Lords uphold buyer's right to reject after repair

Information crucial if buyer to be taken bound to accept goods

News, 9 March 2007

The House of Lords has filled in a gap in sale of goods law in a Scottish appeal over a faulty agricultural seed drill and power harrow.

The point at issue concerned the buyer's right to reject faulty goods which the seller has taken back to repair.

The Law Lords allowed an appeal by Paisley farmers J & H Ritchie Ltd in an action against suppliers Lloyd Ltd of Kelso. Ritchies found a serious vibration problem with the machinery, which bought secondhand, within a day or so of starting to use it, and Lloyds agreed to take it back for inspection and, if possible, repair. By the time Ritchies were told the equipment was ready the sowing season was over and when Lloyds refused to confirm the nature of the problem, Ritchies decided to reject the equipment.

In the sheriff court it was found that the equipment had been repaired to "factory gate standard", and the Court of Session by a majority ruled that as the goods were of satisfactory quality by the time they were rejected, the purported rejection came too late.

The Lords, however, ruled that Lloyds' refusal to explain what had been wrong was fatal to their defence. Lord Hope of Craighead said that in the absence of express agreement, the result had to depend on what terms, if any, were to be implied into the contract at the stage of the repair having been carried out, "bearing in mind that the seller was in breach at the time of delivery and that the buyer retains the right to resile because the goods were not in conformity with the contract".

If the nature of the problem was obvious and the buyer allowed the seller to incur the cost of repair, the buyer would be under an obligation to take and pay for the goods once repaired. But, he continued, where the nature of the defect was not obvious,

"The effect of section 35(2)(a) [of the Sale of Goods Act 1979] is that, as the buyer is not deemed to have accepted the goods, he retains the right to reject them. That right will, of course, be lost if, at any time, he decides to accept the goods or is deemed to have accepted them. But it is a right of election which the buyer cannot be expected to exercise until he has the information that he needs to make an informed choice. The seller, for his part, cannot refuse to give him the information that he needs to exercise it."

He continued: "A condition that the seller would provide this information, if it was asked for, was one which every buyer would seek for his own protection in such circumstances. It was one which no reasonable seller, who was already in breach of contract, could refuse as a condition of being given the opportunity to cure the defect and preserve the contract."

The Lords' decision can be read at http://www.publications.parliament.uk/pa/ld200607/ldjudgmt/jd070307/ritch-2.htm .