KG Bominflot Bunkergesellschaft fur Mineraloele mbH & Co v Petroplus Marketing AG (The Mercini Lady)

An implied condition of satisfactory quality under Sale of Goods Act 1979, section 14(2), is assessed at delivery. It may require goods to have the durability to withstand a normal voyage. A later defect may evidence unsatisfactory quality at delivery, but the condition is not a continuing guarantee of later quality.

A court will not imply a further term making a seller liable merely because goods later fall outside their contractual specification. Such a term was inconsistent with contractual provisions for final quality determination on loading and transfer of all risk. An exclusion of guarantees and warranties did not exclude the statutory condition, because the established authorities require language extending to conditions themselves.

Under an FOB contract for gasoil, the seller delivered cargo that the buyer accepted was within the contractual sediment specification on loading at Antwerp. The cargo was later rejected at El Ferrol after tests indicated excessive sediment.

Field J held that section 14(2) of the Sale of Goods Act 1979 and the common law imposed obligations extending beyond delivery, and that clause 18 did not exclude them: [2009] EWHC 1088 (comm). The seller appealed against the additional common-law term and the conclusion on clause 18. The appeal concerned whether such a term could be implied despite final loading certification and risk allocation, and whether clause 18 excluded the statutory condition of satisfactory quality.

1. The appeal was allowed in part. The court rejected the additional common-law term, but upheld the conclusion that clause 18 did not exclude the statutory condition under section 14(2) of the Sale of Goods Act 1979.

2. The section 14(2) condition is a fixed-point, prospective condition assessed on delivery. It may include the capacity of goods, at that point, to withstand a normal and reasonably timed voyage with their satisfactory quality intact. It does not guarantee their condition after delivery. Subsequent deterioration may be evidence from which a breach at delivery can be inferred, but it does not itself establish breach.

3. No separate common-law term required the gasoil to remain within the contractual specification after loading. The express contract required a final and binding quality determination at loading and transferred all risks to the buyer at delivery. A term making later off-specification decisive would defeat the commercial certainty for which the loading determination was agreed. It was neither supported by the contract nor an implication reasonable merchants would understand it to contain.

4. The court left open whether a truly latent inherent vice, not addressed by the stipulated quality tests, might support a properly pleaded claim under section 14(2). That depended on evidence about the reason for the increased sediment and the intended scope of the specification and certification clauses. The preliminary issues could not provide a factual shortcut.

5. The established line from Wallis, Son & Wells v Pratt & Haynes remained binding. Although modern contractual construction could suggest that clause 18 was intended to exclude statutory quality obligations, it excluded guarantees, warranties and representations without referring, expressly or necessarily, to conditions. It therefore did not exclude the section 14(2) condition.

• Court of Appeal (Civil Division) — allowed the seller's appeal against implication of the additional common-law term, but dismissed its appeal on the clause 18 exclusion issue: [2010] EWCA Civ 1145.
• Commercial Court — Field J held that statutory and common-law obligations extended beyond delivery and were not excluded by clause 18: [2009] EWHC 1088 (comm).