This case concerned the contract for Omega's sale of animal by-products to Pears. Pears claimed that the products had to be of category 3 standard rather than category 1 standard and Omega had breached the contract by supplying only to the category 1 standard. The High Court agreed with Pears. There was a breach of an express term of the contract.
Although the High Court could have stopped there, it went on to examine other arguments made by Pears in the alternative. Under sale of goods legislation, there were implied terms that the goods had to be of satisfactory quality and fit for any particular purpose known to Omega. Again, the High Court agreed with Pears on these issues. The Court explained that when determining whether goods were of satisfactory quality, you must look at what a reasonable person would have considered satisfactory in all the relevant circumstances. The list of items in the statute to be considered – fitness for all common purposes, appearance and finish, freedom from minor defects, safety, and durability - was not an exhaustive list. The move from 'merchantable quality' in the old legislation to 'satisfactory quality' was intended to strengthen the standards for the customer's benefit. As to the fitness for a particular made known purpose term, Omega's argument - that its general knowledge of Pears' business did not meet the requirement that Pears had made known a specific purpose – failed.
The High Court's pronouncements on these implied terms issues under sale of goods laws are not binding on future decisions, as the Court had already made its mind up on the breach of the express term of contract. However, the comments are seen as persuasive and likely to be followed in future court cases.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.