Medivance Instruments Limited v Gaslane Pipework Services Limited & Vulcana Gas Appliances Limited

Compliance with a relevant British Standard is an important, but not conclusive, factor in assessing merchantable quality and fitness for purpose. A product may still fail either test if the standard does not address the defect, was deficient, or the circumstances of use require more. A clear warning is highly significant, but does not automatically satisfy the fitness-for-purpose test under section 14(3) of the Sale of Goods Act 1979. The court must consider the product, the known purpose and all relevant circumstances, including the buyer’s knowledge, experience and precautions. On the facts, the heater was merchantable and fit for purpose, so the claim failed.

Medivance claimed damages after a fire in its packing area, alleging that a heater supplied and installed by Gaslane, and manufactured by Vulcana, was not of merchantable quality or reasonably fit for its known purpose. The alleged defect was the absence of an additional overheating cut-off device or protective guard if the front grill became obstructed by combustible material.

The High Court dismissed the claim. Medivance appealed with permission. The central issues were the effect of compliance with British Standards, the significance of warnings and the buyer’s prior knowledge, and the application of section 14 of the Sale of Goods Act 1979 to Gaslane and its tortious equivalent to Vulcana.

1. Appeal. Neuberger J, with whom Mance LJ and Thorpe LJ agreed, held that the heater was of merchantable quality and reasonably fit for its known purpose. The appeal was therefore dismissed on the merits.
2. Merchantable quality under section 14(2) is assessed generally by reference to the nature of the goods and their likely uses. Fitness for purpose under section 14(3) is directed to the particular purpose made known to the seller. Section 14(6) principally informs the merchantable-quality test, although the purposes for which goods are commonly bought may sometimes assist with fitness for purpose.
3. Compliance with a British Standard is an important factor, particularly on merchantability, but is not conclusive. Liability may still arise if the standard did not address the defect, was prepared without knowledge of the problem, or was deficient. The standard had greater force here because it addressed overheating controls and the heater was used in a regulated, standard-related industry.
4. A clear and unambiguous warning, or the buyer’s actual knowledge of the risk, is highly material. Section 14(2)(a) makes such disclosure decisive as to a defect clearly drawn to the buyer’s attention for merchantability. Section 14(3) contains no equivalent provision, so a warning is not automatically conclusive as to fitness for purpose. Its effect depends on the product, the known purpose and all relevant circumstances.
5. The buyer’s commercial experience and prior satisfactory use of similar products may be relevant to fitness for purpose. The judge was entitled to rely cumulatively on the British Standard, the warning and the buyer’s knowledge, its previous use of similar heaters, its precautions, and the expert evidence.
6. The judgment records an inconsistent concluding order stating that the appeal was allowed in part, despite the approved reasoning and conclusion that the appeal should be dismissed.

• Court of Appeal (Civil Division) [2002] EWCA Civ 500: dismissed the appeal on the merits, notwithstanding the inconsistent order reproduced at the end of the transcript.
• High Court of Justice, Queen’s Bench Division: His Honour Judge Philip Price QC dismissed Medivance’s claim in a reserved judgment dated 10 January 2001.