Trac Time Control Ltd v Moss Plastic Parts Ltd (t/a "Rowan Plastic Parts Centre") & Ors

In contracts for the sale of goods, an agreed specification may form an express contractual term. A general disclaimer does not permit delivery of goods departing so substantially from that specification that it becomes meaningless.

Where goods are supplied for a known purpose, fitness for purpose and satisfactory quality may also arise as express or implied terms. A buyer’s failure to discover a defect breaks causation only where the buyer knew of it, or where the circumstances demonstrate a reckless disregard of an obvious defect. Concurrent processing or design defects do not displace a dominant contractual breach.

Illegality will defeat a claim only where the claimant must substantially rely on its own unlawful conduct. Collateral regulatory or documentary breaches do not ordinarily bar recovery.

The claimant manufactured external light fittings using housings moulded by the first defendants. The housings were initially made from polycarbonate supplied by Cotswold Compounders to the Sylex 2000 specification. The defendants later obtained materially cheaper polycarbonate from Anglo Polymers.

The claimant alleged that the substituted material failed to meet the agreed specification, was unsuitable for the purpose, and caused widespread cracking and product returns. The defendants pursued related claims against Anglo and the Part 20 defendants. Issues included contractual description, satisfactory quality, fitness for purpose, causation, mitigation, foreseeability, damages and an alleged illegality defence based on regulatory breaches.

The central questions were whether the specification was contractual, whether the defective material caused the losses, whether testing or processing failures interrupted causation, and whether the claimant’s alleged regulatory breaches prevented recovery.

1. Contractual terms. The contracts required the housings to be manufactured from polycarbonate conforming to the Sylex 2000 specification, or, for black polycarbonate, the agreed Anglo specification. The same requirement applied to white and grey housings. The specification described the goods for the purposes of section 13(1) of the Sale of Goods Act 1979.
2. The caveat stating that the specification was not a guarantee concerned tolerable variation in precise figures. It did not authorise a departure which rendered the specification meaningless. The contractual MVR range was approximately 8–16, and the material supplied was far outside it. The housings therefore failed to correspond with their description, were of unsatisfactory quality under section 14(2A), and were not reasonably fit for the known purpose under section 14(3).
3. Causation. The low-quality material was the effective and dominant cause of the failures. The claimant had no contractual or separate duty to test the housings for compliance with the supplier’s specification. Its omission to carry out more detailed testing did not obliterate the defendants’ breaches. Mowbray v Merryweather and Lambert v Lewis supported that conclusion. Beoco Ltd v Alfa Laval Co Ltd was distinguishable because it involved a known risk followed by a positive decision to return defective equipment to service.
4. For the same reasons, the defendants failed to establish that the defect was patent and obvious, or that continued use constituted a reckless disregard of the obvious. There was no break in causation and no duty to mitigate by ceasing to use the material. Processing deficiencies and design criticisms were, at most, concurrent matters and did not displace the dominant effect of the defective polycarbonate.
5. Illegality. The claimant’s alleged breaches of electrical-safety and trade-description requirements were collateral. The products were not shown to be unsafe, the regulatory breaches were principally documentary or procedural, and section 35 of the Trade Descriptions Act 1968 preserved contractual enforceability. The illegality defence therefore failed.
6. Damages. The claimant reasonably issued credits and replacements for past returns. Future losses were assessed using a broad-brush assessment of reasonable mitigation and future chances. The court accepted the contemporaneous forecasts as the best available evidence for loss of profits. The precise figures were to be calculated by the accountants in accordance with the findings.
7. The claims against Rowan and Moss succeeded on liability. Anglo was liable to Rowan on the contractual issues, subject to the damages assessment. Regent/BIP was not in breach of its contract with Anglo because it had supplied low-grade material suitable for the agreed industrial purpose.