Claymore Lubricants (Midlands) Ltd v P & P Sergeant (Belting and Automotive) Ltd

A supplier is liable where goods fail to comply with an express description, are of unsatisfactory quality, or are not reasonably fit for their purpose. Civil liability does not depend on proving deliberate dishonesty where the defect itself establishes breach. A representative sample may support findings about a wider quantity where, on the balance of probabilities, the evidence shows that it fairly represents the goods supplied and there is no credible alternative explanation. Contractual acceptance provisions must be incorporated before they can govern the parties’ relationship. They may not exclude a damages claim where their wording does not extend to that claim, and reliance on them may also fail for unreasonableness.

Claymore manufactured and supplied engine oil to Sergeant, which exported some of it to Greece. Claymore had represented in writing that only virgin mineral oils would be used. Complaints were later made about contamination, colour variation, sediment and inconsistency within containers.

Sergeant brought a Part 20 claim alleging breach of the contractual requirements as to description, satisfactory quality and fitness for purpose, together with misrepresentation. The court first determined liability. The principal issues were whether the sampled oil was virgin oil and compliant with its specification, whether the samples supported conclusions about the wider supplies, whether Claymore’s representation had been relied upon, and whether standard acceptance terms governed the relationship.

1. Liability. Claymore was liable for breach of contract and misrepresentation. The oil supplied since April 2000 was not virgin oil, was non-homogeneous, was not of satisfactory quality and was not reasonably fit for its purpose.
2. The July 2002 samples were taken as well as reasonably possible in the circumstances. The court rejected the suggested cross-contamination and sampling criticisms. The samples showed wear-metal contamination, colour variation and separated additives. The evidence established that the oil did not comply with its description or performance specification.
3. The samples were sufficiently representative to support a conclusion about the oil supplied for the Greek market. The court applied the civil standard of proof. It was unnecessary to link each sample to a particular delivery where the evidence established, on balance, that the supplies were generally deficient.
4. Claymore’s January 1999 letter was a clear commercial representation that only virgin mineral oils would be supplied. Sergeant believed and relied on it in making its purchases and developing the Greek market. The representation was false and the misrepresentation claim therefore succeeded.
5. Claymore’s standard acceptance clause was not incorporated. It appeared on the reverse of invoices without adequate reference on their face, and the parties were not ad idem about its terms. In any event, the clause concerned rejection of goods rather than the damages claim. Reliance on the clause would also have been unreasonable given the transit time and the difficulty of inspecting sealed containers.
6. The claim succeeded on liability. Quantum remained to be determined, with the parties invited to agree procedural steps.

This was a first-instance liability judgment. The judgment records that Claymore obtained summary judgment on its invoice claim on 9 May 2003, and that the court ordered an initial trial on liability on 18 December 2003.