Implied Terms – Answer Structure

1. A contract for a commercial photo printer costing £12,000. The printer is designed to
print very high-quality photos in large formats with the added advantage that her
customers can connect mobile devices to it and wirelessly print photos immediately.
Almost all of Ellen’s customers have had difficulty connecting their devices to the
printer. When it has been possible to connect to the printer, the transfer of data has
been extremely slow and large parts of the image are often missing when it is printed. In
the course of three weeks, Office Products Ltd came to Ellen’s premises twice to rectify
the fault but were unable to do so. Last week they took the printer away to diagnose the
fault and returned it in working order. They have refused to tell Ellen what the fault was
or what they have done to correct it. Ellen has now had the printer for a total of four
weeks. Office Products Ltd claim Ellen is not entitled to reject the goods. Advise Ellen.
Answer:
Step 1: SGA or CRA? SGA Governed
Step 2: Overview of Implied Terms
Step 3: Relevant implied terms – Satisfactory quality (14:2) + Fitness for particular purpose
(14:3). Arguably conforming to description as well.
Step 4: Apply the relevant implied terms.
Step 5: Remedy: Right to reject – depends upon acceptance. State the law on acceptance – s.35
Step 6: Discuss if the goods have been accepted or not?
Goods Accepted
 Lapse of reasonable time
 Buyer has not rejected/repudiated after the fault was not correctly rectified by the seller
Goods Not Accepted
 One month/ four weeks is not reasonable time
 Buyer accepting that the goods be repaired does not automatically mean acceptance
 “Repair” requires disclosure of the fault repaired. In the present case, seller failed to
disclose the defect repaired.
Step 7: Conclusion – Buyer has a right to reject. She can repudiate the contract or can accept
and claim damages.

2. Ellen runs a printing business. Her business is not incorporated. Ellen entered into two
contracts with Office Products Ltd, a wholesaler of printing and general office
equipment to purchase:
 A contract for an office chair support for £1,000. Ellen bought this particular chair
because she suffers from back pain. She uses the chair support at her business premises
during the week but has on occasion taken it home for the weekend when her back pain
was particularly bad. She explained to Office Products Ltd about the specific nature of
her back problems and bought this chair support on their recommendation. Within a
week of starting to use the chair support, her back pain became worse. She has now
discovered that the chair support is totally inappropriate for her particular condition. It
is now three months since she purchased the chair support. The chair support cost
£1,000.
Answer:

Step 1: SGA or CRA? Consumer – Purchases goods wholly or mainly outside the course of
business, trade, craft or profession. Ellen can be regarded as consumer, as she purchases it for
her personal use, not for her business use.
Step 2: Overview of Implied Terms
Step 3: Relevant implied terms – satisfactory quality + fitness for particular purpose – law
Step 4: Apply the relevant implied terms.
Step 5: Remedy: Right to reject – discuss the various of rejection available to the consumer.
Step 6: Apply the relevant remedy – Rejection is allowed, however, short term right to reject
has been lapses. Buyer will have to give one opportunity to the seller to repair/ redeliver the
goods, which would meet the specific requirements, as mentioned by Ellen. If the seller fails to
repair/ redeliver the goods, the buyer can claim the entire purchase price, i.e., GBP1000 paid.

3. Brenda buys from Sheldon a quantity of citrus pellets which Sheldon has been importing
for several years from Florida. Sheldon supplies the pellets to Brenda on the basis that
‘ownership in the pellets remains in the supplier until all outstanding liabilities are
discharged to the supplier, who is under no liability for the suitability of the pellets for
any of the purposes to which they may be put’.
Brenda also buys from Terence a quantity of Romanian Canoil which Terence has
specially imported on Brenda’s instructions. Terence takes delivery of sealed drums of
Canoil and he then delivers it on to Brenda without opening any of the drums. The
small print of the accompanying invoice, which Terence neither reads nor passes along
to Brenda, states that once Canoil is exposed to air it must be used within five days or it
will deteriorate.
For the next few months Brenda immerses the citrus pellets in the Canoil to produce
Citrus Oil. This product she sells as animal feedstuff. She sells some of her Citrus Oil to
Una, an ostrich farmer. The contract between Brenda and Una includes the same terms
 as those on which she purchased the citrus pellets from Sheldon. Una feeds some of the
Citrus Oil to her ostriches. The ostriches develop a severe reaction to the product and
rampage madly through the barley fields of Una’s neighbour, Virginia, destroying her
barley crop.
Sheldon, whom Brenda has not paid, and who now demands payment for the citrus
pellets he has sold her, contacts Brenda. Una also contacts Brenda, to hold her
responsible for the state of her ostriches.
Discuss the rights and liabilities of the parties.
Answer:
i. Brenda & Sheldon
Buyer: Brenda
Seller: Sheldon
Goods: Citrus Pellets
Issue: Non-payment by the Buyer (ROT will be valid or not?) + exclusion of liability of the goods
sold
Facts –
ROT clause
Benefit of ROT
Limitation of ROT
Final Conclusion: Buyer can only be personally liable, no proprietary liability
Exclusion Clause Validity
Through UCTA’77: Exclusion clause must be reasonable. Reasonableness requirement will be
met.

ii. Brenda & Terence

Buyer: Brenda
Seller: Terence
Goods: Canoil
Issue: No instructions given in relation to the usage of Canoil
Governing Law: SGA or CRA?
Overview of Implied Terms
Relevant Implied Term: s.14(2) – discuss the elements of s.14(2)
Conclusion: Breach of s.14(2) due to not giving instructions

iii. Brenda & Una

Buyer: Una
Seller: Brenda
Goods: Citrus Oil
Issue: Goods not of SQ due to which the Ostriches rampaged the neighbors farm
Governing law: SGA
Relevant Implied Term: s.14(2) + s.14(3)
Conclusion: Breach of s.14(2) + s.14(3)
Remedies/ Damages – Was the loss to the neighbor’s farm recoverable? Quantum of damages:
Too remote + reasonably not foreseeable.

4. Saran Ltd. are a major manufacturer and supplier of food processing equipment. Boland
plc., who are food manufacturers, have designed a new range of frozen vegan burgers
made from pea protein. To preserve flavour, the pea protein must be partially and
rapidly dehydrated before cooking and freezing. Specialist, high-speed dehydration
equipment is needed for this process.

Boland purchase several million pounds of manufacturing equipment each year and
have purchased numerous friers and blast freezers from Saran before. They have never
purchased dehydration equipment. Saran only sells a small range of general dehydration
equipment. Boland shared with Saran significant amounts of information about their
new product and asked them to recommend a suitable dehydrator. Boland agreed to
buy a Menschel XF45 convection-type dehydrator from Saran for £430,000.

Soon after the new production line was started, it became apparent that the dehydrator
was not removing sufficient water from the pea protein which affected their taste,
although the burgers were entirely safe to eat. Many customers, including leading
supermarkets, returned defective goods worth £203,000, which Boland disposed of at a
cost of £14,000. A further customer withdrew from negotiations for a contract worth
£760,000. Boland temporarily halted production of the burgers which meant £13,000 of
pea protein was also wasted

An independent inspection has found that despite minor defects in its conveyor system,
the dehydrator is functioning correctly but that it is not an appropriate type of drier for
pea protein products - a "dry cool jet" type should have been specified. Boland are now
seeking to reject the dehydrator and claim damages of £1,420,000.

Advise Saran plc.

 Facts+Issues
 Determine the Governing Law – SGA
 Introduction to Implied Terms – What are implied terms? Included in order to give certain level
of protection to the buyers.
 S.13 – Correspondence with description.

- General overview of law of s.13

- Apply and state the outcome (whether breach or not?)

 Introduction to implied terms of quality.

- S.14(1) – sale must be made in the course of business.

- In the present case,......

 S.14(2) – Satisfactory quality - Law

- Apply – whether minor defects would make the goods unsatisfactory? 7. S.14(3) – Fitness
for particular purpose
- Law / conditions / Apply

i. Buyer must have disclosed the purpose to the seller

ii. Buyer must have relied on the S’s expertise?

 Remedies of the Buyer – Rejection

a. Whether available or not?

i. Only available if there is a breach of condition or serious breach of innominate term

ii. In the present case, there is a breach of s.14(2) and s.14(3), both of which are
conditions (s.14 (6)).

b. Has the goods been accepted or not?

i. Acceptance depends on the reasonable opportunity to examine.

ii. Reasonable opportunity to examine will require a reasonable amount of time

c. Rejection possible or not?

i. Yes.

 Damages

- Damages can be claimed under common law

- Quantum of damages: All damages which are directly and naturally flowing from the seller’s
breach, provided they are reasonably foreseeable and not too remote.
- Law also allows claim for consequential economic loss (case) and pure economic loss (case),
as long as it is RF.

 Conclusion
- Rejection and Damages will be possible.
5. Beome Ltd. have developed a new electric truck, the Beome Nexus. The Nexus is
revolutionary in that its battery pack offers twice the range at half the weight of any
other battery pack available on the market. Under test conditions, Beome claim, even
with a full load, it is possible to drive up to 800km on a single charge. Running costs are
extremely low but the upfront cost of each truck is £125,000.

AS Haulage Ltd. operate an all-electric fleet of vehicles, powered entirely by renewable

energy. As a result, they have attracted a number of prominent customers who are also
working actively to reduce their own carbon emissions.

In January 2020, AS Haulage entered into a contract with Beome for the sale of five
Nexus trucks to be delivered by the end of May 2020.

Four trucks were delivered in April 2020. All four have suffered breakdowns as a result
of “software issues”, costing AS Haulage £12,000 in recovery costs, and £8,000 to
compensate customers for delayed deliveries. Beome have repeatedly updated the
software of the trucks remotely. The most recent update in January 2021 appears to
have finally solved the problem.

Since delivery, in real world use, the trucks have had a range of only around 500-600km
on a single charge. The trucks cannot be used for longer distances as there are few
suitable charging stations available. Beome claim this is entirely normal and that the
range achieved under test conditions cannot reasonably be expected to be replicated in
everyday use but have undertaken to monitor how the trucks are driven and used to
help AS Haulage improve the range.

The delivery of the fifth truck was delayed until the end of November 2020. Demand for
haulage services had fallen and AS Haulage told Beome the delay was “not a problem”.
Delivery was then further delayed until March 2021. AS Haulage replied the further
delay was “totally understandable”. When Beome attempted to deliver the fifth truck in
March, AS Haulage refused to take delivery, claiming it was now too late.

A week later, an investigation into Beome showed that factories manufacturing its
batteries were causing catastrophic pollution to local rivers. A major customer of AS
Haulage has now said that it will no longer use them as a result. AS Haulage estimate
this will cost more than £40,000 per year in lost profits. After a year of use, the first four
trucks have also been withdrawn from service and AS Haulage has indicated that it
intends to reject them and repudiate the contract.

Advise Beome
 Facts + Issues: AS Haulage wants to reject the five trucks he ordered from Beome. Four trucks
and the one truck will be dealt separately.
 Governing Law: SGA
 Overview of Implied Terms
 Correspondence with the description:

- Law
- Apply: No breach of s.13

 Satisfactory Quality

- Law
- Apply: The trucks suffered breakdowns due to software issues. Lower mileage is not a
breach b/c it is reasonably expected that the truck will not drive for the entire amount
mentioned under the test conditions.
- Remedies: Rejection or Damages

 Fitness for Particular Purpose

- Seller must be aware of the purpose for which the buyer is purchasing the goods.

i. In the present case, the specific purpose of the buyer was to have environment
friendly vehicles.
ii. Was this specific purpose disclosed to the seller?

- Buyer must have relied on the seller’s expertise.

i. Yes, buyer relied on the S’s expertise and he expected that the vehicle will be
environmentally friendly.

- Goods must be reasonably fit for the purpose

i. Trucks are not environmentally friendly.

 Right to Reject

- Available for breach of s.14(2) and s.14(3)

- But the right to reject is not available for breach which are slight/ trivial (s.15A).
- In the present case, the breach (Software issues) can be argued to be trivial/ slight, as it
has been solved.
- However, the non-environmentally friendly battery is a severe breach, allowing the B to
reject the goods.
 Acceptance of the Goods

- Reasonable opportunity to examine the goods to ensure that the goods conform to the
contract.
- In the present case, the goods were rejected after one year of usage.
- One year is a reasonable time lapsed for goods to have been accepted.

 Damages

- Damages can be claimed for the losses suffered due to the breakdowns, including the
12000 recovery costs and 8000 for compensating for delayed deliveries. All these
damages can be construed as “losses which are directly and naturally flowing from the
sellers breach and are reasoanably foreseeable and not too remote”
- AS Haulage also lost a customer causing loss of 40000 pounds per year.

 One Truck

- Delayed delivery
- Buyer can reject the late delivery where the delay is such that it amounts to repudiation
of the contract.
- However, in the present case, the S had made constant communication with the Buyer
and the delay was acknowledged by the B. In light of the same, B can now not reject the
late delivery of the goods.
- Beome can sue AS Haulage for wrongful rejection.