Slater v Finning Ltd

The House of Lords considered the proper construction of section 14(3) of the Sale of Goods Act 1979 (the implied condition that goods supplied in the course of business are reasonably fit for a particular purpose made known to the seller). The court held that where a buyer makes known only the ordinary purpose (here: camshafts for a Caterpillar D398 engine) and not an unusual, idiosyncratic condition of the buyer's vessel, the seller does not undertake that the goods will be fit to meet unknown peculiarities of that vessel. On the facts the camshafts were fit for their ordinary purpose; the repeated failures were caused by excessive torsional resonance excited by an external and peculiar feature of the buyer's vessel, not by a defect in the camshafts themselves. Section 14(3) therefore did not give rise to seller liability.

The pursuers (buyers) owned the fishing vessel Aquarius II and contracted with the defenders (dealers) for replacement camshafts for a Caterpillar D398 engine. After uprating the engine and fitting redesigned 1W camshafts supplied by the defenders, the camshafts repeatedly failed. The pursuers sued for damages alleging breach of the implied condition of fitness for purpose under section 14(3) of the Sale of Goods Act 1979; the defenders counterclaimed for unpaid goods and services.

The factual findings at first instance (Lord Ordinary) and on reclaiming were that the camshafts themselves were not defective: the failures resulted from excessive torsional resonance excited by some external cause peculiar to Aquarius II. The Lord Ordinary dismissed the pursuers' claim and awarded the defenders their counterclaim; the Second Division of the Court of Session refused the reclaiming motion. The pursuers appealed to the House of Lords.

The issues framed by the House of Lords included: (i) whether section 14(3) should be read as making the seller liable where goods supplied for use in a particular vessel fail because of an unknown, idiosyncratic characteristic of that vessel; (ii) whether the buyers had made known any particular purpose or special characteristic enabling the seller to exercise skill and judgment; and (iii) whether the camshafts were themselves unfit for the stated purpose.

The House of Lords analysed the meaning of 'particular purpose' and the related issue of reliance on the seller's skill and judgment under section 14(3). The court reaffirmed that the buyer must communicate, expressly or by implication, the special purpose or unusual characteristic for which the seller is to be held responsible; otherwise the seller may reasonably assume the goods are required for their ordinary purposes. Applying those principles, the court concluded that the sellers were not made aware of any abnormal propensity of Aquarius II to excite excessive torsional resonance, and therefore did not undertake that the camshafts would meet that unknown abnormality. Because the camshafts were found to be fit for their ordinary purpose and the failures were due to external, vessel-specific factors, the appeal was dismissed.

The Lords noted the wider commercial consequences of imposing liability where sellers are ignorant of buyer-specific idiosyncrasies and referred to earlier authorities (including Griffiths v Peter Conway Ltd and Christopher Hill Ltd v Ashington Piggeries Ltd) to explain the distinction between general unsuitability and buyer-specific idiosyncrasy.

Appeal dismissed. The court held that under section 14(3) of the Sale of Goods Act 1979 a seller is not liable for failure of goods caused by an unknown, idiosyncratic characteristic of the buyer's vessel where that special purpose or characteristic was not made known so as to enable the seller to exercise skill and judgment; on the facts the camshafts were fit for their ordinary purpose and the failures were caused by external torsional resonance peculiar to the vessel.

Proof before Lord Weir (Lord Ordinary) who dismissed the pursuers' claim and allowed the defenders' counterclaim (judgment delivered 22 January 1993). Reclaiming motion refused by the Second Division of the Court of Session (Lord Justice-Clerk Ross, Lord Clyde and Lord Morison) on 30 November 1994. Appeal to the House of Lords allowed to be heard and dismissed on 4 July 1996 ([1996] UKHL 59; reported also as [1997] SC(HL) 8).