Question 1
Internal Reference: MILO 6
Question 1 – Description and Quality
Wong is an office manager for a firm of auditors. He ordered a new ‘Colourfast
Office Copier’ branded photocopier from Inkpro having seen their catalogue which
stated that it could “copy up to 60 pages per minute” and was “of the best quality”.
The copier was delivered and installed. When Wong switched it on, he found that it
could copy black and white documents at 60 pages per minute but colour copying
was much slower at only 5 pages per minute.
He also discovered that it could only copy A4 documents and did not copy A3 sized
paper as he expected an office copier would. He further noticed that the glass of the
copier had a small scratch. After 3 weeks of use, paper continually jammed in the
copier and it appeared to be overheating. The power on the machine also kept
cutting out and Wong telephones Inkpro to say that he wants to reject it. They tell
him he is not able to send it back.
Advise Wong in relation to his rights under s.15 and 16 Sale of Goods
Ordinance (Cap.26).
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Wong is the office manager for a firm of auditors so this is not a Business to
Consumer transaction (B2C). It is also clear that Inkpro are acting in the course of
their business – Stevenson v Rogers.
Is this a sales contract? SOGO s.3(1) defines a contract for the sale of goods as “a
contract whereby the seller transfers or agrees to transfer the property in the goods
to the buyer for a money consideration, called the price.” This is clearly a contract of
sale.
The central issues here are whether the goods conform with the contract, by way of
conformity with description and also in terms of quality and fitness for purpose.
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Compliance with description
There is a statement made that the copier is a new ‘Colourfast Office Copier’ and
the catalogue states that it can copy up to 60 pages per minute. The copier can only
copy at 5 pages per minute in colour. The latter statement is true for black and white
and there would be no claim.
The catalogue also states it is of the best quality. It needs to be considered whether
“new Colourfast Office Copier” and “is of the best quality” forms a term of the
contract and part of the description of the goods.
Even if they are not terms they could be actionable as misrepresentations if proved
to be false.
The statement will not form terms unless the parties intend them to be terms – the
court will consider this objectively – Heilbut Symons v Buckleton and Oscar Chess v
Williams.
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Could the statement breach SOGO s.15 as regards description? Where the sale is
made by description there is an implied condition that the goods will comply with
that description.
What is a sale by description? There is no definition in the statute. Sales of
unascertained goods are necessarily sales by description and by ordering from a
catalogue he is ordering unascertained goods.
We need to look to case law to see which words form part of the description.
In Harlingdon & Leinster Enterprises v Christopher Hull Fine Art it was held that it
must have been reasonable for the buyer to have relied on the description.
The modern approach is reflected in the comments of Lord Wilberforce in Reardon
Smith Line v Hansen Tangen where he suggested that parties should “ask whether
a particular item in a description constituted a substantial ingredient of the identity
of the thing sold, and only if it does to treat it as a condition”.
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The question arises then whether the statements are essential to the contract and
form substantial ingredients of the identity of the copier.
In Ashington Piggeries v Hill the sale was for “Norwegian herring meal fair average
quality for the season…” intended to be used as feed for mink.
A preservative was added which reacted with the herring and produced a chemical
poisonous to mink.
The court held that “fair average quality for the season” did not form part of the
description of the goods.
Words forming part of the description must go to the identity and non-compliance
would be shown if it made goods of a different kind to those in the contract.
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Following the Ashington Piggeries case it would seem that “is of the best quality” does not form
part of the description but may be relevant to the question of quality.
The item was stated to be new. We will need to check whether the copier that was delivered
was new or had been used.
The model name will certainly form part of the description and it does not seem that the wrong
model has been delivered. The word “Colourfast” was used in the model name but Wong
complains that the copier is slow at colour copying.
Inkpro will argue that this is either a brand/model name rather than a description or that the
word colourfast has an alternative accepted meaning in that it denotes that colour dye is
permanent.
Again it seems unlikely that there is a breach of the requirements for sale by description.
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Quality
Under SOGO s.16(2) there is an implied condition that where the seller sells in the
course of a business the goods must be of satisfactory quality. Under s.14(3) the
goods must also be reasonably fit for any specific purpose which is brought to the
attention of the seller.
S.2(5) provides that goods are of merchantable quality if they meet the standard
that a reasonable person would regard as satisfactory, taking account of any
description of the goods, the price and all the other relevant circumstances.
The term is a condition which means that if breached then Wong will be entitled to
repudiate the contract.
Goods will clearly cover the copier as a physical asset.
Under s.16(2) the requirement to be of merchantable quality does not apply to any
defect brought specifically to the attention of the buyer before the contract is made
or to any defect which the buyer ought to have discovered when examining the
goods. It does not seem that Wong carried out an inspection and nothing was
brought to his attention.
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s.2(5) further defines the quality of goods to include their fitness for all the purposes
for which goods of the kind in question are commonly supplied, appearance and
finish, freedom from minor defects, safety and durability.
A copier should clearly last longer than a few weeks though we will want to
investigate whether it has been used properly.
The standard is that expected by a reasonable person so here Wong is likely to
have a claim on the basis that:
1. the glass is scratched;
2. the copier regularly jams;
3. it overheats;
4. it lacks any durability.
The machine is therefore not of satisfactory quality and does not conform with the
contract.
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The court will consider whether the goods are fit for all the purposes for which goods of
the kind in question are commonly supplied.
Wong complains that the machine does not copy A3 and continually jams with paper.
Is the machine fit for all purposes for which such goods are commonly supplied?
Where the goods supplied have only one purpose then it should be fit for that one
purpose – Grant v Australian Knitting Mills.
The fact that the copier does not seem able to perform its basic function of copying
because it jams suggests it does not comply.
All copiers will jam at some point but in this case it is more regular and caused by
overheating. The scratched glass may also impact on the quality of copying.
However, whilst many copiers do have an A3 copying function, there are many that do
not. When assessing whether it carries out all purposes goods of the kind are
commonly supplied for the court will compare it to like copiers and will not require it to
copy A3 because some do.
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Fitness for a specific purpose made known to the seller
There may also be a breach of the implied condition under s.16(3), where goods are
sold in the course of a business they should be reasonably fit for any specific purpose
made known to the seller.
We should ask Wong whether he made any specific purpose known to Inkpro before
ordering the machine. Did he for example make it clear that he wanted to copy A3
documents as well?
Wong would only be able to claim a breach of this implied term if he told Inkpro he
needed a copier to copy A3.
However, s.16(3) will not be breached where the buyer does not rely on the seller’s skill
and expertise. Had Wong simply selected the goods before he spoke to Inkpro or based
on the information in the brochure?
We should also check whether the brochure made it clear that the copier did not copy
A3 documents as Wong read the brochure.
Remedies
Breaches of the implied terms under ss.15 and 16 impose strict liability – Frost v
Aylesbury Dairy Co. – so Wong does not need to establish fault on the part of the seller.
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