bricks Work (Serendah) Sdn Bhd, the appellant claims that the price of oil supplied
and delivered to them was of low quality and not merchantable. It stated that the appellant
contract with the respondent was for “Petronas” oil and the appellant has a contracted under
a patent or trade name which can have disqualified them to involve the section to counterclaim
against the respondent. In this case, Rina did not buy the oven under patent or trade name.
She goes to the Good Chef Bhd (GCB) to buy the oven and survey by herself and she also
relies on the seller’s skill and judgment. However, the implied condition applies if the items
were not purchased under the patent or trade name or if the purchaser did so but relied on the
seller's expertise and judgement. The relevant cases that related in this situation is Baldry v
Marshall, the customer had requested a car from the dealer that was good for travelling and
the dealer suggested a Bugatti car. A deal was arranged to purchase a Bugatti car but then
discovered that the car was unsuitable for travelling. Even though the car was sold under a
trade name, but the court determined that the dealer was responsible because the customer
had relied on the dealer's expertise and judgement in choosing a vehicle that was appropriate
for the buyer's stated purpose.

In conclusion, Rina already fulfilled all the four conditions, and she has the right to get
upset as the ovens could not fulfil her needs. Good Chef Bhd (GCB) has breached the implied
condition as to fitness for particular purpose. Rina can claim for her loss and can sue Good
Chef Bhd (GCB) for this matter. Good Chef Bhd (GCB) cannot refuse to let Rina return or
exchange the oven even though the oven is still can be used and is not damaged. It is because
the oven could not be used for grilling even though Rina followed the instructions correctly and
could only bake in a limited number of cakes at one time.