Sale of Goods Act 1893 – provision in CIF sale, shipped “in good condition” – held not to be a condition
Citrus pulp pellets used in the manufacture of cattle feed were shipped from Port Manattee, Florida to Rotterdam.
Some of the cargo was found to be damaged on outturn. Buyers rejected the entire cargo.
The main question was whether the obligation to ship “in good condition” was a condition of the contract. If it was a condition, buyers could reject a cargo for slight damage, provided it was not de minimis.
The umpire, Sir Lesley Phillips, found that it was not a condition and the buyers’ remedy was limited to damages. The Board of Appeal of the Grain and Feed Trade Association upheld an appeal from the buyers.
Mocatta J affirmed the Board of Appeal but Lord Denning MR, Roskill and Ormrod LJJ, each delivering a full judgment, restored the original decision of the umpire.
They rejected an argument that the Sale of Goods Act 1893, a statute drafted by Sir Mackenzie Chalmers, created a separate contractual dispensation applicable only to the law of sale, to the exclusion of the general principles outlined in the Hongkong Fir.
Maintaining the distinction between conditions and warranties, it was accepted that “the good condition” obligation was an intermediate term, breach of which could only justify cancellation only if it went to the root of the contract which it did not in this case.
Lord Denning’s judgment contains a useful historical analysis of the condition / warranty dichotomy.
The reasoning of all three members of the Court of Appeal panel demonstrates the difficulty which English law has with this outdated and unprincipled distinction.
There is no such distinction in Roman Dutch law where the simple touchstone is seriousness of the breach measured by its consequences.