Page 122 - DMGT407Corporate and Business Laws

Unit 5: Law of Sale of Goods

Notes
Examples:
1. A person who is a draper and has no special knowledge of hot water bottles, purchases
a hot water bottle from a chemist. The bottle bursts and injures his wife. The chemist
would be liable for refund of price and damages as there is a breach of condition as
to fitness.
2. A dealer sells a refrigerator to Bhanu. The refrigerator performs all other functions
but fails to make ice. This would amount to a breach of an implied condition.
The above exception does not apply where the specific goods are sold under their patent or trade
name.

Examples:
1. A buyer orders a patent smoke consuming furnace by its patent name for his brewery.
The furnace supplied is found to be unsuitable for the purpose. The buyer would
have no cause of action against the seller.
2. Where goods are bought by description from a seller who deals in goods of that
description (whether he is the manufacturer or producer or not), there is an implied
conditions that the goods shall be of merchantable quality, i.e., the goods shall be
free from latent defects (defects which are not apparent or possible of detection by
mere inspection). Where, however, the buyer has examined the goods, there shall
be no implied condition as regards defects which such examinations ought to have
revealed.
3. A condition as to fitness for a particular purpose or as to quality may also arise on
account of a custom of trade.
Condition as to merchantable quality [s.16 (2)]. Another implied condition is that the goods
must be merchantable. They must be saleable in the market under the denomination mentioned.
Thus the quality of goods is such that reasonable persons would accept them as performance of
a promise. This means that if you buy a washing machine, it should actually work when you get
it home.

Examples:
1. Ameer buys a black yarn from Daleep and finds it to be damaged by white ants. The
condition as to merchantability is broken.
2. There is a contract for sale of Manila hemp. The hemp that is supplied, though
Manila hemp, is so damaged by sea water that no one in the market would accept it
as Manila hemp. The condition as to merchantability is broken.
Where, however, the buyer examines the goods prior to sale, there is no implied condition as to
merchantability as regards defects which such examination ought to have revealed.

Example: In a sale of vegetable glue packed in casks, the buyer comes to examine them
but simply looks at the outside of the casks. Thus, the defect which could have been discovered
by examination is overlooked. The implied condition of merchantability is not applicable.

However, in spite of examination, if the goods have certain latent defects which no examination
by a man of ordinary prudence would have revealed, the implied condition as to merchantability
subsists.

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