Unknown case

In an FOB sale, the implied term of satisfactory quality under the Sale of Goods Act 1979 may extend beyond delivery on to the vessel for a reasonable time. The same applies at common law to an obligation that goods remain within their contractual specification. Where the seller does not know the destination, the period is assessed by reference to all the circumstances rather than by assuming a normal voyage. Contractual specifications and load-port inspection provisions do not necessarily exclude these obligations. An exclusion clause referring to guarantees, warranties and representations does not exclude statutory conditions or a closely analogous condition implied at common law unless it uses sufficiently clear language.

The buyers purchased gasoil under an FOB Antwerp contract. The contract specified quality requirements, made an independent inspector’s determination final at loading, and excluded guarantees, warranties and representations. The buyers alleged that the gasoil deteriorated during an ordinary sea transit and claimed breaches of statutory terms under sections 14(2) and 14(3) of the Sale of Goods Act 1979, together with a common-law term. Four preliminary issues concerned the duration of the quality obligation, fitness for purpose, the effect of FOB delivery and the exclusion clause.

The court answered the preliminary issues as follows:

1. Quality and specification. An FOB contract contains an implied term under section 14(2) of the Sale of Goods Act 1979 that the goods will be of satisfactory quality when delivered on to the vessel and for a reasonable time thereafter. The same obligation arises at common law, together with an obligation that goods sold to a contractual specification remain on specification for a reasonable period.
2. Reasonable time. Durability is an aspect of satisfactory quality under section 14(2B). In a CIF or C&F contract, where the destination is known, the duration of a normal voyage may provide the basic measure of reasonable time, as explained in Mash & Murrell Limited v Joseph I. Emanuel Limited [1961] 1 Lloyd’s Rep 46. In an FOB contract where the destination is unknown, “normal voyage” is not the appropriate measure. The court must consider the individual contract, the fact of carriage by sea, the nature of the goods and whether the seller knew that the buyer was dealing in them or acquiring them for its own use.
3. Fitness for purpose. The pleaded section 14(3) term was not established merely because the sellers knew that the goods would be carried on the vessel. If a relevant purpose existed, the obligation would extend for a reasonable time in all the circumstances, not necessarily for the actual voyage undertaken.
4. Contractual provisions. The detailed specification and load-port inspection clause were not inconsistent with the implied terms. Section 33 did not undermine the conclusion. The buyer bears the risk of deterioration necessarily incident to transit, but the reasoning in Mash & Murrell Limited v Joseph I. Emanuel Limited did not impose liability for deterioration common to all goods of the contractual description or caused by the buyer or shipper.
5. Clause 18. The exclusion of guarantees, warranties and representations did not exclude conditions. Applying Wallis, Son & Wells v Pratt & Haynes [1911] AC 394 and Camell Laird & Co v The Manganese Bronze and Brass Co [1934] 402, clear and precise words were required. Section 14(6) confirms that the statutory terms are conditions. The preliminary issues were therefore answered: (1) no as framed, but the described quality obligations existed; (2) no; (3) no; and (4) clause 18 did not exclude them.