Question 1
Sale of Woolen Wall Rug
Sale by Sample
Step 1
The first implied term that emerges from these set of facts regards sale by sample.
Step 2
The premise of this transaction is a clear manifestation of sale by sample as well as description. Section 15 of the Sale of Goods Act 1895 (WA) stipulates that if a contract is entered into on the basis of the sample, first, the bulk or a great number of the goods must correspond with the features of the original sample. Secondly, the buyer must be given an ample opportunity to carry out an inspection of the goods while comparing them to the sample so as to ascertain whether the two sets match. Finally, the goods sold must be of merchantable quality and free from any latent defect. In the case of Ship Agencies Australia Pty Ltd v Fremantle Fishermen’s Co-Operative Society Ltd the Court held that so long as the buyer was induced into entering into the contract by viewing the sample; and the final merchandise does not correspond with the sample, then the seller is in contravention of s 15 of the Sale of Goods Act.
Step 3
The negotiations preceding the contractual agreement for sale of the wall rug revealed that Henrietta offered to buy the wall rugs only after viewing a sample which was so colorful and was described as ‘handmade from finest merino wool.’ The case at hand illustrates that the provisions of the Act were hardly complied with in this transaction. Henrietta’s only opportunity to inspect the goods came after they had been delivered in Fremantle at her place of business. Out of the 80 rugs delivered, 78 of them were machine made from polyester and they were not very colourful at all. This is against her expectations because she expected handmade rugs made of merino wool which were so colourful.
Step 4
Merchantability of Goods
Step 1
The other applicable area of law is an implied condition that goods sold must be of merchantable quality.
Step 2
There is an implied condition that the goods must be of merchantable quality in the Sale of Goods Act 1895 (WA). The Act also provides that goods which are purchased on the basis of either sample or description must be of merchantable quality unless if the buyer has already examined the goods in an exercise which would have ideally revealed the defects. According to the Australian Consumer Law (Cth), goods can be said to be of merchantable quality if they are fit for all purposes for which goods of that kind are often purchased for; if they have acceptable appearance and finish; if they are free from defects; if they are safe, and if they are durable. In the case of Wilson v Rickett Cockerell & Co Ltd the buyer ordered coalite from a coal vendor. During usage, the coalite exploded when it was thrown into the fire, thus causing unprecedented damage. The Court held in favour of the plaintiff that the product was not of merchantable quality.
Step 3
The other two rugs were in worn condition and had a label attached reading “property of the Lisbon Art Gallery”. In that case, the only rugs which would slightly match the sample were not of merchantable quality because there is no way in which the buyer would have sold them with that kind of label. This means that they were full of defects, with an unacceptable appearance and not durable either.
Step 4
Since the goods would not be viable for reselling, the court can also order repudiation of the contract.
Fitness for Purpose
Step 1
Additionally, there is an implied condition that the goods in question should be fit for the intended purpose as anticipated by the buyer.
Step 2
Section 14 (2) of the Sale of Goods Act provides that the goods sold should be fit for the purpose they intend to serve. This condition is not absolute however because the buyer has to prove the existence of three preconditions before the section can be invoked. To start with, the buyer must have informed the seller of the specific purpose which the goods intend to serve upon purchase. But if the goods are to serve the ordinary purpose, it is not a requirement to make this fact known to the seller. Secondly, the buyer must have relied upon the seller’s skill and judgement before making the purchase. Finally, it must be proven that the seller usually makes ordinary dealings in the product in question. In Ashington Piggeries Ltd v Christopher Hill Ltd,it was observed that the fact that poisonous chemicals were added into mink during preparation thus killing the farmer’s minks illustrated that the product was not fit for its intended purpose.
Step 3
All the factors highlighted above are present in this situation because first, Henrietta made it known to Juan that the wall rugs were for reselling. She further relied on Juan’s assurance about the nature of goods. Also, Juan’s enterprise has specialized in dealing with decorations and such like products. The fact that the products supplied cannot be sold in any market makes them not fit for the purpose they were bought for.
Step 4
Violation of such a condition warrants rescission of the contract by the aggrieved party who in this case is Henrietta.
Sale of Vases
Sale by Description
Step 1
The contract to buy the ceramic vases was governed by the implied condition on sale by description.
Step 2
Section 13 of the Sale of Goods Act provides an implied condition that if goods are sold by description; the seller must deliver goods that correspond with the description given. In a contract entered into on the basis of description, the bulk of goods ought to be in correspondence with the sample and description given. In addition to this, goods which are purchased on the basis of description are equally required to be of merchantable quality unless if the buyer examined the goods and the nature of the examination should have revealed any defects whatsoever. In the case of Elder Smith Goldsbrough Mort Ltd v McBride & Anor, the defendants inspected a bull which was described as a breeding law. It turned out that the bull was in fact infertile, a fact which could not be manifested during inspection. The court found the seller in breach of the implied condition under s 13 and it gave the plaintiff an option to rescind the contract. In Beale v Taylor, the Court awarded the plaintiff damages worth the value paid for the car less the scrap metal value because the defendant had misrepresented the model of the car.
Step 3
Had Henrietta not read the catalogue and been impressed with the description of the products, she would not have gone ahead to partake in this dealing. The agreement was reached at only after Henrietta read the catalogue to the product which indicated that the vases were beautifully designed and crafted from Portugal. Ultimately, the vases that were delivered in Fremantle fell short of the description given in the catalogue. The vases were blue and white instead of red and blue. They were designed in Mauritius, manufactured in Mexico and they were porous and brittle.
Step 4
Therefore, Juan was clearly in breach of the provisions of section 13 of the Sale of Goods Act 1895 (WA) and the contract could be declared voidable at the choice of Henrietta.
Question 2
Step 1
This question regards the available remedies on account of non-performance of contract.
Step 2
Under Section 50 of the Sale of Goods Act 1895 (WA), a person may seek damages for non-delivery of the product if she wants to do away with the contract altogether. In the alternative, she might also sue for specific performance. Specific performance is an equitable remedy in which the plaintiff seeks to enforce the full agreement of the contract and the defendant is required to perform the actual obligation as agreed before. In the case of Wolseley Investments Pty Ltd v Gillespie,Santow JA intimated that the remedy of specific performance would be triggered if the defendant has exhibited conduct that points to the fact that they may not perform the contract either in part or whole. The Judge also noted that in cases of threatened breach of contract, the breach ought not be explicit. So long as an intention can be imputed on the part of the defendant, the court can go ahead and order specific performance. Special damages are also punitive in the sense that they are intended to deter the defendant from dishonouring future agreements with other parties. Damages are always a substitute for specific performance if it is not feasible to execute the latter as was observed in ANZ Executors & Trustees Ltd v Humes Ltd.
Step 3
The agreement to send Henrietta a photo of Lisbon in the 1900s was not honoured by Juan because he mailed her claiming that he had changed his mind. This amounts to non-performance of the contract and Henrietta might be entitled to remedies mentioned above. However, if it can be proven that the photo in question no longer exists, specific performance will not be viable because inexistence of the photo will be construed as frustration of the contract. Also, if it can be proven that the non-performance of the contract has caused Henrietta immeasurable harm or certain losses because she probably had to send a photo of 1900s Fremantle to Lisbon, then she can also request the court to award special damages to compensate for the inconveniences.
Step 4
Therefore, the court is likely to order specific performance and if this is not possible award damages to Henrietta.
Bibliography
Allan, David E., and Mary E. Hiscock. Law of contract in Australia. North Ryde, N.S.W: CCH Australia, 1987.
Carter, John W. Contract Law in Australia. Chatswood, A: Lexisnexis Orders/service, 2012.
Davis, J. L. R. Contract: general principles: the laws of Australia. Pyrmont, N.S.W.: Thomson Lawbook Co, 2006.
Gillies, Peter. Concise contract law. Sydney: Federation Press, 1988.
Graw, Stephen. An introduction to the law of contract. Sydney: Lawbook Co., 2008.
