Mechans Ltd v Highland Marine Charters Ltd

JurisdictionScotland
CourtCourt of Session (Inner House - Second Division)
Judgment Date22 November 1963
Date22 November 1963
Docket NumberNo. 6.

2ND DIVISION.

No. 6.
Mechans
Limited
and
Highland Marine Charters
Limited.

Sale of MoveablesBreach of contractAcceptanceSubsequent discovery of major defects in goodsRight to reject after acceptanceRelevancySale of Goods Act, 1893 (56 and 57 Vict. cap. 71), secs. 11 (2) and 35.

The Sale of Goods Act, 1893, enacts, inter alia:Sec. 11. "(2) In Scotland, failure by the seller to perform any material part of a contract of sale is a breach of contract, which entitles the buyer either within a reasonable time after delivery to reject the goods and treat the contract as repudiated, or to retain the goods and treat the failure to perform such material part as a breach which may give rise to a claim for compensation or damages." Sec. 35 enacts: "The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them."

A company contracted to purchase from manufacturers two steel water buses to be built according to specification. The buses were duly delivered and, after inspection and survey by Ministry of Transport inspectors, as provided for in the contract, acceptance certificates were signed by the company. Thereafter the buses were used for a few weeks, during which it was alleged that certain major defects arose, which rendered them quite unsuitable for the purpose for which they were intended. The company thereupon repudiated the contract and refused to pay the purchase price. In an action by the manufacturers for the price,

Held, followingMorrison & Mason, Limited v. Clarkson BrothersUNKSC, (1898) 25 R. 427, that as the company had expressly accepted the buses, they were not entitled thereafter to reject them; and that their defences based on the alleged defects were irrelevant.

Dictum of Lord Salvesen in Mechan & Sons, Limited v. Bow, M'Lachlan & Co., Limited, 1910 S. C. 758, at p. 763, disapproved.

ContractConditionsBreach of ContractContract to build water busesClause protecting builder from damages caused by defectsApplicability where articles wholly disconform to contract.

Sale of MoveablesBreach of contractCounter-claimRight of rejection barred by prior acceptanceNo alternative averments of right to retainClaim for damagesRelevancySale of Goods Act, 1893 (56 and 57 Vict. cap. 71), sec. 11 (2).

The Sale of Goods Act, 1893, provides, by sec. 11 (2), that in Scotland a material breach of contract by the seller entitles the buyer either to reject the goods and treat the contract as repudiated, or to retain the goods and claim compensation or damages for the breach.

A company contracted to purchase from manufacturers two steel water buses to be built according to specification. The contract contained the following clause: "We [i.e. the manufacturers] shall not be responsible, in any event, for loss of profits, detention, personal injury, damage to property or for any other consequential damages, loss or expenses whatsoever arising from defects in the manufacture or erection of our goods." The buses having been delivered, accepted and used for some time, the company alleged that they were defective and refused to pay the purchase price. In an action for the price the manufacturers contended that the clause excluding their liability barred the company from founding on any defects in the buses. In their defences the company claimed that the buses were so defective as to be unfit for any useful purpose, and that they were therefore entitled to reject them and repudiate the contract. They also counter-claimed for damages which they alleged they had suffered as a result of the manufacturers' breach of contract. Their counterclaim was pled upon the basis that they were entitled to reject the buses, and they made no averment that they were entitled to retain them, nor did they aver what value should be put upon them in the event of retention.

The company's defences to the action having been held irrelevant, on the ground that they were no longer entitled, after accepting the buses, to reject them,

Held (1) followingPollock & Co. v. Macrae, 1922 S. C. (H. L.) 192, that, the company's case being that the manufacturers were in total breach of the contract, by failing to supply the articles contracted for, the clause excluding liability would not have precluded them from recovering damages in respect of the defects, if these had been proved; but (2) that the counter-claim was irrelevant, in respect that the company had no record for a case based on a right to retain the buses and, in particular, had not averred what value should be put on the buses, in the event of their retaining them, as a set-off against their claim of damages.

Mechans, Limited, brought an action against Highland Marine Charters, Limited, in the Sheriff Court of Lanarkshire at Glasgow, concluding for payment of 18,048, 1s. 7d., being the cost of two steel water buses ordered by the defenders from the pursuers. The defenders denied liability and counter-claimed for 49,164, 18s. 8d. as damages for alleged breach of contract on the part of the pursuers.

The averments of the parties were as follows:(Cond. 2) "By quotation, dated 30th December 1959, the pursuers offered to build two steel water buses for the defenders at a price of 9000 each, the vessels to be built as shown on the specification accompanying the quotation. The front of the said quotation bore in large print the words Conditions of sale see overleaf. The reverse side of the said quotation contained numerous conditions which were stated to be standard terms and conditions of sale. By letter, dated 12th January 1959 but written on 12th January 1960, the defenders confirmed their acceptance of said quotation. The pursuers acknowledged receipt of this acceptance by letter, dated 13th January 1960. It is denied that the vessels were required to operate as a pair in order to maintain a regular passenger serviceExplained and averred that it was a provision of the contract of purchase in each case that trials would be carried out before delivery of the water buses and that the water buses should receive certificates from the Ministry of Transport after inspection and survey as to their fitness for use as class 5 passenger carrying launches. Explained and averred that the said certificates were obtained after inspection and survey by the Ministry of Transport and that trials were carried out on Loch Lomond with defenders' skippers at the wheel and in the presence of skilled representatives of the defenders. One of the said water buses, named the Lomond Lass, was delivered to the defenders on 8th June 1960. The pursuers produce and found upon acceptance certificate, dated 9th June 1960, in respect of the said Lomond Lass, signed by J. Anderson on behalf of the defenders. Averred that the first inspection referred to in the said acceptance certificate, and in the acceptance certificate for the Lomond Princess referred to hereunder, included trials afloat as provided for in the contract, and, in particular, that the standard of manuvreability of both water buses was apparent at the said trials. The remaining water bus, named the Lomond Princess, was delivered on 28th June 1960. The pursuers produce and found upon acceptance certificate, dated 28th June 1960, in respect of the said Lomond Princess signed by the said J. Anderson on behalf of the defenders. An additional payment of 90 falls to be made for each water bus resulting from certain wage alterations and the pursuers also supplied certain extras for and carried out certain works to the said water buses, all as shown in the statement annexed, bringing out a total of 18,348, 1s. 7d. Denied that, except as averred in condescendence 3 in regard to leakage in the roofs of the said water buses, the pursuers are in breach of the said contracts of purchase. Admitted that the sum of 10, 10s. is in respect of poles to support canvas supplied free of charge by the pursuers. Explained and averred that the sum of 300 referred to in condescendence 3 was calculated on the basis that the said sum of 10, 10s. would be met by the defenders. Admitted that a sum of 50, 17s. 1d., included in the sum sued for, is in respect of certain repairs carried out to the engine of the said Lomond Lass which were required during its first two months in service. With reference to the defenders' averments added at adjustment it is averred that the sheer of the said water buses, the fact that the method of checking the temperature of the water cooling the engine was by way of a thermometer on the control panel, the form of securing device on the rudder, the method of construction and securing of the reverse gear control and the manner of construction and installation of the stern tube should all have been apparent to the defenders at the time of delivery and inspection of the said vessels. Denied that any of these alleged defects, if they exist at all, are in the nature of latent defects. Averred in particular that all the said matters are covered by the said certificates. In addition it is averred that the operation of the steering gear in its working from hard over port to hard over starboard was not only apparent on inspection, but was carefully tested in the said trials and if there is any defect in the steering in this respect, which is denied, it must have been apparent to the defenders before the said certificates were signed. In addition, it is averred that during the said trials ample opportunity was given of testing the manuvreability of both water buses, the weight of their steering and the reliability of their steerage astern, all of which were in fact tested. Averred that ample opportunity was given of inspecting the size of the rudders of both water buses...

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2 cases
  • Ailsa Craig Fishing Company Ltd v Malvern Fishing Company Ltd
    • United Kingdom
    • House of Lords
    • 26 November 1981
    ...& Co. v. Macrae 1922 S.C. (H.L.) 192 is no such authority and if the latter case of Mechans Ltd. v. Highland Marine Charters Ltd. 1964 S.C. 49 so decided, it ought in my view not to be followed. 7 The appellants tried to find an ambiguity in this clause in three ways. 8 (i) First they r......
  • David Douglas V. Glenvarigill Company Limited
    • United Kingdom
    • Court of Session
    • 5 February 2010
    ...reredos was kept in store throughout the period prior to rejection. I was further referred to Mechans Ltd v Highland Marine Charterers Ltd, 1964 SC 48; that case, however, involved an express certificate stating that the goods (two steel water buses) were accepted as in accordance with the ......

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