Implied condition of satisfactory quality


In relation to international sales contracts, the High Court clarified when the ‘term’ that goods will be of satisfactory quality implied by the Sale of Goods Act 1979 (SAGA) will apply in a free on board (FOB) contract and what that term means. This term is also implied at common law, with an additional term that the goods should remain in accordance with any contractual specification after delivery for a reasonable period.

The case also highlighted the now largely historical distinction between lesser contractual provisions or ‘warranties’, breach of which only gives rise to a claim for damages, and ‘conditions’, which are more important provisions and whose breach gives rise to a claim for damages and a right to terminate the contract. This distinction is now much less important than it ever was because most contracts contain express provisions dealing with rights to terminate and these generally sidestep the distinction by simply referring to ‘material breaches’. However, as P learned to its cost, this distinction does retain some significance when excluding the operation of terms implied by statute.


points to note:

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