CONDITION AS TO MERCHANTABILITY

Section 16 (2)-Where goods are bought by description from a seller who deals in
goods of that description whether he is not the producer or manufacturer or not,
there is an implied condition that the goods shall be of merchantable quality
The statement above says that the condition of merchantability applies when,
a) The goods are sold by description
b) The seller deals with such goods
Thus when Manohar a shopkeeper sold his old car to Deepak, no implicit situation as
to merchantability applies.
Merchantability of a good refers to the fact that the item should be working properly
for the intended use for which it has been manufactured. For example, when clothes
are sold, merchantability requires that the clothes have their seams and buttons
attached and sewn well enough, that they will not un-seam or come out under
regular use.
In Jones v. Just, 1868LR 3 QB 197, B & Co, a firm of merchants contracted to buy
some bales of Manila hemp from S. The hemp was to arrive from Singapore. On
delivery the hemp was found wetted with sea water and was in such a spoiled state
that it was impossible to sell it in the market. It was held that the Manila hemp was
not of merchantable quality and hence it could be rejected by the buyer.
The condition of merchantability on defects does not apply in conditions where the
seller allows the buyer of the good to examine the good for defects which are not
revealed upon ordinary examination of the product.
The condition of merchantability although applies when the product has some
defects which are not readily observable or on defects which are concealed and
which normal examination of the product does not reveal any defect. This applies
even if the buyer has been able to examine the goods to his satisfaction.


In Thornet v. Beers, (1919) 1 KB 486, B wanted to purchase glue. It was stored in
the sellers warehouse in barrels. B was given every opportunity to open the barrels
for examination but B refrained from inspecting the barrels. It was later discovered
that the glue had defects which B could have easily observed only if he had taken
the opportunity to open the barrels. It was held by the court that no implied condition
as to merchantability had been breached in this case and there was no entitlement to
any relief for B.

In Grant v. Australian Knitting Mills AIR1936PC34, B purchased underwear from S, B
carefully examined it before purchasing the product. It was revealed that the product
was harmful for his skin later on because of the presence of hidden sulphites in the
underwear, it was not possible to ascertain their presence through normal
examination of the good. It was held as a breach of implied condition of
merchantability in this case.

The insight that we can derive from the cases above are that in Thornets case the
buyer was liberty to check the goods for fault but he chose otherwise. Here its not
the seller but it is the buyer of the merchant good who is expected to make the
examination.

Packaging is also of equal importance in considering the merchantability of the good.

In Morreli v Fitch & Gibbons (1928)2K.B.636, M proposed to buy a bottle of Stones
Ginger Wine at Ss shop, which was licensed to sell wines. The bottle broke when M
was drawing the cork, injuring his hand. It was held by the court that the sale was by
description and as the bottle was not of sufficient quality to be called merchantable.
Hence M was eligible to recover damages.




CONDITION AS TO WHOLESOMENESS.

The condition of fitness or merchantability for food products require that the food
should be wholesome, they should be fit for human consumption.
In Chapronier v/s Mason, (1905)21 TLR633, C bought a bun from a bakers shop.
The bun enclosed a stone which severely damaged Cs teeth. It was held by the
court that the baker was responsible and should pay damages to C, as he had
breached the condition of wholesomeness.

CONDITION IMPLIED BY CUSTOM

The acceptable use of a particular good or service limits the implied conditions for
the fitness or quality of the particular good, which is the product is used for the task
for which it was prepared. Only in such a case will the seller be responsible for the
product in case it malfunctions or defects appear in the product or service. Section
16(3), the intended use of the purchased goods can be discovered from the conduct
of individuals party to the sale, or from the description mentioned of the thing being
purchased. For example, if a water bottle is bought by a buyer for its intended use
then the buyer does not need to inform the seller the reason for buying the water
bottle.

In Dr.Baretto v. T.R.Price, AIR 1939 Nag 19, A purchased false teeth from a dentist
but the set turned out to be unfit for As mouth. The court held that A could reject the
set as the reason why anyone would buy the set was known only to the seller, which
in this case was the dentist.

In Priest v Last (1903)2K.B.148, P purchased a hot water bottle to S, a retail
chemist. The bottle supplied to P burst after a few days use and injured Ps wife. It
was held by the court that since P had made the Chemist aware of the purpose for
which he bought the good, S was liable for breaching the implied condition of the
product.

CONDITIONS FOR SALE BY SAMPLE

A contract of sale by sample is one in which there is a term which expresses or
implies a sale by sample mentioned in the contract. (Section 17), Case of contract of
sale by sample implies on the following conditions:
1. The sample should be the part of the bulk of the material being sold
2. The buyer should have a fair chance of inspecting and comparing the bulk
material to the sample
3. The product should be free from any defect that renders them non-
merchantable. A reasonable examination should not however make the defect
in the sample obvious.
The condition of merchantability is not breached in case of patent defects.
In Mody v/s Gregson, L.R.4E.X.49, in the sale of brandy transaction, the sample
brandy had been mixed with a dye to provide a particular colour was supplied. It was
held by the court that the defects were not obvious upon a reasonable examination
of the sample. Hence buyer was not bound by the contract even though the bulk
goods were equal to the sample.
In E & S. Ruben Ltd v/s Fair Bros, 1949 1K.B.254. E proposed to purchase some
rubber material from B. E was given a sample to view the quality of the good. On
receiving the bulk product, E discovered that the quality of the rubber material was
different from the sample. The court held that the bulk did not match up to the
sample provided.
In Lorymer v/s Smith, (1822) 1 B&C1, there was a sale of two parcels of wheat upon
inspection by sample. A week later, when the buyer went to examine the goods one
parcel was shown to him but not the other by the seller, as it was not there. In this
case the court held that the buyer was entitled to reject the contract of sale. It was
ascertained that the buyer was not given a reasonable opportunity to test the bulk
product with the sample properly.



EXCLUSION OF IMPLIED CONDITIONS

Section 62 of the sale of Goods Act states -Where any right, duty or liability would
arise under a contract of sale by implication of law, it may be negatived or varied by
express agreement or by the course dealing by the parties or by usage, if the usage
is such as to bind both the parties to the contract
The participating parties are free to make any transaction the fancy in the contract of
sale according to the law. Sellers can exclude their liability by expressly making
provisions in the contract of sale stating that they will not be liable for any condition
not being met. The buyers can similarly waive any breach of condition in a contract.
However, a sellers liability to fulfil the basic aspects of the contract is not excluded
by it. According to Lord Harbinger, If a seller contracts to sell a horse, and expressly
excluded all conditions and warranties, express or implied, could he escape liability,
if he delivered a pig? He would be met by the simple and sufficient answer that he
had failed the one fundamental obligation.
A sold a horse to B with the provision that there is no warranty over the fitness of the
horse. If the horse passes away only a few days after its sale, then in such a case
the seller is not liable to give any compensation to the buyer.
Remedy for Breach of Condition
Buyers can avail remedy by rejecting the transaction and returning the goods to the
seller in case there is a breach in condition done by the seller earning a
compensation in return. If a provision of warranty is not fulfilled, the buyer is provided
a compensation to remedy the losses incurred because of the goods which had been
bought under the transaction, but no provision has been provided for the return of
goods. When a certain condition is breached, the buyer is not allowed to end the
contract by rejecting the goods and recover damages from the seller for breach of
warranty. Once the buyer uses his option to treat a breach of condition as a breach
of warranty, he cannot insist on the fulfilment of the condition later. This rule is stated
in Section 13 (1) of the Act.
In cases where the contract of sale cannot be revoked and it is proven that the buyer
has accepted the goods or any part of the goods. Any breach of condition by the
seller would be treated only as a breach of a warranty, unless there is a term in the
contract, which expressly implies to the contrary. This rule is laid down in Section
13(2) of the Sale Goods Act.