Brown (B. S.) & Son Ltd v Craiks Ltd

JurisdictionEngland & Wales
JudgeLord Reid,Lord Hodson,Lord Guest,Viscount Dilhorne,Lord Wilberforce
Judgment Date03 March 1970
Judgment citation (vLex)[1970] UKHL J0303-2
CourtHouse of Lords
Docket NumberNo. 5.
Date03 March 1970

[1970] UKHL J0303-2

House of Lords

Lord Reid

Lord Hodson

Lord Guest

Viscount Dilhorne

Lord Wilberforce

B. S. Brown and Son Limited
and
Craiks Limited

Upon Report from the Appellate Committee, to whom was referred the Cause B. S. Brown and Son Limited against Craiks Limited, that the Committee had heard Counsel, as well on Wednesday the 21st as on Thursday the 22d, days of January last, upon the Petition and Appeal of B. S. Brown and Son Limited, Richmond House, Richmond Grove, Manchester, 13, praying, That the matter of the Interlocutors set forth in the Schedule thereto, namely, an Interlocutor of the Lord Ordinary in Scotland (Lord Robertson) of the 10th of January 1969 and also an Interlocutor of the Lords of Session there of the First Division of the 10th of July 1969, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Interlocutors might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Craiks Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Interlocutors of the 10th day of January 1969 and of the 10th day of July 1969, complained of in the said Appeal, be, and the same are hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the parties entitled to the same within one calendar month from the date of the Certificate thereof, the Cause shall be, and the same is hereby, remitted back to the Court of Session in Scotland, or to the Judge acting as Vacation Judge, to issue such Summary Process or Diligence for the recovery of such Costs as shall be lawful and necessary.

Lord Reid

My Lords,

1

This case arises out of two orders given by the Appellants, who are textile merchants, to the Respondents, who are cloth manufacturers. Those orders were for the manufacture of considerable quantities of rayon cloth to a detailed specification. There was a misunderstanding as to the purpose for which the buyers wanted the cloth. They wanted it to fulfil contracts for cloth for making dresses. The sellers thought it was for industrial use. The Lord Ordinary found that they were "astounded" when they first heard, some months after deliveries had commenced, that it was to be used for dresses, and they would not have accepted the order if they had known that. When the contract was determined both parties were left with considerable quantities on their hands.

2

The buyers sue for damages. Admittedly this was a sale by description within the meaning of the Sale of Goods Act, 1893, and the cloth delivered complied with the description. But the buyers alleged breach of the conditions implied by section 14( 1) and (2) of the Sale of Goods Act, 1893. The Lord Ordinary held there was no breach and assoilzied the defenders. The buyers accepted this decision as regards section 14(1) but reclaimed as regards section 14(2). They accept all the Lord Ordinary's findings of fact. The First Division adhered to the Lord Ordinary's Interlocutor. The only question now before your Lordships is whether the goods were of merchant able quality within the meaning of section 14(2) which is as follows:

"(2) Where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality; provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed."

3

It is common ground that the cloth, though complying with the contract description, was not suitable for making dresses—apparently because of irregular weaving. But it was suitable for a number of industrial uses such as making bags. Was it therefore of merchantable quality?

4

The Lord Ordinary found that the contract price was a low price for cloth of that description for use for making dresses but "higher than would have been normal for it as an industrial fabric, but not unreasonably high for the sellers constructing it for such a purpose". There is no doubt that cloth of this or very similar description was in common use for making dresses. There was no evidence that cloth of this precise description had been used for industrial purposes, but there is a finding that the Respondents "had made rayon material of a very similar construction for industrial use before". The Lord Ordinary appears to have accepted the evidence of an expert who said that he had never seen this particular construction of cloth before because the material was viscose, not cotton.

5

It is evident that at the proof the Appellants put most weight on their case under section 14(1), so it is not surprising that the findings of fact with regard to their case under section 14(2) are not as detailed as one might have desired. Certainly this kind of cloth of the quality delivered was suitable for industrial use, but we do not know why it was not more frequently used for industrial purposes. There is no suggestion in the findings that the manufacturers, as dealers in goods of that description, ought to have known, or even suspected, that these goods were not intended for industrial use.

6

All the well-known authorities were cited on the proper interpretation of "merchantable quality". Some importance was attached to what I said in Hardwick Game Farm [1969] 2 A.C. 31:

"If the description is a familiar one it may be that in practice only one quality of goods answers that description—then that quality and only that quality is merchantable quality. Or it may be that various qualities of goods are commonly sold under that description—then it is not disputed that the lowest quality commonly so sold is what is meant by merchantable quality: it is commercially saleable under that description."

7

I see no reason to alter what I said, but judicial observations can never be regarded as complete definitions: they must be read in light of the facts and issues raised in the particular case. I do not think it is possible to frame, except in the vaguest terms, a definition of "merchantable quality" which can apply to every kind of case. In the Hardwick case no question as to price arose because the evidence shewed that, even when all the facts were known, the market price was the same for tainted and untainted goods. But suppose that the market price for the better quality is substantially higher than that for the lower quality. Then it could not be right that, if the contract price is appropriate for the better quality, the seller should be entitled to tender the lower quality and say that, because the lower quality is commercially saleable under the contract description, he has fulfilled his contract by delivering goods of the lower quality. But I think that the evidence in this case with regard to prices is much too indefinite to support a case on that basis.

8

The Appellants mainly relied on the contention that, whereas cloth of this description had been commonly used for making dresses, there was no evidence that such cloth had ever been put to any industrial use. There is, I think, some ambiguity in saying that goods are of the same description where the contract description is a precise and detailed specification for their manufacture. One may mean of the same precise and detailed description, and that may be novel: or one may mean of the same general description, and that may be common. In most of the authorities the latter meaning seems to have been adopted. Here, as I read the findings of fact, it is not clear whether cloth had commonly been made to this precise specification: but it is clear that cloth of this general description had commonly been used for making dresses and had sometimes been put to an industrial purpose.

9

Of the various general statements of the law I think that the most applicable to the present case is that of Lord Wright in Cammell Laird [1934] A.C. 402. In the Hardwick case I suggested that a slight alteration was necessary and that this statement should read:

"What subsection (2) now means by 'merchantable quality' is that the goods in the form in which they were tendered were of no use for any purpose for which goods which complied with the description under which these goods were sold would normally be used, and hence were not saleable under that description."

10

The question, then, is whether this cloth "would normally be used" for industrial purposes. It was suitable for such use. Moreover, the manufacturers assumed it was for such use and their good faith is not disputed: there is no finding that other skilled and knowledgable manufacturers would have thought differently. So I cannot find any ground for holding that the cloth delivered would not normally be used for any industrial purpose. And if one is entitled to look at the facts and the statutory condition apart from authority, I would not hold that it had been proved that the cloth delivered were not of merchantable quality. I would, therefore, dismiss this appeal.

Lord Hodson

My Lords,

11

I have had the advantage of reading the Opinion of my noble and learned friend, Lord Guest, with which I agree. I would, therefore, dismiss the appeal.

Lord Guest

My Lords,

12

The...

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