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The development of the implied terms on quality and fitness in sale of goods in Britain and Canada Sutherland, Elaine Elizabeth 1984

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THE DEVELOPMENT OF THE IMPLIED TERMS ON QUALITY AND FITNESS IN SALE OF GOODS IN BRITAIN AND CANADA By ELAINE ELIZABETH SUTHERLAND LL.B. (Hons.), The University of Glasgow, 1978 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF LAW in THE FACULTY OF GRADUATE STUDIES (The Faculty of Law) We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA October 1984 © Elaine Elizabeth Sutherland, 1984. In presenting t h i s t h e s i s i n p a r t i a l f u l f i l m e n t of the requirements fo r an advanced degree at the U n i v e r s i t y of B r i t i s h Columbia, I agree that the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r reference and study. I further agree that permission for extensive copying of t h i s thesis f o r s c h o l a r l y purposes may be granted by the head of my department or by h i s or her representatives. I t i s understood that copying or p u b l i c a t i o n of t h i s t h e s i s f o r f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of v-~-y e>^-U^^». The U n i v e r s i t y of B r i t i s h Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date OtVa^cc v °\ ST <h>- • Abstract THE DEVELOPMENT Ob' THE IMPLIED TERM  ON QUALITY AND FITNESS IN SALE OF  GOODS IN BRITAIN AND CANADA H i s t o r i c a l l y , in sale of goods transactions, the law has implied terms in the contract. These terms have varied in t h e i r content and a p p l i c a t i o n and have been subject to change. The implied terms concerning the q u a l i t y of goods sold and th e i r f i t n e s s f o r p a r t i c u l a r uses are considered in t h i s thesis. The provisions of the common law i n Scotland and England are examined h i s t o r i c a l l y , developmentally and comparatively, and the a p p l i c a t i o n of the English approach i n Canada i s noted. The e f f e c t on the common law of statutory provisions i s then considered: f i r s t i n B r i t a i n , and then in the adoption of the statutes in Canada. The content of the statutory provisions, t h e i r i n t e r p r e t a t i o n and amendment, and the c r i t i c i s m s of t h e i r operation, are reviewed. It becomes apparent th a t , i n both B r i t a i n and Canada,these provisions have been the subject of c r i t i c i s m from various quarters. The precise meaning of the terms, t h e i r a p p l i c a t i o n in consumer and non-consumer contracts, t h e i r s u i t a b i l i t y to the variety of types of goods sold and the remedies available in cases of dispute, have a l l been questioned. The e f f e c t of t h i s , in leading to c a l l s for reform in B r i t a i n and Canada, i s then examined. The work of the various law reform bodies and t h e i r proposals are considered from both the h i s t o r i c a l perspective and comparatively. It i s concluded that, i f the proposals for reform are f u l l y implemented, they - i i -w i l l provide a workable framework for modern conditions. Nonetheless, i t i s submitted that such a po s i t i o n could have been reached by the development of Scots common law. Supervisor Date - i i i -TABLE OF CONTENTS Page TABLE OF CASES v i CHAPTER I: INTRODUCTION 1 CHAPTER I I : THE QUALITY OF GOODS SOLD -HISTORICAL DEVELOPMENT 4 (A) Scotland: The Common Law. 4 The C o n s t i t u t i o n a l Question 4 Adoption of English Law 8 Warrandice 10 Priceworthiness 13 Patent Defects 15 Minor Defects 17 Limitations on the Warranty 18 Dur a b i l i t y 19 Uniformity 20 The Mercantile Law (Amendment) (Scotland) Act 1856 23 Fitness for Purpose 27 (B) England: The Common Law 29 Caveat Emptor 31 Exceptions 34 Sale by Sample 39 Fitness for Purpose 43 Custom of Trade 45 Merchandise Marias Act 46 Express Warranty 46 (C) Canada: The Common Law 49 Reception of English Law in Canada 51 Caveat Emptor 53 Sale by Description 57 Fitness for Purpose 67 Express Warranties 71 Remedies 71 Dur a b i l i t y 72 i v -TABLE OF CONTENTS (Cont.) Page CHAPTER I I I : THE ARRIVAL OF SALE OF GOODS LEGISLATION AND ITS OPERATION 74 L e g i s l a t i v e Developments 78 Conditions and Warranties 81 Caveat Emptor. 86 (A) Fitness For Purpose 87 "Business" S e l l e r 87 Description 88 Communication of Purpose 91 Buyer's Reliance on S e l l e r ' s S k i l l and Judgment 94 Sale Under Patent or Trade Name 101 Used Goods 102 Du r a b i l i t y 104 (B) Merchantable Quality 108 Description 110 Business S e l l e r 113 What i s "Merchantable Quality"? 113 Buyer's Examination of Goods 118 D u r a b i l i t y 121 Other Provisions as to Quality 122 Usage of Trade 123 CHAPTER IV: CRITICISM OF THE LEGISLATION AND THE MOVEMENT FOR REFORM 124 (A) The Reform Bodies 125 Canada 128 (B) Some General Issues To Consider 132 Consumer and Non-Consumer Sales. 132 Conditions and Warranties 138 Caveat Emptor 140 Merchant and Non-Merchant S e l l e r s 142 (C) The Quality of Goods and the Implied Term 143 Problems Surrounding Implied Warranties of Quality and Fitness 144 Merchantable Quality 150 Defects Out With the Scope of the Warranty 156 - v -TABLE OF CONTENTS (Cont.) Page (D) Fitness for Purpose 158 (E) Remedies for Breach of Implied Terms of Quality and Fitness for Purpose 161 Canada 166 B r i t a i n and Canada Compared 169 CHAPTER V: CONCLUSIONS 171 BIBLIOGRAPHY , 174 - v i -TABLE OF CASES Page Alabastine Co. v. Canada Producer and Gas Engine Co. Ltd. (1914) 17 D.L.R. 813 57,72 Ashton Piggeries v. Christopher H i l l Ltd. [1971] 1 A l l E.R. 847 89-90 93,99,111 Baird v. Aitken (1788) M. 14243 18 Barr v. Gibson (1838) 3 M . & W. 390; 150 E.R. 1196 37 B a r t l e t t v. Sidney Marcus Ltd. [1965] 1 W.L.R. 1013 102,103 Bentsen v. Taylor, Sone & Co. [1893] 2 O.B. 274 83 Biqqe v. Parkinson (1862) 7 M.& N. 955; 158 E.R. 758 46,47 Borthwick v. Young (1886) 12 O.A.R. 671 53, 55 B r i s t o l Tramways, etc. Ltd. v. Fiat Motors Ltd. [1910] 2 K.B. 831 114,115 Brown v. Edqinqton (1841) 2 Man. & G. 279; 133 E.R. 751 43 Brown v. Nicholson 9th January 1629 19 B.S. Brown & Son Ltd. v. Craiks Ltd. [1970] 1 A l l E.R. 823 116 Buckle v. Morrison [1924] 4 D.L.R. 1252 88 Buckley v. Lever Bros. Ltd. [1954] 4 D.L.R. 16 89,92,97 Bunge Corporation v. Tradax S.A. [1981] 2 A l l E.R. 513 85 Burnby v. B o l l e t t (1847) 16 M. & W. 644; 153 E.R. 1348 45 - v i i -TABLE OF CASES (Cont.) Page Bu l l v. Robison (1854) 10 Ex. 342; 156 E.R. 476 38,48 Cammel Laird and Co. v. Manganese Bronze and Brass Co. Ltd. [1934] A.C. 402 92,98,99 114,116 Canadian Gas and Power Launches Ltd. v. Orr Bros. Ltd. [1911] 23 O.L.R. 616 68,69 Cehaven.v. v. Bremer Handelsqesell-Schaft M.B.H. [1976] Q.B. 44 84 Chanter v. Hopkins (1838) 4 M.& W. 399; 150 E.R. 1484 35,36,69 City of Simcoe A g r i c u l t u r a l Society v. Wade [1855] 12 U.C.R. 614 68 Cooper & Avis v. Clydesdale Shipping Co. (1875) 2 R. 529 27, 28 Corbett Construction Ltd. v. Siroplot Chemical Co. [1971] 2 W.W.R. 332 94 Dickson v. Zazania (1851) 10 C.B. 602 86 Dominion Brake Shoe Co. v. Kramer Tractor Co. [1964] 46 D.L.R. (3d) 471 95 Dominion Paper Box Co. Ltd. v. Crown T a i l o r i n g Co. Ltd. [1918] 43 D.L.R. 557 64,66,67 68 Dunlop v. Crawford (1886) 13 R. 973 24 Emmerton v. Mathews (1862) 7 H.& N. 586; 158 E.R. 604 33 Fraser v. S a l t e r (1869) 7 N.S.R. 424 58, 59 Gardiner v. Gray (1815) 4 Camp. 144; 171 E.R. 46 37,38 - v i i i -TABLE OF CASES Pa£e Georgetown Seafoods Ltd. v. Usen Fish e r i e s Ltd. (1977) 78 D.L.R. (3d) 542 106,117 112 Gilmer v. Galloway (1830) 8S.420 16 Godsoe v. Beatty (1959) 19 D.L.R. (2d) 265 103 Gower v. Van Dedalzen (1837) 3 Bing. N.C. 717; 132 E.R. 587 39 Grant v. Australian K n i t t i n g M i l l s (1933) 50 C.L.R. 387 109, 110 111,115,116 Grocers Wholesale Co. v. Bostock (1910) 22 O.L.R. 130 61 Grodwards Co. v. Kirkland Lake Gold Mining Co. [1919] 17 O.W.N. 300 72 Hardie v. Austin and McAslan (1870) 8 M. 798 24,26,28 Hedstrom v. Toronto Car Wheel Co. (1883) 8 O.A.R. 627 59 Heilbutt v. Hickson (1872) L.R. 7 C P . 438 41,66 Hjggins v. C l i s h (1900) 34 N.S.R. 135 53, 54, 56 60 H i l l y. Pringle (1827) 6 S. 229 16 H i l l y. Rice Lewis and Sons Ltd. [1913] 12 D.L.R. 588 70 Hong Kong F i r Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 O.B. 26 84 Hopkins v. Jannison (1914) 18 D.L.R. 88 52,62,69 70 Hutchison & Co. v. Henry and Carrie (1867) 6 M. 57 25,26 - ix -TABLE OF CASES Page International Business Machines Co. Ltd. v. Shcherban [1925] 1 D.L.R. 864 116,117 Island Cold Storage Co. v. Murch (1922) 70 D.L.R. 449 54,56 Ja f f e v. Ritchie (1860) 23D.242 4,24,25 26 John Hallam Ltd. v. Bainton [1919] 48 D.L.R. 120 67 John MacDonald and Co. Ltd. v. Princess Manufacturing Co. [1926] 1 D.L.R. 718 61,62,70 Jones v. Bowden (1813) 4 Taunt. 84 7; 128 E.R. 565 45 Jones v. Bright (1829) 5 Bing. 533; 130 E.R. 1167 43,44,48 Jones v. Just (1868) L.R. 3 Q.B. 197 33,34,38 52 Jordan v. Leonard [1904] 36 N.B.R. 518 69 Jo s l i n g v. Kingsford (1863) 13 C.B. N.S. 447; 143 E.R. 177 36,41 Kendall v. L i l l i c o [1969] 2 A.C. 31 92,93,97 98,110,113,117,118 Klenqon v. Goodall [1914] 6 O.W.N. 674 65 Laleune v. Fairweather and Co. [1915] 25 D.L.R. 23 71 Lambert v. Lewis [1981] 1 A l l E.R. 1185 106, 108 122 Lei t z v. Saskatoon Drug and Stationery Co. [1954] 4 D.L.R. 16 97,112 Lindsay v. Wilson (1771) M. 14243 17 - x -TABLE OF CASES P a9 e Lorymer v. Smith (1822) 1 B.& C. 1; 107 E.R.I 41 Lo u t t i t ' s Trustees v. Highland Railway Co. (1892) 19 R. 791. . . . . . . 11 MacCormick and Another v. The Lord Advocate 1953 S.L.T. 255 5,6,7 McCormick & Co. v. Rittmeyer & Co. (1869) 7 M. 854 28,29 McLeod v. Ens (1982 ) 135 D.L.R. (3d) 365 104 Manchester Liners Ltd. v. Rea [1922] 2 A.C. 74 96,97 Manuel and Others v. A.G. [1982] 3 A l l . E.R. 822 6 Masden v. Anderson [1937] 3 W.W.R. 41 88 Mash and Murrell Ltd. v. Joseph I. Emanuel Ltd. [1961] 1 A l l E.R. 485; [1962] 1 A l l E.R. 77.. 105, 121 Mi t c h e l l v. Seaman ( 1909) 43 N.S.R. 311 57, 58, 59 Mody v. Greqson (1868) L.R. 4 Ex. 49 42,66 Moders v. Gooderham & Worts Ltd. (1887) 14 O.R. 451 58, 59 Nib l e t t v. Confectioners Materials Co. Ltd. [1921] 3 K.B. 387 115,117 Oldrieve v. Anderson Co. Ltd. (1916) 27 D.L.R. 231 54, 55 Ontario Sewer Pipe Co. v. MacDonald (1910) 2 O.W.N. 483 52 Pagan v. Baird (1765) M. 14240 14 Parker v. Palmer (1821) 4 B. & Aid. 387; 106 E.R. 978 40 Parkinson v. Lee (1808) 2 East 314; 102 E.R. 389 31,32, 35 40,41,43,46,47 - xi -TABLE OF CASES Page Pasley v. Freeman (1789) 3 T.R. 51; 100 E.R. 450 47 Paterson v. Dickson (1850) 12 D. 502 13,23 P r i e s t v. Last [1903] 2 K.B. 148 91,92 Ralston v. Robb 9th July 1808 17 Ralston v. Robertson (1761) M. 14238 17 Reardon Smith Line Ltd. v. Hansen Tangen [1976] 3 A l l E.R. 570 85 Re De Sousa (1885) 9 O.R. 39 49 Re Faulkners Ltd. [1918] 38 D.L.R. 84 63,64 Re Sc o t t i s h Woolen M i l l s Co., Ex Parte Denby and Sons [1923] 2 D.L.R. 274 66 Risney v. Selby (1704) 1 Salkend 210; 91 E.R. 189 34 Rothwell v. Milner (1892) 8 Man. R. 472..... 56 Rough v. Moir & Sons (1862) 24 D. 174 26 Sawyer Massey Co. v. Richie (1910) 43 S.C.R. 614 95,96 Sawyer Massey Co. v. Thibart (1907) 6 Terr. L.R. 209 101, 102 Scottis h Rubber Co. v. Berger T a i l o r i n g Co. [1921] 20 O.W.N. 463 65 Seaton v. Carmichael and Findlay 28th January 1680 14,18 Shepherd v. Pybus (1842) 3 Man. & G. 858; 133 E.R. 1390 44 Sims v. Marryatt (1851) 17 Q.B. 281 34,86 - xi i -TABLE OF CASES Page Sims Packing Co. v.Corkum and Richey [1920] 53 D.L.R. 445 72,73 Stuart v. Wilkins (1778) 1 Doug. 18; 99 E.R. 15 32,34 Teheran-Europe Co. Ltd. v. S.T. Belton (Tractors) Ltd. [1968] 2 A l l E.R. 886 100 Thornett and Fehr v. Beers and Son [1919] 1 K.B. 486 119 Town Investments Ltd. v. Department of the Environment [1978] A.C. 359 88 Truro Volkswagen Ltd. v. O'Neil (1980) 37 N.S.R. 396 104,112 Tye v. Fynmore (1813) 3 Camp. 462; 170 E.R. 1446 35, 36,40 Wade v. Waldon 1909 S.C. 571 83 Wallace v. Garrett (1904) 3 O.W.N. 649 55, 56 Weil v. C o l l i s Leather Co. Ltd. [1925] 4 D.L.R. 815 84 Weis v. Bi s s e t t (1857) 3 N.S.R. 178 60,61 Whealler v. Methven (1843) 5 D. 402 13, 18 Winslow v. Jenson [1920] 55 D.L.R. 314 91 Wren v. Holt [1903] 1 K.B. 610 120 Yelland v. National Cafe [1955] 5 D.L.R. 560 92 - xi i i -Acknowledgement My studies in Vancouver, of which th i s i s the f i n a l , i f tardy, element, would not have been possible but for the generous support of the Law Foundation of B r i t i s h Columbia whose scholarship i s g r a t e f u l l y acknowledged. Thanks are due to the Faculty and Staff of the Faculty of Law, the University of B r i t i s h Columbia and, in p a r t i c u l a r , to Professors Diebolt, H i c k l i n g , MacCrimmon, McRae and Vaver. Both Annette Graham and Lenair Mulford deserve s p e c i a l mention for th e i r patient e f f o r t s in decyphering various drafts and producing l e g i b l e typescript, often under impossible time 1imits. Special and warm thanks go to Professor Emeritus S i r Thomas Smith whose u n f a i l i n g i n s p i r a t i o n and encouragement made the completion of t h i s thesis possible. E • E. S • October 1984 chapter i ; INTRODUCTION The law on sale of goods has d a i l y impact on a l l of us; perhaps we buy some item, use an item we have bought, are employed in the manufacture of goods to be sold, are employed in the r e t a i l trade, or advise c l i e n t s on buying p a r t i c u l a r commodities. A number of aspects of the sale may assume p a r t i c u l a r importance in i n d i v i d u a l cases. Such matters as the time of de l i v e r y , the e f f e c t of delay in payment, damage to the goods in t r a n s i t , "sale" by a non-owner and the e f f e c t of delivery of goods of a poorer g u a l i t y than expected, may matter more or less in a p a r t i c u l a r case. It i s with one of these aspects of sale that we are concerned here — that of the q u a l i t y of the goods sold. What qua l i t y of goods the s e l l e r i s bound to tender and the buyer is bound to accept i s often of c r u c i a l importance in sales transactions. While the parties may make detailed provision for th i s themsleves, they often w i l l not. Thus, the law, in providing the framework for sales, must determine what, i f any, terms r e l a t i n g to the g u a l i t y of goods sold should be implied in contracts of sale. If i t i s operating e f f e c t i v e l y , the law w i l l meet the needs of the consumer and of commerce over widely-varying sales transactions. From time to time, those needs w i l l c o n f l i c t and change, whereupon the demand w i l l come, from one quarter or another, for reform. - 1 -Law reformers would do well to heed the advice of a leading Scott i s h l e g a l scholar and teacher, Professor Emeritus S i r Thomas Smith. Himself a former Commissioner in the S c o t t i s h Law Commission, he said: "I believe, moreover, that only when one has studied c a r e f u l l y the history of a rule of law and has considered i t in the context of the system as a whole can one safe l y conclude whether i t has outlived i t s s o c i a l u t i l i t y and, i f one so concludes, evaluate what rule should replace i t . " That then i s the s t a r t i n g point here. Chapter II examines the common law provision of implied terms on g u a l i t y in sales of goods, and how they developed to meet the needs of the times. This concentrates on developments in Scotland and England, and concludes with an examination of the a p p l i c a t i o n of the l a t t e r system in Canada. Chapter III takes up the story with the intervention of statute at the end of the nineteenth century, and traces statutory applications in B r i t a i n and Canada to the present day. During that time, rapi d l y changing s o c i a l and i n d u s t r i a l conditions prompted development through j u d i c i a l i n t e r p r e t a t i o n and further statutory intervention. Nonetheless, by the mid-1960s, there was a considerable body of opinion in B r i t a i n and Canada which viewed the law on sales as defective in a number of respects. The e f f o r t s of the various law reform agencies, prompted by t h i s body of opinion, are examined and evaluated in Chapter IV. Some of the suggested 1. Smith, Property Problems In Sale (1978), at p.7. - 2 -reforms have found t h e i r way into the statutes already, others are s t i l l being considered. In e i t h e r case, i t i s apparent that common trends have emerged in B r i t a i n and Canada. One such trend is the b e l i e f that the laws should set out in d e t a i l what factors a f f e c t i n g the q u a l i t y of goods sold are deemed to be important. One such factor — that of d u r a b i l i t y — appears expressly for the f i r s t time. The reformers, ever conscious that the needs of the consumer w i l l often d i f f e r from those of commerce, have attempted to provide a s u f f i c i e n t l y f l e x i b l e system to deal with the needs of a l l . It may be too early to reach a firm conclusion on t h e i r success here, but Chapter V concludes with an assessment of the changes of the l a s t two and a half centuries and the response of the law to them. - 3 -CHAPTER I I : THE QUALITY OF THE GOODS SOLD -HISTORICAL DEVELOPMENT (A) Scotland: The Common Law On 21st July 1856, the Mercantile Law (Amendment) (Scotland) Act came into force. Its declared object was, "with regard to various matters r e l a t i n g to trade, to assimilate the law of Scotland to the law of England." A Royal Commission had been appointed in 1852 to examine Scots and English mercantile law, with a view to t h e i r a s s i m i l a -3 t i o n . The Act resulted from i t s Report and both the approach taken by the Commission and the product of that approach have been the subject of c r i t i c i s m ever since. The l e g i s l a t i o n was introduced into Parliament in 1856 and, in the Speech from the Throne, was explained by Her Majesty in the following terms: "The difference which ex i s t s in several important p a r t i c u l a r s between the commercial laws of Scotland and those of the other parts of the United Kingdom has occasioned incon-venience to a large portion of my subjects engaged in trade. Measures w i l l be proposed to you for remedying t h i s e v i l . " The C o n s t i t u t i o n a l Question Lord Kilbrandon, the senior l i v i n g S c o t t i s h judge to have sat in the House of Lords, comments on the matter and suggests two separate c r i t i c i s m s . The f i r s t i s a c o n s t i t u t i o n a l point. ~* 2. J a f f e v. Ritchie (1860) 23 D. 242, per the S h e r i f f at p.244. 3. Report of the Mercantile Law Commission, 1864, No. 7. 4. See Kilbrandon, "Scots Law Seen From England," The Child and Co. Oxford Lecture 1980/1, at p.5. - 4 -By the Treaty of Union 1707, A r t i c l e XVIII, i t was guaranteed that future l e g i s l a t i o n would not a l t e r Scots law with regard to "private r i g h t " unless t h i s was, "for evident u t i l i t y of the subjects within Scotland." The Commission's comment on Scots mercantile law was that, while i t s English counterpart adhered to the p r i n c i p l e of caveat emptor, i t implied warrandice as to the q u a l i t y of goods. That i s to say, that Scots law was d i f f e r e n t from English law. As Lord Kilbrandon points out, that alone i s not enough to s a t i s f y the requirement that any change would benefit "the subjects within Scotland." The c o n s t i t u t i o n a l v a l i d i t y of the Act was never questioned in the courts; nor has any such challenge been made to the subsequent U.K. l e g i s l a t i o n on sale of goods. Indeed, the Treaty of Union has rarely been mentioned in S c o t t i s h courts. One exception here was MacCormick and Another v. The Lord  Advocate.^ In that case the p e t i t i o n e r s raised an action against the defendant, as the representative of H.M. Ministers and O f f i c e r s of State, seeking a declarator that the use by Her Majesty Queen Elizabeth of the numeral " I I " was inconsistent with h i s t o r i c a l fact and p o l i t i c a l r e a l i t y and was in breach of A r t i c l e 1 of the Treaty of Union, 1707. The action f a i l e d on the following grounds. F i r s t , the p e t i t i o n e r s were held to have no t i t l e and inte r e s t to sue (no locus s t a n d i ) . Secondly, the p e t i t i o n e r s had f a i l e d to show that i t was within the competence of the Court to consider the issue. Thi r d l y , that there was no 5. Kilbrandon, note 4, supra. 6. 1953 S.L.T. 255. - 5 -p r o h i b i t i o n in The Treaty of Union which was relevant to the case. The fourth ground concerned the in t e r p r e t a t i o n of the Royal T i t l e s Act 1953 and the Court held that the procalairition of the t i t l e "Elizabeth I I " was not made under the statute. The importance of the case, in the present context, l i e s in the opinions delivered by the Court and t h e i r possible a p p l i c a t i o n to a challenge to sale of goods l e g i s l a t i o n . In addition, the case generated considerable academic debate on the Treaty of Union and i t s place in B r i t i s h c o n s t i t u t i o n a l theory. Any challenge to sale of goods l e g i s l a t i o n would have the address i t s e l f to the p o s s i b i l i t y , in the U.K., of challenging a statute. As Smith pointed out, "So far no S c o t t i s h court has ever ruled that a statute made by the Parliament in Westminster i s i n v a l i d . " That i s not to say that such a challenge i s necessarily impossible. As Middleton pointed out, "The fact that Parliament has done something cannot prove that i t was e n t i t l e d to do i t . " Nonetheless, Lord Cooper's review of B r i t i s h c o n s t i t u t i o n a l t h e o r y ^ i n MacCormick suggests that the v a l i d i t y of such a challenge i s , at l e a s t , doubtful. 7. See Middleton, "New Thoughts on the Union," (1954) 66 J.R. 37; M i t c h e l l , Book Review (1956), 1 Public Law 296; Smith, "The Union of 1707 as Fundamental Law," (1957) 2 Public  Law 99; Smith, B r i t i s h J u s t i c e : The Scottish Contribution (1961), Hamlyn Lectures, Thirteenth Series. 8. Smith, B r i t i s h J u s t i c e : The Sco t t i s h Contribution (161), note 7, supra, at p.212. See also Edinburgh and Dalkeith Railway v.  Wauchope (1842) 8 CI. & S 710; 8 E.R. 2 79, Mortensen v. Peters (1906) 8 F. 93; and Manuel and Others v A.G. [1982] 3 A l l E.R. 822. 9. Middleton, note 7, supra, at p.49. 10. Note 6, supra, at p.262. - 6 -It i s possible to argue, as did Smith, that the Treaty of Union i s a of a higher status than ordinary l e g i s l a t i o n and that i t could, therefore, form the basis of the challenge. In this respect two types of provisions within the treaty must be distinguished. On the one hand there are what the pe t i t i o n e r s in MacCormick sought to e s t a b l i s h as fundamental, c o n s t i t u t i o n a l p r i n c i p l e s . On the other hand, there are the matters concerning "private r i g h t " which are administered by the courts. Lord Cooper doubted that the former could be challenged, but expressly 12 reserved his opinion on the l a t t e r . C l e a r l y , questions of sale of goods could f a l l into the l a t t e r category. Assuming that a challenger was able to overcome the problem of challenging a statute, he would face a further two hurdles. F i r s t , he would have to e s t a b l i s h t i t l e and inter e s t to sue. He would have to show that, in a p a r t i c u l a r s i t u a t i o n , his pos i t i o n was worse, or at least d i f f e r e n t , as a re s u l t of the l e g i s l a t i o n than i t would have been under the common law. Secondly, he would have to show that the l e g i s l a t i o n i t s e l f was not for the evident u t i l i t y of the subjects in Scotland. It 13 was the view of at least one learned writer on the subject that the assessment of u t i l i t y i s a matter for Parliament and i s not open to subsequent consideration elsewhere. Assuming that view were rejected, the challenger would have to overcome arguments favouring uniformity and the r e s u l t i n g e f f i c i e n c y in trade. 11. Smith, "The Union of 1707 as Fundamental Law," note 7, supra. 12. Note 6, supra, at p.263. 13. M i t c h e l l , note 7, supra, at p.297. - 7 -Given the period of time which has elapsed since l e g i s l a t i o n f i r s t made inroads into the Scott i s h common law, the l i k e l i h o o d of such a challenge i s remote. In the l i g h t of the foregoing discussion, the prospect of success would be minimal. Adoption of English Law Lord Kilbrandon's second c r i t i c i s m of the 1856 Act relates to the way in which as s i m i l a t i o n was achieved. 1^ Rather than as s i m i l a t i n g the two legal systems on the basis of the r e l a t i v e merits of each, the Commission's solution was to replace the Sc o t t i s h approach with that from England. This crude approach has now been modified as Gow points o u t : 1 5 "It i s no longer true to say as did the preamble to the 1856 Act that because Scots law inconveniently d i f f e r e d from English law i t was expedient to remedy the inconvenience by making the former conform to the l a t t e r and ex hypothes: superior law." It may be acknowledged that, "the contract of sale must be s u b s t a n t i a l l y the same in a l l c i v i l i s e d countries* in as far as regards i t s general character." 14. Kilbrandon, note 4, supra, at p.6. 15. In view, p a r t i c u l a r l y , of the p r i n c i p a l j u r i s d i c t i o n s chosen for t h i s t h esis, i t seems appropriate to provide a b r i e f background note on J. J . Gow. His book, The Mercantile and  In d u s t r i a l Law of Scotland (1964), has been described as "one of the most b r i l l i a n t products of the renaissance in Scott i s h l i t e r a t u r e that took place in the 1960s." Black, Review in 1983 S.L.T. A former Director of the I n s t i t u t e of Comparative Law at McGill University, he i s currently a O.C. p r a c t i c i n g in V i c t o r i a , B.C., Canada. 16. Gow, "Warrandice In Sale," 1962 S.L.T. (News) 137, at p.141. 17. M.P. Brown, Treatise On the Law of Sale (1821), at p . l . To avoid confusion, i t should be noted that reference w i l l also be made to another author of a work on sale, R.P. Brown. - 8 -However, in 1856 substantial differences in p a r t i c u l a r aspects of the law of sale did exist between the two j u r i s d i c t i o n s in Great B r i t a i n ; not least between the Scots and English approaches to 1 ft implied warrandice in s a l e . It i s not suggested that reform - even involving some form of a s s i m i l a t i o n - would have been undesirable. Scots law had long shown a keen awareness of the need for the law to respond to commercial r e a l i t y . S t a i r c l e a r l y had t h i s in mind when he stated that the law should be, current and secure. For nothing i s more p r e j u d i c i a l to trade, than to be involved in pleas; which d i v e r t s merchants from t h e i r trade, and frequently mars t h e i r gain, and sometimes t h e i r c r e d i t . " Indeed B e l l accepted that, "The regular forms and r i g i d maxims of Municipal Law are not always well suited to the occasions of mercantile intercourse." Uniformity within the commercial sphere may have advantages but, i s i s submitted, those who seek to achieve i t must maintain the utmost vigi l a n c e since, "The price of achieving uniformity may be unduly h i g h . " 2 1 Indeed, over a century l a t e r , Hellner saw the problem in a d i f f e r e n t l i g h t . Discussing the United Nations Convention on 2 2 Contracts for the International Sale of Goods, which provides a 18. B e l l , Inquiries Into The Contract of Sale of Goods and  Merchandise (1827), at p.96. 19. S t a i r , The I n s t i t u t i o n s of the Law of Scotland (5th ed. 1832), I, 9, 10. 20. B e l l , note 18, supra, at p . l . 21. Smith, Studies C r i t i c a l and Comparative (1962), at p.121. - 9 -uniform system to replace national legal provisions in thi s respect, he said, "In a l l countries with an advanced economy and considerable foreign trade, the law of sales has largely been concerned with i n t e r n a t i o n a l contracts, or with contracts that are so cl o s e l y connected with i n t e r n a t i o n a l trade as to be influenced by i t . " He goes on to point out that, in such cases, parties may prefer a p a r t i c u l a r municipal system. That the root of the so-called " e v i l " referred to in the Speech from the Throne in 1856 was the warrandice implied by Scots law by contrast with the English doctrine caveat emptor, is beyond doubt. It i s now appropriate to examine what was meant by implied warrandice, in t h i s context, and the changes that followed, in order that "the p r i c e " of uniformity can be assessed. Warrandice Scots law on sale, in common with many other aspects of our legal system, i s derived from Roman law. 2 4 However, the reception was not a matter of wholesale acceptance and differences were apparent. Both systems provided that the s e l l e r , • "be bound by the nature of the contract, and without s t i p u l a t i o n , ... to warrant the thing sold to be free from such defects as rendered i t u n f i t for the use for which i t was intend e d . " 2 5 22. Adopted in Vienna in A p r i l 1980, O f f i c i a l Records (A/Conf. 79/19) (New York 1981). 23. Jan Hellner, "The U.N. Convention on International Sales of Goods - An Outsider's View," in Ius Inter Nationes:  F e s t s c h r i f t fur Stefan Riesenfeld, at p.71. - 10 -This o b l i g a t i o n could be enforced under Roman law, by the buyer by means of the a c t i o r e d h i b i t o r i a enabling recovery of the p r i c e . In addition to t h i s , Roman law also provided that where, "the defect was of a s l i g h t e r kind, so as merely to a f f e c t the value of the subject," the buyer had the remedy of the a c t i o quanti minoris, enabling him to recover the amount by which the price paid exceeded the value of the defective goods. The p r i n c i p l e underlying the a c t i o r e d h i b i t o r i a forms the foundation of Scots law on implied warrandice. The a c t i o quanti minoris was generally rejected in Scotland as i t was thought to 2 7 be "hurtful to commerce." In asserting t h i s , M.P. Brown r e l i e s 2 8 2 9 on the authority of S t a i r and Erskine. In so far as the aim is to avoid a plethora of l i t i g a t i o n , t h i s view may be defended. However, as w i l l be discussed below, u the a c t i o quanti minoris has much to recommend i t . Indeed, i t did have limited a p p l i c a t i o n in cases where the goods suffered from, "a latent i n f i r m i t y e i t h e r in the t i t l e or the q u a l i t y of the subject sold [which was] discovered when 3 1 matters were no longer e n t i r e . " Thus, where the buyer, in such circumstances had consumed a l l or part of the goods, he was free 24. Smith, note 1 supra, at p.9. 25. M.P. Brown, note 17, supra, at p.285. 26. Id. 27. M.P. Brown, note 17, supra, at p.287. 28. S t a i r , note 19, supra. 29. Erskine, P r i n c i p l e s of the Law of Scotland (21st ed. 1911) I I I , I I I , IV. 30. I n f r a , at p.17. 31. L o u t t i t ' s Trustees v. Highland Railway Co. (1892) 19 R. 791, per Lord McLaren, at p.800. - 11 -to claim damages from the s e l l e r . The implied obl i g a t i o n with regard to q u a l i t y , as i t applied in Scotland has been stated thus, "a sound price implied or sound a r t i c l e , i r r e s p e c t i v e of the buyers object in buying, or the knowledge of the par t i e s regarding the condition of the goods." This c l e a r statement of p r i n c i p l e i s repeated throughout the cases and writing on the subject. At f i r s t sight, the views of B e l l may suggest a q u a l i f i c a t i o n on t h i s general statement. He says: "An o b l i g a t i o n i s understood to be undertaken by the s e l l e r that the thing sold at the f u l l p r i c e , i s of qua l i t y s u i t a b l e to the declared or avowed purpose of the purchaser and generally that the a r t i c l e i s of merchantable q u a l i t y , not merely that i t w i l l s e l l at market, but that i t w i l l bring a f a i r average market p r i c e . " The apparent g u a l i f i c a t i o n a rises from B e l l ' s mention of the 34 buyer sta t i n g a purpose. It w i l l be argued below, that t h i s merely provides for the p o s s i b i l i t y of the buyer gaining additional rights in t h i s way and does not l i m i t the general p r i n c i p l e of implied warranty. C l e a r l y , no legal system with an awareness of commercial r e a l i t y would provide that a buyer could always expect the best q u a l i t y of goods, i r r e s p e c t i v e of the surrounding circumstances. What circumstances, then, affected the operation of the implied warranty? 32. R.P. Brown, Treatise On The Sale of Goods With Special  Reference to The Law of Scotland (2d ed., 1911), at p.88. 33. B e l l , note 18, supra. 34. Infra p. 14. - 12 -Priceworthiness One factor which gives some ind i c a t i o n of qu a l i t y i s that of pr i c e . The obl i g a t i o n on the s e l l e r was to provide goods, "of a qu a l i t y commensurate with the p r i c e . " In Paterson v. Dickson,^ 6 a quantity of Ichaboe guano was sold at fc7.5s. per ton. It was found to be adulterated with other substances. In finding Paterson e n t i t l e d to rej e c t the goods, Lord Justice-Clerk Hope states the position thus, "when an a r t i c l e i s sold at a good market price, t h i s implies a warranty on the s e l l e r ' s part that i t i s of good q u a l i t y , or of the best q u a l i t y according to the price and the circumstances of the sale." 3 8 In Whealler v. Methven, Methven agreed to supply Whealler with a quantity of, "well-cured red herrings." These turned out to be of i n f e r i o r q u a l i t y . While he stresses that, in the absence of any s p e c i a l undertaking, a buyer i s e n t i t l e d to expect goods free from defects, Lord Justice-Clerk Hope continued, "the price agreed on i s important, as showing the understanding of the p a r t i e s . For when anyone sends an order for goods, without a word as to t h e i r q u a l i t y , he is e n t i t l e d to such an a r t i c l e as the price e n t i t l e d him to expect, of good sound f a i r q u a l i t y . " Thus, while payment of the highest price implies that the goods w i l l be of the best q u a l i t y , a considerably lower price might indicate that a lesser q u a l i t y of goods was expected. That is 35. Gow, The Mercantile and In d u s t r i a l Law of Scotland (1964), at p.161. 36. (1850) 12 D. 502. 37. Ibid, at p.503. 38. (1843) 5 D. 402. 39. Ibid, at p.406. - 13 -not to say, however, that a buyer can be expected to accept goods which are of such q u a l i t y as to render them completely unsuited to the reasonable use of such goods. The q u a l i t y of red wine may vary considerably and the price w i l l often r e f l e c t t h i s , but when i t i s so sour as to taste l i k e vinegar, i t may well have passed beyond a q u a l i t y acceptable as wine. Where goods were capable of being put to a number of uses, the implied warranty did not necessarily require that they were f i t for a l l of those uses. In the absence of any agreement by the p a r t i e s , i t i s submitted that the question of price would be relevant in determining what was intended. In Seaton v. Carmichael and F i n d l a y , 4 0 the pursuer sold the defenders a quantity of "good s u f f i c i e n t marketable bear" [coarse barley]. The bear was steeped [soaked], but f a i l e d to malt and the defenders purported to reject the goods. In finding for the defenders, the Court took the view that, for the bear to be s u f f i c i e n t and marketable, "did not import that i t behoved to be s u f f i c i e n t to be malt, i f i t was s u f f i c i e n t to be meal." 4 1 Where, however, the buyer did state a p a r t i c u l a r use to which the goods were to be put, t h i s provided a requirement as to qu a l i t y over and above that of the ordinary implied warranty. In 4 2 Pagan v. Baird, the pursuer sold a quantity of strong ale to the defender, s p e c i f i c a l l y for export to the West Indies. The 40. 28th January 1680, c i t e d in M.P. Brown, note 17, supra, at p.289. 41. Id. 42. (1765) M. 14240. - 14 -p r i c e was higher than usual because of the add i t i o n a l treatment required to prepare the ale for export. On a r r i v a l in the West Indies, much of i t had been spoiled by the heat. The defender refused to pay the price and was held to be e n t i t l e d to do t h i s . In his report of the c a s e , ^ Lord Karnes expressed the view that, "a man who purchases goods for a c e r t a i n purpose i s not bound to receive them unless they answer that purpose." With the t r a d i t i o n a l regard for commerce, he went on to say, " i f the brewer be not answerable for the s u f f i c i e n c y of ale sold by him for the American market, that branch of commerce cannot be ca r r i e d on." It should be noted that t h i s case provides another example of the price being a relevant factor in determining the q u a l i t y to be expected. Patent Defects While Scots law has never accepted the doctrine of caveat emptor, B e l l does point out that the implied undertaking, "suffers exception only in the case of f a u l t s so obvious that they cannot be supposed to escape ordinary observation." M.P. Brown states the p o s i t i o n , thus, "The vendor i s not l i a b l e under the obli g a t i o n of warrandice, unless the vice or defect complained of was latent at the time of S 3 1 Q m 43. Repeated in Morrisson's report, note 42, supra, at p.14241. 44. Note 18, supra, at pp.96-97. 45. Note 17, supra, at p.296. - 15 -He goes on to give the example of a person buying a horse that was "obviously lame or b l i n d . " It i s submitted that the "exception" does no more than i n f e r , from the surrounding circumstances, that the buyer knew of and accepted the defect. It did not apply to defects that were less than completely obvious and did not put any p a r t i c u l a r onus on the buyer. 4 6 In H i l l v. Pringle, the pursuer purchased a quantity of rye grass seed from the defender. At the time, he noticed that i t had a musty smell and a bad colour, but he did not comment on t h i s . When the seed f a i l e d to grow, he raised an action for r e p e t i t i o n of the price and damages. In finding for the pursuer, Lord P i t m i l l y found that his f a i l u r e to act on the warning signs did not bar his claim. Again, the relevance of price paid was the deciding factor, "the seed was bad, although the price paid was that for good seed ... [the buyer] was e n t i t l e d to sow on the f a i t h that the s e l l e r would not give him bad seed." Since the warranty as to g u a l i t y i s implied, i t is no defence that the s e l l e r was ignorant of the defect. In Gilmer v. 4 8 Galloway, a cow which appeared healthy at the time of sale, but was in fact s u f f e r i n g from a longstanding i l l n e s s , died within a few days of purchase. The buyer was held e n t i t l e d to r e p e t i t i o n of the p r i c e , although there was no evidence that the s e l l e r knew of the i l l n e s s . 46. (1827) 6 S. 229. 47. Note 43, supra, per Lord P i t m i l l y , at p.232. 48. (1830) 8 S. 420. - 16 -The same point was made by the Court in Ralston v. 4 9 Robertson, where a horse was found to be su f f e r i n g from a number of ailments and was returned soon a f t e r purchase. The Court held the buyer e n t i t l e d to r e p e t i t i o n of the price and took the view that, "when a man s e l l s a horse for f u l l value, there i s an implied warrandice, both of soundness and t i t l e , nor i s there any necessity to prove the knowledge of the s e l l e r . " ^ 0 Minor Defects The Roman law approach, encompassing as i t did the ac t i o quanti minoris, accepted that for ce r t a i n minor or curable defects, the appropriate remedy was not re j e c t i o n and r e p e t i t i o n , but damages. Since, subject to ce r t a i n exceptions, Scots law did not embrace t h i s aspect of Roman law, the c u r a b i l i t y of a defect was no bar to r e j e c t i o n . In Ralston v. Robb,^1 the pursuer bought an apparently sound horse from the defender. It was found to be s u f f e r i n g from a mild form of "running thrush," a defect which would make i t u n f i t to use for the time being, but which could be completely cured simply and quickly. The pursuer was held e n t i t l e d to reject the horse since, "he i s not understood in law to go to market with a view of purchasing a commodity of which he cannot have immediate use." 49. (1761) M. 14238. 50. Ibid, at p.14240. See also Lindsay v. Wilson (1771) M. 14243 on the same point. 51. 9th July 1808, c i t e d in M.P. Brown, note 17, supra, at p.290. 52. Id. - 17 -On the question of minor f a u l t s , M.P. Brown takes the view that, for the implied warranty to apply, "the vice or f a u l t complained of must not be of a s l i g h t or p a r t i a l nature." In so f a r as t h i s i s simply an example of the de minimis p r i n c i p l e , i t i s unobjectionable. Most of the cases c i t e d by Brown in support of the proposition can be explained on other grounds; one example being Seaton v. Carmichael and F i n d l a y . 5 4 Limitations on the Warranty A number of other factors can be seen as l i m i t i n g the application of the implied warranty. M.P. Brown notes that the Roman law allowed the s e l l e r to exclude p a r t i c u l a r vices from the warranty. 5 5 Such an exclusion was equally possible in Scotland and Lord Justice-Clerk Hope refers to implied warrandice applying, "unless there are circumstances to Show that an i n f e r i o r a r t i c l e was agreed on." In some cases, a custom of trade may have existed which affected the buyer's right of r e j e c t i o n . This would explain the 57 decision in Baird v. Aitken, where the defender bought a guantity of l i n t - s e e d from the pursuer at the usual price, despite the fact there were some doubts as to i t s q u a l i t y . The seed was sown and did not produce a good crop. The pursuer claimed the p r i c e and further averred that when there was doubt 53. Note 17, supra, at p.288. 54. Note 40, supra. 55. Note 17, supra, at p. 298. 56. Whealler v. Methven (1843) 5 D. 402, at p.406. 57. (1788) M. 14243. - 18 -as to the q u a l i t y of l i n t - s e e d , the usual practice was to sow a small amount as a t e s t , p r i o r to sowing the f u l l amount. While the Court did talk of implied warrandice, i t held the pursuer's claim e n t i t l e d to succeed on the basis that the defender had f a i l e d to observe the normal pr a c t i c e . Delay on the part of the buyer may have barred the right to r e j e c t the goods, although t h i s question would only begin to be relevant where a latent defect became apparent. Roman law limited the a c t i o r e d h i b i t o r i a to goods returned within six months of the sale. Scots law provided no such fixed period. As M.P. Brown put i t , "From the nature of the case, i t must, in some measure, be an a r b i t r a r y question, to be determined according to circumstances." There are few reported cases where r e j e c t i o n was barred on t h i s ground alone. In Brown v. Nicholson, the defender purchased a horse which was, "crooked when he was bought." One year l a t e r , the pursuer raised an action for the p r i c e . The defender's right of r e j e c t i o n was held to be barred by his delay. Durabi1ity In examining the implied warranty as to q u a l i t y , one question remains. Did i t include an element of d u r a b i l i t y ? M.P. Brown's view that, 58. S t a i r , note 19, supra. 59. Note 17, supra, at p.310. 60. 9th Jan. 1629, c i t e d in M.P. Brown, note 17, supra, at p.310. - 19 -"The vendor i s l i a b l e only for vices which are proven to have existed at the date of the contract, the subject being a f t e r that at the ris k of the vendee." suggests, at f i r s t sight, that d u r a b i l i t y had no place in implied warrandice. However, the only S c o t t i s h case which he c i t e s , 6 2 Wellwood v. Gray, does l i t t l e to support such a sweeping statement, since the case concerned a latent defect in a horse which became patent a f t e r the sale. The fact that the concept of d u r a b i l i t y i s not discussed in the cases can be explained on two accounts. F i r s t , those consumer durables which most often give r i s e to the problem in a modern context were unknown in the eighteenth and nineteenth centuries. The problem must be there, before a legal system can deal with i t . Secondly, problems which we now consider as concerning d u r a b i l i t y may have been dealt with on the basis that subsequent f a i l u r e of the subject matter demonstrated a latent defect becoming patent. Uni formity It may be observed that there were even stronger reasons in the mid-nineteenth century than in the second half of the twentieth century for providing uniform solutions in commercial matters throughout the United Kingdom. Commercial men are, in general, impatient of legal differences and prefer speedy and ce r t a i n resolution of t h e i r disputes to perfection of j u r i s p r u d e n t i a l solutions. Hence the popularity even today of 61. Note 17, supra, at p.297. 62. Note 17, supra, at p.298. - 20 -settlement of commercial disputes by a r b i t r a t i o n in the Ci t y of London according to English law - ir r e s p e c t i v e of the n a t i o n a l i t y of the contracting parties or the proper law of the contract. Today English law i s a minority system within the European Economic Community, yet in commercial matters i t s influence i s out of a l l proportion with i t s wealth and population in r e l a t i o n to i t s European partners. In the nineteenth century the influence of English commercial law was further extended by i t s export throughout the Empire, although the Union agreement by which Great B r i t a i n was created made no such provision for preference to be given to English law, as i s pointed out by (now Si r ) T.B. Smith. Addressing the Sixth Commonwealth Law Conference on the influence of English law throughout the world, he points out that t h i s was usually achieved, "through mandate, co l o n i s a t i o n , conquest or cession. Common law influence in Scotland i s an apparent exception. The Sco t t i s h legal system i s guaranteed by the Union Agreement of 1707 under which both Scotland and England ceded t h e i r sovereignty to the new state of the United Kingdom of Great B r i t a i n . " It seemed only reasonable to commercial inter e s t in England that disconformity of Scots law in matters of sale should be eliminated. It seems probable that many Scotti s h commercial men accepted such a solution as commercially expedient. Hence the ultimate acceptance and ultimate promulgation by a predominantly English Parliament of the Mercantile Law (Amendment) (Scotland) Act 1856 under the pretext that e x i s t i n g provisions of Scots law, 63. Proceedings of the Six Commonwealth Law Conference, Lagos, 1980, at p.109. - 21 -a l b e i t arguably more just in theory, constituted "an e v i l " in the United Kingdom context. That the common law of Scotland protected buyers before the 1856 Act is beyond doubt, but the protection was provided in a f l e x i b l e way. A l l the surrounding circumstances - and p a r t i c u l a r l y that of price - were considered in assessing what protection ought to be given. The accusation that "the S c o t t i s h rule tends to create l i t i g a t i o n s , " seems l i t t l e j u s t i f i c a t i o n for depriving d i s s a t i s f i e d buyers of a remedy. Indeed, experience has shown that l i t i g a t i o n i s at least as l i k e l y to re s u l t from l e g i s l a t i o n . Implied warrandice operated amid a keen awareness of the need for and needs of commerce. It is acknowledged that the needs of consumers w i l l often d i f f e r from those of commercial e n t i t i e s , but there i s no reason to suppose that Scots law would have f a i l e d to meet t h i s challenge when i t arose. Indeed, in commenting on implied warrandice, Lord Kilbrandon noted that i t was, "a rule designed to give a remedy to purchasers who have not got what they paid f o r , and was thus in l i n e with modern consumer p r o t e c t i o n . " 6 4 That some attempt at a n g l i e i s a t i o n of Scots law was underway p r i o r to 1856 seems beyond doubt. The extent to which th i s might have been successful without the Act i s unknown, but i t did meet with resistance. M.P. Brown refers to the increasing use of English a u t h o r i t i e s as one of his p r i n c i p a l reasons for writing his Treatise, - 22 -"because the English law of sale i s , in some fundamental p r i n c i p l e s , altogether d i f f e r e n t from the law of Scotland, and unless those d i s t i n c t i o n s are r i g h t l y understood and kept in view, the utmost confusion of p r i n c i p l e must ultimately r e s u l t from the indiscriminate use of English a u t h o r i t i e s . " This suggests that he believed the a n g l i c i s a t i o n to be due to ignorance rather than any deliberate intention. That view was c l e a r l y not shared by Lord Justice-Clerk Hope who sai d , "There seems of late years to have been an attempt to get r i d of the rule of our law as to the guarantee on the part of the s e l l e r , on the q u a l i t y of the a r t i c l e sold by him." He continues, leaving the reader in no doubt as to his views on the matter, "This i s an important feature of the law of Scotland, and one in which i t i s favourably distinguished from that of England." The Mercantile Law (Amendment) (Scotland) Act 1856 Despite the resistance to covert attempts at a n g l i c i s a t i o n , the process became overt and the Mercantile Law (Amendment) (Scotland) Act 1856 passed into Scots law. In section 5, the Act provided: "Where goods s h a l l , a f t e r the passing of t h i s Act, be sold, the s e l l e r , i f at the time of the sale he was without knowledge that the same were defective or of bad q u a l i t y , s h a l l not be held to have warranted t h e i r q u a l i t y or s u f f i c i e n c y , but the goods, with a l l f a u l t s , s h a l l be at the r i s k of the purchaser, unless the s e l l e r s h a l l give an express warranty of 64. Note 4, supra. 65. Note 17, supra, Preface, at p.v. 66. Paterson v. Dickson (1850) 12 D. 502, at p.503. 67. Id. - 23 -the q u a l i t y or s u f f i c i e n c y of such goods, or unless the goods have been expressly sold for a s p e c i f i c and p a r t i c u l a r purpose, in which case the s e l l e r s h a l l be considered, without such warranty, to warrant the same are f i t for such purpose." For the f i r s t time in Scotland, the rule of caveat emptor 6 8 began to have e f f e c t . In Hardie v. Austin and McAslan, the pursuer sold the defenders a quantity of turnip seed, described as, "East Lothian swede, grown i n East Lothian and f i r s t class stock." The seed was tested and yielded a smaller crop than expected. The defenders attempted to reject the seed. The pursuer did not accept t h i s and raised an action for the pri c e . The Court held the pursuer e n t i t l e d to succeed, since the goods had not been sold for a " s p e c i f i c and p a r t i c u l a r purpose." 6 9 In Dunlop v. Crawford, the defender bought milk cows from the pursuer. The cows did not produce as expected and the defender refused to pay the p r i c e . The pursuer succeeded in an action for the price, since the cows were being put to t h e i r usual use and had not been sold for a " s p e c i f i c or p a r t i c u l a r purpose." However, the 1856 Act did not apply in a l l situations and where i t did not apply, the p r i n c i p l e that a sound price implied a sound a r t i c l e remained in force. The Act applied only to the sale of s p e c i f i c goods where the ris k was capable of being passed to the buyer. In the words of Lord Justice-Clerk I n g l i s , in J a f f e v. R i t c h i e , 68. (1870) 8 M. 798. 69. (1886) 13 R. 973. "The kind of sale contemplated ... i s a sale in which, a f t e r the c o n s t i t u t i o n of the contract, the goods are, at common law, at the ris k of the purchaser. That i s a sale of a d e f i n i t e quantity or corpus, for unless i t were that, the goods could not be at the ri s k of the purchaser." In that case the pursuer bought 4120 spindles of "3 l b . flax yarn" from the defender. These were found to contain an admixture of jute. The pursuer c a l l e d upon the defender to replace the spindles and, when t h i s was refused, raised an action for damages. The Court took the view that the pursuer was e n t i t l e d to succeed. That the Act was inapplicable to the case i s explained by Lord Justice-Clerk I n g l i s thus, "The terms 'bad q u a l i t y , ' 'defect' or 'insuf-f i c i e n c y , ' do not apply to a case in which the goods offered are of a d i f f e r e n t description from those about which parties contracted. There, there i s a complete f a i l u r e to perform the express words of the contract, and we do not need to imply anything. The object of [section 5] i s to take away that constructive implication, which arose, according to the law of Scotland, from the payment of a f u l l p r i c e . Here i t is of no consequence whether the price was f u l l or not." C l e a r l y , where the goods tendered were d i f f e r e n t to the goods contracted for, there i s a breach of contract and the Act was i r r e l e v a n t to that s i t u a t i o n . In Hutchison & Co. v. Henry and 7 2 C o r r i e , the pursuer ordered a quantity of Petersburgh oats from the defender, for "mealing purposes." He rejected the goods tendered as wholly unsuited to the purpose and raised an action for damages for breach of contract. The defender argued that the 70. Ja f f e v. Ritchie (1860) 23 D. 242, at p.249. 71. Id. 72. (1867) 6 M. 57. - 25 -goods had not been sold "expressly" for a p a r t i c u l a r purpose. In holding the pursuer e n t i t l e d to succeed, the Court found that the 1856 Act did not apply to the case, since what was tendered could not have been in implement of the contract. The goods were, therefore, incapable of passing to the buyer. In commenting on t h i s , Lord Justice-Clerk Patton points out that, in t h i s respect, the law in Scotland and England remained unchanged by the Act. He said, "The law of England in such cases was always i d e n t i c a l to the law of Scotland. If an order was given in a contract of sale, in eith e r country, for an a r t i c l e which was bespoken, with a view to be applied to a p a r t i c u l a r purpose, and the order was accepted, action would l i e on the contract, at the instance of the purchaser, for implement or damages, just as in S c o t l a n d . " 7 J Section f i v e of the Act provides i t s e l f , for a number of q u a l i f i c a t i o n s on the rule of caveat emptor. The s e l l e r must been "without knowledge" of the defect. Thus, a dishonest s e l l e r receives no protection. In Rough v.  Moir & Sons, 7 4 a horse, sold at auction, was described as having been "driven regularly in single and double harness." Having bought the horse, the defender found that the animal was quite incapable of performing that function. The pursuer's action for the price f a i l e d , p r i n c i p a l l y because the Court took the view that he knew that the assertion made was f a l s e . Indeed in both Hardie and J a f f e , the Courts had stressed the honesty of the s e l l e r s in the transactions. 73. Ibid, at p.59. 74. (1862) 24D.174. - 26 -Where the s e l l e r gave an "express warranty of the quality or s u f f i c i e n c y " of the goods, he was l i a b l e for t h i s . Such express warranty was always possible under Scots law p r i o r to 1856 and operated in addition to the implied warranty. An example under the Act i s found in Cooper & Avis v. Clydesdale Shipping Co., 7 5 where the pursuers, who were marine store merchants undertook to supply the defender's ship, the "Forest Monarch" with provisions, in accordance with the requirements of H.M. Commissioners in respect of emigrant ships. On a r r i v a l in Sydney, A u s t r a l i a , the Commissioners found the supplies d e f i c i e n t and deducted fclOO from the payment to the defenders. The defenders attempted to recover t h i s from the pursuers. While t h e i r claim f a i l e d due to an i n s u f f i c i e n c y of evidence, the fact that an express warranty had been given was not questioned. Fitness for Purpose Where goods were "expressly sold for a s p e c i f i c and p a r t i c u l a r purpose," the s e l l e r warranted that they were f i t for that purpose. Again, t h i s was possible, in Scotland, p r i o r to 1856. It i s the use of the word "expressly" which may give r i s e to some confusion in section 5. In Cooper & Avis, Lord J u s t i c e -Clerk I n g l i s c l e a r l y thought that t h i s "express sale" could be implied from the circumstances. In discussing the fact that the express warranty did not preclude the requirement as to f i t n e s s f o r purpose he s a i d , 75. (1875) 2 R. 529. - 27 -"There i s an express warranty that a l l these stores s h a l l pass survey of Government inspectors; but that i s not the only warranty under th i s contract. On the contrary, i t i s superadded to another warranty c l e a r l y implied - that the a r t i c l e s to be furnished to the defenders should be f i t for the sp e c i a l and p a r t i c u l a r purpose for which they were intende d . 1 , 7 6 This idea of implication i s apparently li m i t e d by Lord 7 7 Kmloch in Hardie when he discusses the p o s s i b i l i t y of goods which have no s p e c i f i c purpose. Clearly he feels that, however obvious the purpose, unless i t i s s p e c i f i e d , i t i s outwith the Act. He says, "It happens in a great many cases that the purpose for which goods are sold can be no other than one purpose only, and yet t h i s does not operate the case contemplated by the statute. The statute does not contemplate a case of mere implication. It requires express contract to be engaged i n . " While the circumstances in which i t could operate were greatly r e s t r i c t e d by the 1856 Act, the remedy remained that of reje c t i o n of the goods, possibly coupled with a claim for 7 9 damages. In McCormick & Co. v. Rittmeyer & Co. the pursuer ordered 100 bales of prime cordage hemp from the defender. He then ordered a further 100 bales on the same terms. The defender shipped 65 bales in part f u l f i l l m e n t of the f i r s t order and these were accepted and resold by the pursuer, as were a further 35 bales. The defender then sent a further 35 bales in part f u l f i l l m e n t of the second order and these were rejected. The 76. Ibid. at p.532. 77. Note 68, supra. 78. Ibid, at p.804. 79. (1869) 7M.854. - 28 -pursuer raised an action of damages on account of i n f e r i o r q u a l i t y of the f i r s t order and fc50 in respect of the second. The Court held that the r e j e c t i o n and claim for damages in respect of the second order was quite j u s t i f i e d , since the goods did not conform to the contract. However, the claim for damages in respect of the f i r s t order did not succeed, because the defective goods had not been rejected. Lord President I n g l i s stated the rule thus, "Where a purchaser receives delivery of goods as in f u l f i l l m e n t of a contract of sale, and thereafter finds that the goods are not conform to order, his only remedy is to r e j e c t the goods and rescind the contract ... the purchaser i s not e n t i t l e d to r e t a i n the goods and demand an abatement from the contract price corresponding to the disconformity of the goods to order, for t h i s would be to substitute a new and d i f f e r e n t contract for that contract of sale which was o r i g i n a l l y made by the p a r t i e s , or i t would resolve into a claim of the nature of the a c t i o quanti  minoris, which our law e n t i r e l y r e j e c t s . " That the 1856 Act brought about a r a d i c a l change in the law of Scotland i s beyond doubt. Moreover, the passing of the Act was simply the beginning of a process which was to be continued by the Sale of Goods Act 1893 and subsequent l e g i s l a t i o n . (B) England; The Common Law Since the aim of the Act of 1856 was to assimilate the law 81 of Scotland to the law of England, i t i s appropriate to examine the contemporaneous provisions of the l a t t e r in r e l a t i o n to implied terms as to q u a l i t y in sale of goods. However, i f t o t a l 80. Ibid, at p.858. 7 M. 854. 81. See p.4 supra. - 29 -confusion i s to be avoided, i t i s e s s e n t i a l to bear in mind that the use of the same word in each j u r i s d i c t i o n does not i n f e r the use of the same concept. Nowhere i s t h i s more apparent than in the use of the word "warranty." In Scotland, the implied warranty as to qua l i t y was a fundamental part of the contract. In England, a warranty was described by Benjamin as, "not one of the e s s e n t i a l elements of the contract, for a sale i s none the less complete and perfect in the absence of a warranty. But i t i s a c o l l a t e r a l undertaking, forming part of the contract by the agreement of the p a r t i e s , express or implied." It i s s i g n i f i c a n t that Benjamin should have i d e n t i f i e d the s t r i k i n g contrast between English law and systems based on the developed C i v i l or Roman law. Judah P h i l i p Benjamin (1811-1884) had served as Attorney General to the Confederate States in the American C i v i l War and had established a distinguished reputation in Louisiana before his escape to England a f t e r the defeat of the South. In 1866 he was c a l l e d to the English bar and only two years l a t e r published the f i r s t e d i t i o n of his t r e a t i s e on Sale of Goods. A r t i c l e 2451 of the Louisiana C i v i l Code of 1825 (corresponding to a r t i c l e 2476 of the Revised Louisiana C i v i l Code of 1870 and a r t i c l e 1625 of the French Code C i v i l ) l a i d a c l e a r foundation for warranty of hidden defects as among the obligations of the s e l l e r . Scots law, though not c o d i f i e d , 82. Note 32, supra at p.88. 83. J.P. Benjamin, A Treatise on the Law of Sale of Personal  Property; With Reference to the American Decisions and to the  French Code and C i v i l Law (2nd ed., 1873), at p.497. - 30 -followed the t r a d i t i o n with which Benjamin was f a m i l i a r before he made himself master of the law of sale of goods in England. The warranty in Scots law might therefore be regarded as more akin to what English law would regard as a "condition precedent." This 8 4 view i s supported by Greig who, in a discussion of the pre-1893 p o s i t i o n , demonstrated that the term "warranty" in English law did not have one c l e a r meaning. Nor did i t correspond to the term's meaning in Scotland. He says, "If the s e l l e r was in breach of an express or implied term of the contract, the buyer's ri g h t of repudiation depended upon his being able to show that the s e l l e r ' s f u l f i l l i n g the warranty in question constituted a condition precedent to his own l i a b i l i t y under the contract and that the breach in question had gone to the root of the contract." Apart from d i f f i c u l t i e s of terminology, what did English law imply as to the q u a l i t y of the goods sold? Caveat Emptor The law of sale in England has, as i t s foundation, the rule caveat emptor. R.P. Brown suggested that t h i s rule dates from at o c least 1447. 0 0 The same authority pointed out that i t may indeed be of greater a n t i q u i t y . He goes on to assert that the rule, "appears to have suffered a temporary e c l i p s e in the early part 8 7 of the eighteenth century." The view was taken by Grose J . , in 8 8 Parkinson v. Lee, that, by 1778, caveat emptor was firmly re-established. He said, 84. D.W. Greig, "Condition - Or Warranty?" (1973), 89 L.O.R. 93. 85. Ibid, at p.96. 86. Note 32, supra at p.88 and fn. 4, where he examines b r i e f l y the evidence. - 31 -"It i s the f a u l t of the buyer that he did not i n s i s t on a warranty; and i f we were to say that there was not withstanding, an implied warranty a r i s i n g from the conditions of sale, we should again be opening the controversy, which existed before the case of Douglas. Before that time i t was a current opinion that a sound price given for a horse was tantamount to a warranty of soundness, but when that came to be s i f t e d , i t was found to be so loose and unsatisfactory a ground of decision that Lord Mansfield rejected i t , and said there must be an express warranty of soundness, or fraud in the s e l l e r . " 8 9 9 0 Since that decision, writers, including Benjamin and R.P. 91 Brown, have accepted t h i s conclusion without question. However, when the case c i t e d by Grose J. - that of Stuart v. 92 Wilkins i s examined, i t can be argued that such a sweeping conclusion i s not j u s t i f i e d . The case concerned an action by the buyer of a horse against the s e l l e r . The horse had been purchased for B31.10 (a substantial price at the time) and the s e l l e r had said that i t was sound when i t was, in fact, s u f f e r i n g from "the windgalls." Lord Mansfield found for the buyer on the basis of express warranty. He did speculate about the use of assumpsit, had there been no such express warranty and said, " S e l l i n g for a sound price without warranty may be a ground for an assumpsit, but, in such a case, i t ought to be l a i d that the defendant knew of the unsoundness." It might be thought that he was not expressing a wide proposition 87. Note 32, supra, at p.89. 88. (1808) 2 East 314; 102 E.R. 389. 89. Ibid, at p.321-22. 90. Note 83, supra at p.525. 91. Note 32, supra at p.89. 92. (1778) 1 Doug. 18; 99 E.R. 15. 93. Note 17, supra at p.20. - 32 -of that attributed to him by Grose J. However, i t i s accepted that Grose J's statement did r e f l e c t the p o s i t i o n of caveat  emptor at the time he made i t and, indeed, for some time p r i o r to that. What, then, was meant by caveat emptor? Benjamin stated the position thus, " [ I t is] the general rule of law, that no warranty of the q u a l i t y of a c h a t t e l i s implied from the mere fact of sale. The rule in such cases i s caveat emptor, by which is meant that when the buyer has required no warranty, he takes the r i s k of q u a l i t y upon himself, and has no remedy i f he chose to rely on the bare representation of the vendor, unless indeed he can show that representation to be fraudulent." He pointed out l a t e r that the rule only applied absolutely to, "an ascertained s p e c i f i c c h a t t e l , already e x i s t i n g , and which the buyer has inspected." This applied even where the defect was latent, and the buyer's examination of the goods could not have reasonably revealed i t . An example of t h i s can be seen in Emmerton v. Mathews. 9 6 In that case the defendant sold a guantity of (apparently good) meat to the p l a i n t i f f at Newgate market. No express warranty was given and, once the meat was cooked, i t was found to be u n f i t for human consumption. The buyer's action against the s e l l e r f a i l e d on the ground that he had bought s p e c i f i c goods having had the opportunity to examine them. 9 7 In Jones v. Just, decided on another point, Mellor J . 94. Note 83, supra at p.498. 95. At p.525. 96. (1862) 7 H. & N. 586; 158 E.R. 604. - 33 -discussed the rule caveat emptor and the exceptions to i t at length, and states the position thus, "Where goods are in esse, and may be inspected by the buyer, and there i s no fraud on the part of the s e l l e r , the maxim caveat emptor applies, even though the defect which e x i s t s in them i s latent, and not discoverable on examination." Exceptions The f u l l rigour of the doctrine of caveat emptor did not apply to a l l sales in a l l s i t u a t i o n s . Commenting on the position in 1851, Lord Campbell pointed out that the exceptions had "well 9 9 nigh eaten up the r u l e . " Indeed, i t is c l e a r from the d e f i n i t i o n s of caveat emptor 1*^ that the s e l l e r could expect no protection in a number of circumstances. The f i r s t exception concerned the case of fraud by the s e l l e r referred to in Lord Mansfield's judgment in Stuart and in almost a l l d e f i n i t i o n s of caveat emptor. Where the s e l l e r knew of the defect and represented to the buyer that the s i t u a t i o n was otherwise, he would be l i a b l e . An example of t h i s i s found in Risney v. S e l b y , 1 0 1 where the s e l l e r of a house told the buyer that i t was worth fc30 per annum in rent when he knew i t to be worth only fc20. The Court had no h e s i t a t i o n in finding for the p l a i n t i f f . It would be su r p r i s i n g to f i n d the law taking any other view of fraudulent behaviour. In common with the Scot t i s h courts, the 97. (1868) L.R. 3 Q.B. 197. 98. Ibid, at p.202. 99. Sims v. Marryatt (1851), 17 Q.B. 281, at p.291. 100. Note 98, supra. 101. (1704) 1 Salkeld 210; 91 E.R. 189. - 34 -emphasis l a i d on fraud i s most often demonstrated by the English courts in the number of cases where the absence of fraud i s noted. Thus, in Parkinson v. Lee, which concerned the sale of unmerchantable hops, i t was emphasised that t h i s was in no way due to fraud on the part of the s e l l e r . So too, in Chanter v. 10 3 Hopkins, where the p l a i n t i f f sold the defendant a furnace which proved wholly unsuited to the use to which i t was put, the p l a i n t i f f ' s lack of fraud was emphasised. A further exclusion of the doctrine of caveat emptor arose in the s i t u a t i o n in which goods were sold by description and did not correspond to that d e s c r i p t i o n . However, i t i s clear that, in such a s i t u a t i o n , the question of warranty does not a r i s e since there has been complete f a i l u r e to implement the contract. Lord Abinger C.B. was at pains to emphasise t h i s when he s a i d , "If a man o f f e r s to buy peas of another, and he sends him beans, he does not perform his contract; but that i t not a warranty; there i s no warranty that he should send him peas; the contract i s to s e l l peas, and i f he sends him anything else in t h e i r stead, i t i s nonperfor-mance of i t . " i U 4 In Tye v. Fynmore, 1^ the p l a i n t i f f agreed to s e l l the defendant, "2 tons of f a i r merchantable sassafras wood, in logs, at 6 guineas per cwt." The defendant refused to accept delivery of the goods on the ground that what arrived was timber from the sassafras tree (a small North American laurel) and, in the trade, "sassafras wood" meant the roots of the tree, the l a t t e r being 102. Note 88, supra. 103. (1838) 4 M. & W. 399; 150 E.R. 1484. 104. Ibid, at p.404. 105. (1813) 3 Camp. 462; 170 E.R. 1446. - 35 -about six times as valuable as the former. Despite the fact that the defendant, who was "a druggist, and w e l l - s k i l l e d in a r t i c l e s of t h i s s o r t , " had examined a sample p r i o r to purchase, he was held to be e n t i t l e d to refuse the goods since they did not correspond to the description given of them. A s i m i l a r s i t u a t i o n arose in J o s l i n g v. K j n g s f o r d , ^ 6 where the p l a i n t i f f obtained a quantity of "oxalic acid" from the defendant. In the trade, "oxalic a cid," i s understood to be a pure substance, whereas what was delivered contained 10% sulphate of magnesia (Epsom S a l t s ) . The Court found for the p l a i n t i f f on the basis of simple breach of contract by f a i l u r e of performance. While the buyer, under English law, was afforded a degree of protection in cases of sale by d e s c r i p t i o n , t h i s could prove to be something of a double-edged sword. Where the goods answered the d e s c ription, the fact that they proved unsatisfactory or useless did not give the aggrieved buyer a remedy. This i s 10 7 evidenced by Chanter v. Hopkins i t s e l f . In that case the p l a i n t i f f was the patentee of an invention "Chanter's smoke-consuming furnace." The defendant sent an order in the following terms: "Send me your patent hopper and apparatus, to f i t up by brewing copper with your smoke consuming furnace. Patent right fcl5.15s., ironwork not to exceed fc5.5s., engineer's time f i x i n g 7s.6d. per day." The furnace was i n s t a l l e d but was found to be of no use for the purpose of brewing. The defendant returned the equipment and, in an action for the p r i c e , the p l a i n t i f f 106. (1863) 13 C.B.; N.S. 447; 143 E.R. 177. 107. Note 103, supra. - 36 -succeeded. The defendant had received exactly what he ordered and the fact that i t did not perform as he thought i t might was held not to be the p l a i n t i f f ' s r e s p o n s i b i l i t y . The f u l l force of th i s approach can be seen in Barr v. 108 Gibson, where the defendant sold the p l a i n t i f f a ship, the "Sarah," on 21st October 1836. Unknown to the p a r t i e s , the "Sarah" had gone aground on the coast of Prince of Wales Island on 13th October 1836. Due to the time of year and weather conditions, i t was recommended that she be l e f t there and was resold on 24th October for fclO. In se t t i n g aside the o r i g i n a l verdict for the p l a i n t i f f , Parke B. s a i d : "Here the subject of transfer had the form and structure of a ship, although on shore, with the p o s s i b i l i t y , though not the p r o b a b i l i t y of being got o f f . She was s t i l l a ship, though at the time incapable of being, from the want of l o c a l convenience and f a c i l i t i e s , b e n e f i c i -a l l y employed as such." However, t h i s rigorous approach to the question of description had not been u n i v e r s a l l y accepted even before the Sale of Goods Act 1893. In Gardiner v. G r a y , 1 1 0 Lord Ellenborough required not only s t r i c t correspondence with de s c r i p t i o n , but s a l e a b i l i t y as goods of that d e s c r i p t i o n , where there had been no opportunity for inspection. In an explanation of t h i s view, to be recommended for i t s c l a r i t y , he s a i d : "The purchaser has a right to expect a saleable a r t i c l e answering the description in the contract. Without any p a r t i c u l a r warranty, t h i s i s an implied term in every 108. (1838) 3 M. & W. 390; 150 E.R. 1196. 109. Ibid, at p.401. 110. (1815) 4 Camp. 144; 171 E.R. 46. - 37 -contract. Where there i s no opportunity to inspect the commodity, the maxim of caveat  emptor does not apply. He cannot without a warranty i n s i s t that i t s h a l l be of any p a r t i -c ular q u a l i t y or f i t n e s s , but the intention of both parties must be taken to be, that i t s h a l l be saleable in the market under the denomination mentioned in the contract between them. The purchaser cannot be supposed to buy goods to lay them on a dunghill." 112 F i f t y - t h r e e years l a t e r , in Jones v. Just, Mellor J. r e s t r i c t e d the p r i n c i p l e set out by Lord Ellenborough to cases where the s e l l e r was e i t h e r the manufacturer of, or a dealer i n , the commodity sold. Adherence to description was subject to a further q u a l i f i c a t i o n that of a "reasonableness" t e s t . In B u l l v. 113 Robison, the p l a i n t i f f agreed to supply the defendant with a quantity of hoop-iron, to be manufactured by the former in S t a f f o r d s h i r e and delivered to the l a t t e r in Liverpool. The hoop-iron was merchantable when dispatched but, in t r a n s i t by canal, i t suffered what was accepted by the court to be normal de t e r i o r a t i o n . The defendant refused to accept the goods and the p l a i n t i f f sued for the p r i c e . In finding for the p l a i n t i f f , Alderson B. took the view that, "Any warranty implied by the law must be a reasonable warranty and cannot be one which.it i s p h y s i c a l l y impossible to comply with." No more did the protection afforded by the description extend beyond the goods to t h e i r packaging. In Gower v. Van 111. Ibid, at p.145. 112. Note 97, supra at p.203. 113. (1854) 10 Ex. 342; 156 E.R. 476. 114. Ibid, at p.345. - 38 -Dedalzen, the p l a i n t i f f agreed to s e l l the defendant "a certa i n cargo of good merchantable G a l l i p o l i o i l , then being the cargo of the vessel "Fortuna", .... (the said cargo consisting of L.R. 240 casks, containing 901 salmes and 9 p i g n a t e l l e s ) . . . . " The defendant refused to take delivery a l l e g i n g that the casks were not s u f f i c i e n t l y well-seasoned to contain "good merchantable G a l l i p o l i o i l . " Having resold the o i l at auction for less than the price agreed with the defendant, the p l a i n t i f f sued for the balance. In finding for the p l a i n t i f f , the Court made clear that the containers were a matter peripheral to the contract and t h e i r condition would only be relevant i f the e f f e c t was to render the goods unmerchantable. The r e s t r i c t i o n s on the rule caveat emptor discussed above are a res u l t of the general p r i n c i p l e s of contract and, as such, cannot be said to be a true exception to i t . However, the rule was r e s t r i c t e d , in addition, by a number of implied warranties. Sale by Sample One such warranty arose in sale by sample. Where such a sale occurred, i t was. implied that the bulk must correspond to the sample. Benjamin - who treated t h i s almost as i f i t "went without saying" - stated the position thus, " i n a sale of goods by sample, the vendor warrants the q u a l i t y of the bulk to be equal to that of the sample. The rule i s so univer-s a l l y taken for granted that i t i s hardly necessary to give d i r e c t authority for i t . 115. (1837) 3 Bing. N.C. 717; 132 E.R. 587. 116. Note 83, supra, at p.528. - 39 -That t h i s provided an a d d i t i o n a l element of protection for the 117 buyer, was stressed by Abbott J. in Parker v. Palmer, when he said, "The words per sample are not a description of the commodity sold, but a mere c o l l a t e r a l engagement on the part of the s e l l e r * that i t s h a l l be of a p a r t i c u l a r q u a l i t y . " In that case the p l a i n t i f f sold the defendant 1826 bags of East India r i c e of 132.6d. per 100 pounds, according to the conditions of the East India Company. This was a sale by sample and the bulk was of a lesser q u a l i t y than the sample. While the defendant's subsequent putting the r i c e up for sale at a limited price and buying i t himself barred r e j e c t i o n , the Court was in no doubt that he would have been e n t i t l e d to reject p r i o r to that behaviour. It may be noted that the fact that a small amount of the commodity was shown to the buyer, p r i o r to the sale, would not necessarily mean that the sale was by sample. Thus in Tye v. 119 Fynmore, where the buyer had examined a small amount of the sassafras wood, Lord Ellenborough was adamant that the sale was by description and not by sample. Where the bulk did correspond with the sample, the s e l l e r was usually held to have f u l f i l l e d his o b l i g a t i o n . Thus, in 12 0 Parkinson v. Lee the p l a i n t i f f who bought f i v e packets of hops from the defendant, on the basis of samples he had inspected, had 117. (1821) 4 B. & Aid. 387; 106 E.R. 978. 118. Ibid, at p.391. 119. Note 105, supra. 120. Note 88, supra. - 40 -no remedy when i t became apparent that they were unmerchantable due to a latent defect, since the bulk corresponded to the sample. However, even where the bulk did correspond with the sample, the s e l l e r was protected where the defect was such as to render the goods d i f f e r e n t to those described in the contract. This was i pi the case in J o s l i n g v. Kjngsford. In order that the buyer could e s t a b l i s h whether or not the bulk corresponded with the sample he was given, "a f a i r 122 opportunity of comparing the bulk with the sample." This was 12 3 stressed in Lorymer v. Smith where the p l a i n t i f f i n i t i a l l y declined to l e t the defendant examine the whole consignment of wheat. In r e j e c t i n g the goods, the defendant r e l i e d on a custom of the trade which provided for inspection. The Court took the view that t h i s was "so reasonable, that, without such usage, the 124 law would give him that r i g h t . " Controversy has surrounded the matter of the buyer's right where the sample i t s e l f contained a latent defect. Certainly in 12 5 Parkinson v. Lee, the fact that the bulk corresponded with the sample was held to be enough, regardless of the latent defect in the sample. However, seventy years l a t e r in Heilbutt v. 12 6 Hickson, t h i s l i n e of reasoning was not followed. 121. Note 106, supra. 122. Benjamin, note 83, supra at p.528. 123. (1822) 1 B. & C. 1; 107 E.R. 1. 124. Ibid, at p.2. 125. Note 88, supra. 126. (1872) L.R. 7, C P . 438. - 41 -In that case the p l a i n t i f f s contracted to supply the defendant with 30,000 pairs of black shoes for the French army and provided a sample shoe. It was known to both parties that French regulations prohibited the use of paper in the f i l l i n g of the soles of shoes used by the army. Several consignments of shoes were accepted before i t was discovered that paper had been used in the soles of some of the shoes. When the sample shoe was cut open, i t was found that the sole contained paper. In finding for the p l a i n t i f f s , the Court decided that, since the defect was latent, i t was no defence that the bulk corresponded with the o sample. 127 So, too, in Mody v. Gregson, where the defendant agreed to manufacture 2500 pieces of grey s h i r t i n g according to the sample. It was agreed that each piece should weigh 7 pounds. The consignment was accepted and i t was l a t e r discovered that the s h i r t i n g contained 15% china clay which had been added so l e l y in order to reach the desired weight. This had also been done with the sample. In finding for the p l a i n t i f f , Wiles J. took the view that, "the s e l l e r himself made the sample, and must be taken to have warranted that i t was one which so far as h i s , the s e l l e r ' s knowledge went, the buyer might safely act upon." These cases are taken by Benjamin to support the proposition that, " [ I ] f a manufacturer agrees to furnish goods according to sample, the sample is to be considered as free from any secret defect of 127. (1868) L.R. 4, Ex. 49. - 42 -manufacture not discoverable on inspection, and unknown to both p a r t i e s . " Not only would t h i s d i s t i n c t i o n between manufacturers and other s e l l e r s explain the decision in Parkinson v. Lee, but i t i s 129 echoed elsewhere. In Jones v. Bright, where the defective goods were a quantity of copper, Best C.J. made t h i s point, "Reference has been made to cases on warranties of horses; but there i s great difference between contracts for horses and a warranty of a manufactured a r t i c l e . No produce can guard against latent defects in a horse; but by providing proper materials, a merchant may guard against defects in manufactured a r t i c l e s . " This d i s t i n c t i o n has s i g n i f i c a n t p a r a l l e l s with modern d i s t i n c t i o n s between commercial and consumer s e l l e r s and w i l l be discussed at a l a t e r stage. Fitness for Purpose A second exception to the rule caveat emptor in the context of warranty i s found in the s e l l e r ' s warranty that goods w i l l be f i t for a p a r t i c u l a r purpose where the buyer has made the purpose known and i s "relying on the s e l l e r ' s s k i l l and judgment. 131 An example of t h i s i s found in Brown v. Edgington, where the p l a i n t i f f , a wine merchant, ordered a crane rope from the defendant. This was to be used to l i f t pipes of wine from the p l a i n t i f f ' s c e l l a r . When the rope proved inadequate, the court had no he s i t a t i o n in finding for the p l a i n t i f f , regardless of the fact that the defendant was not the manufacturer of the rope. 128. Note 83, supra at p.533. 129. (1829) 5 Bing. 533; 130 E.R. 1167. 130. Ibid, at p.544. 131. (1841) 2 Man. & G. 279; 133 E.R. 751. - 43 -The e s s e n t i a l elements in t h i s warranty are the undertaking as to f i t n e s s for a p a r t i c u l a r purpose and reliance on the T O O s e l l e r . It i s c l e a r from Jones v. Bright, that the s e l l e r did not have to state expressly that the goods would be f i t for the purpose. In that case, the p l a i n t i f f bought copper sheathing for a ship from the defendant. The defendant had s a i d , "I w i l l supply you well." Due to a defect in manufacture, the sheathing lasted four months instead of the usual four years. In finding f o r the p l a i n t i f f , Best C.J. said, "It i s not necessary that the s e l l e r should say, 'I warrant,' i t i s enough i f he says that the a r t i c l e which he s e l l s i s f i t for a p a r t i c u l a r purpose." However, the s e l l e r ' s actual knowledge of the buyer's purpose would not necessarily mean that the s e l l e r warranted the f i t n e s s of the goods for a p a r t i c u l a r purpose. In Shepherd v.  P y b u s , t h e defendant undertook to build the p l a i n t i f f a barge that was, "reasonably f i t for use." He knew that the p l a i n t i f f intended to use i t to carry cement from Faversham to London. The written contract made no reference to the defendant's under-taking. The barge proved inadequate for the task and the p l a i n -t i f f expended sums of money on repairs and damaged cement. A new t r i a l was ordered on the question of the barge's adequacy as an ordinary barge, any question of a sp e c i a l purpose being rejected. Nor did the fact that the purpose for which goods were bought was obvious result in any implied warranty on the s e l l e r ' s 132. Note 129, supra. 133. Ibid, at p.543. 134. (1842) 3 Man. & G. 858; 133 E.R. 1390. - 44 -part. In Burnby v. B o l l e t t , the defendant had bought a pig's carcass from a butcher at Lincoln market. He l e f t i t at the butcher's s t a l l while he completed other business. The p l a i n t i f f came to the s t a l l and, on requesting to buy the carcass, was referred by the butcher, to the defendant from whom he purchased the carcass. It turned out to be u n f i t for human consumption, but the court found for the defendant there being no implied warranty since no p a r t i c u l a r purpose was stated. In that case i t appears to have been s i g n i f i c a n t that the 13 6 defendant was not a dealer in meat. Again, there seems to have been a d i s t i n c t i o n drawn between manufacturers and non-commercial s e l l e r s , on the one hand, and consumer s e l l e r s on the other. While t h i s i s s i m i l a r to the d i s t i n c t i o n drawn in sales by sample, i t i s submitted that, where the s e l l e r was a pr o f e s s i o n a l , i t would be easier to e s t a b l i s h the buyer's reliance on the s e l l e r ' s s k i l l . Custom of Trade In common with the po s i t i o n in Scots law, English law accepted warranties implied by the custom of a p a r t i c u l a r 13 7 trade. An example of t h i s i s found in Jones v. Bowden, where the defendant had purchased a quantity of sea-damaged pimento. He repackaged i t and resold i t , at auction, to the p l a i n t i f f . Although i t was the usual practice in such sales for the fact of sea-damage and repackaging to be mentioned in the auctioneer's 135. (1847) 16 M. & W. 644; 153 E.R. 1348. 136. Ibid, at p.653. 137. (1813) 4 Taunt. 847; 128 E.R-. 565. - 45 -catalogue, t h i s was not done in t h i s case. The p l a i n t i f f was held e n t i t l e d to succeed because of the custom of trade. Merchandise Marks Act The Merchandise Marks Act, 1862, provided that where trademarks or indications of weight, measure or of the country of o r i g i n were on the containers of goods, the s e l l e r gave an implied warranty that these r e f l e c t e d the truth. The Act was repealed and s u b s t a n t i a l l y reenacted by the Merchandise Marks Act of 1887 which remained in force u n t i l the Trade Descriptions Act of 1968. Express Warranty A further point on implied warranties requires exploration. Where the s e l l e r gave an express warranty, did t h i s preclude the p o s s i b i l i t y of a warranty being implied? This would appear to be the conclusion drawn by Benjamin when he said, "no warranty i s implied where the parties have expressed in words, or by acts, the warranty by which they mean to be bound.' In support of t h i s view he c i t e s Parkinson v. Lee and Dickson v. Zazania. However, i t i s c l e a r from Bigge v. P a r k i n s o n , 1 4 0 that t h i s was not an absolute ru l e . In that case the p l a i n t i f f had agreed with the East India Company that he would convey troops to Bombay. He contracted with the defendant for a quantity of stores "guaranteed to pass survey of the East India Company's O f f i c e r . " Much of the stores proved to be unwholesome 138. Note 83, supra at p. 546. 139. (1851) 10 C.B. 602. 140. (1862) 7 H. & N. 955; 158 E.R. 758. - 46 -and the p l a i n t i f f ' s action succeeded on the basis of an implied warranty that the stores should be f i t for t h e i r purpose. The Court had no d i f f i c u l t y in adding t h i s to the express warranty, as Cockburn C.J. made cl e a r when he said: "In addition to the implied condition that the provisions supplied s h a l l be f i t for the purpose intended, there i s superadded an express condition, not q u a l i f y i n g the former but inserted for the benefit of the buyer." It was always possible for the buyer to require an express warranty from the s e l l e r . Indeed, in a system where no warranty as to the q u a l i t y of goods i s implied by a general provision of the law, the express warranty takes on a greater s i g n i f i c a n c e . This i s r e f l e c t e d by one learned judge who remarked, "It is the f a u l t of the buyer that he did not i n s i s t on a warranty." 1'* 2 What amounted to a warranty depended on the intention of the p a r t i e s . As B u l l e r J. put i t , "It was r i g h t l y held by Holt C.J. ... and has been uniformly adopted ever since, that an affirmation at the time of sale i s a warranty, provided that i t appears on evidence to have been so intended." Benjamin provides rather more guidance here when he said, "a decisive test i s whether the vendor assumes to assert a fact of which the buyer i s ignorant, or merely states an opinion or judgment upon a matter of which the vendor has no s p e c i a l knowledge, and on which the buyer may be expected also to have an opinion, and to exercise his judgment." 141. Ibid, at p.961. 142. Per Grose J. in Parkinson v. Lee, note 88, supra at p.321. 143. Pasley v. Freeman, (1789) 3 T.R. 51; 100 E.R. 450. 144. Note 83, supra at p.499. - 47 -Thus, while English law had, as i t s foundation, the rule caveat emptor, i t i s c l e a r that, in a number of s i t u a t i o n s , a warranty as to the q u a l i t y of goods would be implied. Again, the question must be asked - did any of these implied warranties include an element of d u r a b i l i t y ? Two of the cases discussed above contain elements of the issue of d u r a b i l i t y . However, in both cases, the decision of the court i s based on other grounds. In Jones v. Bright where the copper lasted for one-twelfth of the time expected, the matter was decided on the basis of f i t n e s s for purpose. In B u l l v. Robison, where the hoop-iron deteriorated in t r a n s i t , t h i s was held to be part of the warranty to be implied. Thus, as was suggested in respect of Scotland, i t may be that the question of d u r a b i l i t y was simply dealt with as an aspect of another warranty. - 48 -(c) Canada; The Common Law In 1969, the then Chief J u s t i c e of Canada, the Honourable Bora Laskin, delivered the annual Hamlyn L e c t u r e 1 4 5 In his opening comments, he referred to a l e t t e r , published in the Law Times in 1856, which commented on the law in force, at that time, in England and Upper Canada. It claimed that: "The laws of the two countries are almost i d e n t i c a l . The practice or administration of the law i s the same in each country.... I do not i n v i t e an emigration of English lawyers, for i n Upper Canada the profession i s well supplied from native sources. But i t w i l l be a consolation to such members of the English bar as may resolve to enter into competition in the colonies to know that they w i l l labour under no disadvantage.' Laskin went on to recount the t a l e of a member of the English bar who f e l t s u f f i c i e n t l y confident that the s i m i l a r i t y e n t i t l e d him to practice in Canada, without s a t i s f y i n g the requirements of the Law Society of Upper Canada, that he was 14 8 w i l l i n g to l i t i g a t e the point. In considering the B r i t i s h influence on the Canadian legal system, two points require emphasis. F i r s t , the " B r i t i s h influence" was, in truth, the influence of English law. The Sco t t i s h l e g a l system made v i r t u a l l y no impact on developments in Canada. As Laskin said, "one looks in vain for any s t r i c t l y 14 9 Sco t t i s h influence on Canadian law." Even a cursory glance at 145. Laskin, The B r i t i s h T r a d i t i o n in Canadian Law (1969), The Hamlyn Lectures, Twenty-First Series. 146. 28 L.T. 85. 147. Note 145, supra at p. x i i i . 148. Note 145, supra at p. xiv, where Laskin c i t e d Re de  Sousa (1885) 9 O.R. 39. 149. Note 147, supra. - 49 -the names of the pa r t i e s , in early Canadian reports, demonstrates that many Scots had found t h e i r way to Canada, but t h i s does not appear to have been r e f l e c t e d in the leg a l system. As Cote said: "Large as the Scots have bulked in the history of the B r i t i s h empire, no one has ever doubled that i t was purely English law which was introduced into such [settled] colonies." Secondly, i t should be noted that t h i s English influence in Canada was only barely f e l t in what i s now the Province of Quebec. I n i t i a l l y a French colony, Quebec was ceded to B r i t a i n in 1763. English law was introduced at that time, although the e f f e c t of t h i s has been a matter of d e b a t e . 1 ^ In any event, the Quebec Act, 1774 reintroduced the French law of the time, "for matters of property and c i v i l r i g h t s , " although i t expressly I C O preserved English "criminal and testamentory laws." While the 1 CO position in Quebec i s outwith the scope of t h i s paper, i t i s important to note the d i s t i n c t legal system operating in that part of Canada. In examining the common law in Canada on implied terms as to qua l i t y in sale of goods, and in assessing the extent to which i t was "almost i d e n t i c a l " to the English common law, the acceptance of the l a t t e r as the foundation of the former must be established. However, th i s alone would not be s u f f i c i e n t . In 150. Cote, "The Reception of English Law," (1977) 15 A l t a . L.  Rev. 29, at p.36. 151. Cote, note 150, supra at p.88. 152. Id. 153. For an excellent discussion of the s e l l e r ' s l i a b i l i t y for defective goods, in Quebec, see the debate which took place between Professors Durnford and Gow in the McGill Law Journal in the 1960's (1963-64) 10 McGill L.J, and (1964) 11 McGill L.J. - 50 -addition, the development of the common law in Canada must be considered. As Laskin pointed out: "The introduction of English law in the 18th and 19th centuries into the then separate constituents of a l a t e r Canada, whether on the p r i n c i p l e of colonies by conquest ... or on the h a l f - t r u t h of colonies by settlement ... had to take account of the rude r e a l i t i e s of small settlements, with hardly any resources of professional manpower and beset by d i f f i c u l t i e s of communication." Reception of English Law In Canada The timing of the reception of English law i n Canada has generated considerable d i s c u s s i o n . 1 5 5 The following i s a br i e f o outline of the process, and the dates given relate to the time when English law was formally accepted as operating in a colony. The actual a p p l i c a t i o n of English l e g a l p r i n c i p l e s would seem to depend on whether the area was acquired by settlement or was conquered or ceded. Where s e t t l e r s arrived in an area devoid of an organised l e g a l system, they simply brought the English common law rules of the time with them. As Cote points out, "the aborigines of the New World were always d i s r e g a r d e d , " 1 5 6 in t h i s context. Where the area was conquered by or ceded to B r i t a i n , English law would be applied from that date. An example of thi s i s found in the case of Quebec. For the purpose of cer t a i n t y , the l e g i s l a t u r e of the colony might set a date for the reception of English law. In terms of the Provinces and T e r r i t o r i e s , as they e x i s t today, the following dates for reception are widely 154. Note 145 supra, at p.2. 155. See Cote, note 150, supra, and a r t i c l e s c i t e d therein, and Laskin, note 145, supra, at pp.3-10. 156. Note 150, supra p.37. - 51 -157 accepted: New Brunswick and Nova Scotia, October 3, 1758; Prince Edward i s l a n d , October 7, 1763; Ontario, October 15, 1792; Newfoundland, December 31, 1832; B r i t i s h Columbia, November 19, 1858; Alberta, Manitoba, Saskatchewan, the Northwest T e r r i t o r i e s and the Yukon, July 15, 1870. It should be noted that, once the English common law was received in a p a r t i c u l a r area, i t was that law which was applied and developed in Canada and subsequent a l t e r a t i o n of provision in B r i t a i n was i r r e l e v a n t . Thus, in 1 58 Hopkins v. Jannison, Middleton J . warned that English cases decided since the Sale of Goods Act 1893, "must ... be received 159 with caution where, and here, we s t i l l have the common law." In 1910, in Ontario Sewer Pipe Co. v. Macdonald, Garrow J.A. accepted that the rules set out by Mellor J. in Jones v. J u s t , ^ ^ "may s t i l l be safely r e l i e d on as c o r r e c t l y expressing the law 16 2 here," despite the fact that they had been altered by statute in B r i t a i n . That English common law formed the foundation upon which subsequent developments b u i l t , in Canada, i s c l e a r . Indeed, the extensive reference to and reliance upon English cases and writers i s found through the cases discussed below. 157. Note 155 supra. 158. (1914) 18 D.L.R. 88. 159. Ibid, at p.108. 160. (1910) 2 O.W.N. 483. 161. (1868) L.R. 3 Q.B. 197. 162. Note 160, supra at p.485. - 52 -Caveat Emptor The common law of sales was firmly rooted in the doctrine of I C O caveat emptor. In Borthwick v. Young, the p l a i n t i f f bought 138 barrels of apples from the defendant. P r i o r to the sale, the defendant's agent had opened a number of the barrels to enable the p l a i n t i f f to examine the contents. The p l a i n t i f f had simply looked at the apples at the top of a few ba r r e l s , despite the opportunity to make a thorough inspection. A f t e r the sale, i t was discovered that many of the apples were of i n f e r i o r q u a l i t y and the p l a i n t i f f claimed damages. In dismissing the p l a i n t i f f ' s action, Osier J.A. quoted the following passage from Benjamin: "In general when an a r t i c l e i s offered for sale, and i s open to the inspection of the purchaser, the common law does not permit the l a t t e r to complain that the defects, i f any, of the a r t i c l e are not pointed out to him. The rules are caveat emptor and s implex  commendatio non ob l i g a t . " I C C In Hjggins v. C l i s h , Graham E.J. stated the position thus: "When goods are in esse and may be inspected by the buyer, and there i s no fraud on the part of the s e l l e r , the maxim caveat emptor applies, even though the defect which ex i s t s in them i s latent, and not discoverable on examination, at least when the s e l l e r i s neither the grower nor the manufacturer." In that case, the p l a i n t i f f had bought a "Leonard" b o i l e r and engine for use in the operation of a g r i s t m i l l . The machinery was unsuited to the task and he sought to recover the price paid 163. (1886) 12 O.A.R. 671. 164. Ibid, at p.676. 165. (1900) 34 N.S.R. 135. 166. Ibid. at p.136. - 53 -from the s e l l e r . Whide-the case also raised the question of purchase of an a r t i c l e under a patent name, the decision was based largely on the app l i c a t i o n of the doctrine of caveat  emptor. The doctrine i s repeated in Island Cold Storage Co. v. Murch. ^ 7 In that case the defendant offered to s e l l the p l a i n t i f f a quantity of veal. The price was agreed at 15c. per lb. and sixteen carcasses were delivered to the p l a i n t i f f ' s premises, where the p l a i n t i f f ' s employees inspected and weighed them. The p l a i n t i f f l a t e r alleged that the meat was not veal and claimed damages. The jury found for the defendant, and the p l a i n t i f f ' s appeal was dismissed by Arsenault J. who stated the po s i t i o n thus: "They [the p l a i n t i f f s ] were buying an a r t i c l e with no latent defects; i t was, to a l l intents and purposes, a sale and purchase over the counter with f u l l and ample opportunity on the part of the p l a i n t i f f to protect i t s interest and see that i t was getting what i t bargained fo r . The doctrine of caveat emptor applies to th i s case, for here the p l a i n t i f f did not buy on the f a i t h of the s e l l e r ' s word, but, af t e r taking in the goods and with a f u l l opportunity of inspection and examination." It i s c l e a r , from the cases discussed above, that the doctrine of caveat emptor did not apply to every sale in a l l s i t u a t i o n s . As in England under the common law, c e r t a i n factors had to be present before the f u l l rigour of the doctrine was f e l t by the buyer. That the goods themselves had to be in esse i s 169 i l l u s t r a t e d by Oldrieve v. Anderson Co. Ltd. There, the 167. (1922) 70 D.L.R. 449. 168. Ibid, at p.450. - 54 -p l a i n t i f f had some white ash lumber p i l e d up at a sta t i o n and ready for sale. The defendant's agent saw i t , made a cursory examination of i t and, at a l a t e r stage, the defendant bought the lumber. A dispute arose as to the q u a l i t y of the lumber. In finding the p l a i n t i f f e n t i t l e d to the pr i c e , Garrow J.A. said, "The goods were in esse from the beginning of negotiations — not goods to be manufactured. The rule caveat emptor therefore applies to exclude implied warranties. Where the goods were not in esse by the time of the sale, caveat emptor would not apply. The sale in such a case would be by descr i p t i o n and the obligations on the s e l l e r , in such cases, are 171 discussed below. It i s c l e a r from the cases discussed above that for caveat emptor to apply, not only must the goods be in esse, but the buyer must have been afforded an opportunity to examine them. As 17 2 i s i l l u s t r a t e d by Borthwick v. Young, where the buyer f a i l e d to take the opportunity, the doctrine continued to operate. It i s not s u r p r i s i n g to fi n d that, as in England, the doctrine would not protect a fraudulent s e l l e r . In Wallace v. 17 3 Garrett, the p l a i n t i f f ordered a "style number 24" piano from the defendant. The defendant delivered a "s t y l e number 20" piano and claimed i t was the same as that ordered, but in a d i f f e r e n t case. On discovering the truth, the p l a i n t i f f raised an action 169. (1916) 27 D.L.R. 231. 170. Ibid, at p.232. 171. See i n f r a p.57. 172. Note 163, supra. 173. (1904) 3 O.W.N. 649. - 55 -to recover the p r i c e . Despite the fact that he had had an opportunity to examine the piano before accepting i t , the p l a i n t i f f was successful because of the defendant's fraud. Where the circumstances providing for the operation of the doctrine of caveat emptor c l e a r l y envisaged patent defects, did the same rule apply where the defect was latent? The statement of Graham E.J. in Higgins v. C l i s h , quoted above, 1 7'* makes clear that the latency of the defect was i r r e l e v a n t . This view i s supported by the e a r l i e r case of Rothwell v. Milner, where the defendant sold the p l a i n t i f f a horse which, unknown to ei t h e r party, was s u f f e r i n g from "glanders." As a r e s u l t of the condition, the horse was quarantined and eventually destroyed. The p l a i n t i f f sued for damages. In dismissing the appeal and confirming the o r i g i n a l judgment, Bain J. held the doctrine of caveat emptor applicable, despite the latency of the defect. 1 7 ft By 1922, in Island Cold Storage Co. v. Murch (discussed above), the absence of a latent defect was s p e c i f i c a l l y mentioned in the judgment. While the reference is s t r i c t l y obiter, the fact that the reference was made might suggest a changing atti t u d e . C e r t a i n l y , in the l a t e r cases, where the sale was by d e s c r i p t i o n , latent defects were viewed in a l i g h t more favourable to the 1 77 buyer. 174. See supra p.53. 175. (1892) 8 Man. R. 472. 176. Note 167, supra. 177. See i n f r a discussion p.61. - 56 -Sale By Description In discussing the common law in England, i t was observed that caveat emptor did not apply where the goods were sold by d e s c r i p t i o n and f a i l e d to conform to that description. So too was the s i t u a t i o n in Canada. In Alabastine Co. v. Canada Producer and Gas Engine Co. 178 Ltd., the defendant agreed to provide the p l a i n t i f f with a three-cylinder gas engine, pulley, regulator and piping, in accordance with c e r t a i n s p e c i f i c a t i o n s . The p l a i n t i f f paid most of the price p r i o r to i n s t a l l a t i o n . While there was some dispute over the evidence, the Court accepted that the machinery never worked properly. The p l a i n t i f f raised an action for return of the money paid and for damages. In finding for the p l a i n t i f f , 17 9 Meredith J, quoting from Benjamin on Sale, s a i d : "Where the subject matter of the sale i s not in existence, or not ascertained, at the time of the contract, an engagement that i t s h a l l , when e x i s t i n g or ascertained, possess c e r t a i n q u a l i t i e s , i s not a mere warranty, but a condition, the performance of which i s precedent to any o b l i g a t i o n upon the vendee under the contract; because the existence of those q u a l i t i e s , being part of the description of the thing sold, becomes e s s e n t i a l to i t s i d e n t i t y , and the vendee cannot be obliged to receive and pay for a thing d i f f e r e n t from that for which he contracted." While the goods sold by description were often unascertained, i t was possible to have a sale by description of a s p e c i f i c a r t i c l e . In M i t c h e l l v. Seaman the p l a i n t i f f agreed 178. (1914) 17 D.L.R. 813. 179. 3rd. Am. ed. para. 895. 180. Note 178, supra at p.817. 181. (1909) 43 N.S.R. 311. - 57 -to buy a quantity of f i r s t - c l a s s hay from the defendant. The hay was in the defendant's two barns and the p l a i n t i f f did not see i t p r i o r to going to c o l l e c t i t . He removed the hay from the f i r s t barn and, on s t a r t i n g to remove i t from the second barn, discovered that i t was musty and mouldy. The p l a i n t i f f refused to take i t and, in finding for him, Graham E.J. accepted that t h i s was a sale by d e s c r i p t i o n . He s a i d : "It i s quite c l e a r that there may be a sale by d e s c r i p t i o n notwithstanding that there i s a s p e c i f i c a r t i c l e . The sales of cargoes s t i l l on the ocean are instances, and the terms of the contract often contain a description that the a r t i c l e i s of a p a r t i c u l a r kind. One can hardly suppose that a person would buy a cargo of f i s h or coal or lumber without requiring some further d e s c r i p t i o n . " In deciding whether or not sale of s p e c i f i c goods was by description, the buyer's opportunity to examine the goods was c l e a r l y relevant. Although i t is not discussed in M i t c h e l l , the 18 3 e a r l i e r case of Mooers v. Gooderham & Worts Ltd. provides a good example of the s i t u a t i o n described by Graham E.J. In that case the grain was purchased by the defendants by l e t t e r and telegraph. Since there was no opportunity to inspect, i t was held that t h i s was a sale by description and, since the grain was of poor q u a l i t y , the defendants were not bound to accept i t . What amounted to an opportunity to inspect the goods seems, in M i t c h e l l and Mooers, to have depended on p r a c t i c a l r e a l i t y . This does not appear to have been the case in Fraser v. 18 4 S a l t e r . There the p l a i n t i f f was the consignee of 6000 bushels 182. Ibid, at p.317. 183. (1887) 14 O.R. 451. - 58 -of oats, stored in bulk on a vessel in the harbour. He advertised the oats for sale at an auction and, p r i o r to the auction, the defendant agreed to buy the oats. About 1500 bushels had been resold by the time i t was discovered that the oats were musty.. The defendant refused to pay the balance of the price and the p l a i n t i f f raised an action. In finding for the p l a i n t i f f the court held that the doctrine caveat emptor applied, since the sale was of a s p e c i f i c thing and both parties had an equal opportunity to inspect. While i t i s accepted that the p a r t i e s ' opportunity to inspect was equal, i t is submitted that i t was not reasonably p r a c t i c a l . Fraser was not referred to in Mooers, nor in M i t c h e l l , a decision in the same province. C l e a r l y then, where the sale i s by description, the buyer i s protected by the requirement that the goods should conform to the description to the f u l l . A c l e a r example of the degree of t h i s •joe protection i s found in Hedstrom v. Toronto Car Wheel Co. The p l a i n t i f f agreed to supply the defendant with a guantity of "Depere" iron. He attempted to d e l i v e r the quantity of i r o n , made by another company, but by the same process and of the same qu a l i t y . The defendant refused to accept the iron and the p l a i n t i f f raised an action for the p r i c e . In finding that the defendant was e n t i t l e d to reject the iron, Spragge C.J.O. said: "A customer i s e n t i t l e d to i n s i s t upon having what his contract provides that he s h a l l have; and i s not bound to accept some other thing of the l i k e d e s c r i p t i o n , even though i t be shown that the other thing i s of equally good q u a l i t y . " 1 8 6 185. (1883) 8 O.A.R. 627. 186. Ibid, at p.631. - 59 -As was demonstrated in the English context, th i s requirement of s t r i c t adherence to description could be something of a double-edged sword. Where the goods did conform to the des c r i p t i o n , the buyer was bound to accept and pay for them even i f they proved wholly unsuited to his needs. Thus, in 18 8 Higgins v. C l i s h , discussed above, the buyer got the "Leonard" engine and b o i l e r he ordered, and the fact that i t was unsuited to his purpose was not considered to be relevant. In discussing correspondence with description, a number of cases suggest that an element of merchantability was contained within the notion of desc r i p t i o n . References to " s a l e a b i l i t y , " for example, suggest that goods had to be commercially acceptable I Q Q as being of a p a r t i c u l a r d e s c r i p t i o n . In Weis v. B i s s e t t , the p l a i n t i f f sold the defendant a quantity of mackeral. The mackeral was l y i n g in boxes, in front of the p a r t i e s , and the defendant was given the opportunity to inspect, although he did not do t h i s . On a r r i v a l in Boston, i t was found that part of the consignment was of i n f e r i o r q u a l i t y . The p l a i n t i f f ' s action for the price f a i l e d , despite the defendant's f a i l u r e to inspect, because q u a l i t y was held to be part of the d e s c r i p t i o n . Halliburton C.J., quoted Chancellor Kent in the following statement: 186. Ibid, at p.631. 187. See supra p.36. 188. Note 165, supra. 189. (1857) 3 N.S.R. 178. - 60 -"There i s an implied warranty that the a r t i c l e s h a l l answer the character described, and be saleable in the market under that denomination. , , i y u 191 In Grocers Wholesale Co. v. Bostock, the defendant sold the p l a i n t i f f s 573 cases of canned salmon. While these were "do-overs," (cans which have been cooked once, found to be unsatisfactory, and cooked and sealed again within 24 hours), there was an express warranty that they were free from "blown, burst, dry and leaks." There was breach of the express warranty for which the p l a i n t i f f was held e n t i t l e d to recover and of the implied warranty of f i t n e s s for purpose. In his judgment, providing an excellent review of the law, Ri d d e l l J . made the following statement: "The goods were bought by de s c r i p t i o n , from which an implied warranty arose that they are of merchantable g u a l i t y . " The question arises — did thi s requirement of merchantability within the description extend to protect the buyer against latent defects? While the case was concerned primarily with issues of sale by sample and f i t n e s s for purpose, Rifnet J's judgment in John Macdonald and Co. Ltd. v. Princess 193 Manufacturing Co. suggests that, at least l a t e r , under the common law, the buyer might be protected against latent defects. He said that the common law required that goods should 190. Ibid, at p.181. 191. (1910) 22 O.L.R. 130. 192. Ibid, at p.138. 193. [1926] 1 D.L.R. 718. The transaction from which the case arose took place p r i o r to the enactment in Ontario of the Sale of Goods Act 1920, c.40. The decision rests therefore upon the common law. - 61 -"answer [their] usual commercial description and be merchantable and saleable under that d e s c r i p t i o n . " Under English common law, i t was suggested that the duty placed on a dealer or manufacturer to provide "saleable" goods of a p a r t i c u l a r d e s c r i p t i o n was higher than that placed on other s e l l e r s . While most of the Canadian cases, which deal with t h i s point, concern f i t n e s s for purpose and, as such, may be t i e d to the notion of re l i a n c e , the discussion, by Middleton J . in 19 5 Hopkins v. Jannison, of the nature of implied terms i s illu m i n a t i n g . He sa i d : "I think i t i s desirable to point out that the implied warranty, where goods are sold by a manufacturer or dealer, rest on pr e c i s e l y the same footing as a l l other implied contracts. This i s sometimes l o s t sight of not only in argument but in decided cases; and, where that i s so, the decision i s generally out of harmony with the body of the law." He went on to review the English a u t h o r i t i e s on implied terms, emphasising that the rationale behind them lay in giving e f f e c t to the intention of the p a r t i e s . On t h i s basis, i t is clea r that terms could be implied, regardless of the character of the s e l l e r . The requirements placed on the s e l l e r where a sale was by description may simply r e s u l t from the ap p l i c a t i o n of general contractual p r i n c i p l e s , i . e . , that contracting parties should do what they undertook to do. In t h i s respect i t i s perhaps erroneous to describe i t as an exception to the doctrine of 194. Ibid, at p.724. 195. (1914) 18 D.L.R. 88; discussed supra p.52. 196. Ibid, at p.102. - 62 -caveat emptor. More accurately described as "exceptions" would be the law applicable to sale by sample, sales where the r e l a t i v e p o s i t i o n of buyer and s e l l e r put the s e l l e r under an obligation to provide goods which were f i t for the buyer's intended purpose and si t u a t i o n s where there was a custom of trade which provided for a warranty on the part of the s e l l e r . Sale By Sample What was required for a sale to be "by sample" i s discussed 1 q 7 f u l l y i n Re Faulkners Ltd. While the case was primarily concerned with competing claims to the property of a company in l i q u i d a t i o n , the discussion of sale by sample examined the d i s t i n c t i o n between sale "by" sample and sale "from" samples. A Scotti s h company, which sold dried goods in Glasgow, sent i t s agent to Canada with samples of t h e i r wares. The agent showed the samples to prospective customers, in the hope that they would place orders, although the samples were not l e f t with buyers. Faulkners Ltd. ordered a quantity of dried goods which were lodged in a bonded warehouse in Canada, in February 1915, pending payment of the duty on them. The company paid most of the duty and the goods were f i n a l l y released in March 1915. Meanwhile the creditors had commenced l i g u i d a t i o n proceedings. If the sale had been by sample, the property in the goods would not have passed to the buyer u n t i l there had been an opportunity to compare the bulk with the sample. Meredith C.J.CP. made clea r however, that th i s was not a sale by sample but a sale from samples. He drew the d i s t i n c t i o n in the following terms: - 63 -"In t h i s case a good many more than a hundred d i f f e r e n t kinds of goods were purchased: to say that in such a case the sale was by sample, that the contract was that each should be in accordance with the sample, and that there was to be an inspection for the purpose of comparing them with the samples exhibited, i s to say that which, by reason of i t s i m p r a c t i c a b i l i t y only, no business man would serious l y assert. In a case of a sale by sample the buyer usually retains the sample to be the guide in the inspection or other t e s t : in cases such as t h i s the samples go with the salesman; they are part of the stock-in-trade of his employers." He goes on to note that, while sale by sample was once a popular way to deal with bulky goods, such as wheat, i t had been superseded, by 1918, by "sale by grade." From Meredith 19 9 C.J.C.P.'s description of i t , i t appears that t h i s l a t t e r mode of sale was a form of sale by de s c r i p t i o n . S i m i l a r l y , the fact that an example of the item sold was shown to the prospective purchaser and l e f t with him, would not necessarily mean that the sale was by sample. In Dominion Paper Box Co. Ltd. v. Crown T a i l o r i n g Co. L t d . , 2 0 0 where the decision was based primarily on the s e l l e r ' s implied o b l i g a t i o n that the goods would be f i t for the buyer's purpose, the fact that an example of the goods had been exhibited was not enough to 2 01 persuade Rose J . that there was a sale by sample. Where the sale was by sample, there was an implied o b l i g a t i o n that the bulk would correspond to the sample. That 197. [1918] 38 D.L.R. 84. 198. Ibid, at p.90. 199. Id. 200. [1918] 43 D.L.R. 557. 201. Ibid, at p.561. - 64 -t h i s was s t r i c t l y construed i s i l l u s t r a t e d in S c o t t i s h Rubber o n 9 Co. v. Berger T a i l o r i n g Co. z There the defendant ordered 200 raincoats from the p l a i n t i f f s , "to be confirmed upon receipt of a f u l l y cemented sample." The sample proved s a t i s f a c t o r y and the order was confirmed.. When the f i r s t 100 coats arrived, the defendant rejected them on the ground that they did not conform to the sample. The p l a i n t i f f ' s action for the price included the claim that the coats sent were better than the sample coat. In rej e c t i n g t h i s argument, Orde J . s a i d : " i t was beside the mark to argue that they were better or more serviceable. The defendants presumably knew what they wanted. As in cases of sale by des c r i p t i o n , in the absence of any other implied or express term, where the bulk did conform to the sample, the buyer could not then complain i f the goods proved to be unsuitable. Thus, in Klengon v. G o o d a l l , 2 0 4 the buyer was held l i a b l e for the purchase price of a quantity of peas where they conformed to the sample, despite the fact that they were unsuited to his purpose. Where the sample i t s e l f contained a latent defect, the fact that the bulk corresponded to the sample might not be s u f f i c i e n t for the s e l l e r to avoid l i a b i l i t y for the defect. In England, the l a t e r pre-statute cases i l l u s t r a t e that, at least where the s e l l e r manufactured the sample, he was l i a b l e where that defect 2 0 5 rendered the goods unmerchantable. Most of the Canadian cases 202. [1921] 20 O.W.N. 463. 203. Ibid, at p.464. 204. [1914] 6 O.W.N. 674. - 65 -which discuss t h i s deal with s i t u a t i o n s where the s e l l e r was held to have warranted that the goods would be f i t for the buyer's 206 purpose. The question of a latent defect in a sample was discussed in Re Scotland Woolen M i l l s Co., Ex Parte Denby and S o n s . 2 0 7 There, the s e l l e r , a manufacturer of woolen f a b r i c in Bradford, England, contracted (through an agent) to s e l l a quantity of f a b r i c to a manufacturer of men's s u i t s in Toronto. The parties had transacted on numerous previous occasions and the s e l l e r knew the purpose for which the f a b r i c would be used. The s e l l e r ' s agent had given the buyer samples of the f a b r i c and had described i t as " a l l wool." The f a b r i c was made up into s u i t s and sent out to various buyers. Many were returned and buyers complained that they did not "stand up." In finding for the buyer, the court based i t s decision largely on the questions of reliance and fi t n e s s for purpose. However, in his judgment, Fisher J. discussed the question of a latent defect in the sample and took the view that i t would not have barred r e j e c t i o n of the bulk s o l d . 2 0 8 In order that the buyer might assess whether or not the bulk corresponded to the sample, he was given the opportunity to inspect the goods, p r i o r to acceptance of them. Quite apart from 205. See discussion of Heilbutt v. Hickson (1872) L.R. 7, C P . 438 and Mody v. Greqson (1868 ) L.R. 4, Ex. 49 at p.41, supra. 2 06. E.g., Dominion Paper Box Co. v. Crown T a i l o r i n g Co., note 200, supra. 207. [1923] 2 D.L.R. 274. 208. Ibid, at p.277. - 66 -the inherent fairness of t h i s approach, i t was important since, on acceptance, the buyer's right of r e j e c t i o n was lost and he was l e f t to claim damages. The s i g n i f i c a n c e of t h i s was discussed in John Hallam 209 Ltd. v. Bainton. Having examined a sample of wool, the p l a i n t i f f ordered "48 to 50,000 lbs. of the mixed grey and black wool at 40c. per l b . ... sample expressed to us on Dec. 31st." The bulk did not correspond to the sample and the p l a i n t i f f rejected the consignment and sued for damages. Affirming the decision of the t r i a l judge, R i d d e l l J. discussed the rules where the sale was by sample. In p a r t i c u l a r , he explained that the buyer's opportunity to examine the goods, " i s for the purpose of enabling the buyer to determine whether he w i l l take the property in the goods at a l l i f , a f t e r an opportunity i s afforded to the buyer to compare the bulk with the sample, he proceeds to take the goods into his possession or deals with them, he w i l l not be allowed to repudiate the bargain in toto and claim that the property has never passed, but he i s driven to rel y on the implied warranty that the bulk s h a l l correspond with the sample — the condition to that e f f e c t becoming a warranty on change of ownership." Fitness for Purpose. Another exception to the ap p l i c a t i o n of the doctrine of caveat emptor occurred where the buyer made known the purpose for which goods were being bought and r e l i e d on the s e l l e r ' s s k i l l and judgment to provide goods reasonably f i t for that purpose. In Dominion Paper Box Co. Ltd. v. Crown T a i l o r i n g Co. 209. [1919] 48 D.L.R. 120, affirmed (1920) 54 D.L.R. 537. 210. Ibid, at pp.121-22. - 67 -Ltd., the buyer of cardboard boxes t o l d the p l a i n t i f f ' s agent that they were required for the shipment of clothing and, in rel i a n c e on his assurance that they would be sui t a b l e , ordered 19,000 boxes. The boxes turned out to be inadequate and the defendant returned most of the o r i g i n a l consignment of 8500. In holding that they were e n t i t l e d to do t h i s , Rose J. stated the p o s i t i o n thus: "through [the agent] the defendants made known to the manufacturer the purpose for which the boxes were to be used; and they r e l i e d upon the s k i l l of the manufacturer to furnish boxes reasonably f i t for that purpose, so that there was an implied condition that the goods should be f i t for the purpose; and, that condition being broken, the defendants had the right to rej e c t the goods." The mere fact that the s e l l e r knew of the buyer's purpose would not alone be s u f f i c i e n t to require that the goods should be f i t for that purpose. Thus, in City of Simcoe A g r i c u l t u r a l 213 Society v. Wade, where the defendant knew that the p l a i n t i f f ' s agent was buying a b u l l for breeding purposes, the fact that he offered the agent the choice of two animals was enough to remove any suggestion of reliance on the s e l l e r ' s s k i l l and, thereby any warranty that the animal was f i t for breeding. In addition to the s e l l e r ' s knowledge of the purpose, there had to be relian c e , by the buyer, on the s e l l e r ' s s k i l l and judgment. In Canadian Gas and Power Launches Ltd. v. Orr Bros. 214 Ltd., the p l a i n t i f f s agreed to s e l l the defendants a 50 horse 211. Note 200, supra. 212. Ibid, at pp.560-61. 213. [1855] 12 U.C.R. 614. 214. [1911] 23 O.L.R. 616. - 68 -power engine and a dynamo, complete with a l l attachments, for use in the defendants' restaurant and amusement f a c i l i t i e s . The equipment never worked properly and the defendant refused to pay. The p l a i n t i f f s raised an action for the balance of the pr i c e . In a judgment which was subsequently affirmed by the Supreme Court of Canada, the Ontario Court of Appeal affirmed the t r i a l judge's finding for the defendants. Distinguishing t h i s case from Chanter v. Hopkins, Moss C.J.O. made the following statement: "Where a manufacturer or dealer contracts to supply an a r t i c l e which he manufactures or produces, or in which he deals, to be applied to a p a r t i c u l a r purpose, so that the buyer trus t s to the judgment or s k i l l of the manufacturer or dealer, there i s in that case an implied term or warranty that i t s h a l l be reasonably f i t and proper for the purpose for which i t was designed." In a number of cases, the surrounding circumstances of the case make i t cl e a r that the buyer i s not r e l y i n g on the s e l l e r ' s s k i l l and judgment and, in such cases, there i s no warranty that the goods w i l l be f i t for the purpose. 216 Thus, in Jordan v. Leonard, the p l a i n t i f f ' s action for breach of warranty f a i l e d because he was held to have bought the engine on the strength of his own assessment that i t was suitable 217 for hxs purpose. S i m i l a r l y , in Hopkins v. Jannison, where the defendant bought c e r t a i n mechanical shovels on the basis of his own judgment and that of his prospective partner, the s e l l e r was 215. Ibid, at p.622. 216. [1904] 36 N.B.R. 518. 217. Note 158, supra. - 69 -not l i a b l e for the fact that they were unsuited to the defendant's intended use. 218 In H i l l v. Rice Lewis and Sons Ltd., the p l a i n t i f f bought a sealer box of .38 r i f l e cartridges manufactured by the Union M e t a l l i c Company. P r i o r to purchase, he had examined the outside of the box and had bought s i m i l a r packages many times before. One of the s h e l l s in the box was for a revolver and the p l a i n t i f f sustained injury when he attempted to use i t in a r i f l e . His action against the s e l l e r f a i l e d on the grounds that, since he was re l y i n g on his own judgment and on his experience of the manufacturer's product, there was no reliance on the s e l l e r . 2 1 9 While, as a matter of general p r i n c i p l e , there was no d i s t i n c t i o n dependent upon whether or not the s e l l e r was also the 2 2 0 manufacturer, i t may have been easier to e s t a b l i s h reliance on the s e l l e r ' s s k i l l and judgment in such cases. Custom Of Trade Where, by custom of a p a r t i c u l a r trade, there existed an implied term as to the q u a l i t y of goods sold, the courts were quite w i l l i n g to give e f f e c t to t h i s . Thus, in John Macdonald & O p ] Co. v. Princess Manufacturing Co., 1 the term "black I t a l i a n c l o t h " was interpreted as meaning what was understood in the trade. 218. [1913] 12 D.L.R. 588. 219. In his dissenting judgment ( i b i d . at pp.596-97), Rid d e l l J. took the view that the sale here was by description and that the p l a i n t i f f should succeed. 220. See supra discussion at p.62. 221. Note 193, supra. - 70 -Express Warranties It was always possible for the buyer to require an express warranty as to the q u a l i t y of goods purchased and, given the l i m i t s placed on the exception to the doctrine of caveat emptor, t h i s must have seemed a prudent course to take. The buyer might also volunteer undertakings as to the q u a l i t y of the goods sold, thereby giving the buyer a d d i t i o n a l 2 2 2 protection. Thus, in Laleune v. Fairweather and Co., where the defendant advertised a "high grade Alaska seal coat ... $750 value for $375," he was found l i a b l e when the coat was found to be of a poorer q u a l i t y . Where an express warranty was given, t h i s did not preclude the buyer from r e l y i n g on a d d i t i o n a l implied warranties. In 2 2 3 Ontario Sewer Pipe Co. v. Macdonald, where the buyer's conduct barred him from r e l y i n g on the express warranty that the pipes purchased would be " v i t r i f i e d and s a l t glazed," Garrow J.A. 2 2 4 referred to his "other r i g h t s " in the form of implied warranties. Remedies That Canadian common law accepted the d i s t i n c t i o n between conditions and warranties i s evident from the cases discussed 2 2 5 . above. The s i g n i f i c a n c e of t h i s lay in the e f f e c t of the d i s t i n c t i o n on the remedies available to the aggrieved buyer. 222. [1915] 25 D.L.R. 23. 2 23. Note 16,0, supra. 224. Ibid, at p.484. 225. In p a r t i c u l a r , see discussion p.67, supra. - 71 -Where there was a breach of a condition, the buyer could reject the goods and claim damages, provided that nothing he had done amounted to acceptance of the goods. Thus, in Alabastine 22 6 Co. v. Canada Producer and Gas Engine Co., the fact that the purchaser had not accepted the engine, but had simply t r i e d i t out to assess i t s a c c e p t a b i l i t y , enabled him to reject i t . Where the goods had been accepted, thereby reducing the condition to a warranty, or where the term breached was a warranty in i t s e l f , then the buyer was limited to a claim for damages. Du r a b i l i t y The question a r i s e s here, as i t did in the S c o t t i s h and English contexts, of d u r a b i l i t y . Did any of the implied terms in the common law of Canada require that the goods should remain of a p a r t i c u l a r q u a l i t y for any length of time? There seems no express reference to d u r a b i l i t y in the a u t h o r i t i e s . Indeed, in 9 9 7 Grodwards Co. v. Kirkland Lake Gold Mining Co., where the defendants bought an ice-crushing machine, t h e i r claim f a i l e d because they did not e s t a b l i s h that "at the time i t was 2 2 8 delivered," i t was u n f i t for i t s purpose. It i s possible that in Canada a lack of d u r a b i l i t y may have been treated as an in d i c a t i o n of a defect which was dealt with in 2 2 9 some other way. In Sims Packing Co. v. Corkum and Richey, the 2 26. Note 178, supra. 227. [1919] 17 O.W.N. 300. 228. Ibid., per Masten J. at p.301. An unusual point arose here. When the defendants found that the machine did not work, they "threw i t out." 229. [1920] 53 D.L.R. 445. - 72 -defendants who were meat r e t a i l e r s ordered a quantity of pork from the p l a i n t i f f s . When i t arri v e d , they refused to accept i t , a l l e g i n g that i t was u n f i t for human consumption. The evidence was that i t was in acceptable condition when i t was shipped. In 230 finding for the defendants, Harris C.J. took the view that, where the goods sold were for human consumption, there was an implied term that they should remain in that state u n t i l the purchaser had an opportunity to deal with them. Nonetheless, there appears to have been no general requirement of d u r a b i l i t y at common law. 230. Ibid, at p.447. - 73 -CHAPTER I I I : THE ARRIVAL OF SALE OF GOODS LEGISLATION AND ITS OPERATION In drafting a Sale of Goods B i l l for England in 1888, Chalmers stated that he took the advice of Lord Herschell and, "endeavoured to reproduce as exactly as possible the e x i s t i n g 231 law." The B i l l was introduced into the House of Lords in 1889 by Lord Herschell, "not to press i t on, but to get c r i t i c i s m on 23 2 i t , " and was reintroduced two years l a t e r where i t was considered by a Select Committee. U n t i l t h i s time there was do intention that the B i l l should apply to Scotland. Indeed, commenting on the B i l l in 1892, Professor Mackintosh said; "The a p p l i c a t i o n to Scotland of a B i l l based exc l u s i v e l y on English case law with a few saving clauses i n t e r j e c t e d would be productive of more confusion than advantage. If the l e g i s l a t i v e desire of the mercantile community for an a s s i m i l a t i o n of the law of sale in the two countries i s to be given e f f e c t to in a s a t i s f a c t o r y manner, i t i s e s s e n t i a l that there should be adequate enquiry and mature consideration before a consolidating statute i s passed." Lord President I n g l i s , for many years Olympian President of the Court of Session, had been a constant opponent of the B i l l . He died in 1891. By 1892 the decision had been taken that the B i l l should apply to Scotland. 231. Chalmers, Sale of Goods (1st ed. 1894), at p . v i i i . 232. Ibid. at p . v i i . 233. Mackintosh, The Roman Law of Sale (1st ed. 1892), at p . v i . - 74 -Chalmers himself explains why t h i s change of policy was thought to be desirable. F i r s t , he notes that t h i s was simply a further step in the process of a s s i m i l a t i o n begun by the Mercantile Law (Amendment) (Scotland) Act of 1856. Indeed, he remarked, " i t i s perhaps to be regretted that the process has not 234 been completed." He went on, somewhat f l i p p a n t l y , to state the second supposed reason thus, " L e g i s l a t i o n , too, i s cheaper than l i t i g a t i o n . Moreover, in mercantile matters, the ce r t a i n t y of the rule i s often of more importance than the substance of the ru l e . If pa r t i e s know beforehand what t h e i r l e g a l p o s i t i o n i s , they can provide for t h e i r p a r t i c u l a r wants by express s t i p u l a t i o n . " While i t may well be true that ce r t a i n t y provides the experienced, s k i l l e d , economically powerful businessman with the opportunity to make al t e r n a t i v e arrangements, the same choice i s ra r e l y a v a i l a b l e to the small trader or consumer. It was many years before opposition to the unrestrained doctrine of l a i s s e z -f a i r e became s u f f i c i e n t l y organised and e f f e c t i v e for the l e g i s l a t u r e to be able to acknowledge t h i s . The hasty extension of the B i l l to Scotland cannot be blamed so l e l y on English lawyers. Organised commercial interests regarded with impatience the continued existence of a separate body of Scots law applicable to the main commercial contract. Moreover, in an imperial context the English law had been established worldwide, while a r b i t r a t i o n according to the law of England in the C i t y of London was a s o l u t i o n favoured even by 234. Note 231 supra, at p . v i i i . 235. Ibid . , at p.ix. - 75 -foreign businessmen. S c o t t i s h business interests looked to London as the centre of the commercial world. With the S c o t t i s h l e g a l profession s e l f - i n t e r e s t and sycophancy fostered a faction favouring A n g l i c i s a t i o n . This was led by Lord Watson, a Scottish Lord of Appeal in Ordinary, who had never sat as a judge in Scotland. R.P. Brown and others w i l l i n g l y assisted in the 2 36 process. While in 1891, Brown was expressing c r i t i c i s m s of 2 37 the B i l l , by 1911' J' he was proud to admit his part in i t s extension to Scotland. The long-term e f f e c t of bringing the Scots law of sale of goods within the scope of l e g i s l a t i o n e s s e n t i a l l y designed to restate the English common law has been that t h i s f i e l d of law has come within the scope of the Department of Trade in Whitehall, so that future developments of the law are controlled by a Great B r i t a i n Department to which the s p e c i a l t i e s of Scots law are i r r i t a t i n g anomalies to be curbed or eliminated. The passing into force of the Sale of Goods Act 1893 raises a curious c o n s t i t u t i o n a l question. The Act i t s e l f provided, in section 63, that i t should come into force on 1st January 1894. Delays in processing various amendments to i t meant that the Royal Assent was not received u n t i l 20th February 1894. What then, was the law on sale of goods for the f i r s t f i f t y - o n e days of 1894? In considering t h i s point, Robertson C h r i s t i e observed that, 236. Brown, "Assimilation of the Law of Sale," (1891) 3 J.R. 297. 237. Note 32 supra, at p.4. - 76 -"On the other side of the A t l a n t i c , a nice l i t t l e c o n f l i c t might have been engineered between the l e g i s l a t u r e and the j u d i c i a r y . " No such c o n f l i c t appears to have arisen in the United Kingdom. The Sale of Goods Act 1893 formed the foundation of l e g i s l a t i o n in Canada in a l l the provinces except Quebec. Indeed, most of the provinces adopted the Act almost in i t s 239 e n t i r e t y . It should be noted that the timing of the enactment of l e g i s l a t i o n varied widely across Canada. 2 4 0While as a s t r i c t matter of precedent, the decisions of courts in B r i t a i n are not binding on the Canadian courts, Fridman accepts that, "English decisions are undoubtedly relevant, and to some extent authoritative in r e l a t i o n to the understanding of the l e g i s l a t i o n , at least when the language of the appropriate Canadian statute i s the same or v i r t u a l l y the same as that of the Sale of Goods Act 1893." 2 4 1 That t h i s assessment i s correct, i s borne out by the extensive use made of English a u t h o r i t i e s in the Canadian cases, c i t e d be low. Where the same provision occurs in the U.K. and Canadian statutes, i t i s proposed, in t h i s paper, to examine i t in both j u r i s d i c t i o n s together. 238. J . Robertson C h r i s t i e , "The Sale of Goods Act 1893 and Recent Cases" (1897), 9 J.R. 275, at p.275. 239. For a cross reference to the appropriate sections of the statutes of each province, see Fridman, Sale of Goods in Canada (2d ed. 1979), at p.4-5. In t h i s paper, the reference to the equivalent provisions i n Ontario and B r i t i s h Columbia w i l l be given. 240. E.g., in the Northwestern T e r r i t o r i e s , the Sale of Goods Ordinance, c.39 was passed in 1898 whereas i t was not u n t i l 1920 that Ontario l e g i s l a t u r e passed the Sale of Goods Act, c.40. 241. Note 239, supra. - 77 -L e g i s l a t i v e Developments The law on sale of goods did not remain s t a t i c in the U.K. with the passing and enforcement of the 1893 Act. No more was t h i s the e f f e c t of the adoption of s i m i l a r statutes in Canada. If one single factor has influenced l e g a l developments in sales in recent times, i t has been a growing awareness that the need to protect consumers may require an approach d i f f e r e n t from that 2 4? which i s acceptable to commercial p a r t i e s . To some extent, t h i s has been effected by changes within the sphere of private law. The 1893 Act was amended by the Supply of Goods (Implied Terms) Act 1973 which revised the d e f i n i t i o n of merchantable qu a l i t y and con t r o l l e d the practice of contracting out of the obligations r e l a t i n g to t i t l e to and q u a l i t y of goods. Minor amendments to the 1893 Act were contained in the Consumer Credit Act 1974 and, in 1977, the Unfair Contract Terms Act provided more stringent controls on the practice of contracting out or l i m i t i n g of l i a b i l i t y . The 1893 Act, as amended has now been consolidated by the Sale of Goods Act 1979. It i s the 1979 Act which w i l l be referred to hereafter. In Canada, the 1970's saw a number of changes in p r o v i n c i a l l e g i s l a t i o n , aimed at preventing the practice of contracting out of implied terms in sale of goods contracts where the buyer came 2 4 3 within the category of a "consumer." In Manitoba and Nova 242. For an excellent discussion of the development of this approach, see, Romero "The Consumer Products Warranties Act," (1978-79) 43 Sask. L. Rev. 1 and'(1980-81) 44 Sask. L. Regv. 296. 243. R.S.M. 1970, c.200. - 78 -Scotia, the e x i s t i n g consumer protection l e g i s l a t i o n was amended to provide for warranties of merchantability, f i t n e s s for purpose which could not be excluded in a " r e t a i l sale." In B r i t i s h Columbia, 2 4 5 the Sale of Goods Act was amended to render O A (L void such exclusion clauses in " r e t a i l sales." In Ontario, attempts to negate or vary implied terms were rendered void in a "consumer sale." In the sphere of public law, l e g i s l a t i o n has provided addi t i o n a l protection. For p a r t i c u l a r categories of goods, provision has been made that they should conform to a p a r t i c u l a r standard. In Canada, for example, the Federal Motor Vehicles Safety Act 1970 attempts to provide such a standard for motor vehicles. In the U.K., the Consumer Safety Act 1978 empowers the Secretary of State to make regulations in respect of p a r t i c u l a r goods to ensure that they are safe. A connected but separate issue here i s the tremendous increase in the use of c r e d i t as a means of financing transac-tions for the sale of goods. Again in both Canada and the U.K., 947 t h i s area has become s t r i c t l y regulated by statute. No discussion of the q u a l i t y of goods a buyer can expect would be complete without mention of the means by which the disappointed buyer can seek redress. In the commercial sphere, 244. R.S.N.S. 1968, c.5 as am. 1975 S.N.S. 1975, c.19. 245. R.S.B.C. 1979, c.370. For a c r i t i c a l analysis of the 1971 amendment in B r i t i s h Columbia, see F i e l d , "A C r i t i c a l Analysis of the 1971 Amendment to the Sale of Goods Act" (1971) 6 U.B.C. Law Rev. 40 5. 246. R.S.O. 1970, c.82 as am. by R.S.O. 1971, c.421. 247. Consumer Credit Act, 1974. - 79 -a r b i t r a t i o n has provided a popular a l t e r n a t i v e to the established court structure. More recently a number of al t e r n a t i v e s to the courts have been suggested and t r i e d in the consumer f i e l d . The growth of consumer organisations and the increased popularity of informal adjudication and mediation are trends common to the U.K. and Canada. 2 48 In Scotland, the Dundee Small Claims Experiment was set up in 1979 to assess the value of one kind of scheme. In common with the schemes of t h i s sort operating elsewhere, the aim was to provide a quick and inexpensive way to resolve disputes over f a i r l y small sums of money (in t h i s case up to fc500). It was intended that the need for leg a l representation could be avoided by keeping the fo r m a l i t i e s to a minimum. The scheme was reviewed 2 4 9 a f t e r three years and, while only 33% of the cases i t dealt with concerned consumer claims in respect of goods (a further 17% dealt with consumer claims r e l a t i n g to s e r v i c e s ) , i t was concluded that i t "generally worked well [although i t did not provide] a solution for l e g a l l y resolving a l l small claims 2 50 problems." Thus, while t h i s paper is concerned primarily with the rights of the buyer in respect of the g u a l i t y of goods bought, i t i s submitted that these rights w i l l only be of value when there i s an adequate way to enforce them. 248. See note 249 i n f r a , at p . l for a discussion of the background to the scheme. 249. Connor, A Research Based Evaluation of The Dundee Small  Claims Experiment (1983), Central Research Unit, Sco t t i s h O f f i c e . 250. Ibid., at p.69. - 80 -In the discussion that follows, i t w i l l become apparent that a d i s t i n c t i o n i s often drawn between the "consumer" and the "commercial" buyer and s e l l e r . In many cases the category into which a party f a l l s w i l l be c l e a r . However, t h i s sharp d i s t i n c t i o n may be unsuited to a number of s i t u a t i o n s . In many respects the small unincorporated business is in much the same 2 51 s i t u a t i o n as the consumer when dealing with large companies. Goods may be bought p a r t l y for consumer use and also u t i l i s e d for a business purpose. Thus the law must incorporate s u f f i c i e n t f l e x i b i l i t y to provide for the diverse s i t u a t i o n s which w i l l be encountered. Conditions and Warranties In providing for implied terms in contracts for the sale of goods, the 1979 Act does so under the heading, "Conditions and Warranties." The meanings of these terms have been the source of 2 5 2 considerable academic debate. They were developed in the context of the English common law and have never been defined in the context of Scots law. This i s a major c r i t i c i s m of the Sale of Goods l e g i s l a t i o n . Where the entire contract i s subject to a condition - as in a "conditional s a l e " - the understanding of the word "condition" i s s u b s t a n t i a l l y common throughout Scotland, England and Canada. The suspensive and resolutive conditions of the C i v i l law have a comparable to conditions precedent and 251. This point was noted in r e l a t i o n to the provision of c r e d i t in the Report of the Committee on Consumer Credit, (Crowther Committee), 1971, Cmnd. 4597, par.1.1.3. 252. See Greig, "Condition or Warranty" (1973) 89 L.Q.R. 93, Carter and Hodgekiss, "Conditions and Warranties: Forebearers and Descendants" (1977), 8 Sydney L.R. 31. - 81 -conditions subsequent in the English common law. C l e a r l y , "condition" in t h i s sense is intended in the Act and the expression "condition" relates to a term of a v a l i d l y constituted contract. Once t h i s i s appreciated, i t i s important to bear in mind that, "the 'conditions and warranties' forming the subject of t h i s part of the Act are s p e c i a l to the law of England and to legal systems founded d i r e c t l y upon i t , as in the case of Ireland, the United States and most English colonies and dependencies." The importance of the d i s t i n c t i o n between a condition and a warranty i n English law l i e s in the remedies available on breach. In the former case, the innocent party i s e n t i t l e d to treat the contract as repudiated and to claim damages. In the l a t t e r case the only remedy l i e s by way of a claim for 254 damages. It i s , therefore, important to determine whether a s t i p u l a t i o n i s a condition or a warranty. The 1979 Act i s of l i t t l e assistance in providing that t h i s , "depends in each case 2 55 on the construction of the contract." It does, however, make clear that whether the s t i p u l a t i o n i s described as a "condition" or a "warranty" w i l l not a f f e c t the true i n t e r p r e t a t i o n to be put upon i t . Bowden L.J. stated the test more f u l l y when he said that i t involved: "looking at the contract in the l i g h t of the surrounding circumstances, and then making up ones mind whether the intention of the p a r t i e s , as gathered from the instrument i t s e l f , w i l l best be c a r r i e d out by treating 253. Brown, note 32 supra, at p.48. 254. Sale of Goods Act 1979, s . l l . 255. Ibid., at s . l l ( 4 ) . - 82 -the promise as a warranty sounding only in damages, or as a condition precedent by the f a i l u r e to perform which the other party i s relieved of his l i a b i l i t y . " 2 5 6 In Scotland, the innocent party i s e n t i t l e d to treat the contract as rescinded where there has been, " f a i l u r e by the 2 57 s e l l e r to perform any material part of a contract of sale" and indeed, s.61(2) of the 1979 Act c a l l s t h i s a "breach of warranty." Breach of any other s t i p u l a t i o n in the contract only e n t i t l e s the innocent party to claim damages. The d i s t i n c t i o n between breaches j u s t i f y i n g repudiation and those which w i l l only support a claim for damages was stated thus, by Lord President Dunedin: "It i s f a m i l i a r law and quite well s e t t l e d by decision that in any contract which contains multifarious s t i p u l a t i o n s there are some which go so to the root of the contract that a breach of those s t i p u l a t i o n s e n t i t l e s the party pleading the breach to declare the contract i s at an end. There are others which do not go to the root of the contract, but which are part of the contract, and which would give r i s e , i f broken, to an action of damages. I need not c i t e authority upon what is t r i t e and well s e t t l e d l a w . " 2 5 8 The English d i s t i n c t i o n between "conditions" and "warran-t i e s " was not introduced into Scots law in 1894, but the Sale of Goods Act extended generally the benefits of the a c t i o quanti 2 59 minoris to Scotland. However, t h i s import from South of the border has not been u n i v e r s a l l y welcomed. In the words of Gow, 256. Bentsen v. Taylor, Son & Co. [1893] 2 Q.B. 274, at p.281. 2 57. Note 2 54 supra, at s . l l ( 5 ) . 258. Wade v. Waldon 1909 S.C. 571, at p.577. 259. Brown, note 32 supra, at p.63. - 83 -" [ I ] t i s i r o n i c a l that Lord President Dunedin should have attempted to impose upon Scots law a d i s t i n c t i o n which eminent English lawyers wish had never troubled t h e i r l a w . " 2 6 0 That the d i s t i n c t i o n created s i m i l a r problems in Canada is i l l u s t r a t e d by the statement of R i d d e l l J.A. in Weil v. C o H i s Leather Co. L t d . 2 6 1 He said, "It i s not always easy to determine whether a statement concerning goods sold i s a condition or a warranty. There are extreme cases ... but other cases are not so simple, and there has been such difference of j u d i c i a l opinion, many d e f i n i t i o n s have been given." U n t i l the early 1960s, any discussion of conditions and warranties might have ended at t h i s point. However, the decision in Hong Kong F i r Shipping Co. Ltd. v. Kawasaki Risen Kaisha 2 6 3 Ltd., applied to a sale of goods contract in Cehave N.V. v.  Bremer Handelsgesellschaft m.b.H.,264 raises another problem: that of the "intermediate term." Extensive discussion of thi s i s 0 fi S out of the scope of t h i s paper, but the e f f e c t of these decisions i s that a term in a contract may be neither a condition nor a warranty. The e f f e c t of thi s i s to leave the innocent party in a rather uncertain p o s i t i o n in respect of repudiation of the contract. As Benjamin points out, the willingness of the courts to favour the solution which ensures performance, when dealing with commercial contracts, may be based on the b e l i e f 260. Note 35, supra, at p.209. 261. [1925] 4 D.L.R. 815. 262. Ibid, at pp.832-833. 263. [1962] 2 Q.B. 26. 264. [1976] Q.B. 44. 265. See Weir, "Contract - The Buyer's Right to Reject Defective Goods" [1976], C.L.J. 33; Reynolds, "Casenote" (1976), 92 L.Q.R. 17. - 84 -that "commercial men supposedly d i s l i k e r e j e c t i o n . " However, he goes on to say that, "rejection may often, and perhaps usually w i l l , be the best remedy for the consumer." The position accepted in Cehave was endorsed by Lord Wilberforce, in the House of Lords in Reardon Smith Line Ltd. v. 26 7 Hansen Tangen, when he welcomed the treatment of sale of goods contracts in the same way as other contracts, "so as to ask whether a p a r t i c u l a r item in a d e s c r i p t i o n constitutes a substantial ingredient of the ' i d e n t i t y ' of the thing sold, and only i f i t does to treat i t as a c o n d i t i o n . 1 , 2 6 8 Lest i t be thought that the p o s i t i o n of conditions, in contract generally, i s now open to wholesale erosion, the decision of the House of Lords in Bunge Corporation v. Tradax 2 6 9 S.A. should be noted. There, the argument that a s t i p u l a t i o n as to time in the contract should be viewed as an intermediate term rather than a condition, was firmly rejected. It i s proposed that the terms as to the g u a l i t y of the goods implied by statute should be examined in d e t a i l . In p a r t i c u l a r , the extent to which they provide for an element of d u r a b i l i t y w i l l be considered. 266. Guest (Gen. Ed.), Benjamin's Sale of Goods (2d ed. 1981), at p.362. 267. [1976] 3 A l l E.R. 570. 268. Ibid, at p.576. 269. [1981] 2 A l l E.R. 513. - 85 -Caveat Emptor Bearing in mind that the express purpose of the Sale of Goods Act/ 1893 was "codifying the law r e l a t i n g to sale of 270 • goods," i t i s not s u r p r i s i n g that one finds the p r i n c i p l e of caveat emptor firmly retained in the opening words of section 14. It provided: "Subject to the provisions of t h i s Act and of any statute in that behalf, there i s no implied warranty or condition as to the q u a l i t y or f i t n e s s for any p a r t i c u l a r purpose of goods supplied under a contract of s a l e . . . . 9 71 This provision i s repeated in the Canadian Sale of Goods Acts. While the 1979 Act, in the U.K. has changed the wording s l i g h t l y and moved the proposition into the f i r s t subsection of section 14, the fundamental p r i n c i p l e remains unaltered. Thus, when the Act does provide that the buyer can expect a p a r t i c u l a r q u a l i t y of goods, i t i s dealing with exceptions to t h i s general p r i n c i p l e . In 1851, Lord Campbell thought that the exceptions to the p r i n c i p l e of caveat emptor had, "well-nigh eaten up the 27 2 r u l e . " While some of the provisions of the Act simply repeat pre-existing exceptions (e.g., on merchantable quality) others go considerably further. Nonetheless, the whole operation of the Act takes place in the shadow of the p r i n c i p l e of caveat emptor. 270. Preamble to Sale of Goods Act 1893. 271. R.S.B.C., 1979, c.370, s.18; R.S.O. 1980, c.462, s.15. 272. Sims v. Marryatt [1851] 17 Q.B. 281, at p.291. - 86 -(A) Fitness f o r Purpose In i t s o r i g i n a l form, s,14(l) of the Sale of Goods Act 1893 provided, "Where the buyer, expressly or by implication, makes known to the s e l l e r the p a r t i c u l a r purpose for which the goods are required, so as to show that the buyer r e l i e s on the s e l l e r ' s s k i l l or judgment, and the goods are of a description which i t i s the course of the s e l l e r ' s business to supply (whether he be the manufacturer or not) there i s an implied condition that the goods s h a l l be reasonably f i t for such purpose. Provided that in the case of a contract for the sale of a s p e c i f i e d a r t i c l e under i t s patent or other trade name, there i s no implied condition as to i t s f i t n e s s for any p a r t i c u l a r purpose." This provision was adopted and remains the law in 273 274 Canada. The provision has since been amended in the U.K. and as w i l l be seen in the following discussion, the changes brought about thereby are more a matter of change of emphasis than substantial change in the law. "Business" S e l l e r It should be noted, at the outset, that the buyer i s only protected by t h i s provision where the s e l l e r i s s e l l i n g in a "business" context. C l e a r l y , t h i s section i s intended to exclude the t r u l y "private s a l e , " e.g., sale by an i n d i v i d u a l of the family car. The Act gives l i t t l e guidance on what is meant by a business except to define i t as including, "a profession and the a c t i v i t i e s of any government department ... or l o c a l or public a u t h o r i t y . 1 , 2 ^ 273. 274. 275. Note 271, supra. Now s,14(3) of the Sale of Goods Act 1979. Sale of Goods Act 1979 s.61(l). Some degree of commercial a c t i v i t y would indicate a "business sa l e . " In the words of Lord Diplock, "anything which is an 2 7 6 occupation or duty which requires attention i s a business." Description In i t s o r i g i n a l form, i t was provided that the goods themselves must be of a description which the s e l l e r supplied as a business. This continues to be the case under the Canadian statutes. Thus, even where a s e l l e r i s "a business" i f the goods sold are not of a description that i s encompassed by that business, the Act w i l l not protect the buyer. The e f f e c t of t h i s i s i l l u s t r a t e d by Buckle v. 277 Morrison. In that case, the defendant was a farmer with extensive experience in growing f l a x . He was approached by the p l a i n t i f f , a f a i r l y inexperienced farmer, who wanted to buy flax seed for sowing. The defendant had some seed l e f t over from the previous year which he sold to the p l a i n t i f f . Unknown to eithe r party i t was no longer f i t for use. The p l a i n t i f f planted the seed, the crop f a i l e d and he raised an action for damages against the s e l l e r . His action f a i l e d , since the defendant was not in business as a supplier of seed. The same result was arrived at forty-nine years l a t e r in 27 8 Masden v. Anderson, a case on almost i d e n t i c a l f a c t s . Again, i t was held that the Act did not apply since the s e l l e r was not in business for the supply of seed. 276. Town Investments Ltd. v. Department of the Environment [1978] A.C. 359, at p.383. 277. [1924] 4 D.L.R. 1252. - 88 -Over the years, there has been a tendency to construe what might be included within the description dealt with by the business in a f a i r l y broad way. In Buckley v. Lever Bros. 27 9 Ltd., the defendants had engaged in a sales promotion scheme which offered a p l a s t i c clothespin apron and p l a s t i c clothespins to anyone who sent them 50 cents plus two box tops from t h e i r soap products. The p l a i n t i f f complied with the instructions and received the apron and clothespins. While using the clothespins, one of them shattered and a fragment h i t her in the eye. She raised an action under section 15 ( f i t n e s s for purose) of the Ontario Sale of Goods Act. In finding her e n t i t l e d to succeed, the Court addressed i t s e l f to the question of whether or not the defendants were in the business of supplying clothespins. In concluding that they were, Wells J. stated to position thus; "Where a vendor d e l i b e r a t e l y deals in some commodity for the purpose of his business, he, in my view, makes i t a part of his business to supply such a r t i c l e s . " This was the approach confirmed and explained in Ashington 2 81 Piggeries v. Christopher H i l l Ltd. In that case the respondents were experienced in preparing animal feedstuff, although u n t i l they were approached by the appellants, they had not dealt in feedstuff for mink; t h e i r previous products having been for poultry, calves and pigs. They agreed to provide the appellants with feedstuff for mink based on a formula produced by 278. [1937] 3 W.W.R. 41. 279. [1954] 4 D.L.R. 16. 280. Ibid, at p.27. 281. [1971] 1 A l l E.R. 847. - 89 -an expert in mink n u t r i t i o n and using herring meal, amongst other ingredients. I n i t i a l l y there appears to have been no problem, but a f t e r 14 months, the respondents started to use Norwegian herring meal which, unknown to them, contained DMNA, a substance toxic to mink. A number of mink died and the appellant sued for damages. In finding for the appellants, the House of Lords considered the word "description" in the context of a business. Lord Wilberforce stated the po s i t i o n thus: "I would hold that i t i s in the course of the s e l l e r ' s business to supply goods i f he agrees, eit h e r generally, or in a p a r t i c u l a r case, to supply the goods when ordered and that a s e l l e r deals in goods of that descrip-tion i f his business i s such that he i s w i l l i n g to accept orders for them. I cannot comprehend the rat i o n a l e of holding that the subsections do not apply i f the s e l l e r i s dealing in the p a r t i c u l a r goods for the f i r s t time or the sense of di s t i n g u i s h i n g between the f i r s t and second order for the goods or for goods of the des c r i p t i o n . " He continues l a t e r to emphasise that in th i s context "goods of a 2 8 3 d e s c r i p t i o n " means goods of a kind. While the in t e r p r e t a t i o n of the word "description" remains important in Canada, the amendment of the section in the U.K. has removed the p o s s i b i l i t y of d i f f i c u l t y . Section 14(3) of the 1979 Act now provides that where the s e l l e r " s e l l s goods in the course of a business," the requirement of f i t n e s s for purpose w i l l apply. The courts in the U.K. have not yet had the opportunity to discuss the f u l l implications of th i s amendment. However, i t seems c l e a r that the e f f e c t i s to broaden the range of cases 282. Ibid., at p.875. 283. Ibid., at p.877. - 90 -which w i l l come within the provision. Reynolds, one of the contributors to the current e d i t i o n of Benjamin's Sale of Goods, takes the view that the provision now extends to: "a s e l l e r in the business of s e l l i n g one type of goods who i n c i d e n t a l l y in his business s e l l s another type of goods ... [and] also persons who s e l l goods in the course of a business even though the business i s not directed towards sales at a l l . " Communication of Purpose Having established that the sale was in the course of the s e l l e r ' s business, the aggrieved buyer must face a number of further hurdles before being able to benefit of th i s provision. The buyer must make known to the s e l l e r the p a r t i c u l a r purpose for which the goods are required. The buyer may do th i s by 28 5 s t a t i n g the purpose expressly. Thus, in Winslow v. Jenson, where the buyer t o l d the s e l l e r that he was buying a s t a l l i o n for breeding purposes, he was protected by the section when the s t a l l i o n proved unsuited for t h i s purpose. However, the p a r t i c u l a r purpose for which the goods are to be used may be implied e i t h e r by the nature of the goods themselves or by other surrounding circumstances. The former 2 8 6 s i t u a t i o n arose in P r i e s t v. Last, where the p l a i n t i f f purchased a hot water bottle without expressly st a t i n g the purpose for which i t was to be used. The bottle burst, in j u r i n g the p l a i n t i f f ' s wife. The defendant was held l i a b l e in damages for breach of s.l4(3) on the basis that the purpose for which the 284. Note 266 supra, at p.380. 285. [1920] 55 D.L.R. 314. 286. [1903] 2 K.B. 148. - 91 -hot water bottle was purchased could be implied. The same point i s accepted in the Canadian case of Yelland v. National C a f e , 2 8 7 where the subject matter of the sale was a bottle of coca-cola. 28 8 S i m i l a r l y , in Buckley v. Lever Bros. Ltd., the purposes for which the p l a s t i c clothespins were to be used was held to be s u f f i c i e n t l y obvious to be implied. Whether or not the buyer can be held to have implied the purpose for which the goods are to be used w i l l always depend on the circumstances of the p a r t i c u l a r case. Thus, in Cammell Laird O Q Q and Co. v. Manganese Bronze and Brass Co. Ltd. where the s e l l e r knew that the propellers were being supplied for a p a r t i c u l a r ship, i t was held that t h i s amounted to s u f f i c i e n t communication of purpose to enable the buyer to be protected by t h i s section. Where the goods can be used for a number of purposes, the question of f i t n e s s for the p a r t i c u l a r purpose for which they were used has been the subject of considerable debate in recent ? 9 0 years. In Kendall v. L i l l i c o , the s e l l e r A obtained a quantity of " B r a z i l i a n ground nut extractions" from a new supplier. Some of the consignment was then sold to B and i t was known to A that i t would be used to make feedstuffs for c a t t l e and poultry. Unknown to the p a r t i e s , the goods contained a substance rendering them toxic to poultry but not to c a t t l e . B then resold to C in the knowledge that the goods would be used in 287. [1955] 5 D.L.R. 560. 288. [1954] 4 D.L.R. 16, discussed at p.89, supra. 289. [1934] A.C. 402. 290. [1969] 2 A.C. 31. - 92 -feedstuff for c a t t l e and poultry. C then made the ground nut extraction into feedstuff for birds, sold i t to D who fed i t to pheasants. Many of the pheasants died. C accepted l i a b i l i t y and, having agreed compensation with D, raised an action against B. B in turn raised an action against A. In f i nding that B was e n t i t l e d to recover from A, the House of Lords took the view that the purpose for which the goods were purchased was s u f f i c i e n t l y c l e a r . Lord Reid c l a r i f i e d the s i t u a t i o n saying, "I t was argued that, whenever any purpose i s stated ... the s e l l e r must supply goods reasonably f i t to enable the buyer to carry out his purpose in any normal way. That can only be right however, i f the purpose i s stated with s u f f i c i e n t p a r t i c u l a r i t y to enable the s e l l e r to exercise his s k i l l or judgment in making or s e l e c t i n g appropriate goods." Lord Morris stated the po s i t i o n thus, "The degree of precision or d e f i n i t i o n which makes a purpose a p a r t i c u l a r purpose depends e n t i r e l y on the facts and circumstances of a purchase and sale transaction. No need arises to define or l i m i t the word ' p a r t i c u l a r . ' If a buyer explains his purpose or impliedly makes i t known so that, to put the matter in homely language, in e f f e c t he i s saying 'this i s what I want i t for, but I only want to buy i f you can s e l l me something that w i l l do', then i t w i l l be a question of fact whether the buyer has s u f f i c i e n t l y stated his purpose." The decision in Kendall v. L i l l i c o was followed in Ashinqton 2 9 3 Piggeries v. Christopher H i l l . ^ In that case, the Court accepted that the purpose had been made s u f f i c i e n t l y clear to the 291. Ibid., at p.454. 292. Ibid., at p.465. 293. Ib i d . . , at p.465. - 93 -s e l l e r . Buyer's Reliance on S e l l e r ' s S k i l l and Judgment In i t s o r i g i n a l form S.14(1) required that, in addition to stat i n g a p a r t i c u l a r purpose, i t must be shown that, "the buyer r e l i e s on the s e l l e r ' s s k i l l or judgement." Although i t has undergone amendment in the U.K., th i s remains the form of the provision in Canada. What then, does a buyer in Canada have to do in order to meet th i s requirement? C l e a r l y , where the buyer i s r e l y i n g on his own s k i l l and judgment, t h i s w i l l displace the inference of reliance on the s e l l e r . In Corbett Construction Ltd. v. Simplot Chemical Co., ? the defendants supplied the p l a i n t i f f s with a quantity of " p r i l l s " (ammonium n i t r a t e p e l l e t s ) . They could be used as f e r t i l i z e r and, with the addition of d i e s e l o i l , could be made to explode. The defendant t o l d the p l a i n t i f f that he did not manufacture "explosive f e r t i l i z e r " but agreed to l e t him have the p r i l l s he had in stock, i f the p l a i n t i f f wanted them. The p l a i n t i f f took the p r i l l s , put them in the ground and, when they f a i l e d to detonate, raised an action against the defendants. In dismissing the action, the Court held that there had been no reliance on the s e l l e r ' s s k i l l . As Wilson J . explained i t , "the p l a i n t i f f , s t a t i n g the object of his purchase, i s t o l d what the vendor has for sale, and makes up his own mind whether to buy i t or not. Where the buyer has a s p e c i a l expertise i s the area of the 294. [1971] 2 W.W.R. 332. 295. Ibid, at p.340. - 94 -goods sold and t h i s i s not shared by the s e l l e r , there w i l l be an inference that he r e l i e s on his own s k i l l and judgment. In 2 9 6 Dominion Brake Shoe Co. v. Kramer Tractor Co., the defendant had designed a new plow and ordered 5,000 s t e e l castings from the p l a i n t i f f . The defendant supplied a blueprint of the castings required and the p l a i n t i f f sent him a sample of the product. Having retained the sample for 2-1/2 months, without objection, the defendant rejected the f i r s t consignment of 1,539 castings, when they were delivered. The castings were not suitable for use in the plow. Nonetheless, the p l a i n t i f f ' s action for the price succeeded. In holding that the defendant had not r e l i e d on the p l a i n t i f f ' s s k i l l and jdugment, MacPherson J. said, "The defendnat r e l i e d on i t s own s k i l l and judgment. It was the defendant who decided upon a casting. Although the p l a i n t i f f was informed what the purpose of the casting was, there was no reliance upon the s k i l l or judgment of the p l a i n t i f f because there was no evidence that the p l a i n t i f f knew anything of plowing, s u f f i c i e n t , at l e a s t , to appreciate that the inexactitude i n t r i n s i c in casting would make the thing inoperable." An i n t e r e s t i n g example of a lack of reliance by the buyer on the s e l l e r ' s s k i l l and judgment i s found in Sawyer Massey Co. v. 29 8 Richie. It should be noted that the case rests on the unusual, although by no means unique, facts of the case. The p l a i n t i f f s sold threshing machinery to Ritchie and Neuffel, who were in business together, in November 1906. In return they gave notes for the p r i c e . After the threshing season was over, 296. [1964] 46 D.L.R. (3d) 471. 297. Ibid, at p.473. 298. (1910) 43 S.C.R. 614. - 95 -R i t c h i e and Neuffel dissolved t h e i r business, the notes signed by them both were replaced by notes signed by Ritchie alone and he entered a new sale agreement with the p l a i n t i f f s , on the same terms as the previous one. In the autumn ( f a l l ) of 1907, Ritchie defaulted on his payments a l l e g i n g breach of the implied warranty of f i t n e s s for purpose. The p l a i n t i f f s ' action for the price was successful. The court held that the defendant was not r e l y i n g on the p l a i n t i f f ' s s k i l l and judgment, but on his own experience of using the machine during the 1906 threshing season. While the onus i s c l e a r l y on the buyer to e s t a b l i s h that there was reliance on the s e l l e r ' s s k i l l and judgment, such reliance need not have been stated expressly and may be implied from the circumstances of the case. This point was discussed at 29 9 length in Manchester Liners Ltd. v. Rea. The p l a i n t i f f s had ordered 500 tons of South Wales coal for t h e i r steamship the "Manchester Importer." Various d i f f i c u l t i e s existed, p a r t l y to an i n d u s t r i a l dispute, but a quantity of coal was delivered. The "Manchester Importer" set out but the coal proved wholly unsuited to i t s draught furnaces and i t had to return to port. The p l a i n t i f f s claimed damages from the defendants. In finding for the p l a i n t i f f s , the Privy Council discussed the question of r e l i a n c e . Lord Buckmaster took the view that, "If goods are ordered for a s p e c i a l purpose, and that purpose i s disclosed to the vendor, so that in accepting the contract he under-takes to supply goods which are suitable for the object required, such a contract i s , in my opinion, s u f f i c i e n t to e s t a b l i s h that the 299. [1922] 2 A.C. 74. - 96 -buyer has shown that he r e l i e s on the s e l l e r ' s s k i l l and judgement." 3 0 0 Lord Atkinson went a l i t t l e further in asserting that actual or implied communication of purpose would be s u f f i c i e n t to 3 01 demonstrate the re q u i s i t e r e l i a n c e . While simple communication of the purpose, as s u f f i c i e n t demonstration of reliance in a l l sales, may be placing an undue burden on the s e l l e r , the courts have shown a willingness to accept implied communication as s u f f i c i e n t in consumer sales. Ziegel took the view that, "very l i t t l e evidence i s required to show that a buyer i s re l y i n g on the s k i l l and knowledge of the s e l l e r . It has been held, for example, that the presumption arises in every r e t a i l s a l e . , , j 5 U 2 Support can be found for the l a t t e r part of t h i s statement in 3 0 3 Buckley v. Lever Bros. Ltd. In Le i t z v. Saskatoon Drug and Stationery C o . , 3 0 4 the p l a i n t i f f bought a pa i r of sunglasses, described at the r e t a i l outlet as "impact r e s i s t a n t . " While wearing the sunglasses, the p l a i n t i f f was struck by a s o f t b a l l , the sunglasses shattered, causing severe i n j u r y . The court had no d i f f i c u l t y in finding for the p l a i n t i f f . 30 5 In Kendall v. L i l l i c o , the purpose stated, i . e . compounding as food for c a t t l e and poultry, was held to be s u f f i c i e n t l y stated to indicate the buyer's reliance on the 300. Ibid., at p.79. 301. Ibid., at pp.85-86. 302. Z i e g e l , "The S e l l e r ' s L i a b i l i t y for Defective Goods at Common Law," (1966-67) 12 McGill L.J. 183, at p.191. 303. [1954] 4 D.L.R. 16, discussed at p.89 supra. 304. (1980) 112 D.L.R. (3d) 106. 305. Note 290 supra. - 97 -s e l l e r ' s s k i l l . This raises the further question of the buyer's own expertise in the f i e l d . In that case both buyer and s e l l e r were members of the same trade association and had some expertise in the preparation of animal feedstuffs. The court was w i l l i n g to accept on the evidence that the buyer had r e l i e d on the s e l l e r ' s s k i l l . However, in his speech Lord Reid made the following statement, "I would read i l y accept that a customer, buying from an apparently reputable shopkeeper or a manufacturer, w i l l normally as a matter of fact be r e l y i n g on the s e l l e r ' s s k i l l and judgment, unless there i s something to exclude the inference. I do not think, however, that the same can be said when two merchants equally knowledgeable deal with each other. Then I can see no reason in law or fact for a presumption e i t h e r way." That the reliance placed by the buyers on the s e l l e r ' s s k i l l and judgment need not be t o t a l was accepted in Camme11 Laird & 3 0 7 Co. v. The Manganese Bronze and Brass Co. The appellents, who were ship builders, ordered two propellors to be f i t t e d to p a r t i c u l a r ships, from the defendants. The former gave the l a t t e r d e tailed plans and s p e c i f i c a t i o n s . One of the propellors proved unsatisfactory (although a s a t i s f a c t o r y propellor was ultimately provided) and the appelents raised an action for damages caused by the delay against the respondents. In finding for the appelents Lord Macmillan considered the question of reliance and p a r t i c u l a r l y the fact that the buyers provided plans of the propellors they wanted. He said, 306. Ibid., at p.457. 30"7. Note 289 supra. - 98 -"The respondents argument was that the appelents by t h e i r d etailed s p e c i f i c a t i o n so t i e d the respondents' hands as to negative the idea that anything was l e f t or intended to be l e f t to t h e i r s k i l l or judgment, except mere matters of material and workmanship.... That there was an important margin within which the respondents s k i l l and judgment i s best demonstrated [by the fact that of three propellors made to the same s p e c i f i c a t i o n , only one was s a t i s f a c t o r y ] . " This view was accepted and followed in Ashinqton 3 09 Piggeries v. Christopher H i l l . J It w i l l be re c a l l e d that, in that case, the buyer had ordered feedstuff to be made up in accordance with a formula which he had obtained from an expert in 310 mink n u t r i t i o n . Lord Hodson repeated with approval the 311 d i s t i n c t i o n accepted in Cammell L a i r d : that, where the s e l l e r produces goods in accordance with a s p e c i f i c a t i o n provided by the s e l l e r , the former, while not making any claim for the o v e r a l l r e s u l t , undertakes to provide components or ingredients in accordance with the s p e c i f i c a t i o n . Thus, p a r t i a l reliance on the s e l l e r ' s s k i l l or judgment would seem to be enough to enable the buyer to benefit from the provision. Since the passing of the Supply of Goods (Implied Terms) Act 1973, the provision on f i t n e s s for purpose has been amended. This amendment and that introduced by the Consumer Credit Act 1974 are reproduced in the 1979 Sale of Goods Act S.14(3). With reference to the buyer's reliance on the s e l l e r ' s s k i l l and judgment, there has been a substantial change of emphasis and i t 308. Ibid., at p.419. 309. Note 281 supra. 310. Ibid . , at p.855. 311. Note 289 supra. - 99 -i s now provided that, having expressly or impliedly made known the purpose for which the goods are being bought, the buyer w i l l be protected, "except where the circumstances show that the buyer does not r e l y , , or that i t i s unreason-able for him to r e l y , on the s k i l l or judgment of the s e l l e r . " Thus, the buyer in the U.K. need no longer e s t a b l i s h that he r e l i e d on the s e l l e r . The onus now l i e s with the l a t t e r to e s t a b l i s h the absence of t h i s . There are no reported cases on th i s point, but the pre-amendment case of Teheran-Europe Co. Ltd. v. S.T. Belton (Tractors) Ltd. may give some in d i c a t i o n of what would be s u f f i c i e n t for the s e l l e r to avoid l i a b i l i t y . In that case, the p l a i n t i f f ' s agents in the U*K. ordered twelve "new and unused" a i r compressor units for resale in (then) Persia from the defendants. One unit was inspected by the p l a i n t i f f s and no objection was made. The whole consignment was invoiced to the p l a i n t i f f ' s agents and the p l a i n t i f f s sued for damages on the ground that the compressors were u n f i t f o r resale in Persia. The court did not accept that there had been reliance on the s e l l e r ' s s k i l l and judgment and rejected the claim. Lord Diplock commented. "Where a foreign merchant ... buys by description goods, not for his own use, but for resale in his own country, of which he has no reason to suppose the English s e l l e r has any s p e c i a l knowledge, i t f l i e s in the face of common sense to suppose that he r e l i e s on anything but his own knowledge of the market in his own country and his own commercial judgment of what i s saleable there." - 100 -Sale Under Patent or Trade Name In i t s o r i g i n a l from the Act provided that, "in the case of a contract for the sale of sp e c i f i e d a r t i c l e under i t s patent or other trade name, there i s no implied condition as to i t s f i t n e s s f o r any p a r t i c u l a r purpose." This provision remains in the Canadian statutes, and, while i t i s no longer found in the U.K. l e g i s l a t i o n , a s e l l e r might argue that the buyer r e l i e d on the manufacturer's reputation or advertising in making a purchase by trade name, rather than his (the s e l l e r ' s ) s k i l l or judgment. An in t e r e s t i n g s i t u a t i o n , concerning reliance on a trade 31 5 name, arose in Sawyer Massey Co. v. Thibart. There, the defendant bought an "Eclipse" thresher, a three-horse power tread, P i t t s pattern and an "Eclipse" bagger, for the purpose of threshing grain. While i n d i v i d u a l l y , the items were in accordance with the express warranty and were good pieces of machinery, they could not be made to operate e f f i c i e n t l y in combination. The defendant alleged that they were u n f i t for the purpose and refused to pay the p r i c e . The p l a i n t i f f ' s action for the price f a i l e d . The Court held that, while the i n d i v i d u a l items were sold under trade names, t h i s was "one contract for the sale, not of a s p e c i f i e d a r t i c l e , but of a combination of s p e c i f i e d a r t i c l e s ... that combination has neither a patent nor a trade name, and ... the whole trouble arose just exactly out of the 312. [1968] 2 A l l E.R. 886. 313. Ibid. , at p.894. 314. Sale of Goods Act, 1893, S.14(1). 315. (1907) 6 Terr. L.R. 209. - 101 -combining of those a r t i c l e s into one single piece of machinery and out of the attempt to work them together, and not out of the defect of any one of them separately." Hence, the o v e r a l l combination was not sold under a patent or trade name. Having crossed the hurdles discussed above, what i s i t that the buyer can expect in r e l a t i o n to the q u a l i t y of the goods purchased? Both in i t s o r i g i n a l form and as amended, the statute o. "i 7 provides that the goods s h a l l be "reasonably f i t " for the purpose. This w i l l always be a question of fact, depending on the goods themselves and the purpose for which they were bought. Examples of what did or did not amount to reasonable f i t n e s s can be seen in the foregoing discussion. Thus, foodstuff for animals which proves toxic, hot water bottles which explode and propellors which are p a r t i c u l a r l y noisy were not deemed to be reasonably f i t . Used Goods There has been some question as to whether the implied term as to f i t n e s s for purpose covers "used" or "second-hand" goods. In B r i t a i n , i t was never doubted that the provision could apply to used goods. In B a r t l e t t v. Sidney Marcus Ltd. the p l a i n t i f f bought a second-hand Jaguar motor car from the defendants, having been t o l d that the clutch required a minor repair. He drove the car for a few weeks and i t was discovered 316. Ibid. at p.415 per Stuart J . 317. Sale of Goods Act 1893, S.14(1); Sale of Goods Act 1979, S.14(3); and note 271, supra. 318. [1965] 1 W.L.R. 1013. - 102 -that the repairs required were considerably more extensive than i n i t i a l l y believed. The p l a i n t i f f raised an action against the defendants a l l e g i n g breach of the implied warranties of merchantable q u a l i t y and f i t n e s s for purpose. While, on appeal, he was unsuccessful on the f a c t s , the Court proceeded on the basis that the implied warranties could apply to second-hand goods. It i s c l e a r from Lord Denning*s judgment that he f e l t the q u a l i t y need not be as high as that to be expected from a new car. Nonetheless, he said, "It should be reasonably f i t for the purpose of being driven along the road." r> 2 n In Canada, the case of Godsoe v. Beatty suggests that the implied terms do not apply to second-hand goods — or, at l e a s t , to second-hand motor vehicles. The p l a i n t i f f , in that case, bought a second-hand Meteor Sedan car from the defendants. The conditional sale agreement excluded a l l implied warranties and t h i s , i n 1959, might have s u f f i c e d to reach the r e s u l t which was, in fact, reached. The p l a i n t i f f did allege breaches of the implied warranties of merchantable q u a l i t y and f i t n e s s for the purpose. In re j e c t i n g his claim, the Court held that the implied warranties did not apply to the sale of second-hand vehicles. The decision, in that case, has been c r i t i c i s e d . As Ziegel pointed out, "'Used' goods and 'defective' goods are not interchangeable terms." 319. Ibid, at p.1017. 320. (1959) 19 D.L.R. (2d) 265. 321. Note 302, supra, at p.191. - 103 -It i s most u n l i k e l y that a Canadian Court today would support the complete denial of implied warranties in the sale of second-hand g o o d s . 3 2 2 Nonetheless, some j u r i s d i c t i o n s have sought to avoid doubt by providing for the sale of second-hand goods in other l e g i s l a t i o n . An example i s found in the Saskatchewan Consumer 3 2 3 Product Warranties Act. The general approach taken in the ACt renders l i m i t a t i o n and exclusion of implied terms void. While second-hand dealers are permitted to exclude or modify the 3 24 implied warranties, second-hand car dealers are expressly 32 5 excluded from t h i s group. Thus, in McLeod v. Ens, the purchaser of a second-hand car, who has signed an agreement to take the car "as i s " was protected. The approach taken by various law reform bodies, in dealing with used goods, w i l l be considered in the next chapter. D u r a b i l i t y Where the provision applies, i t seems cle a r that goods must be f i t for the purpose at the time of s a l e . However, a buyer may intend not only a p a r t i c u l a r use for the goods, but also that the use w i l l continue for some time. Is there any requirement that the goods should continue to be f i t for a p a r t i c u l a r purpose; that i s to say, does the concept of d u r a b i l i t y have any place here? 322. See Truro Volkswagen Ltd. v. O'Neil (1980) 37 N.S.R. 396, discussed at p.112, i n f r a . 323. R.S.S. 1978, c. C-30. 324. Ibid, at 3.6(2). 325. (1982) 135 D.L.R. (3d) 365. - 104 -I n i t i a l l y , in B r i t a i n , discussion of t h i s point was confined to the sale of perishable goods. In Mash and Murrell Ltd. v. o p e Joseph I. Emanuel Ltd., the p l a i n t i f f s bought a quantity of potatoes from the defendants. Both dealt in potatoes and the defendants knew that the p l a i n t i f f s intended to r e s e l l the potatoes for human consumption. The potatoes were dispatched from Cyprus but, on a r r i v a l in Liverpool, were found to be affected by " s o f t - r o t " and u n f i t for human consumption. The p l a i n t i f f s raised an action for damages, al l e g i n g breach of sections 14(2) (fi t n e s s for purpose) and section 14(1) (merchantable quality) of the 1893 Act. They were successful, at f i r s t instance, on both claims. Although the decision was l a t e r 3 27 reversed, on the f a c t s , by the Court of Appeal, Lord Diplock's judgment at f i r s t instance i s deserving of consideration. He accepted that the buyers had s u f f i c i e n t l y communicated the purpose for which the potatoes were being bought and had r e l i e d on the s e l l e r s ' s k i l l and judgment. Thus, the buyers would have succeeded on that ground alone. In addition, he discussed the meaning of merchantable q u a l i t y and held that, in that context, "the warranty as to merchantability was a warranty that [the goods] should remain merchantable for a reasonable time, the time reasonable in a l l the circumstances, which means a time reasonable for the normal t r a n s i t to the destination ... and for disposal a f t e r . 2 8 326. [1961] 1 A l l E.R. 485. 327. [1962] 1 A l l E.R. 77. 328. Note 326, supra at p.489. - 105 -In Canada, a s i m i l a r view of the meaning of merchantable qu a l i t y i s found in Georgetown Seafoods Ltd. v. Usen Fisheries L t d . 3 2 9 It seems c l e a r that a degree of d u r a b i l i t y was being applied to cases where the goods sold were perishable. However, the s i t u a t i o n with regard to non-perishable goods received scant attention u n t i l the landmark decision of the House of Lords in 330 Lambert v. Lewis. While the main issue centered on a tort action, the implied warranties of merchantable q u a l i t y and f i t n e s s for purpose were discussed. In that case, the p l a i n t i f f was injured and her husband was k i l l e d when t h e i r car was h i t by a t r a i l e r , which had become detached from the vehicle towing i t . She raised an action against the farmer who owned the t r a i l e r and the vehicle towing i t , the dealer who supplied the coupling which attached the t r a i l e r to the vehicle and the manufacturer of the coupling. The farmer raised an action against the dealer and the dealer raised and action against the manufacturer. The unfortunate Mrs. Lambert was successful in her action but, in the present context, the respective claims in the manufacturing and d i s t r i b u t i o n chain are of greater i n t e r e s t . The t r i a l judge found that the coupling was of a defective design and was dangerous. He also found that part of the coupling was missing and that the farmer must have known of t h i s as he continued to use i t . Accordingly, he apportioned l i a b i l i t y at 329. (1977) 78 D.L.R. (3d) 542, discussed i n f r a at pp.117 and 121. 330. [1981] 1 A l l E.R. 1185. - 106 -75% for the manufacturer and 25% for the dealer. The farmer's claim against the dealer, under the Sale of Goods Act, was dismissed, as was the dealer's action against the manufacturer. The dealer appealed to the Court of Appeal against the finding of negligence against him and the dismissal of his action against the manufacturers. The Court of Appeal upheld the finding of negligence, but upheld the appeal in the action against the dealers, on the ground that the chain of causation between the manufacturer's negligence and the farmer's loss was unbroken. The dealers' appeal against the dismissal of t h e i r action against the manufacturers was dismissed. The dealers appealed against both decisions. In finding the dealer e n t i t l e d to succeed, the House of Lords considered the question of implied warranties and d u r a b i l i t y . Lord Diplock's judgment gives the c l e a r e s t i n d i c a t i o n of a previously uncertain area of the law. He said, "The implied warranty of f i t n e s s for a p a r t i c u l a r purpose relates to the goods at the time of delivery under the contract of sale in the state in which they were delivered. I do not doubt that i t i s a continuing warranty that the goods w i l l continue to be f i t for that purpose for a reasonable time a f t e r d e l i v e r y , so long as they remain in the same apparent state as that in which they were delivered, apart from normal wear and tear. What i s a reasonable time w i l l depend on the nature of the goods." 3 3 The fact that the farmer knew that part of the coupling was missing meant that the goods were no longer in the "same apparent state" and consequently the o b l i g a t i o n did not continue to operate. 331. Ibid, at p.1191. - 107 -The importance of t h i s decision coming, as i t does, from the highest c i v i l court i n B r i t a i n , l i e s in i t s impact on future decisions. C l e a r l y , d u r a b i l i t y has emerged as part of the implied warranty of f i t n e s s for purpose. Since merchantable 332 q u a l i t y i s now defined, i n B r i t a i n , in terms of f i t n e s s for purpose, i t i s submitted that d u r a b i l i t y w i l l now emerge in that context too. (B) Merchantable Quality In i t s o r i g i n a l form, the 1893 Act provided in section 14(2) "Where goods are bought by description from a s e l l e r who deals in goods of that description (whether he be a manufacturer or not), there i s an implied condition that the goods s h a l l be of merchantable q u a l i t y ; " "Provided that i f the buyer examined the goods, there s h a l l be no implied condition as regards defects which such examination ought to have revealed." This provision was adopted in Canada and remains in t h i s form. J The Supply of Goods (Implied Terms) Act 1973, which resulted from the work of the S c o t t i s h and English Law Commissions, 3 3 4 amended the provision and i t s present form in the Sale of Goods Act 1979 section 14(2) reads: "Where the s e l l e r s e l l s goods in the course of a business, there i s an implied condition that the goods supplied under the contract are of merchantable q u a l i t y , except that there i s no such condition -(a) as regards defects s p e c i f i c a l l y drawn to the buyer's attention before the contract i s made; or 332. Sale of Goods Act 1979, s.l4(6). 333. Note 271, supra. 334. Law Com. No. 24, Scot. Law Com. No. 12 (1969), para.43. - 108 -(b) i f the buyer examines the goods before the contract i s made, as regards defects which the examination ought to have revealed." In addition to amending the provisions i t s e l f , the 1973 Act introduced, for the f i r s t time, a d e f i n i t i o n of merchantable q u a l i t y . It i s found in section 14(6) and provides, "Goods of any kind are of merchantable q u a l i t y within the meaning of subsection (2) above i f they are as f i t for the purpose or purposes for which goods of that kind are commonly bought as i s reasonable to expect having regard to any desc r i p t i o n applied to them, the price ( i f relevant) and a l l other relevant circumstances." This d e f i n i t i o n of merchantable q u a l i t y , while being that f i n a l l y recommended by the Law Commissions, was not as o r i g i n a l l y p r o v i s i o n a l l y formulated by them at the stage of consultation. They had o r i g i n a l l y suggested p r o v i s i o n a l l y that, "'Merchantable g u a l i t y ' means that the goods tendered in performance of the contract s h a l l be of such type and qu a l i t y and in such a condition that, having regard to a l l the circumstances, including the price and description under which the goods are sold, a buyer, with f u l l knowledge and c h a r a c t e r i s t i c s of the goods including knowledge of any defects, would, acting reasonably, accept the goods in performance of the contract." In defining merchantable q u a l i t y in t h i s way, for the purpose of discussion, the Commissions acknowledged that they were adopting the " a c c e p t a b i l i t y t e s t " derived from the judgment 3 3 6 of Dixon J. in Grant J. Australian K n i t t i n g M i l l s . That i s , 335. Working Paper No. 18, Consultative Memorandum No. 7 (1968) para.23. - 109 -that goods are of merchantable q u a l i t y i f a reasonable buyer would have accepted them as such. They describe the al t e r n a t i v e test as the " u s a b i l i t y t e s t . " As formulated by Lord Reid in 3 3 7 Kendall,v. L i l l i c o that defines merchantable q u a l i t y in terms of f i t n e s s for purpose. While the Commissions received support for t h e i r personal choice of t e s t , i t was c r i t i c i s e d for being 3 38 too complicated and c i r c u l a r . They accepted the c r i t i c i s m and we now have a version of the " u s a b i l i t y t e s t . " What hurdles then face the buyer in seeking the protection of the provision as to merchantable q u a l i t y in i t s various forms? Description In i t s o r i g i n a l form, in B r i t a i n , and as i t remains in Canada, the provision requires that the goods were bought by 3 3 9 de s c r i p t i o n . Sale by desc r i p t i o n has already been discussed, but a few addit i o n a l points deserve consideration. Fundamental to the question of sale by desc r i p t i o n i s what is meant by "description" in t h i s context? Debate has centered on two possible answers. 3 4 0 "Description" might simply refer to a means of i d e n t i f y i n g the goods or i t might re f e r to some undertaking as to the qual i t y of the goods. In the l a t t e r case, questions of misrepresentation may become relevant. In reviewing the cases here, Fridman concludes that, 336. (1933) 50 C.L.R. 387, at p.418. 337. Note 290 supra. 338. Working Paper No. 85; Consultative Memorandum No. 58 (1983), Sale and Supply of Goods, at para.2.4. 339. At p.88 supra. 340. See, for example, Montrose, "The Operation of Description in a Contract of Sale of Goods" (1937) 15 Can. Bar Rev. 760. - 110 -"The expression in the Uniform Commercial Code, v i z . , that the s e l l e r i s a merchant with respect to goods of that kind, i s preferable, at least as one possible s o l u t i o n of the problem raised in t h i s context, since i t avoids the n i c e t i e s and problems raised by the meaning of d e s c r i p t i o n . " Nonetheless, the trend appears to suggest that a preference was being shown for i n t e r p r e t i n g "description" in terms of i d e n t i f i c a t i o n of the goods. This was confirmed in Ashington 3 4 2 Piggeries Ltd. v. Christopher H i l l Ltd., discussed above, where i t was accepted that despite contamination (and the implications in law thereof), what was supplied was "Norwegian herring meal." Another point to be considered i s what kind of goods can be the subject of a sale by d e s c r i p t i o n . C l e a r l y , t h i s w i l l include unascertained and future goods since these can only be described. However, i t has. long been accepted that ascertained goods can be sold by description even where the buyer has the goods before him at the time of s a l e . In Grant v. Australian  Knitti n g M i l l s , 3 4 3 Lord Wright was quite c l e a r on t h i s point. He said, "there i s a sale by d e s c r i p t i o n even though the buyer i s buying something displayed before him on the counter; a thing i s sold by d e s c r i p t i o n , though i t i s s p e c i f i c , so long as i t i s sold not merely as the s p e c i f i c thing but as the thing corresponding to a d e s c r i p t i o n . " 341. Note 241 supra, at p.222. 342. Note 281 supra. 343. Note 336 supra. 344. Ibid., at p.456. - I l l -In Canada, the same view of sale "by d e s c r i p t i o n , " has been accepted. Thus, in Leitz v. Saskatoon Drug and Stationery 3 4 5 Co., the purchaser of sunglasses on display in a shop bought them "by d e s c r i p t i o n . " 3 4 6 In Truro Volkswagen Ltd. v. O'Neil, the defendant agreed to trade in her car as part of the price of a new car. Both pa r t i e s knew that the vehicle was sometimes d i f f i c u l t to s t a r t due to a problem with the f u e l pump. Prior to the trade-in, the car broke down completely. The defendant led the p l a i n t i f f to believe that t h i s was simply due to the f u e l pump problem. On discovering that the car required extensive repair, the dealer raised an action against the defendant. Despite the fact that the p l a i n t i f f was experienced in the f i e l d and that he had had the opportunity to examine the car, t h i s was held to be a sale "by d e s c r i p t i o n . " While the question of whether or not the sale was by description remains important in Canada, th i s i s no longer the case in the U.K. where the amended provision makes no reference to such sales. S i m i l a r l y , the requirement that the s e l l e r must deal in goods of that d e s c r i p t i o n . 345. (1980) 112 D.L.R. (3d) 106, discussed at p.97 supra. 346. (1980) 37 N.S.R. 396. - 112 -Business S e l l e r In the discussion of f i t n e s s for p u r p o s e , 3 4 7 what constituted dealing in goods of a p a r t i c u l a r description was discussed at length and applies equally to the provisions currently under discussion. The discussion of s e l l i n g " i n the course of a business" found in the current U.K. provision i s equally applicable here. What i s "Merchantable Quality"? Having established that the provision requiring the goods to be of merchantable q u a l i t y applies, what guarantee of q u a l i t y does t h i s give the buyer? Although there i s now a statutory 3 4 8 d e f i n i t i o n of merchantable q u a l i t y in the U.K., i t i s worth considering the attitude of the courts in Canada and the U.K. for two reasons. F i r s t , because the statutory d e f i n i t i o n has not yet been adopted in Canada. Secondly, because i t was that very i n t e r p r e t a t i o n by the courts which led to a d e f i n i t i o n being 349 formulated in the U.K. and influenced i t s eventual form. It has long been accepted that the term "merchantable g u a l i t y " has 3 5 0 i t s roots in the commercial notion of "commercially saleable" and that t h i s may render i t less than ideal to cover "consumer" as opposed to "commercial" sales. However, as the cases discussed below show, the concept i s capable of being applied to a l l sales. Indeed the question of " s a l e a b i l i t y " can i t s e l f be interpreted in at least two ways. F i r s t , goods can be saleable 347. See p.87 supra. 348. Sale of Goods Act 1979, s . l ( 6 ) . 349. See p.108 supra. 350. Kendall v. L i l l i c o , note 290 supra, at p.477. - 113 -i n terms of purpose; that i s to say, can f u l f i l l a purpose and therefore be marketable. Secondly, goods can be saleable in terms of a c c e p t a b i l i t y to purchasers. An example of the courts considering whether or not the goods are s u f f i c i e n t l y suited to t h e i r purpose as to make them saleable i s found in Cammell Laird 3 51 Co. Ltd. v. Manganese Bronze and Brass Co. Ltd. Lord Wright took the view that goods were not of merchantable q u a l i t y i f , "goods in the form in which they were tendered were of no use for any purpose for which goods would normally be used and hence were not saleable under that d e s c r i p t i o n . " This was l a t e r c r i t i c i s e d as being too narrow and only one of the 3 5 3 relevant f a c t o r s . Commenting, in Kendall v. L i l l i c o , on Lord Wright's statement, Lord Guest^ 5 4 considered that one of i t s c r u c i a l weaknesses was the omission of any reference to p r i c e . 3 55 Lord Reid too thought that Lord Wright's d e f i n i t i o n required amendment to cover the variety of purposes to which goods could be put and the relevance of price thereto. Another test would be to re l a t e merchantability to the "reasonable buyer." In B r i s t o l Tramways, etc. Ltd. v. Fiat  Motors Ltd., the p l a i n t i f f s bought an omnibus and chassis from the defendants. They proved unsatisfactory and in finding for the p l a i n t i f f s on the question of merchantable q u a l i t y , Farwell L.J. gives the test in the following terms, 351. Note 289 supra. 352. Ibid. , at p.414. 353. Note 290 supra. 354. Ibid., at p.477. 355. Ibid., at p.452. 356. [1910] 2 K.B. 831. - 114 -"that the a r t i c l e i s of such q u a l i t y and in such condition that a reasonable man acting reasonably would a f t e r a f u l l examination accept i t under the circumstances of the case in performance of his o f f e r to buy that a r t i c l e whether he buys i t for his own use or to s e l l again." This i s the test accepted by Dixon J . i n Grant J . Australian 3 58 K n i t t i n g M i l l s , with the refinement of assuming the buyer to know of hidden as well as apparent defects. 3 5 9 In N i b l e t t Ltd. v. Confectioners Materials Co. Ltd., the buyers agreed to buy a quantity of condensed milk in cans at a cer t a i n price from s e l l e r s in the U.S.A. On a r r i v a l in London, the goods were detained by H.M. Customs at the i n s t i g a t i o n of the Nestle and Anglo-Swiss Condensed Milk Co. Ltd. The cans bore the word "Nissly" and t h i s was alleged to inf r i n g e the Nestle Co.'s brand name. The buyers were obliged to remove the offending word and were only able to s e l l the milk at a loss . They succeeded in t h e i r action against the s e l l e r s on a number of grounds including a breach of the requirements as to merchantable q u a l i t y . In commenting on t h i s Lord Atkin said, "If [the buyer] knew the real facts he would refuse the goods on the grounds that they were in such a state or condition as to expose him to an injunction. No one who knew the facts would buy them in that state or condition; in other words they were unsaleable and unmerchantable." 357. Ibid . , at p.841. 358. Note 337 supra. 359. [1921] 3 K.B. 387. 360. Ibid., at p.404. - 115 -The approach found in Grant was severely c r i t i c i s e d by Lord Reid in Kendall v. L i l l i c o who preferred Lord Wright's approach in Cammell L a i r d . He did, however, f e e l that t h i s required some amendment and his reformulated version gives the following test for merchantable q u a l i t y ; "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 d e s c r i p t i o n . " This d e f i n i t i o n was accepted in B.S. Brown & Son Ltd. v. o c p Craiks Ltd. where the buyers bought a quantity of c l o t h from the s e l l e r s , without intimating the purpose for which i t was intended. The f a b r i c was capable of a number of i n d u s t r i a l uses but was not suitable for making dresses which was what the buyers had intended. The c l o t h was held to be merchantable because i t was capable of a number of uses which f e l l within the description applied to i t . In one Canadian case the Court appears to have accepted Lord Wright's approach in Cammell Laird and given a very wide in t e r p r e t a t i o n to the "reasonable buyer." In International 3 6 3 Business Machines Co. Ltd. v.Shcherban, the defendants bought a computing scale from the p l a i n t i f f s for c£294. On a r r i v a l , i t was found that a small piece of glass which covered the d i a l was broken. The glass could have been replaced for about 30 cents 361. Note 290 supra, at p.451. 362. [1970] 1 A l l E.R. 823. 363. [1925] 1 D.L.R. 864. - 116 -and i t s absence did not prevent the machine from operating. Nonetheless, the defendants refused to accept the scale on the ground that i t was not of merchantable q u a l i t y . While Houltain C.J.S. viewed t h i s as f a l l i n g within the de minimis maxim, the majority of the Court held the defendants e n t i t l e d to reject the goods. Despite the nature of the defect, i t s c u r a b i l i t y and, in the case of Martin J.A., the fact that he regretted the o c. c r e s u l t , the majority held the goods to be unmerchantable. In the more recent case of Georgetown Seafood Ltd. v. Usen 3 6 6 Fish e r i e s Ltd. , the buyer contracted to buy f i s h for processing. Once processing started, the f i s h was found to be wholly unsuited to the purpose. The Court found for the buyers on the basis of a latent defect, rendering the goods unmerchantable. In reaching i t s decision the court did consider the question of the "reasonable buyer." In that case, however, i t i s probable that the same re s u l t would have been reached by ap p l i c a t i o n of the " s a l e a b i 1 i t y " t e s t . Merchantable q u a l i t y applies not only to the goods themselves but, in the words of the statutes, to t h e i r "state or 3 67 condition." As was demonstrated by N i b l e t t v. Confectioners 3 6 8 Materials Ltd., t h i s can extend to the packaging of the goods. The d e f i n i t i o n of merchantable q u a l i t y found in the 1979 Sale of Goods Act would appear to follow the thinking of Lord 364. Ibid, at p.865. 365. Ibid, at p.870. 366. (1977) 78 D.L.R. (3d) 542, discussed at p.121 i n f r a . 367. Sale of Goods Act 1893, s.62; Sale of Goods Act 1979, s.61; R.S.B.C. 1979, c.370, s . l ; R.S.O., 1980, c.462, s . l . 368. Note 359 supra. - 117 -Reid in Kendall v, L i l l i c o . As was discussed e a r l i e r , the Law Commissions o r i g i n a l suggestion for consultation was more in l i n e with the thinking of Farwell L.J. and Dixon J . and the change of emphasis was in response to comments and c r i t i c i s m received. The Law Commissions are continuing to look at t h i s area of the law on sale of goods and t h e i r c r i t i c i s m s of the current l e g i s l a t i o n and proposals for the future w i l l be discussed in the next c h a p t e r . 3 7 0 Buyer's Examination of the Goods For the moment i t i s appropriate to consider the statutory exceptions to and l i m i t a t i o n s on the requirement that the goods should be of merchantable q u a l i t y . In i t s o r i g i n a l form, the 1893 Act provided that, " i f the buyer examined the goods, there s h a l l be no implied condition as regards defects which such examination ought to have r e v e a l e d . " 3 7 1 C l e a r l y , t h i s applies only in cases where the buyer had an opportunity to examine the goods. Where the buyer was given the 3 7 2 opportunity to examine the goods but f a i l e d to do so, Reynolds takes the view that he would s t i l l be protected by the provisions on merchantable g u a l i t y , although he does concede that the guestion of estoppel (personal bar, i n Scotland) might a r i s e . This view seems open to c r i t i c i s m . If the buyer i s better off i f 369. See p.109 supra. 370. At p.124 i n f r a . 371. Sale of Goods Act 1893, S.14(2). 372. Note 266 supra, at p.391. Prosser takes the same view. See Prosser, "The Implied Warranty of Merchantable Quality" (1943) XXI Can. Bar Rev. 446, at pp.479-483. - 118 -he f a i l s to inspect the goods, then t h i s w i l l only delay the discovery of defects and lead to dispute and possibly l i t i g a t i o n at a l a t e r stage - by which time the costs incurred by both buyer and s e l l e r may be greater. Such an approach i s hardly in l i n e with commercial sense. An i n t e r e s t i n g decision, in t h i s context, i s found in 3 7 3 Thornett and Fehr v. Beers and Son, where the defendants agreed to buy a quantity of vegetable glue from the p l a i n t i f f s . They went to the p l a i n t i f f s * warehouse to inspect the glue and were given every opportunity to do so. The defendants were pressed for time and, instead of looking inside at the contents, simply looked at the outside of the b a r r e l s . Once the glue had been delivered, they alleged that i t was unmerchantable and refused to pay the p r i c e . The p l a i n t i f f ' s action for the price was successful. Having decided that t h i s was not a case of sale by sample, Bray J. went on to consider the question of inspection. He was s a t i s f i e d that both parties had intended that a f u l l examination should have taken place and that, in the event the barrels were not opened. He continued, "the reason was that they [the defendants] had no time; they were s a t i s f i e d with t h e i r inspection of the barrels, and they were w i l l i n g to take the r i s k , the price being so l o w . 1 , 3 7 4 He concluded that there was inspection, within the meaning of the ACt, and that, "such an examination i f made in the ordinary way 3 7 5 would have revealed the defects complained of." This suggests 373. [1919] 1 K.B. 486. 374. Ibid, at p.489. - 119 -that, not only i s the buyer better to avoid examination altogether, but that he should also avoid p a r t i a l examination. Where there has been inspection of the goods, the s e l l e r i s only protected against defects that ought to have been revealed by the inspection. Where the defect could not have been discovered by such inspection, the s e l l e r remains l i a b l e . Thus, "inc. i n Wren v. Holt, where the beer was contaminated with arsenic, i t was accepted that examination would not have revealed the defect and the p l a i n t i f f ' s claim for damages for the injury caused was successful. This exception in the 1893 Act was retained and i s now found, with s l i g h t changes in the wording in the 1979 Act. Section 14(2)(b) provides that there i s no condition that the goods w i l l be of merchantable q u a l i t y , " i f the buyer examines the goods before the contract i s made, as regards defects which that examination ought to reveal." It can be argued that the change from "such examination" to "that examination" may result in a d i f f e r e n t decision in the future where the buyer chose to make a p a r t i a l rather than t o t a l examination, but there has, as yet, been no decision on the point. The Supply of Goods (Implied Terms) Act 1973 introduced another statutory exception to the condition that goods w i l l be of merchantable q u a l i t y , 375. Id. 376. [1903] 1 K.B. 610. - 120 -"as regards defects s p e c i f i c a l l y drawn to the buyer's attention before the contract i s made.""311 While t h i s exception has a p p l i c a t i o n throughout the f i e l d of sale of goods, i t w i l l have p a r t i c u l a r a p p l i c a t i o n in cases of sale goods and second-hand goods. D u r a b i l i t y The decision in Mash and Murrell Ltd. v. Joseph I. 3 78 Emanuel made clea r that, at least as regards perishable goods, the implied terms of merchantable q u a l i t y required that the goods should remain in that state for a reasonable time. The same view was taken by the Supreme Court of Prince Edward Island in Georgetown Seafoods Ltd. v. Usen Fi s h e r i e s 3 79 Ltd. In that case, the p l a i n t i f f s sold the defendants a quantity of f i s h . Both par t i e s were in the f i s h processing business and while the f i s h were adequately stored and should have lasted for ten days under those conditions, they deteriorated a f t e r three days. Although the defendants had inspected some of the f i s h , the d e t e r i o r a t i o n did not become apparent u n t i l processing was started. The p l a i n t i f f s ' action for the price f a i l e d because the court found that there had been a breach of the implied warranty of merchantable q u a l i t y , since the goods should have remained merchantable for a reasonable time — in t h i s case, ten days. 377. Sale of Goods Act 1979, s . l 4 ( 2 ) ( a ) . 378. Note 326, supra, discussed at p.105 supra. 379. Note 329, supra. - 121 -As was discussed e a r l i e r , the point was taken a stage 38 0 further by the House of Lords in Lambert v. Lewis where the notion of d u r a b i l i t y in f i t n e s s for purpose was applied to a non-perishable item. Since merchantable q u a l i t y in B r i t a i n , i s defined in terms of f i t n e s s for purpose, i t seems cle a r that d u r a b i l i t y has now firmly emerged. It seems probable that the Canadian courts might take the same view. Other Provisions As To Quality In addition to conditions requiring goods to be f i t for t h e i r purpose and of merchantable q u a l i t y , the Act deals with 3 81 38 2 sale by description and sale by sample and i s to a large extent, a restatement of the English common law. Thus, the 3 83 discussion of both concepts in Chapter II i s s t i l l applicable today. One point should be noted, in both sale by description and sale by sample, the buyer i s protected whether or not the s e l l e r was s e l l i n g in a business context and therefore the provisions have wider a p p l i c a t i o n than those dealing with f i t n e s s for purpose or merchantable q u a l i t y . 380. Note 330, supra. 381. Sale of Goods Act 1893, s.13; Sale of Goods Act 1979, s.13; R.S.B.C, 1979, c.370, s.17; R.S.O., 1980, c.462, s.14. 382. Sale of Goods Act 1893, s.15; Sale of Goods Act 1979, s.15; R.S.B.C, 1979, c.370, s.19; R.S.O. 1980, c.462, s.16. 383. See p.39 supra. - 122 -Usage of Trade Again restating the common law, the Act provides that, "an implied condition or warranty about qu a l i t y or f i t n e s s for a p a r t i c u l a r purpose may be annexed to a contract of sale by us a g e . " 3 8 4 o p c This too was discussed in the previous chapter. These then are the terms which may currently be implied as to the qual i t y of goods sold in B r i t a i n and Canada. As the foregoing discussion shows and the following chapter w i l l consider in more depth, they are open to a number of c r i t i c i s m s . This has prompted law reform bodies in a l l the j u r i s d i c t i o n s concerned to consider a l t e r n a t i v e approaches. It is now appropriate to consider the work of these bodies. 384. Sale of Goods Act 1893, s.14; Sale of Goods Act 1979, S.14(4). 385. See p.45 supra. - 123 -CHAPTER IV: CRITICISM OF THE LEGISLATION  AND THE MOVEMENT FOR REFORM It has been accepted, for some time, that the provisions of the Sale of Goods Act 1893, as amended, and as adopted in Canada, are open to c r i t i c i s m . In B r i t a i n , the Law Commissions commented that, "for some time there has been d i s s a t i s f a c t i o n with c e r t a i n 38 6 aspects of the law on sale," noting that: "The Sale of Goods Act 1893 was a statement of p r i n c i p l e s of law largely derived from the cases decided up to that date. These cases almost a l l concerned disputes between merchants and many of them r e f l e c t conditions of a mercantile l i f e in the 19th century." Writing in 1969 Sutton took the view that, "The law governing everyday transactions of the buying and s e l l i n g of goods is that representing the outlook and marketing conditions of the England of the years of the i n d u s t r i a l revolution. A statute which was concerned with the business practices of the mid-nineteenth century determines the rig h t s and duties of the consumer in a vastly d i f f e r e n t society today." 8 Nor has the c r i t i c i s m of the Act been confined to i t s incongruity in a consumer contract. As Fridman put i t : "In modern Canada for the most part we are governed by an out-of-date statute, which does not f a i r l y represent, nor p a r a l l e l , the r e a l i t i e s of everyday commercial l i f e . " Given these c r i t i c i s m s of the Act, i t i s hardly surprising that the provisions on sale of goods have been the subject of considerable scrutiny over the l a s t twenty years. That scrutiny 386. Note 388 supra, at para.1.10. 387. Ibid . , at para. 3.1. 388. Sutton, "Reform of the Law of Sales" (1969), 7 A l t a . L.  Rev. 130, at p.173. 389. Note 239 supra, at pp.6-7. - 124 -has extended throughout the law on sales, to cover matters outwith the scope of t h i s discussion (e.g., provisions on the implied terms on t i t l e and quiet possession). It has included considerable examination of the provisions r e l a t i n g to the q u a l i t y and f i t n e s s of the goods and i t i s with these areas that we are concerned here. Research i n B r i t a i n and Canada has often highlighted s i m i l a r c r i t i c i s m s and concerns. Although not always suggesting the same reforms, i t seems appropriate to consider the views of the various reform bodies, on a p a r t i c u l a r aspect, together. F i r s t , however, i t i s necessary to provide a b r i e f background to the process by which these views emerged. (A) The Reform Bodies  B r i t a i n 3 9 0 In B r i t a i n , the two Law Commissions worked together on most stages of the examination of the law on sale of goods. The 391 Report which resulted from the f i r s t of these cooperative ventures lead to the enactment of the Supply of Goods (Implied Terms) Act 1973, which amended the provisions on implied terms as to q u a l i t y of the goods sold and r e s t r i c t e d the practice of contracting out of them. The second cooperative study by the 392 Commissions and the Report which resulted lead to the 390. The two Commissions are "The Law Commission," which deals with law reform i n England and Wales, and "The S c o t t i s h Law Commission," which deals with law reform in Scotland. While they usually work separately, often on unrelated to p i c s , the fact that the Sale of Goods Acts 1893 and 1979 applied to the whole of the U.K., made j o i n t projects appropriate. 391. Law Com. No. 24, Scot. Law Com. No. 12 (1969), F i r s t  Report on Exemption Clauses. 392. Law Com. No. 69, Scot. Law Com. No. 39 (1975), Second  Report on Exemption Clauses. - 125 -enactment of the Unfair Contract Terms Act 1979. The e f f e c t of 0 Q -3 these enactments has been discussed in the previous chapter. In January 1979 the Lord Chancellor asked the Law Commission to consider "(a) whether the undertakings as to q u a l i t y and f i t n e s s of goods implied under the law r e l a t i n g to the sale of goods, h i r e -purchase and other contracts for the supply of goods require amendment; (b) the circumstances in which a person to whom goods are supplied under a contract of sale, hire-purchase or other contract for the supply of goods i s e n t i t l e d , where there has been a breach by the supplier of a term implied by statute, to: ( i) reject the goods and treat the contract as repudiated; ( i i ) claim against the supplier a diminution or e x t i n c t i o n of the p r i c e ; ( i i i ) claim damages against the supplier; (c) the circumstances in which, by reason of the Sale of Goods Act 1893, a buyer loses the right to reject the goods; and to make recommendations." The Law Commission pursued t h i s inquiry alone and r e p o r t e d 3 9 4 in 1979. The Supply of Goods and Services Act 1982, which applies to England and Wales only, resulted from that Report. In the course of i t s work, the Law Commission considered a variety of questions, including possible provisions on the d u r a b i l i t y of •3 a c goods in the contract of sale or supply of goods. 393. See supra pp.87-91. 394. Law Com. No. 95 (1979), Implied Terms in Contracts for  the Supply of Goods [Terms of reference i n Introduction]. - 126 -It was accepted that such matters were cl o s e l y linked to more general questions of q u a l i t y and f i t n e s s and again, the two Commissions embarked upon a cooperative examination of implied terms in sale of goods contracts and related matters. A s p e c i a l 397 j o i n t committee was set up by the two Commissions and t h i s 39 8 reported in 1983, p r o v i s i o n a l l y recommending a number of reforms. Comments were in v i t e d on the p r o v i s i o n a l 39 9 recommendations by March 1984. The comments received by the Commissions, are under consideration and a f i n a l report, recommending what, i f any, l e g i s l a t i v e action should be taken, w i l l appear in due course. Such was the opposition to the e x i s t i n g provisions on aspects of the law of sale of goods in the U.K., that a Private Members B i l l was introduced into Parliament in 1979 by Donald Stewart, M.P. This B i l l was withdrawn, however, when i t became known that the Law Commissions were about to engage in a detailed examination of the issues. 395. Ibid, at paras. 113-114. 396. Note 338 supra at para. 1.8. 397. The j o i n t committee comprised Mr. J u s t i c e Ralph Gibson, Mr.Brian Davenport, Q.C., and Dr. Peter North, a l l of the Law Commission, and the Rt. Hon. Lord Maxwell, Dr. E.M. Cli v e and Mr. J. Murray, Q.C., a l l of the S c o t t i s h Law Commmission. 398. Note 338 supra. 399. The comments of the Law Society of Scotland (submitted February 1984) are, as yet, unpublished. See Scot t i s h Consumer Council's Response (March 1984). - 127 -Canada In Canada, the concern for reform of the e x i s t i n g provisions in t h i s area has resulted in a considerable body of research, reports and recommendations. One landmark in the process of law reform, in t h i s respect, was the Report on Sale of Goods 4 0 0 produced by the Ontario Law Reform Commission in 1979. It would be no exaggeration to describe the s i g n i f i c a n c e of the Report, in i t s e l f , and in terms of events which followed from i t as "enormous." It i s , therefore, important for an observer of the law reform process to note that the Report i t s e l f was, in some measure, the r e s u l t of views expressed by a small group of individ u a l s on the periphery of the process. A sub-committee of the Commercial Law Subsection of the Ontario Branch of the Canadian Bar Association reported and recommended 4 0 1 that the e x i s t i n g law on sale of goods should be replaced by A r t i c l e 2 of the Uniform Commercial Code. The Report was a p p r o v e d 4 0 2 by the Council Ontario Branch of the Canadian Bar Association in September 1969 and submitted to the Minister of J u s t i c e . In February 1970, the Minister of J u s t i c e and Attorney General, Hon. A.A. Wishart, Q.C., referred the matter of sale of goods to the Ontario Law Reform Commission. Before a study could be f u l l y organised, a j o i n t reguest by the Minister of Justice and the Minister of F i n a n c i a l and Commercial A f f a i r s to "give 400. Ontario Law Reform Commission, Report on Sale of Goods, 1979. 401. Ibid. , Appendix 7. 402. Ibid., at p.159. - 128 -f i r s t p r i o r i t y to a study of the law of warranties and guarantees in the contract of consumer s a l e s , 1 , 4 0 3 was received by the Commission. It was agreed that t h i s project should form part of the broader study on sale of goods. A research team headed by Professor Jacob S. Z i e g e l 4 0 4 assisted the Commission in preparing i t s R e p o r t 4 0 5 which was published in 1972. As a resu l t of the Report, B i l l 1 1 0 , 4 0 6 was introduced in the Ontario Legislature. The untimely d i s s o l u t i o n of the Ontario Legislature i n June 1977 prevented i t from becoming l e g i s l a t i o n . However, the Report did influence l e g i s l a t i o n e l s e w h e r e 4 0 7 and i s an i n t e g r a l part of the Commission's work on sale of g o o d s . 4 0 8 The Commission resumed work on the more general examination of sale of goods in 1972 and again made considerable use of the assistance of a research team headed by Professor Zi e g e l . Their report, research conducted by the Ontario Branch of the Canadian Manufacturers' Association and research conducted by Professor 403. Ibid., at p.3. 404. See Ziegel in Nielsen (ed.), Consumer and the Law in Canada (1970), at p.165; Ziege l , "Report of the Ontario Law Reform Commission on Consumer Warranties and Guarantees in Sale of Goods" (1973) 22 I.C.L.Q. at p.363. 405. Ontario Law Reform Commission Report on Consumer  Warranties and Guarantees in Sale of Goods (1972). 406. Consumer Product Warranties B i l l 1976. 407. E.g., Consumer Product Warranties Act 1977, S.S. 1976-77, c.15, Consumer Product Warranty and L i a b i l i t y Act 1978, S.N.B. 1978, c.18.1. 408. See, e.g., Report on Sale of Goods, note 400 supra, at pp.216-17, where one of the reasons given for including an implied warranty in a contract of sale between commercial parties is that the s e l l e r to a consumer would be giving such a warranty to the buyer i f the Report on Consumer Warranties and Guarantees  in the Sale of Goods were implemented. - 129 -Monson on purchasing practices were considered in d e t a i l by the Commission. 4 0 9 A Draft B i l l was prepared by Professor Ziegel and his team, taking into account the Commission's v i e w s 4 1 0 and the f i n a l Report on Sale of Goods was published i n 1979. I n i t i a l reaction to the Report was not overwhelming. Discussion of i t was confined in the Canadian Bar Review to the "Book Reviews" s e c t i o n . 4 1 1 There, the reviewer noted that, "the Commission appears to have assumed as a fundamental axiom, that the l e g a l rules of sales matter"; an assumption which he had d i f f i c u l t y in accepting. Despite t h i s , the Report was to have considerable impact throughout Canada. The Report was submitted to the Uniform Law Conference of Canada at i t s annual meeting in 1979. The U.L.C.C. Executive appointed a committee 4 1 3 to consider the Report's s u i t a b i l i t y to form the basis of a uniform law of sales for Canada. The committee met over the next two years and in 1981 produced a Draft Uniform Sale of Goods Act. In a number of important respects, the scheme proposed by the committee d i f f e r e d from the scheme proposed by the Ontario Law Reform Commission. In the following discussion, these differences w i l l be noted. The Draft Uniform Sale of Goods Act 409. Note 400 supra, at p.4. 410. Id. 411. Ramsay (1980), 58 Can. Bar. Rev. 780. 412. Ibid., p.782. 413. The committee was comprised of Dr. Mendes da Costa, Q.C. (Ontario), Prof. Braid (Manitoba), Prof. Bridge (Alberta), Prof. Cuming (Saskatchewan), Mr. Dore (New Brunswick), M. Paquette (Quebec), Miss Campbell (Prince Edward Island) and Prof. Vaver ( B r i t i s h Columbia). - 130 -was adopted by the Uniform Law Section of the U.L.C.C. in August 1981 at Whitehorse and the f i n a l English version appeared in 1982. Since then, the law reform bodies of A l b e r t a 4 1 4 and M a n i t o b a 4 1 5 have given detailed consideration to the Act. In 41 6 both cases, i t was recommended that the Province should adopt the Act, subject to c e r t a i n changes. Since one aim of the Uniform Sale of Goods Act would be to achieve uniformity throughout p r o v i n c i a l sales laws, i t i s not s u r p r i s i n g that, in both Alberta and Manitoba, adoption of the Act was made c o n d i t i o n a l , 4 1 7 to varying degrees, on acceptance of i t by the other provinces. The c r i t i c i s m s of the current l e g i s l a t i o n and the proposals for reform w i l l now be examined. F i r s t , a number of the broader issues — the d i s t i n c t i o n between consumers and non-consumers, the d i s t i n c t i o n between conditions and warranties, the doctrine of caveat emptor, the structure of the detailed provisions and the d i s t i n c t i o n between business and private s e l l e r s -- w i l l be 414. I n s t i t u t e of Law Research and Reform, Edmonton, Alberta, Report No. 38 (1982), The Uniform Sale of Goods Act. 415. Law Reform Commission of Manitoba, Report No. 57 (1983), The Uniform Sale of Goods Act. 416. I.L.R.R.A..note 414, supra, at p.14; L.R.CM. note 413 supra, at p.3. 417. In Alberta, the I.L.R.R. recommended that, p r i o r to adoption of the Act, the Alberta Government, "by consultation with the governments of other provinces and the t e r r i t o r i e s , be s a t i s f i e d that the adoption of the Uniform Act w i l l promote uniformity of law among the provinces and t e r r i t o r i e s " (Report at p.14). In Manitoba, the L.R.C. recommended that, "before the Uniform Act i s proclaimed, the Government of Manitoba be s a t i s f i e d that at least one other province has already proclaimed the Uniform Act in force or w i l l , on or about the same time, proclaim the Uniform Act in force" (Report at p.4). - 131 -considered. Secondly, the det a i l e d provisions on quality of goods and t h e i r f i t n e s s for purpose w i l l be examined and t h i r d l y , the focus w i l l be placed on the remedies available to the aggrieved buyer. (B) Some General Issues To Consider Consumer and Non-Consumer Sales The idea that the law should provide greater or d i f f e r e n t protection for consumers as opposed to non-consumers (commercial 418 parties) i s a f a m i l i a r one ° i n sale of goods and other l e g i s l a t i o n . The j u s t i f i c a t i o n for the d i s t i n c t i o n l i e s in the b e l i e f that the consumer's inexperience and inequality of bargaining power may put him at a disadvantage at a number of stages in the process of a sale. The consumer may lack the resources and experience to bargain as e f f e c t i v e l y as a non-consumer buyer. At the stage of acceptance of goods tendered, "a consumer may be less v i g i l a n t than a commercial buyer in s c r u t i n i s i n g goods delivered to him, and indeed i t may not be reasonable to expect the game standard of vigila n c e in both cases." Should the consumer be d i s s a t i s f i e d with the goods, again inexperience and a lack of resources may greatly diminish his a b i l i t y to enforce his rights e f f e c t i v e l y . The acceptance that these differences j u s t i f i e d d i f f e r e n t l e g a l provisions in each case has found expression in a number of 418. See, e.g., Jolowicz, "Protection of the Consumer and Purchaser of Goods Under English Law" (1969), 32 Modern L. Rev. 1; Cavalier, "Consumer Protection and Warranties of Quality" (1970), 34 Albany L. Rev. 339, where the author refers to "the rash of consumer-oriented a r t i c l e s , " at p.339. 419. Note 338 supra, at para. 4.73. - 132 -statutory provisions on sale of goods. In B r i t a i n , the Supply of Goods (Implied Terms) Act 1973, defined a "consumer contract" as one where, "(a) the buyer neither acts in the course of business nor holds himself out as doing so; and (b) the s e l l e r acts in the course of business; and (c) the goods are of a type o r d i n a r i l y bought for private use or consumption;" and provides that the operation of exemption clauses w i l l be d i f f e r e n t to t h e i r operation in other contracts. In Canada, a number of p r o v i n c e s 4 2 0 have enacted l e g i s l a t i o n dealing s p e c i f i c a l l y with consumer sales or have amended e x i s t i n g l e g i s l a t i o n to acknowledge the d i s t i n c t i o n . In B r i t i s h Columbia, the Sale of Goods Act provides that a " r e t a i l sale" includes "every contract of sale made by a s e l l e r in the ordinary course of his business but does not include a sale of goods (a) to a purchaser for resale; (b) to a purchaser who intends to use the goods primarily in his business; (c) to a corporation or an i n d u s t r i a l or commercial enterprise; or (d) by a trustee in bankruptcy, a l i q u i d a t o r or a s h e r i f f , " 4 2 1 and provides that any purported l i m i t a t i o n or exclusion of the 4 2 2 implied warranties or conditions in such a sale s h a l l be void. The Ontario Law Reform Commission Report on Consumer  Warranties and Guarantees i n Sale of Goods was based on acceptance of t h i s separate category of contracts. The Saskatchewan Consumer Products Warranties Act, which was founded 4 20. See supra p. 421. R.S.B.C. 1979, c.370, s.21(i). 422. Ibid., s.21(2). - 133 -upon the "basic i d e a s " 4 2 3 of the Report, defines "consumer" 4 2 4 and "consumer p r o d u c t " 4 2 5 in dealing " i n a comprehensive and systematic manner with the problems faced by consumers of defective p r o d u c t s . " 4 2 6 The notion of consumers as opposed to non-consumers i s , however, open to c r i t i c i s m . The expression "non-consumer" covers an enormously diverse group of indivi d u a l s and le g a l e n t i t i e s ; from the sole trader to the multinational corporation. Many non-consumers s u f f e r from a l l the l i m i t a t i o n s in terms of experience, resources and bargaining power as the consumer, yet none of the l e g i s l a t i o n reviewed attempts to o f f e r s p e c i a l protection. It i s accepted that the small non-consumer w i l l have chosen to enter the business arena. Furthermore, to d i s t i n g u i s h d i f f e r e n t kinds of businesses would be a d i f f i c u l t , although not impossible, matter of d e f i n i t i o n . The response to t h i s problem has been greater in Canada than in B r i t a i n . In B r i t a i n , the Commissions, when making prov i s i o n a l A 7 7 recommendations for reform, assumed that the d e f i n i t i o n would remain that contained in the Sale of Goods Act 1979. In p r o v i s i o n a l l y recommending that the concept of "merchantable q u a l i t y " should be replaced by a new statutory d e f i n i t i o n designed to cover both consumer and commercial t r a n s a c t i o n s , 4 2 8 423. Romero, "The Consumer Products Warranties Act" (1978-79) 43 Sask. L. Rev. 81 and (1980-81) Sask. L. Rev. 296. At p.97, Prof. Romero, himself a member of the committee that drafted the Act, acknowledges t h i s . 424. S.S. 1976-77, c.15, s.2(d). 425. Ibid., s.2(e). 426. Romero, note 423 supra, at p.83. 427. Note 338 supra, at para. 1.19. - 134 -the Commissions avoid the problem. However, a completely new set of proposals on remedies available to the consumer are d i f f e r e n t 4 29 to those provided for non-consumers, regardless of t h e i r s i z e . In commenting on the Commissions' proposals, the Scott i s h 4 30 Consumer Council repeated i t s view that "a separate statement of consumer law" would be of benefit in demonstrating the "d i s t i n c t i v e n e s s of consumer law" and providing consumers with a statement of t h e i r rights which they might more e a s i l y understand. They urged the Commissions to state t h e i r position on t h i s . 4 3 1 4 3 2 In i t s Report on Sale of Goods, the Ontario Law Reform Commission referred frequently to i t s Report on Consumer Warranties and Guarantees, 4 3 3 noting whether or not the same 4 34 solution should apply in a l l s i t u a t i o n s . In the case of disclaimer clauses, for example, the Commission had recommended that, in consumer transactions, such clauses should be p r o h i b i t e d . 4 3 5 When i t considered disclaimer clauses, in the context of commercial sales, i t f e l t that such a 4 3 6 solutio n would be "too draconian." However, the Commission did accept that 428. Ibid., Prov. Recc.2. 429. Ibid., Prov. Reccs. 10-18. 430. Sc o t t i s h Consumer Council, supra note 399, at p.3 4 31. Ibid., at p.4. 432. Note 400 supra. 433. Note 405 supra. 434. Note 400 supra, at p.214, where the c r i t i c i s m of the test of merchantable q u a l i t y applied by the House of Lords in a p a r t i c u l a r case was accepted at "just as apt for non-consumer sales." 435. Note 405 supra, at p.49. 436. Note 400 supra, at p.228. - 135 -"This i s not to say that, in the commercial context, buyer and s e l l e r are always bargaining on equal terms, and that the buyer is always capable of protecting his own i n t e r e s t s . . . . The d i v i d i n g l i n e between a consumer sale and a commercial sale i s often a f i n e one, and many non-consumer buyers are not noticeably more sophisticated, or in a better bargaining p o s i t i o n than the average consumer." The solution, they believed, lay in the concept of unconscionability and accordingly, they recommended that disclaimer clauses should be permitted unless they were unconscionable. C l e a r l y , the f l e x i b i l i t y of t h i s approach appealed to the committee appointed by the Uniform Law Conference of Canada. The Uniform Sale of Goods Act provides that: "In determining whether the whole or any part of a contract of sale i s unconscionable, the court may consider, among other factors (a) the commercial s e t t i n g , purpose and e f f e c t of the contract and manner in which i t i s made, (b) the r e l a t i v e bargaining strength of the s e l l e r and the buyer, taking into account the a v a i l a b i l i t y of reasonable a l t e r n a t i v e sources of supply or demand, (c) the degree to which the natural e f f e c t of the transaction, or any party's conduct p r i o r to or at the time of the transaction, i s to cause or aid in causing another party to misunderstand the true nature of the transaction and of h i s r i g h t s and duties under the transact ion, (d) whether the party seeking r e l i e f knew or should reasonably have known of the existence and extent of the terms alleged to be unconscionable, 437. Ibid. - 136 -(e) the degree to which the contract requires a party to waive rights to which he would otherwise be e n t i t l e d , (f) in the case of a provision that purports to exclude or l i m i t a l i a b i l i t y that would otherwise attach to the party seeking to rely on i t , which party i s better able to safeguard himself against loss or damages. (g) the degree to which a party has taken advantage of the i n a b i l i t y of the other party to reasonably protect his interests because of his physical or mental i n f i r m i t y , i l l i t e r a c y , i n a b i l i t y to understand the language of the agreement, lack of education, lack of business knowledge or experience, f i n a n c i a l d i s t r e s s or other s i m i l a r factors, (h) gross d i s p a r i t y between the price of the goods and the price at which s i m i l a r goods could be r e a d i l y sold or purchased by p a r t i e s in s i m i l a r circumstances, and (i) knowledge by a party, when entering into the contract, that the other party w i l l be s u b s t a n t i a l l y deprived of the benefits reasonably anticipated by that other party under the transaction." Any agreement by the parties to waive the applicati o n of 4 3 9 t h i s provision i s i n e f f e c t i v e . Exclusion, l i m i t a t i o n or modification of any warranty insofar as i t a f f e c t s the right to recover in respect of personal injury i s deemed prima fa c i e to be 4 4 0 unconscionable. In addition, the Act gives the Court the right to raise t h i s 441 issue of i t s own motion. This provision was rejected by both 438. Uniform Sale of Goods Act, Approved by the Uniform Law Conference of Canada, August 1982, S. 31(2). 439. Ibid, s. 31(4). 440. Ibid. s.48(2). 4 41. Ibid. s.31(3). - 137 -the Manitoba L.R.C. 4 4 2 and the L.L.R.R. in A l b e r t a . 4 4 3 The l a t t e r body described such a power as a "forensic s u r p r i s e " 4 4 4 and saw the p o s s i b i l i t y that i t might "degenerate into the sort of u n a n l y t i c a l incantation that the system of guidelines in ts.31(2)] i s designed to a v e r t . " 4 4 5 While these c r i t i c i s m s have some force, i t could be argued that such a power, i f used with caution by the Court, would have provided a useful safety net. Nonetheless, i f the scheme of unconscionability provided for in the Uniform Sale of Goods Act i s f i n a l l y adopted, i t i s submitted that the courts w i l l have the opportunity to acknowledge the very r e a l differences within the sphere of "non-consumer" transactions and, to t h i s extent, the Canadian proposals are to be preferred to those put forward in B r i t a i n . Conditions and Warranties The Sale of Goods A c t 4 4 6 c l a s s i f i e s the implied obligations in the contract as "conditions" or "warranties." Not only has there been considerable debate as to the meaning of these t e r m s , 4 4 7 the very c l a s s i f i c a t i o n of terms as one or the other has been doubted. 4 4 8 In examining t h i s c l a s s i f i c a t i o n and the remedies flowing from i t , the Law Commissions, in B r i t a i n , concluded that i t was 442. Note 400 supra, App. B., Am. 8. 443. Note 338 supra, Recc.10. 444. Ibid., at p.66. 445. Id. 446. 1979, s. 11(3). 447. See supra p.81. 4 48. Cenave N.J, v. Bremer Handelsgesellschaft m.b.H. [1976] Q.B. 44. - 138 -"inappropriate and l i a b l e to produce unjust r e s u l t s . " 4 4 9 Indeed, they went as far as saying, "If the Sale of Goods did not c l a s s i f y the implied terms as conditions of the contract, a court today would not so c l a s s i f y them in the absence of a c l e a r i n d i c a t i o n that t h i s was what the parties to the p a r t i c u l a r contract i n t e n d e d . " 4 5 0 They reached t h e i r conclusions for a number of reasons. Acknowledging that the breach of an implied term might, "vary from the t r i v i a l to one which renders the goods wholly 4 51 useless," they found the term "condition" and the r e s u l t i n g automatic right of r e j e c t i o n , too i n f l e x i b l e . This, they stated, might r e s u l t , where the defect was of a minor nature, in a court holding that there was no breach of a p a r t i c u l a r implied term, in order to avoid the remedy of r e j e c t i o n . 4 5 2 They supported t h e i r concern here with a recent c a s e , 4 5 3 where the court's finding that there had been no breach of the implied term, could be at t r i b u t e d to a reluctance to allow r e j e c t i o n for such minor defects. The Commissions p r o v i s i o n a l l y recommend that the terms as to the q u a l i t y of goods should no longer be c l a s s i f i e d as conditions. They rejected the notion of using "term" to cover 4 54 a l l warranties and conditions and preferred, instead, that the consequences of the breach of each implied term should be 4 55 detailed expressly. 449. Note 338 supra, at para. 2.37. 450. Ibid., at para. 2.30. 451. Ibi d . , at para. 2.29. 452. Ibi d . , at para. 2.31. 453. M i l l a r s of Falkirk v. Turpie 1967 S.L.T. (Notes) 66. 454. Ibid., at para. 4.30. 455. Id. For a discussion of the remedies for breach of the - 139 -The Ontario Law Reform Commission expressed the same concerns over the d i s t i n c t i o n between conditions and warranties. In the context of consumer transactions, i t concluded that, "the d i s t i n c t i o n between warranties and conditions be abolished with respect to consumer sales and be replaced by the single concept of warranty." This recommendation has found support and the Saskatchewan ^ CO Consumer Product Warranties Act, which c l a s s i f i e s a l l such obligations "as warranties." They concluded that the d i s t i n c t i o n was equally inappropriate in the context of commercial 4 59 sales. Consequently, they proposed the single c l a s s i f i c a t i o n of the terms as "warranties." This approach i s repeated in the Uniform Sale of Goods Act, where "warranty" i s used throughout. 4 6 0  Caveat Emptor As a c o d i f i c a t i o n of the then English law, the Sale of Goods Act 1893 restated the p r i n c i p l e of caveat emptor 4 6 1 before d e t a i l i n g exceptions to i t . In view of the development of the "exceptions" to the p r i n c i p l e and of the current approach to consumer transactions, the continued place of such a notion must be guestioned in a modern context. implied terms, see pp.161-170 i n f r a . 456. Note 405 supra, at p.31. 457. Id. 458. Note 407 supra. 459. Note 400, supra at p.147. 460. See, for example, Uniform Sale of Goods Act, ss.44 and 45. 461. S. 14. - 140 -Not only did the Ontario Law Reform Commission f e e l that the p r i n c i p l e was a source of confusion to the layman and 4 6 2 inappropriate in the consumer sphere, i t recommended that i t should be deleted in statutory provisions, in the commercial s p h e r e . 4 6 3 This approach was followed in the Uniform Sale of Goods Act, where the s e l l e r ' s obligations are expressed in po s i t i v e t e r m s 4 6 4 and no mention i s made of "caveat emptor." In B r i t a i n , the Law Commission did not consider t h i s matter and consequently, no change i s suggested. This is not only unfortunate but i s sur p r i s i n g in view of the fact that the p r i n c i p l e of caveat emptor was unknown in Scotland before 1856. 4 6 5 Under the heading "General Policy Considerations," they did say, " i n such an important area of commercial and consumer law, the opportunity should be taken to bring c l o s e r together the laws of the. two j u r i s d i c t i o n s . " 4 6 6 Perhaps any emphasis on the imposition of an English legal doctrine upon Scotland would have been inappropriate in such a s e t t i n g . C e r t a i n l y , i f the Commissions' proposals are accepted, the implied terms w i l l be extensive and det a i l e d and, in pra c t i c e , i t w i l l make l i t t l e difference that caveat emptor remains in the background. Nonetheless, as a r e f l e c t i o n of modern conditions, the removal of the statement as a p r i n c i p l e would have been preferable. 462. Note 405, supra at pp.31-33. 463. Note 400, supra at p.207. 464. See, e.g., ss.44 and 45. - 141 -Merchant and Non-Merchant S e l l e r s The provisions as to q u a l i t y and f i t n e s s apply, in 4 6 7 Canada, where the s e l l e r i s one who "deals in goods of that d e s c r i p t i o n . " The Act in B r i t a i n has been amended to require only A ft R that the s e l l e r , " s e l l s goods in the course of a business." The Ontario Law Reform Commission noted the intended r e s u l t 4 6 9 of t h i s and, viewing the consequences for the s e l l e r as too harsh, recommended that Canadian approach remain s u b s t a n t i a l l y unchanged. 4 7 0 The Uniform Sale of Goods Act r e f l e c t s t h i s 4 7 1 and provides that, for the provision to apply, the s e l l e r must be one who, "deals in goods of that kind." In B r i t a i n , the Commissions did not consider the extension of the implied terms to private s e l l e r s . Again, t h i s i s sur p r i s i n g in view of the fact that, p r i o r to 1856, the implied warranty applied to a l l sales, regardless of the character of the s e l l e r . The Ontario Law Reform Commission considered the idea 472 and rejected i t on the ground that the threefold j u s t i f i c a t i o n f o r the r e s t r i c t i o n ; "namely, that a merchant s e l l e r holds himself out as possessing s p e c i a l s k i l l and knowledge with respect to the goods; that he s e l l s for p r o f i t and, that he i s in a better position to absorb, or to pass on, any loss r e s u l t i n g from undiscoyerable defects than the average b u y e r ; " 4 7 J 465. Note 338 supra, at pp.54-55. 466. Ibid. , at para. 3.4. 467. Note 406 supra, s.52. 468. Sale of Goods Act 1979, S.14(2) and (3). 469. See supra discussion at p.87. 470. Note 400 supra, at p.209. 471. Note 438, supra, ss. 44 and 45. 472. Note 400 supra, at p.207. - 142 -was s u f f i c i e n t l y persuasive. Nor were they i n c l i n e d to require by statute that such a s e l l e r should be obliged to disclose known d e f e c t s . 4 7 4 While i t i s accepted that the private s e l l e r should not be subject to a l l the obligations of a commercial s e l l e r , some less e r standard of disclosure could be imposed by statute. It i s submitted that the appropriate l e v e l for thi s should relate to the s e l l e r ' s actual knowledge of defects. There i s no reason, in p r i n c i p l e , why a s e l l e r should be protected where he f a i l s to mention that, e.g., the f u e l tank in a car i s ruptured and that f u e l leaks out, i f he knows of t h i s . As the Ontario Law Reform Commission pointed out, t h i s i s a d i f f i c u l t area to regulate by s t a t u t e . 4 7 5 However, some statutory of acknowledgment would have two b e n e f i c i a l r e s u l t s . F i r s t , in the cases where the s e l l e r ' s knowledge could be demonstrated, the aggrieved buyer would have a remedy. Secondly, i f the provision were s u f f i c i e n t l y p u b l i c i s e d , i t might reasonably be expected to make private s e l l e r s d i s c l o s e defects, in order to protect themselves. (C) The Quality of the Goods and the Implied Term 4 7 f In B r i t a i n , i n 1973, the Law Commissions' recommendation 4 7 7 that the implied warranty of merchantable qu a l i t y should appear before the implied warranty of f i t n e s s for purpose was implemented. This new format was repeated in the 1979 A c t . 4 7 8 473. Id. 474. Id. 475. Note 400 supra, at p.207, - 143 -The Ontario Law Reform Commission recommended the same change in t h e i r proposals. This approach was followed in the Uniform Sale of Goods where the implied warranty of merchantable qual i t y precedes the implied warranty of f i t n e s s for purpose. The change r e f l e c t s the wider ap p l i c a t i o n of the provision on merchantable q u a l i t y and the b e l i e f that the new, refined d e f i n i t i o n w i l l r e s u l t in less reliance on f i t n e s s for purpose. Problems Surrounding the Implied Warranties of Quality and  Fitness Before the problems highlighted by the law reform bodies in r e l a t i o n to the e x i s t i n g d e f i n i t i o n s of merchantable q u a l i t y and f i t n e s s for purpose are examined and the solutions assessed, i t is appropriate to consider three s p e c i f i c problems common to both warranties. The f i r s t i s the extent to which used goods are covered by the warranties. The second i s the extent to which d u r a b i l i t y i s implied by e i t h e r or both of the warranties. The t h i r d i s whether or not any spare parts or s e r v i c i n g f a c i l i t y i s or should be part of the warranty. It w i l l be r e c a l l e d , from the discussion in the previous 4 7 9 chapter, that, in B r i t a i n , i t seems cle a r that the implied warranties do extend to used goods and i t i s probable, that t h i s approach would be taken in Canada. In B r i t a i n , the Commissions c l e a r l y t h r o u g h t 4 8 0 that used 476. Supply of Goods (Implied Terms) Act 1973. 477. Law Com. No. 24; Scot. Law Comm. No. 12 (1969). 478. Sale of Goods Act, 1969, s.14. 479. See supra pp.102-104. 480. Note 338 supra, at para. 2.17, where the Commmissions refer, in passing, to second-hand goods. - 144 -goods were already covered by the implied warranties. Consequently, they make no express reference to them in t h e i r recommendations. It i s to be hoped that, in the l i g h t of the discussion of t h e i r p r o v i s i o n a l recommendations, clear reference i s made to the inclus i o n of used goods. The Ontario Law Reform Commission f e l t that, while the Commissions in B r i t a i n were probably correct in th e i r assessment, & ft 1 a revised statute should make the position e x p l i c i t . Accordingly, in the provision r e l a t i n g to merchantable q u a l i t y , 4 8 9 they include goods "whether new or used." There i s no r e p e t i t i o n of t h i s phrase, however, in the provision on f i t n e s s 4 8 3 for purpose. While the q u a l i t y or f i t n e s s of used goods cannot be expected to be the same as that of new goods, there seems no reason why, e.g., a used car should not be required to s a t i s f y the f i t n e s s t e s t . The Uniform Sale of Goods A c t 4 8 4 repeats the d i s t i n c t i o n . While the cl e a r i n c l u s i o n of used goods within the scope of the implied warranty of merchantable q u a l i t y i s to be welcomed, the f a i l u r e to do so, in the case of the warranty of f i t n e s s for purpose, i s to be regretted. The extent to which the e x i s t i n g provisions include an element of d u r a b i l i t y has been discussed in the previous c h a p t e r . 4 8 5 While the Commissions 4 8 6 in B r i t a i n and the Ontario 481. Note 400, supra at pp.214-215. 482. Draft Act, s.5(13)(a). 483. Ibid, at s.5.14(1). 484. ss. 44 and 45. 485. See supra pp.104 and 121. 486. Note 338 supra ; at paras. 2.14 and 2.15. - 145 -Law Reform Commission believed d u r a b i l i t y to be an inherent part of "merchantable q u a l i t y " they f e l t there was a need to c l a r i f y t h i s . In t h e i r p r o v i s i o n a l proposals, the Commissions in B r i t a i n s p e c i f i c a l l y mention " d u r a b i l i t y " as one of the facts in the new 4 8 8 d e f i n i t i o n of merchantable q u a l i t y . While t h i s i s a welcome c l a r i f i c a t i o n , i t i s to be hoped that what i s meant by " d u r a b i l i t y " w i l l be spelled out e x p l i c i t l y in any future l e g i s l a t i o n . In t h e i r comments on the Commissions' proposals, the Sc o t t i s h Consumer Council suggested that the Director General of F a i r Trading should be empowered to require manufacturers of p a r t i c u l a r goods to publish statements of l i f e expectancy of 4 8 9 those goods. Furthermore, they suggested that any statement as to l i f e expectancy made to the buyer p r i o r to purchase should be incorporated in the contract of s a l e . 4 9 0 These suggestions could operate in addition to the basic implied term on d u r a b i l i t y and, as such, would provide useful a d d i t i o n a l protection to buyers. In Canada, the Draft Uniform Sale of Goods Act provides, as one of the elaborations on the basic d e f i n i t i o n of merchantable q u a l i t y , that the goods, " w i l l remain f i t , perform s a t i s f a c t o r i l y and continue to be of such q u a l i t y and in such condition for any length of time that i s 487. Note 400 supra, at pp.215 and 216. 488. Note 338 supra, at Prov. Recc. 6. 489. Note 399 supra, at para. 4.24. 490. Ibid, at para. 11(1). - 146 -reasonable having regard to a l l the circumstances." Although, s i m i l a r to the provision suggested by the Ontario Law 492 Reform Commission, the provision in the Draft Act i s more e x p l i c i t . In addition, the Draft Act extends the implied warranty of f i t n e s s for purpose, in providing that, "the goods w i l l so remain for any length of time that i s reasonable having regard to a l l the circumstances." While t h i s was not part of the Ontario Law Reform Commission's 4 9 4 proposals, i t has been received without objection in Alberta and Manitoba. It i s to be regretted that no such extension is proposed by the Commissions in B r i t a i n . While d u r a b i l i t y may be an inherent part of the warranty, c l a r i f i c a t i o n of the matter would be welcome. The question of spare parts and s e r v i c i n g / r e p a i r f a c i l i t i e s 4 9 5 was considered by the Commissions in B r i t a i n and the Ontario Law Reform Commission. 4 9 6 It i s submitted that t h i s i s often part of the same issue as d u r a b i l i t y . One of the concerns of any buyer, p a r t i c u l a r l y where the item purchased i s mechanical (e.g., vehicles, domestic appliances, i n d u s t r i a l plant) i s the length of time for which i t can be used. While t h i s may relate to the item 491. s.44(b)(iv). 492. Note 428 supra, s.s.13(1)(b)(vi). 493. S.45(l). 494. Note 428 supra, s.5.14(1). 495. Note 338 supra, at para.2.17. 496. Note 400 supra, at pp.216 and 217. - 147 -as a whole, and so be a general question of d u r a b i l i t y , i t w i l l often include the p o s s i b i l i t y that a p a r t i c u l a r part of the item w i l l require replacement before the rest of the parts cease to operate. In B r i t a i n , the Commissions rejected the idea of creating any obl i g a t i o n on the s e l l e r or supplier to maintain stocks of spare parts or to provide s e r v i c i n g f a c i l i t i e s . In the words of the Commissions: "Hardly any support for [the creation of such an obligation] was received on consultation and i t was thought that i f such an ob l i g a t i o n applied to a l l kinds of contract involving a l l kinds of goods, i t could, in many cases, impose hardship on the r e t a i l e r , p a r t i c u l a r l y the small shop-keeper." Their conclusion i s to be regretted. The opposition of the merchant-seller i s neither s u r p r i s i n g , nor the only factor to be considered. The d i f f i c u l t y of applying the ob l i g a t i o n in a l l s i t u a t i o n s i s not insurmountable as the provision of the Uniform Sale of Goods Act, discussed below, indicates. There, the provision simply raises a presumption and i s confined to new goods. It i s to be hoped that, a f t e r consultation, the Commissions w i l l reassess t h e i r p o s i t i o n . In i t s consideration of the question, the Ontario Law Reform Commission supported the inc l u s i o n of a requirement that spare parts and repair f a c i l i t i e s should remain avai l a b l e for a reasonable period of time. In t h e i r view, "Given the fact that complex durable products require spare parts and repairs during t h e i r l i f e t i m e , the a v a i l a b i l i t y of spare parts and repair f a c i l i t i e s does seem to us to come 497. Note 338 supra, para.2.17. - 148 -within the expanded concept of a modern warranty of merchantability." The Draft Uniform Sale of Goods Act, which follows the Ontario Law Reform Commission's proposal, on t h i s occasion, provides that, "In the case of new goods, unless the circumstances indicate otherwise, that spare parts and repair f a c i l i t i e s , i f relevant, w i l l be available for a reasonable period of t i m e . " 4 y y While t h i s provision was accepted without objection in Alberta, the Law Reform Commission in Manitoba proposed an amendment. They proposed that the requirement should be only that "the s e l l e r w i l l make reasonable e f f o r t s to ensure that spare parts and repair f a c i l i t i e s , i f relevant, w i l l be a v a i l a b l e for a reasonable period of time." While t h i s may appear to be a lesser requirement, the res u l t may frequently be s i m i l a r under both provisions. Since adjudication of the question w i l l only a r i s e a f t e r spare parts or repair f a c i l i t i e s have not been provided, the s e l l e r ' s "reasonable e f f o r t s " to ensure t h e i r provision w i l l at least be one of the circumstances to be considered. Insofar as the provision gives s e l l e r s p r i o r warning of what i s expected of them, i t i s a valuable addition. 498. Note 400 supra, at p.217. 499. s 5 . 1 3 ( l ) ( c ) . 500. Note 415 supra, App.B., Ann.12. - 149 -Merchantable Quality In i t s o r i g i n a l form, in B r i t a i n , and as i t has remained in Canada, the only statutory clue as to what was meant by "merchantable q u a l i t y " was that t h i s included the "state or condition" 5 0" 1" of the goods. Despite a considerable body of j u d i c i a l decision and academic debate, a degree of uncertainty remained and the Ontario Law Reform Commission f e l t that the 5 0 2 concept was unsatisfactory in i t s current statutory form. In B r i t a i n , a d e f i n i t i o n was introduced in 1973, in the following form: "Goods of any kind are of merchantable q u a l i t y ... i f they are as f i t for the purpose or purposes for which goods of that kind are commonly bought as i t i s reasonable to expect having regard to any description applied to them, the price ( i f relevant) and a l l other relevant circumstances." Despite t h i s , the Law Commissions f e l t 5 0 4 that the concept and i t s d e f i n i t i o n required further scrutiny. The concept of "merchantable" q u a l i t y was found to be d e f i c i e n t in a number of respects. F i r s t , the concept i t s e l f , being firmly rooted in 18th century commercial practices i s dated in a modern sales context 5 0 5 and p a r t i c u l a r l y so with respect to consumer transactions. Secondly, i t has been the subject of such extensive and varied R n ft i n t e r p r e t a t i o n that i t s meaning i s unclear. T h i r d l y , i t 501. R.S.B.C. 1979, c.370, s.1. 502,. Note 400 supra, at pp.210-13. 503. Sale of Goods Act 1979, s. 14(6). 504. Note 338 supra, at para. 1.18. 505. Note 338 supra, at paras. 2.6 and 2.7. 506. Ibid., at para. 2.3; note 600 supra, at p.210. - 150 -r e l i e s excessively on the question of the purpose for which goods 507 were bought. Fourthly, t h i s reliance on purpose leads to uncertainty on the question of whether or not minor defects can 50 8 amount to a breach of the implied term. It should be noted that the Ontario Law Reform Commission did not accept t h i s c r i t i c i s m , s t a t i n g that i t , "places an unjustifyably narrow construction on the meaning of ' f i t n e s s , ' and also ignores the statutory d e f i n i t i o n , which i s not r e s t r i c t e d to functional c h a r a c t e r i s t i c s . " While they may be correct in t h i s , i t i s nonetheless possible that a court, in the absence of a c l e a r i n d i c a t i o n to the contrary, might adopt such a construction. Having considered the weaknesses in the e x i s t i n g operation of the concept of "merchantable q u a l i t y , " the Commissions in B r i t a i n came to the p r o v i s i o n a l conclusion that one word was not adequate in q u a l i f y i n g the standard of q u a l i t y to be implied in instances of sale of g o o d s . 5 1 0 In addition, they f e l t that the word "merchantable" was s u f f i c i e n t l y burdened with past i n t e r p r e t a t i o n , which would remain with i t in the future, that i t should be d e l e t e d . 5 1 1 Instead, they suggested that the implied term should, 507. Note 338 supra, at paras. 2.10-2.12. 508. Ibid., at para. 2.13. 509. Note 400 supra, at p.212. 510. Note 338 supra, at para. 4.3. 511. Ibid., at Prov. Recc. 4. - 151 -"be formulated as a f l e x i b l e standard coupled with a cle a r statement of ce r t a i n important elements included within the area of qu a l i t y (e.g. freedom from minor defects, d u r a b i l i t y and safety) and with a l i s t of the most important factors (e.g. description and price) to which regard should normally be had in determining the standard to be expected in any p a r t i c u l a r case." The "elements" and "factors" w i l l be discussed below. In developing the " f l e x i b l e standard," the Commissions considered . • . . 513 three p o s s i b i l i t i e s . The f i r s t , was to provide a q u a l i t a t i v e standard, e.g., "good quality." 5"'" 4 While t h i s would be appropriate in many cases, they f e l t that i t might lack the necessary f l e x i b i l i t y . The second p o s s i b i l i t y was based on some notion of a c c e p t a b i l i t y , 515 e.g., "acceptable q u a l i t y . " This, however, raises the question, "Acceptable to whom?" and, i f the answer i s not to be the actual buyer, must involve the complex p o s s i b i l i t y of the "reasonable buyer." T h i r d l y , they considered a neutral standard, e.g., "proper quality." 5"'" 6 This may appear, at f i r s t glance, to be so vague that i t i s meaningless, but i t would be f l e x i b l e and, coupled with the "elements" and "fact o r s , " would meet i n d i v i d u a l cases. While accepting that there were d i f f i c u l t i e s inherent in the concept of "merchantable q u a l i t y , " the Ontario Law Reform Commission was not prepared to abandon i t . Instead, i t 512. Ibid. 513. Ibid. t 514. Ibid. 515. Ibid. r 516. Ibid. I at para. 4.7. at paras. 4.8-4.12. at para. 4.8. at para. 4.10. at para. 4.12. - 152 -recommended adoption of a d e f i n i t i o n s i m i l a r to that in the U.K. Sale of Goods Act with some amendment, coupled with s p e c i f i c c r i t e r i a drawn from the Uniform Commercial Code. Their amendment of the d e f i n i t i o n takes account of goods which may be put to a number of uses and makes clea r that " q u a l i t y " is not r e s t r i c t e d to functional c h a r a c t e r i s t i c s . Thus, they suggested that "merchantable q u a l i t y " mean: "that the goods, whether new or used, are as f i t f or the one or more purposes for which goods of that kind are commonly bought and are of such q u a l i t y and in such condition as i t i s reasonable to expect having regard to any de s c r i p t i o n applied to them, the price and a l l other relevant circumstances." While the Draft Uniform Sale of Goods Act retains many of the features of t h i s d e f i n i t i o n , there are c e r t a i n differences. It provides that "merchantable q u a l i t y " should mean, "(a) that the goods, whether new or used, are (i) as f i t for the one or more purposes for which goods of that kind are commonly bought or used, ( i i ) of such q u a l i t y , and in such condition, as i s reasonable to expect having regard to any description applied to them, the price and a l l other relevant circumstances." It then goes on to provide a l i s t of add i t i o n a l c r i t e r i a for assessing merchantability. The c r i t e r i a w i l l be considered below. F i r s t , i t i s important to note the changes made to the Ontario Law Reform Commission's proposal, by the Draft Uniform 517. Uniform Commercial Code, 2-314(2). 518. Note 136 supra, at p.212. 519. s 4 4 ( l ) . - 153 -Act. The reorganized format, in providing a more readily i n t e l l i g i b l e d e f i n i t i o n , i s an improvement. In addition, in discussing the purpose for which the goods should be f i t , the Draft Act talks of the purpose for which the goods are "commonly bought or used" (emphasis added). This can only c l a r i f y the po s i t i o n , p a r t i c u l a r l y for the layman. At f i r s t glance, i t may appear that, by retaining the term "merchantable q u a l i t y , " what i s being accepted i n Canada, i s what was rejected in B r i t a i n . However, when the B r i t i s h proposal i s viewed, in the l i g h t of the "important elements and factors," and compared with the Canadian proposal and i t s "additional c r i t e r i a , " i t becomes c l e a r that the o v e r a l l r e s u l t i s s i m i l a r , in many respects. In B r i t a i n , i t i s proposed that the new d e f i n i t i o n should make reference to the following f a c t o r s : "(a) the f i t n e s s of the goods for the purpose or purposes for which goods of that kind are commonly bought (b) t h e i r state or condition (c) t h e i r appearance, f i n i s h and freedom from minor defects (d) t h e i r s u i t a b i l i t y f or immediate use (e) t h e i r d u r a b i l i t y (f) t h e i r safety (g) any description applied to them (h) t h e i r price ( i f r e l e v a n t ) . " 5 2 0 The Draft Uniform Sale of Goods Act provides, in addition to the d e f i n i t i o n of merchantable q u a l i t y , that the goods, "( i) are goods that pass without objection in the trade under the contract d e s c r i p t i o n , 520. Note 338 supra, Prov. Recc. 6. These would provide the test for what i s good/acceptable/proper q u a l i t y (see supra notes 514, to 516). - 154 -( i i ) in the case of fungible goods, are of f a i r or average q u a l i t y within the descr i p t i o n , ( i i i ) within the variations permitted by the agreement, are of the same kind, q u a l i t y and quantity within each unit and among a l l units involved, ( iv) are adequately contained, packaged and labe l l e d as the nature of the goods or the agreement required, and ( v) w i l l remain f i t , perform s a t i s f a c t o r i l y and continue to be of such q u a l i t y and in such condition for any length of time that i s reasonable having regard to a l l the circumstances." Here, the only substantial difference between the Draft Act and the Ontario Law Reform Commission's proposals i s that the l a t t e r also required that the goods, "conform to the representations or promises made on the container or la b e l or other ' 5 2 2 material, i f any accompanying the goods." The reason that t h i s provision was deleted probably l i e s in the fact that such statements or promises w i l l have been provided by the manufacturer, who w i l l frequently not be the s e l l e r in the f i n a l contract. It might be placing an undue burden on the s e l l e r to require him to investigate the claims made on the packaging of every product he s e l l s . Furthermore, these representations may be made in l i t e r a t u r e which is inside a sealed package, and therefore beyond the reach of the s e l l e r . In any event, should the manufacturer's representations have been made negligently or fraudulently, the ultimate buyer may obtain 521. s . 4 4 ( l ) ( a ) . 522. Note 428 supra, at s.5.13(1)(b)(v). - 155 -redress through an action in t o r t . When the o v e r a l l proposals i n B r i t a i n and Canada are compared, i t becomes apparent that there are substantial s i m i l a r i t i e s . The following are mentioned s p e c i f i c a l l y as being relevant under the B r i t i s h and Canadian proposals; the purposes for which the goods are commonly bought, the description applied to them, the price and t h e i r condition. While some matters are detailed in one set of provisions and not in the other, they can usually be included under some aspect of the l a t t e r ' s more general provisions. Thus, while "appearance, f i n i s h and freedom from minor defects" appear in the B r i t i s h proposals and are not i n d i v i d u a l l y mentioned in the Uniform Sale of Goods Act, they would be covered by the requirement that they should be "of such g u a l i t y and in such condition" as i s reasonable to expect. The differences between the proposals, in B r i t a i n and Canada, in respect of used goods, d u r a b i l i t y and the provision of spare parts and s e r v i c i n g / r e p a i r f a c i l i t i e s have been 5 2 3 discussed. Defects Outwith the Scope of the Warranty Regarding defects which are outwith the scope of the implied term, the Law Commissions in B r i t a i n p r o v i s i o n a l l y recommended 5 2 4 that no change in the e x i s t i n g provision was required and there would continue to be no implied warranty, 523. See supra pp.144-149. 524. Note 338 supra, at para. 4.24. - 156 -"(a) as regards defects s p e c i f i c a l l y drawn to the buyer's attention before the contract i s made; or (b) i f the buyer examines the goods before the contract i s made, as regards defects which that examination ought to reveal." The Ontario Law Reform Commission considered the d i f f i c u l t y that the basis for the defects to be excluded from the implied term i s the buyer's "actual" examination, not a "thorough" or "reason-able" examination. Despite the p o s s i b i l i t y that t h i s could be p r e j u d i c i a l to the s e l l e r , they recommended no change, 5 2 6 believing that the general requirement of good f a i t h should cover the s i t u a t i o n where the buyer chose to make a cursory examina-t i o n . This general approach was accepted in the Uniform Sale of Goods Act, as was the acceptance of a provision dealing with defects drawn to the buyer's attention p r i o r to sale. The Draft Uniform Act provides that the implied warranty of merchantable q u a l i t y does not apply, "(a) to defects s p e c i f i c a l l y drawn to the buyer's attention before the contract waS made, (b) i f the buyer examined the goods before the contract was made, to any defect that the examination should have revealed." 52 8 While these exceptions were accepted i n Alberta, the Manitoba Law Reform Commission recommended amendment of part (a) above to: 525. Sale of Goods Act 1979, s. 14(2). 526. Note 136 supra, at pp.218-219. 527. s.44(3). 528. Note 414 supra. - 157 -"defects known to the buyer before the contract was made." This imposes a s l i g h t l y higher standard of communication on the s e l l e r and also excludes defects known to the buyer, regardless of how that knowledge was acquired. The implied term on the q u a l i t y of goods sold proposed by the Commissions in B r i t a i n and enacted in the Uniform Sale of Goods Act i n Canada provides a more comprehensive guide to the p a r t i e s to a contract and to the courts. There w i l l s t i l l be a need for j u d i c i a l i n t e r p r e t a t i o n , but t h i s i s e s s e n t i a l i f the terms are to have the f l e x i b i l i t y to enable a p p l i c a t i o n over the great variety of goods sold. (D) Fitness f o r Purpose In B r i t a i n the implied term dealing with the f i t n e s s of C O Q goods for a p a r t i c u l a r purpose was amended in 1973, as a r e s u l t of recommendations made by the Law Commissions. In reviewing the new l e g i s l a t i o n , which provides, "Where the s e l l e r s e l l s goods in the course of a business and the buyer, expressly or by implication, makes known -(a) to the s e l l e r , or (b) where the purchase price or part of i t i s payable by instalments and the goods were previously sold by a credit-broker to the s e l l e r , to that credit-broker, any p a r t i c u l a r purpose for which the goods are being bought, there i s an implied condition that the goods supplied under the contract are reasonably f i t for that purpose, whether or 5 29. Note 415 supra, at Am. 12. 530. Supply of Goods (Implied Terms) Act 1973, implementing Law Com. No. 24; Scot. Law Com. No. 12 (1969). - 158 -not that i s a purpose for which such goods are commonly supplied, except where the circum-stances show that the buyer does not r e l y , or that i t i s unreasonable for him to r e l y , on the s k i l l or judgment of the s e l l e r or c r e d i t -broker ," 5 3 1 the Commissions noted that they were "unaware of any c r i t i c i s m s S3 2 directed against" i t and therefore proposed that i t remain 5 3 3 s u b s t a n t i a l l y unaltered. The amendment they suggested, r e f l e c t i n g t h e i r general scheme on implied terms and the remedies for breach thereof, was that the term no longer be designated a " c o n d i t i o n . " 5 3 4 The Ontario Law Reform Commission considered the e x i s t i n g 5 3 5 provision, J J based on the o r i g i n a l U.K. l e g i s l a t i o n , in the l i g h t of subsequent developments in B r i t a i n and concluded that c o c amendment was required. J a They proposed that the new U.K. provision should be adopted in so far as i t removed the reference to patent or trade name, s h i f t e d the onus of proof concerning reliance on s k i l l and judgment and made clear that, " p a r t i c u l a r purpose," covered a usual purpose as well as an unusual 5 3 7 purpose. J In taking an approach consistent with that taken in r e l a t i o n to the implied term on q u a l i t y of goods, they rejected the extension of the term to a l l s e l l e r s " i n the course of a business" and preferred the r e s t r i c t i o n of the term to the s e l l e r 531. Note 525 supra, s. 14(3). 532. Note 338 supra, at para. 2.20. 533. Id. 534. Ibid., Prov. Recc. 8. 535. See supra p.87. 536. Note 400 supra, at pp.120-122. 537. The e f f e c t of these amendments, in B r i t a i n , i s discussed in the previous chapter. - 159 -who "deals in goods of that kind." Their proposed provision was in the following terms: "(1) Where the buyer, expressly or impliedly, makes known to the s e l l e r any p a r t i c u l a r purpose for which he i s buying the goods and the s e l l e r deals in goods of that kind, there i s an implied warranty that the goods supplied under the contract are reasonably f i t for that purpose, whether or not that i s a purpose for which goods of that kind are commonly supplied. (2) The implied warranty mentioned in subsection 1 does not apply where the circumstances show that the buyer does not rely or that i t i s unreasonable for him to r e l y on the s e l l e r ' s s k i l l or judgment." In the Draft Uniform Sale of Goods Act, the implied warranty i s d i f f e r e n t in a number of respects. It provides, "(1) Where the buyer, expressly or impliedly, makes known to the s e l l e r any p a r t i c u l a r purpose for which he i s buying the goods and the s e l l e r deals in goods of that kind, there is an implied warranty that the goods supplied under the contract are reasonably f i t for that purpose, whether or not i t i s a purpose for which goodes of that kind are commonly supplied, and that the goods w i l l so remain for any length of time that i s reasonable having regard to a l l the circumstances. (2) The implied warranty mentioned in subsection (1) does not apply where the circumstances show that the buyer does not r e l y , or that i t i s unreasonable for him to r e l y , on the s e l l e r to supply goods reasonably f i t for the buyer's p a r t i c u l a r purpose." The most important difference i s that the Draft Act provides for an element of d u r a b i l i t y in the notion of f i t n e s s for purpose. This aspect of the provision was discussed a b o v e 5 4 0 and 538. Note 428 supra, s.5.14. 539. s.45. 540. See supra p.147. - 160 -would be a welcome improvement on the B r i t i s h proposals. The language used in the Draft Act to explain s i t u a t i o n s where the implied warranty w i l l not apply, i s more precise and, i t i s submitted, would be more readi l y understood by the layman, than the provision proposed by the Ontario Law Reform Commission. The Commissions in B r i t a i n 5 4 1 and the Ontario Law Reform Commission 5 4 2 were aware that the implied terms dealing with f i t n e s s for purpose and the q u a l i t y of the goods might overlap, but both agreed that each term should be retained. It i s submitted that they were quite correct in t h i s approach. While the implied term on q u a l i t y provides a broad spectrum of protection for the buyer, the implied term on f i t n e s s for purpose w i l l often provide separate, additional protection. (E) Remedies f o r Breach of the Implied Terms of Quality and  Fitness f o r Purpose To consider the rights of a p a r t i c u l a r party, in a given s i t u a t i o n , t e l l s only part of the story. In order to assess the o v e r a l l s i t u a t i o n in which that party finds himself, one must also consider the remedies available to him when those rights are not observed. This i s as true in r e l a t i o n to the rights of the buyer in a sale of goods contract as i t is elsewhere. It i s , therefore, appropriate that the remedies proposed by the various law reform bodies should now be outlined. The Commissions in B r i t a i n and the Ontario Law Reform Commission devoted considerable e f f o r t s to the area of remedies, 541. Note 338 supra, at para. 2.20. 542. Note 400 supra, at p.207. - 161 -as did the drafters of the Uniform Sale of Goods Act and those who commented upon i t . . 543 The Commission in B r i t a i n and the O.R.L.C. f e l t that the d i s t i n c t i o n between conditions and warranties and the r e s u l t i n g impact on the remedies avail a b l e was undesirable. The O.R.L.C. stated the pos i t i o n thus, "The a p r i o r i c l a s s i f i c a t i o n of contractual terms in the Sale of Goods Act has come under increasing c r i t i c i s m . The reason for t h i s c r i t i c i s m i s the a r b i t r a r y r e s u l t s to^which such a c l a s s i f i c a t i o n may give r i s e . " 54 5 54 6 Thus, the Commissions i n B r i t a i n and Ontario proposed that the d i s t i n c t i o n be abolished and replaced with a single concept of warranty. They acknowledged that t h i s , alone, would not solve the 54 7 problem. Two further d i f f i c u l t i e s remained. F i r s t , the range of remedies av a i l a b l e , on breach, was very l i m i t e d . Secondly, i t was not always cle a r when a p a r t i c u l a r remedy should apply. For these reasons the Law Commissions in B r i t a i n concluded, "The consequences of breach of the implied terms contained in ... the Sale of Goods ACt ... should be expressly set out in the Sale of Goods A c t . " 5 8 The Ontario Law Reform Commission recommended, "The adoption of a new regime of remedies for breach of warranty obligations that would turn on the gravity of the breach." Note 338 supra, at paras. 2.23-2.32. Note 400 supra, at p.146. Note 338 supra, at Prov. Reccs. 7 and 8. Note 405 supra, at p.31; note 400 supra at pp.145-150. Note 338 supra, at para.4.30; note 400 supra, 543. 544. 545. 546. 547. pp.147-149. 548. Note 338 supra, at Prov. Recc.9. at - 162 -The schemes of remedies proposed in B r i t a i n and Canada w i l l now be considered separately and then compared. B r i t a i n In B r i t a i n , the Commissions concluded that, "when the inte r e s t s of the buyer are analysed a c l e a r difference emerges between those of the non-consumer and those of the consumer." This was so, they believed, because business transactions were often more complicated than consumer transactions. In addition, not only was the receipt of defective goods "often a normal ri s k of ... b u s i n e s s , " 5 5 1 but the non-consumer could more e a s i l y measure any loss in monetary terms than could the consumer. This led them to propose a scheme of remedies where some of the remedies avail a b l e are common to consumers and non-consumers; but, in at least one important respect, there is a diff e r e n c e . Where there has been a breach of one of the implied warranties, both consumers and non-consumers may reject the goods and claim return of the price unless, "the s e l l e r can show that the nature and consequences of the breach are s l i g h t . " This places the onus of proof firmly on the s e l l e r . Where the nature of the breach i s s l i g h t , the remedies available depend on whether the buyer is a consumer or a non-consumer. It i s in t h i s context that the Commissions introduced C c O t h e i r proposals for a regime of "cure." Hitherto, i t i s at least doubtful that the s e l l e r had any 549. Note 400 supra, at p.147. 550. Note 338 supra, at para.4.31. 551. Ibid, at para.4.32. 552. Ibid. at Prov. Reccs. 10 and 11. 553. Ibid. at para.2.38. - 163 -r i g h t to repair or replace defective goods in order that they would conform to the contract. The Commissions concluded that, for consumers, the opportunity to require cure would provide a s a t i s f a c t o r y solution in many cases. Thus, they proposed that the buyer's right to reject the goods and claim back any money paid should be suspended, "where the s e l l e r can show that the nature and circumstances of the breach are s l i g h t and in the circumstances i t i s reasonable that the buyer should accept cure." Thus, they confined the s e l l e r ' s opportunity to e f f e c t cure to s i t u a t i o n s where the nature and consequences of the breach are s l i g h t . In addition, they proposed that where, "cure i s not effected s a t i s f a c t o r i l y and promptly," 5 5 6 the buyer should be able to reject the goods and claim back the p r i c e . In eit h e r case, they proposed that a claim for damages should be avai l a b l e to the consumer. Under the Commissions' proposals, i t i s the s e l l e r , not the buyer, who can enforce cure. The Commissions assumed that the s e l l e r would prefer to repair or replace defective goods, rather than return the price and they were wary of giving the buyer the right to reguire such action, "where the cost of doing so would be out of a l l proportion to the inconvenience [ i n v o l v e d ] . " 5 5 8 The proposal for the introduction of t h i s new remedy i s to 554. Ibid., at Prov. Recc. 10(1). 556. Ibid, at Prov. Recc. 10(b). 557. Ibid, at Prov. Recc. 10(c). 558. Ibid. ,' at para. 4.34. - 164 -be welcomed as a sensible approach to dealing with the more minor, but nonetheless i r r i t a t i n g , defects in goods with which consumers are faced. It i s , however, regrettable that the Commissions confined the remedy to consumer sales. In assessing the p o s i t i o n in respect of non-consumer sales, the Commissions concluded that a regime involving cure "would be p o s i t i v e l y inappropriate." They reached th i s conclusion for two reasons. F i r s t , they f e l t that the a t t r a c t i o n of cure, in consumer transactions, lay in the s i m p l i c i t y of applying i t . They f e l t that commercial transaction could be s u f f i c i e n t l y complex that such a scheme would be s ft n d i f f i c u l t to operate. Secondly, the sums of money involved and distances separating buyer and s e l l e r may make cure i n a p p r o p r i a t e . 5 6 1 r Given the fact that enforcing cure would only be possible, even in consumer transactions, where th i s i s "reasonable," i t i s submitted that the notion of cure could, and should, have been applied to non-consumer transactions. This argument gains force when one finds the Commission admitting that cure i s , "already common in the case of many commercial c o n t r a c t s . " 5 6 2 As w i l l be seen below, the Canadian proposals include the p o s s i b i l i t y of cure in a l l transactions. Under the Commissions' proposals, the commercial buyer 559. Ibid, at para. 4.52. 560. Ibid. at para. 4.53. 561. Ibid, at para. 4.54. 562. Ibid. at para. 4.55. - 165 -remains r e s t r i c t e d to r e j e c t i o n and return of the pr i c e , or to C C T r e t a i n i n g the goods; and, in both cases, may claim damages. A further d i s t i n c t i o n between consumer and non-consumer contracts i s found in the Commissions' proposals on the way in which the right of r e j e c t i o n can be l o s t by a buyer. In C C A considering loss by the "inconsistent act" rule, they propose the a b o l i l t i o n of the rule in respect of consumer b u y e r s . 5 6 5 In c C f. the context of commercial sales, they i n v i t e views on whether or not the rule should be retained and, i f retained, how i t should be c l a r i f i e d . While the Commissions' proposals, in B r i t a i n , are an improvement on the e x i s t i n g law, i t w i l l be demonstrated in the following discussion that they f a l l short of the more r a d i c a l scheme proposed in Canada. Canada In Canada, the Ontario Law Reform Commission f i r s t considered the question of remedies in r e l a t i o n to 5 6 7 consumers. When the Commission considered remedies in a l l sale of goods contracts, i t concluded that t h i e r " e a r l i e r recommendations are as appropriate for general contracts of sale as they are for consumer sales." They accepted that t h e i r e a r l i e r recommendations would require some adaptation to meet the needs of a broader range of 563. Ibid. at para. 4.52. 564. Under the Sale of Goods Act 1979, s.35(1). 565. Ibid. at Prov. Recc. 17. 566. Ibid, at Prov. Recc. 18. 567. Note 415 supra, at pp.41-46. 568. Note 400 supra, at p.147. - 166 -contracts. The Draft Uniform Sale of Goods Act s u b s t a n t i a l l y followed the Ontario Law Reform Commission's proposals. The remedies discussed below apply, unless otherwise stated, to consumer and non-consumer contracts. The Draft Uniform Act provides that, wehre the s e l l e r breaches the contract, the buyer may, "(a) exercise t h i s r i g h t s under section 81(1), (b) maintain an action for damages, (c) obtain s p e c i f i c performance, (d) exercise his rights under section 111. (e) cancel the contract, (f) recover so much of the price as has been p a i d . " 5 7 0 Section 81(1) allows the buyer to r e j e c t or accept non-conforming goods or accept only that portion of the goods which conform to the contract. Damages, s p e c i f i c performance, cancella t i o n and recovery of the price are f a m i l i a r remedies and these remain avai l a b l e to the aggrieved buyer. The s i t u a t i o n in which the buyer would lose the right to reject the goods i s c l a r i f i e d and amended. The right is lost by the buyer where "(a) he s i g n i f i e s to the s e l l e r that the goods are conforming or that he w i l l take or r e t a i n them despite t h e i r non-conformity, (b) he knew or should reasonably have known of t h e i r non-conformity and he f a i l s seasonably to n o t i f y the s e l l e r of his r e j e c t i o n of the goods, (c) the goods are no longer in s u b s t a n t i a l l y the condition in which the buyer received them and t h i s change i s due neither to any defect in the goods themselves nor to casualty 569. Id. 570. s.107. - 167 -suffered by them while at the s e l l e r ' s r i s k ; or (d) the non-cofnormity i s of a minor nature and a substantial period has elapsed a f t e r d e l i v e r y . " b ' 1 Where the buyer retains non-conforming goods in the reasonable b e l i e f that the non-conformity w i l l be cured, he i s not barred 57 2 from subsequent r e j e c t i o n . The "inconsistent act" rule i s modified to provide that, a f t e r r e j e c t i o n , use of the goods or other acts of ownership by the buyer do not n u l l i f y r e j e c t i o n 57 3 unless the s e l l e r has been materially prejudiced by the acts. Where the buyer has possession of the goods and rejects 57 4 them, the Act places him under an o b l i g a t i o n to take reasonable care of the goods, in the case of a consumer buyer. In the same circumstances, a "merchant buyer" i s placed under an o b l i g a t i o n to follow any reasonable instructions from the s e l l e r in respect of the goods and, i f they are perishable, to make 575 reasonable e f f o r t s to s e l l them. An i n t e r e s t i n g addition to the buyer's statutory remedies is found in section 111. This provides that, where the buyer i s e n t i t l e d to cancel the contract, he may, "cover by making in a commercially reasonably time and manner any purchase of, or contract to purchase, goods in s u b s t i t u t i o n for those due from the s e l l e r . " While in practice, in the past, the buyer may have done th i s and included any f i n a n c i a l loss occasioned thereby in a claim for 571. s.82(2). 572. s.82(3). 573. s.83(a) . 574. s.83(b). 575. s.84. - 168 -damages, to have that right expressly included in the statute i s to be welcomed. The Draft Act introduces the idea of cure 576 and, as in B r i t a i n , provides that the s e l l e r has the right to provide t h i s , i n c e r t a i n circumstances. The s e l l e r i s given the right where, "(a) the non-conformity can be cured without unreasonable prejudice, r i s k or inconvenience to the buyer. (b) a f t e r being n o t i f i e d of the buyer's r e j e c t i o n , the s e l l e r seasonably n o t i f i e s the buyer of his intention to cure and of the type of cure to be provided, and (c) the type of cure offered by the s e l l e r is reasonable in the circumstances." The s e l l e r i s denied the right where i t would be unreasonable to expect the buyer to give him more time to perform or where he i s given the opportunity and f a i l s to perform within a reasonable period of time. Thus, the Draft Uniform Act provides a wide range of f l e x i b l e remedies designed to cover a l l kinds of transactions. It has been recommended that these should be accepted in Alberta and Manitoba. B r i t a i n and Canada Compared The s t r i k i n g difference between the remedies proposed in B r i t a i n and in Canada l i e s in the fact that the l a t t e r are set out in greater d e t a i l . To be f a i r to the Commissions in B r i t a i n , t h e i r proposals contain no draft statute and are primarily 576. 577. 578. s.73. Id. Id. - 169 -intended to generate discussion p r i o r to the drafting of a new Act. The proposals in both countries provide for the remedies of damages, r e j e c t i o n and return of the p r i c e . The Canadian proposals mention s p e c i f i c performance and c a n c e l l a t i o n and, while these are not mentioned in the B r i t i s h proposals, the remedies are presently av a i l a b l e at common law. The right to obtain goods elsewhere, where the s e l l e r f a i l s to supply conforming goods, i s c l e a r l y set out in the Canadian proposals. While, as a matter of p r a c t i c e , t h i s i s done i n B r i t a i n , i t would be b e n e f i c i a l to set i t out in a statute. The most s i g n i f i c a n t difference between the proposals, in the two countries, l i e s in the p o s s i b i l i t y of the buyer exercising the right to cure the nonconfomrity in goods. The Canadian provision i t s e l f i s more f l e x i b l e than the B r i t i s h , but i t s r e a l strength l i e s in i t s a p p l i c a t i o n to non-consumer contracts. It i s to be hoped that the B r i t i s h proposal is redrafted in t h i s respect. - 170 -CHAPTER V; CONCLUSIONS This then has been the development of the q u a l i t y of goods to be implied in contracts of sale over the l a s t two and a half centuries, in B r i t a i n and Canada. From B r i t a i n , where the two independent le g a l systems began from r a d i c a l l y d i f f e r e n t premises, we have traced the dominance of the English approach in B r i t a i n and throughout the Empire. The changing needs of that s e t t i n g , and the changing se t t i n g i t s e l f , prompted the emergence of new p o l i t i c a l and economic forces which, in t h e i r turn, effected changes in the law. That the dominant group of the time w i l l colour the response of the law is seen throughout l e g a l systems, and th i s i s no less true in the case of sale of goods than in other areas of the law. Thus, in nineteenth century B r i t a i n , the needs of commerce, with i t s roots in the p r i n c i p l e of " l a i s s e z f a i r e " ensure the dominance of caveat emptor. Technological and economical developments led to the emergence of a consumer lobby and a r e s u l t i n g strengthening of implied terms, through the amendment of the terms themselves and the r e s t r i c t i o n of exclusion clauses. Given the s i m i l a r i t i e s in other respects between the two countries, i t i s not s u r p r i s i n g that, in B r i t a i n and Canada, common trends emerge in the independent development of the implied term. In both countries, the democratic t r a d i t i o n i s r e f l e c t e d in the b e l i e f that, where the parties to a contract are not bargaining on equal terms, the law should protect the weaker party. This has resulted in l e g a l measures of consumer protection. So, too, i s there the acceptance, in both countries, - 171 -that the economy depends on commercial a c t i v i t y and that the law must meet the needs of commerce. The r e s u l t i n g need for the law to meet the needs of consumers and commerce had led to an awareness, in the approach to law reform, that whatever i s provided must be f l e x i b l e . Thus, the implied term on q u a l i t y may be r e s t r i c t e d in the commercial context but not in dealings with consumers. With the development of implied terms came the move away from a broad general p r i n c i p l e to more detailed l e g a l provision. From the general provision in Scotland that "warrandice i s implied in sale," we have moved to the acceptance that "merchantable q u a l i t y " alone i s not s u f f i c i e n t l y precise. The proposed reform, in B r i t a i n , d e t a i l s aspects of th i s which should be considered. S i m i l a r l y in Canada, the meaning of the term i s spelled out. Amongst the factors which emerge are the requirement of d u r a b i l i t y — that goods should l a s t for a reasonable time. Never before in e i t h e r country has th i s requirement been given statutory recognition. This, when taken along with such other requirements as freedom from minor defects and safety, marks a tremendous increase in the protection afforded to buyers. In the context of a legal system which began with the premise caveat  emptor i t i s a considerable achievement. In the context of a system which implied warrandice in sale, however, the development would not have been remarkable. It i s accepted that t h i s concept of implied warrandice was struck down by l e g i s l a t i o n , in B r i t a i n , before i t could meet the changing - 172 -conditions that have brought us the implied term in i t s present form. However, given that implied warrandice was designed to provide the buyer with what he could reasonably expect under the contract, there i s every reason to suppose that, as goods themselves become more sophisticated, the a p p l i c a t i o n of warrandice too would have developed. Thus, as the sale of consumer durables became widespread, the warrandice implied would have required them to be just that -- durable. Perhaps speculation on "what might have been" i s not the c r u c i a l issue here. C l e a r l y , that the law, in i t s present form, meets the needs of the whole community, i s what i s important. 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