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URL: http://www.bailii.org/uk/other/journals/WebJCLI/1996/issue4/hedley4.html
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Fitness for the buyer’s peculiar purpose.

Steve Hedley

Fellow Christ’s College
Cambridge
< [email protected]>

Copyright © 1996 Steve Hedley.
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

Summary

The duty under the Sale of Goods Act 1979 to provide reasonably fit goods is absolute, provided that the buyer has reasonably relied on the seller's skill. Slater v Finning Ltd [1996] 3 WLR 190 seems the archetypal hard case, where the goods are not fit yet the seller could not possibly have anticipated or avoided this. Ultimately, however, the courts managed to escape the conclusion that the seller was liable, by some rather abstruse reasoning about the nature of the buyer's reliance. The author considers the propriety of this reasoning, and suggests that while the result of the case is perfectly fair, it would have been better achieved either through open reform of the 1979 Act or at least by explicit recognition that the courts are whittling away at the absoluteness of the seller’s duty.

Contents

Introduction
The facts
What was the buyer's purpose?
A 'due diligence' defence?
Conclusion

Introduction

The 'fitness for purpose' duty in the Sale of Goods Act 1979, s 14(3) (1) is in essence quite simple, despite the convoluted language in which it is expressed. The goods must be reasonably fit for the purpose for which the buyer requires them - not perfectly and absolutely fit, but reasonably fit - provided three requirements are satisfied. First, the seller must sell in the course of a business. Secondly, the buyer must have told the seller the purpose (expressly or by implication) before the sale takes place. Thirdly, the seller will escape liability if it can be shown that the buyer did not rely on the seller’s skill and judgement, or that it was unreasonable for the buyer so to rely. The duty is slightly confusing because it is both an absolute duty and a 'reasonableness' duty: the standard the goods must reach is not perfection but only reasonable fitness for purpose, but there is an absolute duty on the seller to attain that standard. The classic illustration is the tragic case of Frost v Aylesbury Dairy Co [1905] 1 KB 608, where the seller sold milk to the buyer which turned out to be infected with typhoid, which killed the buyer's wife. Plainly, this milk was not reasonably fit for the buyer's purpose; and because the duty is absolute, it was no answer to the buyer’s claim that the sellers had used all reasonable care to prevent such an infection. The duty is plain sailing, at least as far as the law is concerned, so long as we are clear what the buyer’s purpose is.

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The facts

In Slater v Finning we see a tricky point arising in the definition of this purpose. The pursuers were owners of the 'Aquarius II', a fishing vessel. As part of a general upgrading of the vessel, various items of work were done with a view to increasing the vessel's capacity and engine power. Finding, however, that the work on the engine seemed ineffective, they consulted the defenders, who (after various false starts) advised the installation of a new camshaft. Various difficulties were encountered thereafter so that the vessel’s performance was still distinctly unsatisfactory. The first new camshaft failed in use, as did two replacements. The pursuers eventually sold the vessel. The engine was replaced; both the vessel and the old engine found good homes, and worked satisfactorily in their new locations. The cause of the pursuer’s problem was therefore a bit of a mystery. No complaint of lack of competence was sustained against the defenders; so far as appeared to the court, the vessel itself must have had some unsuspected peculiarity, leading to torsional resonances which made the camshafts, unforseeably, inappropriate.

Manifestly, the camshafts were wrong for this particular vessel. Manifestly, the buyers of the camshafts were placing a high degree of reliance on the skill and competence of the sellers. The sellers were not negligent or in any sense careless, but that is no defence under the Sale of Goods Act 1979. As a matter of strict law, then, it seems hard for the sellers to escape liability. Yet justice seems to point strongly the other way. Why should the sellers have to pay compensation to the buyers for the unforseeable consequences of the peculiar condition of their own vessel, the precise nature of which were not entirely clear to the courts even after the hearing of all the evidence on the issue? Is it not a complete answer to say that it was not the camshafts that were wrong, but something in the vessel itself? This sounds like a fair and simple rule. But to explain why this should be so within the terms of the Sale of Goods Act 1979 seems quite a challenge.

Seen as a conflict between the demands of strict law and the claims of justice, readers will be either joyful or depressed, accordingly to temperament, to know that justice won at all levels, before Lord Weir, before the Second Division of the Court of Session, and before the House of Lords. The decision is not what one would have expected from a brief perusal of the Act. Can it be reconciled with that nitial view?

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What was the buyer's purpose?

The key question is how the buyer's purpose is to be characterised. On the simple and obvious view, the buyer's purpose was to run a vessel incorporating the camshaft they had acquired; and it would appear that the camshaft was not fit for use in it, as it broke down. How could this conclusion be escaped? One way is to say that it was not the camshaft that was wrong, but some other aspect of the vessel. The precise cause of the failure was never established to the satisfaction of Lord Weir, but it seemed clear to him that there was nothing wrong with the camshafts as such, and the problem must lie elsewhere. But surely this will not do. The camshaft was not being bought as a display item, but rather to fit into a specific vessel, in which it proved unsatisfactory. The sellers were not to know that the camshaft was unsatisfactory, and indeed it was never established quite why it was not. But the fact of the matter seems plain enough. The injustice of the result is apparent, but the cause is clearly that the duty is an absolute one, and so catches even blameless parties like the seller in this case.

The other escape route was that of authority, and their Lordships placed particular stress on Griffiths v Peter Conway [1939] 1 All ER 685, which does indeed seem on all fours with the present case. The plaintiff bought a Harris tweed coat, which had been made up to her specific instructions. It rapidly emerged that the coat gave her dermatitis, due to her having abnormally sensitive skin. Branson J and the Court of Appeal refused liability. Again, the case for liability is simple enough - the plaintiff bought the coat to wear, but it turned out not to be suitable for that purpose - and the eventual denial of liability takes some fancy footwork indeed. Sir Wilfred Greene MR went so far as to deny that the buyer had revealed the purpose for which she wanted the coat, namely to be worn by someone with an abnormally sensitive skin. This seems to me to be sophistry. She made it perfectly clear that it was to wear, and that it was she who would be doing the wearing, and that she was relying on the seller’s skill and judgement. It might have been different if she had held back knowledge of her sensitivity, but it was accepted that it was as much a surprise to her as it was to the seller. It is a fair point that the seller was not in a position to use the skill and judgement on which the buyer was relying:

"[H]ow can he decide and exercise skill or judgement in relation to the suitability of the goods that he is selling for the use of the particular individual who is buying from him unless he knows the essential characteristics of that individual?" ([1939] 1 All ER 691, per Sir Wilfrid Greene MR).

But that seems to me to be a criticism of the Act itself, that it subjects those who have skill and judgement to an absolute duty to get it (reasonably) right. And there might have been an argument that the buyer had specified Harris tweed herself, and so could not have been said to be relying on the sellers in that regard. But if so, then the case is distinguishable from Slater, where the choice of camshaft was very much up to the sellers.

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A 'due diligence' defence?

The Slater case, then, seems to me to imply into the Act something quite close to a defence to liability under the 'fitness for purpose' test, that the seller could not possibly have known of, or prevented, the unfitness. Does this mean that Frost is wrong? Probably not, though their Lordships do not say either way. The Act assumes that the goods must be fit for the buyer's purpose; Slater seems to reserve the right to say that in certain circumstances at least, it is not the goods that are wrong but the purpose itself. It was not the camshaft that was wrong, but the vessel into which it placed; it was not the tweed coat that was wrong, but the woman who wore it.

If this is right, it suggests that there is scope for asking on whom it is fairer to place extraordinary risks. Perhaps those who have unusual vessels (Slater), or unusual skins (Griffiths), are to be made to bear the unforseeable risks that result from them. In Frost there is no doubt that the problem arose in the seller's dairy and so we could say that it went the way it did because the problem arose in the seller's dairy. The case would have been fundamentally different if (say) the buyer's wife had some awful allergy which guaranteed her death if she drank milk - even though it would be equally true in such a case to say that the milk was unfit for the buyer's purpose, and that he relied on the skill and judgement of the seller in producing it. Similarly we can explain the departure from Cammel Laird & Co v Manganese Bronze & Brass Co [1934] AC 404, a case very similar to Slater, involving the supply and installation of a new propeller that inexplicably proved wrong; for there, the court was sure that, whatever the problem was, it was in the propeller itself and not the rest of the vessel.(2) This approach resolves many cases, though it is unclear where it leaves the case where there is nothing very peculiar about either the buyer's requirements or the seller's goods, but they nonetheless prove unexpectedly incompatible.

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Conclusion

In sum, then, what we have here is a new proposition about 'reliance' under the fitness-for-purpose obligation. Where the buyer is relying on the skill and judgement of the seller, that reliance will not be taken to extend to the avoidance of peculiarities which no reasonable seller could anticipate - so long as they are plainly peculiarities in the buyer or the buyer's property, rather than in the seller or the seller's property. So stated, the rule is a reasonable one on the facts of Slater, though it is not what the statutory wording most obviously suggests; and perhaps it needs to be emphasised that part of what the buyer is paying for is a knowledge of at least the more usual peculiarities. As the lords were in reality sneaking in a defence of 'due diligence', it would have been well to emphasise that it should be a demanding one. It would be a pity if (for example) sellers of food or medicines could argue that their products need not be suitable for pregnant women, or if such women were put to the trouble of arguing whether their condition was ‘peculiar’ or not.

The result, then, is just, but can only be reconciled with the Act by the most convoluted reasoning. The drafting of the Act reflects a distinctly Victorian approach, under which 'reliance' is hard to establish, but once established is taken as well-nigh absolute. Is this not, perhaps, one more instance where the Act needs to be dragged into the modern world? Buyers are entitled to a reasonable degree of care of skill from sellers, but no more in the absence of very clear undertakings; and it does not appear that the courts are prepared to give any more. "Outside the field of private sales the shift from caveat emptor to caveat venditor...has been a notable feature of the development of our commercial law. But to uphold the present claim would be to allow caveat venditor to run riot" (per Lord Steyn). Indeed. Now that the claims of buyers are more generously interpreted, let us not strain at the wording of the Act, but admit that a change of values has occurred, and amend the Act to reflect it.

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Footnotes

(1) "Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known - (a) to the seller, or (b) where the purchase price or part of it is payable by instalments and the goods were previously sold by a credit-broker to the seller, to that credit-broker, any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgement of the seller or credit-broker." Back to text.

(2) Another difference suggested by Lord Keith is that in Cammel Laird the propeller was not a standard part, but was designed by the sellers, working to the buyer’s specifications. But on the rule which results from Slater, it is not clear why this should make a difference.Back to text.

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URL: http://www.bailii.org/uk/other/journals/WebJCLI/1996/issue4/hedley4.html