Hardwick Game Farm v Suffolk Agricultural and Poultry Producers Association Ltd [1968] UKHL 3 (08 May 1968)

HENRY KENDALL & SONS (a firm)
v.

WILLIAM LILLICO & SONS LTD.
and Others

HOLLAND COLOMBO TRADING SOCIETY
LIMITED

v.
GRIMSDALE & SONS LIMITED

Consolidated
Appeals

GRIMSDALE & SONS LIMITED
v.

SUFFOLK AGRICULTURAL AND POULTRY PRODUCERS ASSOCIATION LIMITED

Lord Reid
Lord Morris of Borth-y-Gest
Lord Guest
Lord Pearce
Lord Wilberforce

Lord Reid

MY LORDS,

In the summer of 1960 very large numbers of young turkeys died in what
appeared to be an epidemic of an unknown disease. But the outbreaks were
curiously patchy and the trouble was soon traced to feeding stuffs. Such
birds are generally fed on mixtures of various ingredients. It was common
to include up to about ten per cent, of ground nut extractions, and it was
found that in the mixture fed to these birds there had been a proportion of
ground nut extractions imported from Brazil. Then it was found that
much of this Brazilian food was contaminated by a poison Aflatoxin to
amounts up to five parts per million. Then it appeared that owing to
climatic conditions in Brazil spores of a fungus aspergillus flavus had caused
a mould to grow on the ground nuts and secrete this poison. Ground nut
extractions had for many years been imported from India. It has now been
found that the Indian product sometimes contains some of this poison though
generally in smaller amounts but in 1960 there was no reason to suspect that
any ground nut extractions might contain this poison.

The plaintiffs Hardwick Game Farm had about 2,000 breeding pheasants.
The eggs were collected and hatched and the young pheasants reared in
much the same way as chickens or turkeys. A large number of them died
in 1960 from this poison and it is not disputed that it was contained in
compound feeding stuffs supplied by a local compounder referred to in this
case as S.A.P.P.A. They sued S.A.P.P.A, and S.A.P.P.A. agreed to pay
£3,000 damages. That settlement is admitted to have been reasonable and
proper. But S.A.P.P.A. brought in their suppliers Grimsdale and Lillico
and they in turn brought in their suppliers, Kendall and Holland Colombo.
It has been held that Grimsdale and Lillico are liable to S.A.P.P.A. and
that Kendall and Holland Colombo are liable to Grimsdale and Lillico. In
the first appeal Kendall and Holland Colombo maintain that they are not
liable. Lillico do riot appeal. But Grimsdale in effect maintain in the
second appeal that, if they cannot recover from Kendall and Holland
Colombo, then S.A.P.P.A. cannot recover from them. I need make no
further mention of Lillico and Holland Colombo and it will be clearer
simply to have in mind the chain Kendall to Grimsdale to S.A.P.P.A. to
the game farm.

Kendall and Grimsdale are both members of the London Cattle Food
Traders’ Association. Brazilian ground nuts had not been imported until
1959 but early in 1960 there were large shipments. Kendall had acquired
a large quantity and while the goods were afloat Kendall sold a consider-
able quantity in the London Market to Grimsdale. Then Grimsdale sold
a part of this to S.A.P.P.A. at the market at Bury St. Edmunds ; S.A.P.P.A.
took delivery shortly after the arrival of the goods in London.

The case raises a number of points and I shall first consider the position
under the Sale of Goods Act, 1893, section 14. The relevant subsections
are:

” (1) Where the buyer, expressly or by implication, makes known
” to the seller the particular purpose for which the goods are required,
” so as to show that the buyer relies upon the sellers’ skill or judgment,
” and the goods are of a description which it is in the course of the
” sellers’ business to supply (whether he be the manufacturer or not),
” there is an implied condition that the goods shall be reasonably fit
” for such purpose, provided that in the case of a contract for the sale
” of a specified article under its patent or other trade name, there is no
” implied condition as to its fitness for any particular purpose.

“ (2) Where goods are bought by description from a seller who deals
” in goods of that description (whether he be the manufacturer or not)
” there is an implied condition that the goods shall be of merchantable
” quality: provided that if the buyer has examined the goods there shall
” be no implied condition as regards defects which such examination
” ought to have revealed.”

Conflicting arguments have been submitted about the meaning of almost
every part of these subsections. If one puts aside for the moment the
encrustations of authority their meaning appears to me to be reasonably
clear. But, if a whole chapter of the law is compressed into one section
of a code, one cannot expect its words to apply to unusual cases without
expansion or adaptation. That is the task of the Court: but it is not in
my view legitimate to substitute for the words of the code some general
words used by an eminent judge in a particular case and treat them as a
test of universal application. Where that has been done in other chapters
of the law it has led to trouble, and there has been a tendency to do that
here.

I take first subsection (2) because it is of more general application. It
applies to all sales by description where the seller deals in such goods.
There may be a question whether the sale of a particular article is not
really a sale by description but that does not arise here: these are clearly
sales by description. Then it is a condition (unless excluded by the
contract) that the goods must be of merchantable quality. Merchantable
can only mean commercially saleable. If the description is a familiar one
it may be that in practice only one quality of goods answers that description
—then that quality and only that quality is merchantable quality. Or it
may be that various qualities of goods are commonly sold under that
description—then it is not disputed that the lowest quality commonly so
sold is what is meant by merchantable quality : it is commercially saleable
under that description. I need not consider here what expansion or adapta-
tion of the statutory words is required where there is a sale of a particular
article or a sale under a novel description. Here the description ground nut
extractions had been in common use.

The novel feature of this case is that whereas in 1960 there appears to
have been thought to be only one quality of this product, subject to minor
variations, it has now been discovered that particular parcels though
apparently of the usual quality may really be of a very different quality
because they are contaminated by minute quantities of a powerful poison.
So the question at once arises—do you judge merchantable quality in light
of what was known at the time of the sale or in light of later knowledge?

It is quite clear that some later knowledge must be brought in for
otherwise it would never be possible to hold that goods were unmerchantable
by reason of a latent defect. By definition a latent defect is something
that could not have been discovered at the time by any examination which
in light of then existing knowledge it was reasonable to make. But there
is a question as to how much later knowledge ought to be brought in. In
the present case it had become well known before the date of the trial
that the defect was that these Brazilian ground nut extractions were con-
taminated by poison: but it had also become well known that, while this

poison made the goods unsuitable for inclusion in food for poultry, it was
generally regarded as proper to include such extractions in cattle food pro-
vided that the proportion included did not exceed 5 per cent, of the whole.
The question is whether this latter fact should be taken into account in
deciding whether these goods were of merchantable quality in 1960.

I think it would be very artificial to bring in some part of the later
knowledge and exclude other parts. In this case it is quite true that there
was a period, after the nature and effect of this contamination had been
discovered but before it had become accepted that small quantities of con-
taminated goods could safely be included in cattle foods, during which con-
taminated ground nut extractions were virtually unsaleable. But suppose
that in this case it had been discovered at an early stage that these goods
could be used for cattle food, so that there never was a period during
which they were unsaleable. In that case I would not think it possible to
take into account the nature of the defect but to exclude from consideration
the effect which knowledge of the defect had on the market.

There is clear evidence that before the date of the trial Indian ground
nut extractions so contaminated were sold under the ordinary description
and were not rejected by the buyers when the contamination was dis-
covered ; a director of British Oil and Cake Mills who are by far the largest
compounders in this country said that they bought these goods untested and
then tested them. If they were found to be very highly contaminated they
were destroyed: but otherwise they were included in feeding stuffs for cattle.
This company apparently did not claim any relief on the ground that such
goods were of defective quality or were of no use if highly contaminated.
And it appears that other buyers who found poison in the goods which
they bought did not try to reject the goods but merely asked for rebates on
the price: they never got any rebates and the evidence is that they did not
press their claims. So I think that it sufficiently appears that ground nut
extractions contaminated to an extent not said to be different from the
contamination of the Brazilian product were regarded as of merchantable
quality under the ordinary description at the date of the trial.

I do not think that I am precluded from taking this view of the meaning
of subsection (2) by any of the authorities.

A statement with regard to the meaning of section 14 (2) which has been
commonly accepted is that of Lord Wright in Cammell Laird v. Manganese
Bronze Co. [1934] A.C. 402. In that case the Respondents contracted to
supply two specially designed ship’s propellers. They first supplied pro-
pellers which were unsatisfactory and it was only at a third attempt that
they supplied propellers which were satisfactory. Cammell Laird sued for
damages caused by the delay. They succeeded on the terms of the contract
and under section 14 (1). But Lord Wright went on to consider the
application of section 14 (2). Apart from a short general statement at the
end of the speech of Lord Tomlin none of the other noble and learned
lords said anything about section 14 (2) or Lord Wright’s gloss on it. Lord
Wright said:

” In earlier times the rule of caveat emptor applied save only where
” an action could be sustained in deceit on the ground that the seller
” knew of the defect or for breach of express warranty (warrantizando
” vendidit). But with the growing complexity of trade dealings in-
” creased in what are now called ‘ unascertained or future goods’ and
” more generally ‘goods sold by description’. As early as 1815 in
” Gardiner v. Gray 4 Camp. 144 Lord Ellenborough stated the rule.
” Goods had been sold as waste silk: a breach was held to have been
” committed on the ground that the goods were unfit for the purpose
” of waste silk and of such quality that they could not be sold under
” that denomination. What subsection (2) now means by ‘ merchantable
” quality’ is that the goods in the form in which they were tendered
” were of no use for any purpose for which such goods would normally
” be used and hence were not saleable under that description.”

I feel sure that Lord Wright did not really mean this to be a test of
universal application in the form in which he stated it. If he did I disagree
for reasons which I shall state. In the Cammell Laird case, if the pro-
pellers were of no use for the ship for which they had been designed it was
true to say that they were of no use for any other ship and therefore
unsaleable as propellers. But there are many cases in which different
qualities of a particular kind of goods are commonly sold under different
descriptions. Suppose goods are sold under the description commonly used
to denote a high quality and the goods delivered are not of that high
quality but are of a lower quality which is commonly sold under a different
description, then it could not possibly be said that the goods in the form
in which they were tendered were of no use for any purpose for which those
goods would normally be used. They would be readily saleable under the
appropriate description for the lower quality. But surely Lord Wright did
not mean to say that therefore they were merchantable under the description
which was appropriate for the higher quality. They plainly were not. Lord
Wright said: ” no use for any purpose for which such goods would normally
” be used “. Grammatically ” such goods ” refers back to ” the goods in
” the form in which they were tendered “. But what he must have meant
by ” such goods ” were goods which complied with the description in the
contract under which they were sold. Otherwise the last part of the
sentence ” and hence were not saleable under that description ” involves a
non sequitur. If I now set out what I am sure he meant to say I think it
would be accurate for a great many cases though it would be dangerous
to say that it must be universally accurate. The amended version would
be ” What subsection (2) now means by ‘ merchantable quality’ is that the
” goods in the form in which they were tendered were of no use for any
” purpose for which goods which complied with the description under which
” these goods were sold would normally be used, and hence were not sale-
” able under that description.” This is an objective test: ” were of no use
” for any purpose . . .” must mean ” would not have been used by a
” reasonable man for any purpose . . .”.

That would produce a sensible result. If the description in the contract
was so limited that goods sold under it would normally be used for only
one purpose then the goods would be unmerchantable under that description
if they were of no use for that purpose. But if the description was so general
that goods sold under it are normally used for several purposes then goods
are merchantable under that description if they are fit for any one of these
purposes : if the buyer wanted the goods for one of those several purposes
for which the goods delivered did not happen to be suitable though they
were suitable for other purposes for which goods bought under that descrip-
tion are normally bought then he cannot complain. He ought either to have
taken the necessary steps to bring subsection (1) into operation or to have
insisted that a more specific description must be inserted in the contract.

That would be in line with the judgment of Mellor J. in Jones v. Just
L.R. 3 Q.B. 197 which has always been regarded as high authority. He
said (page 205):

” It appears to us that in every contract to supply goods of a specified
” description which the buyer has no opportunity to inspect, the goods
” must not only in fact answer the specific description, but must also
” be saleable or merchantable under that description.”

The buyer bought manilla hemp: on arrival the goods were found to be
damaged to such an extent as not to be saleable under that description and
the buyer resold under the description ” Manilla hemp with all faults”
and received about 75 per cent, of what merchantable manilla hemp would
have fetched. So it certainly could not be said that the goods were of no
use. But the buyer recovered, as damages for breach of the implied
warranty, the difference between what the hemp would have been worth
if merchantable as manilla hemp and what he was able to get for it when
sold ” with all faults “.

It would also be in line with what Lord Wright said in Canada Atlantic
Grain Co. v. Eilers 35 Lloyds List Law Reports 206 at page 213:

” If goods are sold under a description which they fulfil and if goods
” under that description are reasonably capable in ordinary user of
” several purposes, they are of merchantable quality within section 14 (2)
” of the Act if they are reasonably capable of being used for any one
” or more of such purposes even if unfit for use for that one of those
” purposes which the particular buyer intended.”

There is another statement by Lord Wright regarding section 14 (2) in
Grant v. Australian Knitting Mills [1936] AC 85 at page 99:

” The second exception (i.e. section 14 (2)) in a case like this in truth
” overlaps in its application the first exception (i.e. section 14 (1)):
” whatever else merchantability may mean, it does mean that the article
” sold, if only meant for one particular use in ordinary course, is fit
” for that use: merchantability does not mean that the thing is sale-
” able in the market simply because it looks alright.”

That too appears to me to be in line with my amended version of what he
said in the Cammell Laird case.

Another explanation of the phrase ” merchantable quality” which has
frequently been quoted is that of Farwell L.J. in Bristol Tramways v. Fiat
Motors [1910] 2 K.B. 831 at page 841:

” The phrase in section 14 subsection (2) is, in my opinion, used as
” meaning that the article is of such quality and in such condition that
” a reasonable man acting reasonably would after a full examination
” accept it under the circumstances of the case in performance of his
” offer to buy that article whether he buys for his own use or to sell
” again.”

I do not find this entirely satisfactory. I think what is meant is that a
reasonable man in the shoes of the actual buyer would accept the goods
as fulfilling the contract which was in fact made. But if the description
was so wide that goods required for different purposes were commonly
bought under it and if these goods were suitable for some of those purposes
but not for the purpose for which the buyer bought them, it would have
to be a very reasonable buyer indeed who admitted that the goods were
merchantable, and that it was his own fault for not realising that goods
might be merchantable under that description although unsuitable for his
particular purpose.

There was also another explanation brought to our attention. In Austra-
lian Knitting Mills v. Grant [1933] 50 C.L.R. 387 at page 418 Dixon J.
said :

” The condition that goods are of merchantable quality requires that
” they should be in such an actual state that a buyer fully acquainted
” with the facts and therefore knowing what hidden defects exist and
” not being limited to their apparent condition would buy them without
” abatement of the price obtainable for such goods if in reasonable
” sound order and condition and without special terms.”

I would only qualify this by substituting ” some buyers ” for ” a buyer “.
” A buyer ” might mean any buyer: but for the purposes for which some
buyers wanted the goods the defects might make the goods useless, whereas
for the purposes for which other buyers wanted them the existence of the
defects would make little or no difference. That is in fact the position in
the present case. I think that it must be inferred from the evidence that
buyers who include ground nut extractions in their cattle foods are prepared
to pay a full price for goods which may be contaminated. But buyers who
only compound poultry foods would obviously not be prepared to buy con-
taminated goods at any price. Nevertheless contaminated ground nut extrac-
tions are merchantable under the general description of ground nut extrac-
tions because, rather surprisingly, some buyers appear to be ready to buy
them under that description and to pay the ordinary market price for them.

On the face of it section 14 (1) has a narrower scope. It requires that the
buyers shall have required the goods for a particular purpose, that that
purpose shall have been made known to the seller, and that it shall have been
made known to him in such circumstances that he realized or ought to have
realized that the buyer was relying on his using his skill or judgment to select
goods fit for that purpose. Many cases in which the seller has been held
liable under this subsection might equally well and more logically have been
decided under subsection (2). But there has been a tendency to construe
subsection (2) too narrowly and to compensate for that by giving a wide
construction to subsection (1).

If the object of the disclosure of the particular purpose is, as I think it must
be, to give to the seller an opportunity to exercise his skill or judgment in
making or selecting appropriate goods, then it is difficult to see how a stated
purpose can be a ” particular ” purpose if it is stated so widely that it would
cover different qualities of goods, because carrying out the purpose in one
way would only require a lower quality of goods whereas carrying it out in
another way would require a higher quality. Different qualities normally
sell at different prices. If a customer sought from a manufacturer or dealer
cloth for the purpose of making overcoats the dealer could not know what
quality was required. A cut price tailor would not want to pay the price
of cloth used in Savile Row, and the tailor in Savile Row would not use
the quality which the cut price tailor wants. Unless the seller knew the
nature of the buyer’s business his only clue to the quality which the buyer
wanted would be the price which the buyer was prepared to pay. If a high
price was offered it might no doubt be right to hold that he must supply
goods suitable for high quality coats. But it could not be right that if the
cloth was sold at a price appropriate for the lower quality, the dealer would
have to supply a higher quality simply because the buyer had stated that his
purpose was to make overcoats and the lower quality would not always be
reasonably fit for making every kind of overcoat.

It was argued that, whenever any purpose is stated so as to bring this
subsection into operation, the seller must supply goods reasonably fit to
enable the buyer to carry out his purpose in any normal way. But that can
only be right if the purpose is stated with sufficient particularity to enable
the seller to exercise his skill or judgment in making or selecting appropriate
goods. The seller may know or be told that the merchant who is buying
from him is buying for the purpose of reselling the goods in the course of his
business. That may be sufficient to enable the seller to select appropriate
goods or it may not. If the buyer’s trade is such that some of his customers
will want goods of the description which he is buying from the seller for one
purpose or of one quality, and others of his customers will want goods of
that description of another quality for another purpose, it could not be right
that the buyer, merely by stating that he wants the goods for resale in the
course of his business, could impose on the seller the obligation to supply
goods reasonably fit for resale to every ordinary customer of the buyer no
matter what his requirements might be.

Perhaps the solution of this problem is to be found in the application of
the requirement of the section that the particular purpose must be made
known ” so as to shew that the buyer relied upon the seller’s skill or judg-
” ment”. A buyer who is buying for the purpose—known to the seller—
of re-selling in the course of his business may want superior goods for which
some of his customers will pay a high price, or he may want goods of lower
quality to sell to less demanding customers. If he does not say which he
wants, or at least indicate which he wants by the price which he is offering,
how can he be relying on the seller to supply something reasonably fit for
his purpose?

The leading case is Manchester Liners v. Rea [1922] 2 A.C. 74. But it
is not a very satisfactory source from which to extract general principles.
Lord Buckmaster began his speech by saying:

” When the circumstances in which this appeal has arisen are examined,
” it will be found that its determination really depends upon the proper

” aspect of the facts rather than on an examination of uncertain principles

” of law.”

Rea were coal merchants and the shipowner’s order was for ” 500 tons South
” Wales coal for the steamship Manchester Importer “. It might seem from
Lord Buckmaster’s speech that there was something unusual about the fur-
naces in this ship, but Lord Atkinson at page 83 quoted the finding of the trial
judge that the ” coal actually delivered was not reasonably fit for an ordinary
” average Manchester steamer like the Manchester Importer in the hands of
” average officers and crew”. So one would assume that coal merchants
could easily have found out if they did not know already what kind of coal
was needed. Lord Dunedin said (at page 82):

” It was not the buyer who was going to find the coal. He says to the
” seller ‘ I want 500 tons for a special purpose, will you give it to me? ‘
” The seller could easily have guarded himself but he merely answered
” ‘ yes ‘ by confirming the proposal as made. Not only so but he came
” into Court asserting that he did supply Welsh coal of suitable quality.”

The passages in Lord Buckmaster’s speech usually quoted are (at page 79):

” It is plain that the order was expressed for the use of a particular
” steamship, and it must therefore be assumed that the respondents knew
” the nature of her furnaces and the character of the coal she used, for
” it was this coal they contracted to supply. … If goods are
” ordered for a special purpose and that purpose is disclosed to the
” vendor so that in accepting it he undertakes to supply goods which are
” suitable for the object required such a contract is in my opinion
” sufficient to establish that the buyer has shewn that he relies on the
” seller’s skill and judgment.”

I think that importance was attached to the fact that the seller was expressly
told for what ship the coal was wanted. It is certainly not necessary in
many cases that the buyer should state his purpose expressly, but in a doubt-
ful case it is much easier to infer that the seller ought to have realised that the
buyer was relying on him if the purpose is stated expressly. I am not at all
convinced that that inference would have been drawn if Rea had merely
happened to know—still less if he had merely assumed—that the coal was
wanted for the Manchester Importer. I do not think that this case is any
authority for the view which has sometimes been expressed that if the seller
knows the purpose for which the buyer wants the goods it will be presumed
that the buyer relied on his skill and judgment. Lord Sumner said (at
page 90):

” The words of section 14 (1) are ‘so as to shew’ not ‘and also
” shews ‘. They are satisfied if reliance is a matter of reasonable inference
” to the seller and to the Court, and in this case I think the evidence
” supports the finding of Salter J. that the inference ought to be drawn.”

Lord Wright might appear to be going further when he said in Cammell
Laird (at page 423):

” Such a reliance must be affirmatively shewn: the buyer must
” bring home to the mind of the seller that he is relying on him
” in such a way that the seller can be taken to have contracted on
” that footing. The reliance is to be the basis of a contractual
” obligation.”

But I do not think that he meant more than that in the whole circumstances
a reasonable man in the shoes of the seller would have realised that he
was being relied on. In Grant’s case he said (at page 99):

” It is clear that the reliance must be brought home to the mind
” of the seller expressly or by implication. The reliance will seldom
” be express: it will usually arise by implication from the circum-
” stances: thus to take a case like that in question of a purchase from
” a retailer, the reliance will be in general inferred from the fact that
” a buyer goes to the shop in the confidence that the tradesmen has
” selected his stock with skill and judgment: the retailer need know
” nothing about the process of manufacture: it is immaterial whether

” he be manufacturer or not: the main inducement to deal with a good
” retail shop is the expectation that the tradesmen will have bought
” the right goods of a good make.”

A shopkeeper’s goodwill consists largely in his reputation of being reliable
—the better the shop the easier it is to draw this inference.

Drummond v. Van Ingen 12 App. Cas. 284 was decided at a time when
there was no clear distinction between the two implied conditions which
are now set out in subsections (1) and (2) of section 14. The contract
was for ” mixt worsted coatings ” equal in quality and weight to samples.
The goods were exported by Van Ingen but rejected by the buyers, returned
and resold at a loss. Van Ingen claimed damages on the ground that the
goods were not merchantable. The trial judge found that there was an
implied warranty that the cloth should be merchantable generally as worsted
coatings, should be properly manufactured and should be suitable to be
made up into coats in the ordinary course of tailor’s work, but that the
cloth was not merchantable as worsted coating and was not properly
manufactured and suitable to be made up into coats in the ordinary course
of tailoring. Lord Selborne said:

” I think your Lordships must . . . take the existence of the defect,
” to a degree sufficient to render the cloth unmerchantable for the
” purposes for which goods of the same general class had previously
” been used in the trade, to have been sufficiently established.”

He went on on page 188 to discuss the degree of knowledge of the trade
to be expected of the manufacturer—but still I think in connection with
merchantability—for he said on page 289 that the Respondents had—

” a right to assume that the Appellants, accepting the order, could
” and would produce and deliver a good article, having the weight
” and all the other apparent qualities of the sample, which would be
” as merchantable for coatings as other articles of the same class
” previously known in the trade.”

Lord Herschell and Lord Macnaghten come nearer to applying the
condition now set out in section 14 (1). Indeed Lord Macnaghten says (at
page 296):

” But the question is not were they saleable but were they fit for
” the purpose for which they were known to have been ordered.”

This was a case of the goods being bought from the manufacturer. It can
only be in unusual circumstances that a buyer doe not rely in part at least
on the skill or judgment of the manufacturer, or that a manufacturer is
entitled to assume that the buyer is not relying on him at least to some
extent.

The difference between the two conditions—they were called warranties
in these cases—is illustrated by the decision in Jones v. Padgett 24 Q.B.D.
650. The plaintiff was a woollen merchant and he ordered a quantity of
” indigo blue cloth “. He also had a tailor’s business and he intended to
use and did use the cloth for making servants’ liveries. It proved to be
not strong enough for that purpose and he sued for breach of an implied
warranty that the cloth should be merchantable. He failed. The cloth
was suitable for other purposes for which cloth of that description was
ordinarily used, and he had not told the defendant the particular purpose
for which he wanted it.

There is some Scottish authority for giving a restricted meaning to the
phrase “particular purpose”. In Flynn v. Scott [1949] SC 442 (an Outer
House case) Lord Mackintosh followed an earlier view that decisions under
the Mercantile Law Amendment Act 1856 were applicable to section 14 (1)
of the Sale of Goods Act. I think this was wrong. The 1856 Act
required that the goods should have been ” expressly sold for a specified
and particular purpose “—words which seem to me to be much narrower
than those in section 14 (1). In Flynn‘s case the buyer of a second hand
motor van had informed the seller that he wanted it for the purposes of a
haulage contractor and intended to use it for the carriage of articles such

as furniture and livestock. That purpose appears to me to have been
stated with sufficient particularity to enable the seller to use his skill and
judgment and therefore to come within the scope of section 14 (1).

We were also referred to a more recent case McCallum v. Mason [1956]
S.C. 50 where a nurseryman bought fertiliser for application to his 1952
tomato crop. It contained poison and damaged both his 1952 and 1953
crops. The Second Division upheld that he could rely on section 14 (1)
as regards the 1952 crop but not as regards the 1953 crop, because appli-
cation to the later crop was not within the particular purpose for which
he bought it. But the Court did not consider the matter from the point
of view of measure of damages—whether the seller ought to have known
that it was not unlikely that some of the poisoned goods would remain
and be used the next year without the buyer realising that the 1952
damage had been caused by this fertiliser. There appears to have been no
doubt that the later damage was in fact caused by the breach of contract
in delivering poisoned goods.

There is no doubt that in this case Kendall knew that Grimsdale were
buying the goods to resell to compounders of animal feeding stuffs. In 1960
that was in my view a particular purpose because there is no evidence to
shew that it was not sufficiently particular to enable Kendall to exercise
skill and judgment. It would not have helped Kendall to be told
that the goods were ultimately to be fed to any particular kind or age
of animal because at that time nobody knew that what was suitable for
one kind of animal might not be suitable for another. Both Kendall and
Grimsdale would assume that Grimsdale’s customers would only include a
suitable proportion in the particular food they were compounding: if they
caused damage by using a wrong formula for their product neither Grimsdale
nor Kendall would be responsible for that.

The difficult question is whether the circumstances were such as to shew
that Grimsdale were relying on Kendall’s skill and judgment: but before I
come to that there are two other matters which require some explanation.
If the law were always logical one would suppose that a buyer, who has
obtained a right to rely on the seller’s skill and judgment, would only obtain
thereby an assurance that proper skill and judgment had been exercised, and
would only be entitled to a remedy if a defect in the goods was due to failure
to exercise such skill and judgment. But the law has always gone farther
than that. By getting the seller to undertake to use his skill and judgment
the buyer gets under section 14 (1) an assurance that the goods will be reason-
ably fit for his purpose and that covers not only defects which the seller
ought to have detected but also defects which are latent in the sense that
even the utmost skill and judgment on the part of the seller would not have
detected them. It is for that reason that, if section 14 (1) applies, Grimsdale
are entitled to relief even although Kendall had no reason to suspect that
the goods might be poisoned.

Secondly it is not necessary to decide whether to-day it would be a
sufficiently particular purpose for Kendall to know that Grimsdale intended
to resell to compounders of feeding stuffs. To-day some compounders are
willing to buy infected goods but presumably some are not, and I doubt
whether mere knowledge on the part of Kendall that Grimsdale intended to
resell would oblige Kendall to supply goods free from this poison. I would
readily accept that a customer buying from an apparently reputable shop-
keeper or from a manufacturer will normally as a matter of fact be relying
on the seller’s skill and judgment unless there is something to exclude the
inference. But I do not think that the same can be said when two merchants
equally knowledgeable deal with each other. Then I can see no reason in
law or in fact for any presumption either way.

If one merchant merely acquired from an importer by buying on c.i.f.
documents goods from a normal source and then resold to another merchant
by transfer of the c.i.f. documents before taking delivery, there might then
be little or no reason to suppose that the former merchant had exercised or
could have exercised any skill or judgment with regard to the quality of the

goods or that the latter was relying on him. But that was not the position
in this case. Kendall had acquired these goods from a new source and one
would suppose must have exercised skill and judgment in deciding to buy
them and put them on the market. And the evidence appears to me to shew
that Kendall were recommending them to Grimsdale. In order to bring
this subsection into operation it is not necessary to shew that the parties
consciously applied their minds to the question. It is enough that a reason-
able seller in the shoes of Kendall would have realised that he was inviting
Grimsdale to rely on his skill and judgment and that is what I think that
in fact Kendall were doing. And the same applies to Holland Colombo.
If that is right then section 14 (1) did apply to this case. I agree with your
Lordships that the clause in the contract on which Kendall rely as exempting
them from liability does not apply.

I turn now to the claims under the Fertilisers and Feeding Stuffs Act
1926. Section 2 (2) provides:

” On the sale for use as food for cattle or poultry of an article included
” in the first column of the First or Second Schedule to this Act there
” shall be implied, notwithstanding any contract or notice to the con-
” trary, a warranty by the seller that the article is suitable to be used
” as such, and does not, except as otherwise expressly stated in the
” statutory statement, contain any ingredient included in the Third
” Schedule to the Act.”

In each case the buyers maintain against the sellers that the ground nut
extractions (which are an article included in the Schedule) were sold to them
for use as food for cattle or poultry, that therefore there was a warranty by
the sellers that the goods were suitable to be used as such, that the goods
were not suitable and that this defect caused the death of the pheasants for
which S.A.P.P.A. had to pay damages to the Game Farm. So S.A.P.P.A.
claim relief against Grimsdale and Grimsdale in turn claim relief against
Kendall. In each case the sellers have two answers. In the first place they
put forward what has been called the ” ingredients ” point: they say that
they did not sell for use as food because ground nut extractions are always
compounded with other ingredients before being fed to animals. They
argue that the Act distinguishes between articles used as food and ingredients
of such articles. I agree with your Lordships that there is no substance in
this argument. If a miller sells to a baker flour which is to be made into
bread or if a grocer sells dried fruit, eggs and butter which are to be made
into a cake, all these articles are sold for use as food for human consumption
though none of them is to be eaten in the form in which it is sold. And the
fact that the Act makes some distinctions between articles and ingredients
does not in my view indicate any intention to limit the generality of the
provision in this section. Any such limitation would produce capricious
results and would go far to thwart the obvious purpose of this legislation.

The second argument requires more consideration. In the first place they
say that pheasants are not poultry and therefore the subsection does not
apply. I do not think that these pheasants were poultry. They were reared
for the purpose of being released to serve as targets for sportsmen and
pheasants which have never been in captivity are clearly not poultry. It
may well be that, if it should prove profitable to rear and keep pheasants
in captivity until killed for human consumption, such pheasants should be
regarded as poultry. But the mere fact that these pheasants like other game
will come to the table after they have been shot seems to me to be immaterial.
It would not in my view be in accordance with the ordinary use of language
to say that they were poultry until released and then became game. They
were game throughout and the farm where they were reared was properly
called a game farm.

The next question is whether the subsection applies when the damage is
done to some animals other than cattle or poultry. The argument is that
this Act was passed for the protection of cattle and poultry and their owners,
and cannot have been intended to confer rights when other animals have been
harmed. I would accept that if this provision were reasonably capable of

that interpretation, but I do not think that it is. It may be that if a customer
states that his purpose is to feed the goods to some other animals, or even
if the seller happens to know that, the section does not apply because the
food was not sold for use as food for cattle or poultry and the mere fact
that the bag is labelled ” poultry food ” would not matter. But that is not
this case.

The main purpose for which S.A.P.P.A. bought was, as Grimsdale knew,
to include these goods in compound foods for pigs and poultry (pigs are
included in the definition of cattle), and it would appear that only a small
part of their production was sold to the game farm for pheasants. So one
must construe the subsection. Does it mean that the warranty is to the effect
that if the goods are fed to cattle or poultry they are guaranteed to be suitable,
or does it mean that they are guaranteed to be of a quality suitable for cattle
and poultry? If the former is right then no warranty would operate until
the goods are fed to these animals: if the latter then the warranty is broken
as soon as the goods are delivered and damages can be claimed before the
goods are fed to any animals on proof of their defective quality. I cannot
avoid the conclusion that the latter is the true meaning.

So in this case this statutory warranty was broken when Grimsdale delivered
the goods to S.A.P.P.A. because they were by reason of the poison unsuitable
to be used as food for poultry; and it becomes an ordinary question of
remoteness of damage whether damage suffered by loss of pheasants is
recoverable. The question then is whether Grimsdale knew or as reasonable
traders in this market ought to have known that it was not unlikely that part
of the goods which they sold would ultimately be fed to pheasants. There is
no evidence that they did know but other traders in the market certainly
knew that, and poultry food has been fed to pheasants for many years. I
cannot avoid the conclusion that, if Grimsdale had thought about it, they
would have realised that compounds sold by country compounders like
S.A.P.P.A. were quite likely to be fed to pheasants. If that is so then this
damage was not too remote. I agree with your Lordships that the clause in
the contract which purports to exclude Grimsdale’s liability in certain cases
does not apply to this case. I am therefore of opinion that Grimsdale’s appeal
against S.A.P.P.A. ought to be dismissed and I return to Kendall’s appeal
against Grimsdale.

The question whether the statutory warranty under the 1926 Act attached
to the contract between Kendall and Grimsdale raises another question of
quite a different character. Kendall held various c.i.f. documents which gave
them a right to large quantities of these Brazilian goods which were in transit
in various vessels. In particular they held such documents for 750 tons and
these they sold to Grimsdale who took delivery of the appropriate c.i.f.
documents. Counsel were agreed about the general legal effect of that sale.
When goods are shipped c.i.f. there is a contract of affreightment under which
the Master of the vessel is bound to deliver the goods to whoever produces
the documents at the end of the voyage. While the goods are in transit the
first holder of the documents can sell the goods to a buyer by delivering the
documents in exchange for payment of the price, and there may be a chain
of such sales. None of the sellers knows for certain whether his buyer will
take delivery or will resell the goods by delivering the documents to another
buyer. None of these sales is intimated to the Master of the vessel. He has
no concern with them, and once a seller has delivered the documents and
received the price he has no concern with further sales or with the ultimate
delivery of the goods. He does not deliver the goods either actually or
fictionally to his buyer on their arrival. The only delivery of the goods is
by the Master to the ultimate buyer who presents the documents to him.

Kendall contend that the statutory warranty never attaches to any sale
by delivery of c.i.f. documents. This matter was considered by the Court of
Appeal in Draper v. Turner [1965] 1 Q.B. 424 but I agree with my noble and
learned friend Lord Wilberforce that the reasoning in that decision cannot
be supported. Accordingly I must go back to the 1926 Act and examine its

purpose and effect. It attaches the warranty to sales of feeding stuffs for
cattle or poultry. That is obviously intended to protect livestock and its
owners and Parliament must have had in mind primarily at least livestock
in this country. There is a general presumption that Parliament does not
intend to legislate with regard to things done abroad: and this provision
cannot be held to apply to a foreign sale which has no other connection with
this country than that it was the buyer’s intention to bring the feeding
stuffs here for use in this country. Farther I do not think that Parliament
can have intended the warranty to attach to an English contract for the sale
of feeding stuffs which are in transit to a foreign country. What then if the
seller knows that the buyer intends to take delivery of goods consigned to a
British port and immediately ship them abroad? It does not seem to be
within the purpose of the Act that this warranty should be compulsorily
attached to that contract: the warranty will not attach to farther sales
to the farmer in the foreign country. There must be many sales by delivery
of c.i.f. documents where neither the seller nor the buyer knows for certain
how or where the goods will ultimately be used because the buyers may intend
to resell to the highest bidder before the goods are delivered. It is sufficient
to attract the warranty that the parties to such a sale know that there is a
probability that the goods will ultimately be used as food for cattle or poultry
in this country? The operation of section 2 (2) is certainly not confined to
sales to farmers or others who intend to feed the goods to their own live-
stock ; but with regard to imported goods its operation must stop somewhere,
and where it is to stop must be determined by examining the terms of the
Act.

Section 1 requires the seller to deliver to the buyer a statement in writing
regarding the nature substance and quality of the goods before or as soon as
reasonably practicable after delivery. I do not see how that section can apply
to a seller on c.i.f. documents. Even if he knows enough to enable him to
complete the statement he never delivers the goods to the buyer, and if the
buyer resells on the documents he never takes delivery of the goods. Section
3 entitles the purchaser to have a sample taken within fourteen days after
delivery to him: that cannot apply if neither the seller nor the buyer has
ever taken delivery of the goods. Failure to comply with these and other
requirements of the Act involves criminal liability: there are obvious diffi-
culties in the way of enforcing criminal liability against c.i.f. sellers. Leaving
aside sections 2 and 5 it appears to me that the operation of the Act is
confined to sales of goods where the seller can make delivery to the buyer
in this country.

Section 5 applies where the goods are delivered from a ship or quay to the
purchaser. It appears to assume that the delivery will be made by or on
behalf of the seller for it imposes duties on the seller to keep a register of
certain particulars. But the last buyer on c.i.f. documents does not take
delivery from the seller, and the Master does not deliver as the agent of the
last c.i.f. seller. That seller has no concern with the goods at that stage
and I do not see how he can keep this register. Unless the buyer from him
or the Master chooses to give him information he cannot make out this
register. I cannot read into the Act provisions which would be necessary to
enable or require the last c.i.f. seller to comply with the provisions of this
section. Any c.i.f. seller may be the last because his buyer may take delivery,
or he may not be the last because his buyer may resell on the documents.

I can find nothing in the Act to require or to enable every c.i.f. seller to
find out whether his buyer has resold on the documents or has taken
delivery of the goods.

So it appears to me to be clear that no part of the Act other than section
2 (2) can apply to a seller who sells by delivery of the documents. Why
should section 2 (2) alone apply to him? To hold that it did would do no
good to the farmer or the person who feeds the goods to his livestock.
It would only be of advantage to the merchant like Grimsdale who was the
last buyer who took delivery of the c.i.f. documents. Some merchant has

to bear the ultimate liability because it cannot go back to the person who
was primarily responsible—the producer in Brazil. It seems to me that
all the arguments are in favour of construing section 2 so that this warranty
attaches to sellers who have duties to perform under the Act, but that it does
not attach to contracts made by sellers who are not otherwise affected by the
Act. In my view Kendall had no duties to perform under the Act and
the warranty did not attach to the contract of sale which they made with
Grimsdale by delivery of the c.i.f. documents to Grimsdale. The same must
apply to Holland Colombo.

I would dismiss the appeals of Kendall and Holland Colombo because,
and only because, there attached to the contracts made by them conditions
in terms of section 14 (1) of the Sale of Goods Act and the Appellants were
in breach of these conditions.

I have already stated that I would dismiss the second appeal because
Grimsdale were liable to S.A.P.P.A. by reason of a breach of the statutory
warranty under the 1926 Act.

Lord Morris of Borth-y-Gest

MY LORDS,

After Hardwick Game Farm fed certain compounded meal to their
pheasants and partridges and poults and chicks the consequences were
disastrous and alarming. Many of the young birds died: many were made
ill: many were permanently affected. The litigation which resulted has
involved many parties and has raised varied and diverse legal issues. The
compounded meal had been bought by Hardwicks from S.A.P.P.A. It
undoubtedly contained deleterious substance which, as has been held,
undoubtedly was the cause of the havoc. Invoking the provisions of the
Fertilisers and Feeding Stuffs Act, 1926, and subsections (1) and (2) of
section 14 of the Sale of Goods Act, 1893, Hardwicks sued S.A.P.P.A.
S.A.P.P.A. had compounded the meal and in doing so had used as an
ingredient some Brazilian 50% fine ground extracted groundnut meal some
of which they had bought from Lillico and some of which they had bought
from Grimsdale. So those two companies were brought in by S.A.P.P.A.
as third parties. Lillico had bought groundnut meal (to a larger extent)
from Kendalls: Grimsdale had bought groundnut meal (to a larger extent)
partly from Kendalls and partly from Holland Colombo. So Kendalls and
Holland Colombo who imported the meal were brought in as fourth parties.

Before the litigation came on for trial S.A.P.P.A. compromised the claim
of Hardwicks and agreed to pay a certain sum. All parties have recognised
that the settlement was wise and reasonable and the issues between
S.A.P.P.A. and the third parties and those between the third and fourth
parties have been fought on the basis that any liability should be related to
the sum which S.A.P.P.A. agreed to pay.

It is now known that the deleterious substance in the compounded meal
which S.A.P.P.A. sold to Hardwicks was a toxin which has been given the
name ” aflatoxin “. In the careful judgment of Havers J. his finding (result-
ing from a consideration of much detailed evidence) is recorded that the
toxin was in the groundnut meal before it was shipped from Brazil and was
therefore in the groundnut meal bought by S.A.P.P.A. Its presence was not
visible and was not known to any of the parties.

It was held by the learned judge that when S.A.P.P.A. bought the ground-
nut meal from Lillico they made it known to Lillico that their purpose
in buying the meal was so that it should be compounded into feeding stuffs
for various kinds of poultry and pigs. They had previously bought ground-
nut meal from Lillico though not Brazilian groundnut meal. Brazilian
groundnut meal had not been imported into this country before 1959.
S.A.P.P.A. had previously also bought groundnut meal from Grimsdale.
The learned judge held that S.A.P.P.A. also made known to Grimsdale that
their purpose in buying the meal was so that they would use it in their
compounds for pig and poultry rations.

On these facts it was held by the learned judge and unanimously in the
Court of Appeal that S.A.P.P.A. could successfully rely on section 14 (1)
of the Sale of Goods Act, 1893, as against Lillico and Grimsdale. It was
in the course of the latter’s business to supply meal and S.A.P.P.A. had
made known their particular purpose in buying so as to show that they
relied on the skill and judgment of Lillico and Grimsdale. Lillico did not
appeal against the finding of the learned judge that they were liable to
S.A.P.P.A.

A considerable issue was raised in the litigation as to the meaning and
extent of ” a particular purpose “. This issue was mainly debated in respect
of the purchases from the fourth parties Kendall and Holland Colombo. If
Grimsdale failed to recover against the fourth parties for the reason that no
particular purpose had been made known to the fourth parties by Grimsdale
then Grimsdale argue that they should not be held liable to S.A.P.P.A.
My conclusion is that S.A.P.P.A. did make known a particular purpose
to Grimsdale but I will revert to a consideration of section 14 (1) when
dealing with the claims against the fourth parties.

A separate issue arises, however, as between Grimsdale and S.A.P.P.A.
There were three contracts between Grimsdale and S.A.P.P.A. They were
oral. The learned judge found that there had been frequent prior
transactions between them. There had been three to four deals a month
during the previous three years. The practice had been that Grimsdale would
send a contract note to S.A.P.P.A. either later on the day of an oral contract
or on the day following. S.A.P.P.A. would expect to receive such a contract
note. It was routine practice. The same practice was indeed followed when
S.A.P.P.A. bought this type of material (cakes and meals) from London
wholesalers. On the back of the contract notes there were certain terms or
conditions. Mr. Golden who acted for S.A.P.P.A. knew that there were
such conditions though he had not read them. One term on the contract
notes was as follows: ” The buyer under this contract takes the respon-
” sibility of any latent defects “. It was the contention of Grimsdale (a) that
the terms or conditions on the contract notes were terms of or were incor-
porated into the relevant contracts of sale and (b) that the above quoted
term operated, on the facts of the present case, to relieve Grimsdale from
any liability to S.A.P.P.A. As to (a) the learned judge after considering
the case of McCutcheon v. David Macbrayne Ltd. [1964] 1 Lloyd’s Law
Rep. 16, held that the conditions in the contract note were not incorporated
into the contracts of sale. In agreement with all the members of the Court
of Appeal I consider that they were. Over the course of a long period prior
to the three oral contracts which are now in question S.A.P.P.A. knew that
when Grimsdale sold they did so on the terms that they had continuously
made known to S.A.P.P.A. In these circumstances it is reasonable to hold
that when S.A.P.P.A. placed an order to buy they did so on the basis and
with the knowledge that an acceptance of the order by Grimsdale and
their agreement to sell would be on the terms and conditions set out on
their contract notes to the extent to which they were applicable.

As to (b) I am in agreement with the members of the Court of Appeal
that the term which I have quoted does not avail Grimsdale. In their
contract of sale with S.A.P.P.A. there was an implied condition that the
goods would be reasonably fit for the purpose of being used in compounds
for pig and poultry rations. There was also an implied condition as to
merchantability. There was also an implied condition that the goods supplied
would correspond with their description. It is well settled law that clauses
such as that now being considered must be clear before they can be held to
exclude a condition of the contract. If the contracts between S.A.P.P.A. and
Grimsdale are held, as I think they should be held, to include (inter alia) the
condition as to fitness for the known particular purpose and also the term that
the buyer takes the responsibility of any latent defects the latter term should
not be held to be inconsistent with or destructive of the former. The word
” defects ” relates prima facie to the quality of goods. Goods might be fit
for a known particular purpose and yet have certain defects. Any latent
defects covered by the clause are such as do not prevent the goods being

reasonably fit for their purpose. As the clause does not refer to the con-
ditions which, being implied, are part of the contract between the parties
and as, in my view, the clause does not either expressly or by necessary
inference negative or cancel any of the conditions it must be construed as
referring to such latent defects as do not prevent compliance with the
conditions.

The clause cannot in any event affect the question of any liability of
Grimsdale under the Fertilisers and Feeding Stuffs Act, 1926: there is a
prohibition against contracting out of the provisions of that Act.

The implied condition under section 14 (1) of the Sale of Goods Act as
held by the learned judge was that the groundnut meal should be reasonably
fit for the purpose of being used in S.A.P.P.A.’s compounds for pig and
poultry rations. The compound food sold by S.A.P.P.A. was in fact given
by Hardwicks to young pheasants and partridges. If such are not within
the designation of ” poultry ” does that prevent S.A.P.P.A. from recovering
damages’? I think not. There was much evidence which showed that it
was quite usual to feed poultry food to pheasants. There was evidence that
turkey and pheasant rations are practically the same: and turkeys are within
the description of poultry. Dealers in poultry foods would regard food for
young pheasants as being within the ” general umbrella ” of poultry foods.
In these circumstances if Grimsdale had given thought to the matter they
would I think have considered that if they supplied meal for use in a com-
pound for poultry rations it was reasonably likely that such poultry rations
would be fed to pheasants or at least that such feeding to pheasants would
be liable to happen (see Hadley v. Baxendale 9 Exch. 431, Koufos v. C.
Czarnikow Ltd. [1967] 3 All E.R. 686).

In agreement with the learned judge and with all members of the Court
of Appeal I consider, therefore, that the condition implied by section 14 (1)
arose between the third parties and S.A.P.P.A. and in agreement with all
the members of the Court of Appeal that though the sold notes clauses
were, in general, applicable the clause concerning latent defects did not
avail the third parties to exempt them from liability.

I pass, then, to consider the position in regard to section 14 (1) as between
the third and fourth parties. Here the various contracts were in writing.
They were on the printed standard form of the London Cattle Food Trade
Association. I need not set out the dates and details of the contracts. They
are recorded in the judgment of the learned judge. Lillico bought from
Kendall: Grimsdale bought both from Kendall and from Holland Colombo.
The finding of the learned judge was that Kendall on their own account and
as brokers for Holland Colombo knew the particular purpose for which
Lillico and Grimsdale respectively required the Brazilian groundnut meal
” namely to resell in smaller quantities to be compounded into food for
” cattle and poultry “. He held that it was in the course of both Kendall’s
business and of Holland Colombo’s business to supply Brazilian groundnut
meal. The learned judge and Diplock L.J. held that liability under section
14 (1) did not follow from those findings: they considered that no reliance
upon Kendall and Holland Colombo was being placed. Sellers L.J. and
Davies L.J. held that there was reliance.

The Act of 1893 was an Act for codifying the law relating to the sale of
goods. If its provisions are clear it should be possible to reach decision by
reference only to the facts that arise in some particular situation. The law
as it evolved before 1893 is revealed by a study of a number of notable
decisions. The law since 1893 is in the terms of the Statute. Many of the
reported cases since 1893 are seen when analysed to be no more than decisions
on the facts of a case as to whether the words of the section applied. I
therefore limit my citations. In general there is no implied warranty or
condition as to the quality of goods which are supplied under a contract
of sale nor as to their fitness for any particular purpose. There are, however,
exceptions to this general rule. One exception arises in the following
circumstances: (1) if the buyer makes known to the seller the particular
purpose for which the goods are required; that may be made known

expressly or it may be made known impliedly, and (2) if the buyer makes
that known so as to show that he relies on the skill or judgment of the
seller and (3) if the goods are of a description which it is in the course of
the business of the seller (who need not necessarily be the manufacturer) to
supply. In those circumstances (subject to one proviso) there will be an
implied condition that the goods shall be reasonably fit for the purpose
which has been made known.

In dealing with this part of the case the learned judge said:

” I am satisfied that Kendall on their own account and as brokers
” for Holland Colombo knew the particular purpose for which Lillico
” and Grimsdale respectively required the Brazilian groundnut meal,
” namely to resell in smaller quantities to be compounded into food for
” cattle and poultry.

” It is established by Manchester Liners Ltd. v. Rea Ltd. [1922] 2 A.C.
” 74; (1922) 10 LL.L.Rep. 697, that if the particular purpose is made
” known by the buyer to the seller, then, unless there is something in
” effect to rebut the presumption, that in itself is sufficient to raise the
” presumption that he relies on the skill and judgment of the seller.”

After a reference to some cases he said:

” It seems to me however that there are facts in this case which do
” rebut the presumption. Lillico, Grimsdale, Kendall and Holland
” Colombo were all members of the London Cattle Food Trade Associa-
” tion (Inc.)”.

He then referred to what Diplock L.J. had said in C. E. B. Draper & Son
Ltd. v. Edward Turner & Son Ltd. [1965] 1 Q.B. 424. He then proceeded:

” It was argued for Grimsdale that this comment was obiter but, even
” if it was, I respectfully agree with it. In these circumstances, notwith-
” standing the evidence of Mr. Waterfall, I am unable to accept that in
” any of these cases the buyers did rely upon the seller’s skill and judg-
” ment and accordingly no condition can be implied under section 14 (1)
” of the Sale of Goods Act 1893 that the goods were reasonably fit for
” the said purpose.”

I think that it is implicit from these passages that the learned judge
was holding not merely that the sellers knew the particular purpose but that
the buyers either expressly or impliedly had made known the purpose. It
was because the learned judge was unable to hold that there was reliance that
he did not hold in favour of the third parties under section 14 (1). Mr.
Waterfall (of Grimsdales) said in his evidence that in his dealings with
Mr. McLeod (of Kendalls) it was understood that Grimsdales were buying for
wholesale distribution as animal feed for poultry and cattle: it was implicit
that anything that Grimsdales bought or sold, they bought and sold only for
animal feeding stuffs. Mr. Waterfall said that Grimsdales would not trade
with anyone they did not trust. I do not read the learned judge’s judgment
as doubting Mr. Waterfall’s evidence generally but only as disagreeing with
the conclusion that there was reliance upon the skill and judgment of Kendalls.
Mr. McLeod had been market clerk with Kendalls for 17 years and had been
in the trade for 40 years. He explained that Kendalls got to know what was
being offered in the market: they found that Brazilian groundnuts ” com-
” peted, with the duty, against Indian “. He said ” It is all a question
” of comparison of price and quality, taking level quality “. So Kendalls
purchased Brazilian groundnuts and then sought purchasers in the market.
Mr. McLeod had traded with Grimsdales and Lillico for years. When he
sold to Grimsdales he would know that Grimsdales would buy in order to
make various re-sales to compounders who would in turn mix the groundnuts
into food, some for cattle, some for poultry and some for birds. Mr. Brown
(of Lillico) said that Mr. McLeod spoke of a nice line of groundnut extrac-
tion. Mr. Brown said that he placed great reliance on Kendall’s integrity as

brokers and he knew that Mr. McLeod would not offer him anything that
he knew was rubbish.

There was I think ample evidence to warrant a finding that the buyers
impliedly made known their purpose in buying. It was so that they could
re-sell in smaller quantities to be compounded into food for cattle and
poultry. Was this a particular purpose? I have no doubt that it was. The
degree of precision or definition which makes a purpose a particular purpose
depends entirely on the facts and circumstances of a purchase and sale
transaction. No need arises to define or limit the word ” particular “. If a
buyer explains his purpose or impliedly makes it known so that, to put the
matter in homely language, in effect he is saying ” that is what I want it for,
but I only want to buy if you can sell me something that will do ” then it will
be a question of fact whether the buyer has sufficiently stated his purpose.
There is no magic in the word ” particular “. A communicated purpose, if
stated with reasonably sufficient precision, will be a particular purpose.
It will be the given purpose. Sometimes the purpose of a purchase will be
so obvious that only one purpose could reasonably be in mutual contempla-
tion. An only purpose or an ordinary purpose may therefore be a particular
purpose. Preist v. Last [1903] 2 K.B. 148 : Wallis v. Russell [1902] 2 I.R. 585.
Sometimes a particular purpose will be made known expressly: sometimes it
will be made known by implication.

If then Grimsdales and Lillico made it known (either expressly or impliedly)
that they were buying the groundnuts in order to pass them on by way of
re-sales to a number of people who would use the groundnuts in making
compound foods for cattle and poultry that, in my view, was a particular
purpose. No greater precision or elaboration of purpose was necessary.
The law neither requires the use of any set formula nor the formal re-iteration
of that which has been made clear.

The next question that arises is whether that particular purpose was made
known so as to show that the buyers relied on the skill and judgment of the
sellers. The object of stating or making known a particular purpose will
usually be to ensure that the seller only sells something that is reasonably fit
for the purpose. It was well established at common law (see James v. Bright
5 Bing 533) and it would appear to be commonsense that if a man sells some-
thing for a particular purpose he undertakes that it will be fit for that purpose.
A question of fact may arise therefore whether a particular purpose was made
known in such a way or in such circumstances that showed that the buyers
were relying on the sellers to show skill and judgment so that they would
supply what was reasonably fit for the buyer’s need. Again, there is no
magic in any particular word in the section. In Manchester Liners Ltd. v.
Rea Ltd. [1922] 2 A.C. 74 coal was ordered by the plaintiff (shipowners) from
the defendants (coal merchants): the coal was expressly ordered for a named
steamship. The coal that was supplied was unsuitable for that ship. Lord
Sumner pointed out in his speech (at page 90) that the words ” so as to show ”
in section 14 (1) are satisfied if the reliance is a matter of reasonable infer-
ence to the seller and to the court. The fact that the buyer in that case knew
at the date of the contract that the seller’s sources of supply of coal were
limited did not negative the implication of a condition of reasonable fitness.

The matter was clearly put by Lord Wright in Cammell Laird & Co. v.
The Manganese Bronze and Brass Co. [1934] A.C. 402 when he said (at page
423):

” Such a reliance must be affirmatively shown: the buyer must bring
” home to the mind of the seller that he is relying on him in such a way
” that the seller can be taken to have contracted on that footing. The
” reliance is to be the basis of a contractual obligation.”

Lord Wright also pointed out (at page 427) that reliance need not be total or
exclusive. He re-echoed what Lord Sumner had said in Medway Oil and
Storage Co. Ltd. v. Silica Gel Corporation 33 Com. Cas. 195. In the later

313165 A 9

case of Grant v. Australian Knitting Mills Ltd. [1936] AC 85 Lord Wright
said (at page 99):

” It is clear that the reliance must be brought home to the mind of the
” seller expressly or by implication. The reliance will seldom be express:
” it will usually arise by implication from the circumstances:”

He proceeded to point out that, when there is a purchase from a retailer,
reliance by the buyer upon the retailer will in general be inferred from
the fact that the buyer goes to the shop in the confidence that the trades-
man has selected his stock with skill and judgment: the main inducement
to deal with a good retail shop is the expectation that the tradesman will
have bought the right goods of a good make.

My Lords, the evidence points, in my view, to the conclusion that the
contracts between the buyers and the sellers were on the basis that the
buyers were relying on the skill and judgment of the sellers to supply goods
that would be reasonably fit for the purpose which the buyers had made
known to the sellers. Mr. McLeod (of Kendalls) was concerned on the
market with selling feeding stuffs for all farm stock: the feeding stuff which
he sold was sold, without any reservation, as being fit to be fed to all
stock on the farm: when he sold to Grimsdales (or to other comparable
purchasers) he would expect that there would be many re-sales in small
quantities to many compounders who would mix the groundnuts into food,
in some cases for cattle, in some cases for poultry and in some cases for
birds.

It was contended, however, that because the buyers and sellers were all
members of the London Cattle Food Trade Association reliance by the
buyers upon the seller’s skill and judgment must be or should be ruled out.
The learned judge expressed his concurrence with, and as I read his judgment
was much influenced by. the view that fellow membership of the Association
negatived reliance. In C.E.B. Draper & Son Ltd. v. Edward Turner & Son
Ltd. (supra.) Diplock L.J. in observing that in that case it had not been
argued that any warranty as to fitness was to be implied under section 14 (1)
added that he supposed that that was for the ” good reason ” that as both
parties were members of the London Cattle Food Trade Association it could
hardly be suggested that the buyers relied upon the sellers’ skill or judgment.
That was a purely personal view expressed obiter in relation to a point
not debated in the case. With respect I cannot agree that the fact that
buyers and sellers are members of the Trade Association inevitably or
generally brings it about that no reliance is placed on the skill or judgment
of sellers. The contrary may well be the case. Nor does the fact that on
arrival of the goods there will be or may be analysis of them negative a
a reliance on skill or judgment. The cattle food market was, in Sellers L.J.’s
phrase, ” an informed market”. Those who were selling would themselves
have had to acquire. They would exercise their judgment and their skill
in making their purchases. They would decide whether or not to buy from
a new supplier or from a new source. They would decide whether to acquire
some new variety. The buyers from them might have added confidence
because they would feel that they could rely upon a fellow member of their
Association. Such reliance might especially arise if a new line in some
commodity was being sold. I agree with Sellers L.J. when he said:

” It is a market in which a prospective buyer would be entitled to
” expect that if he bought a feeding stuff commodity he would receive
” that which he or his purchaser then could use as feeding stuff.”

The contracts between the third and fourth parties which were on the
printed form of contracts of the Association contained a clause (Clause 10)
under the heading of Latent Defects which was in these terms:

” The goods are not warranted free from defect, rendering same
” unmerchantable, which would not be apparent on reasonable examina-
” tion. any statute or rule of law to the contrary notwithstanding.”

Whatever may be the effect of this clause I think that it cannot be construed
as negativing the implication of a condition under section 14 (1) nor a

defeating a claim for damages when there is an election to treat a breach
of a condition implied by section 14 (1) as a breach of warranty (see the
judgment of Fletcher Moulton L.J. in Wallis Son & Wells v. Pratt & Haynes
[1910] 2 K.B. 1003 and see [1911] A.C. 394). The words in clause 10 are
wholly inapt to exclude a condition of the contract. They do not refer
to a condition. You do not exclude a condition by excluding or purporting
to exclude a warranty. In Clarke v. Army and Navy Co-operative Society
[1903] 1 K.B. 155, Collins M.R. (at page 163) expressed the view, though
perhaps obiter, that the words ” no warranties are given with the goods sold
” by the society except on the written authority of one of the managing
” directors or the assistant manager ” would not exclude a condition implied
by section 14 (1). In Cammell Laird & Co. v. The Manganese Bronze and
Brass Co. (supra) Lord Wright having referred (at page 481) to Wallis v. Pratt
(supra) and to Baldry v. Marshall [1925] 1 K.B. 260 said:

” The principle of these authorities is that though a condition is
” deemed to be and can be treated as a warranty if it is not availed
” of to reject the goods, still it remains a condition ; once a condition
” always a condition ; hence apt and precise words must be used to
” exclude it; the words guarantee or warranty are not sufficiently clear.”

It was contended in the alternative that the existence of clause 10 in the
contract was a factor which could lend support to the view that the buyers
(third parties) were not placing reliance upon the skill or judgment of the
sellers (fourth parties). I cannot accept this. If clause 10 does not refer
to conditions it cannot affect a condition which arises because the buyers
make known to the sellers their particular purpose in circumstances which
show that they do rely on the seller’s skill or judgment.

As it was common ground that Brazilian groundnut extractions were goods
of a description which it was in the course of the seller’s business to supply,
I think that for the reasons which I have set out it was established that
there was an implied condition that the goods to be supplied would be
reasonably fit for the particular purpose which was made known i.e. the
purpose of re-selling in smaller quantities to be compounded into food for
cattle and poultry.

The next question is whether the goods which were supplied were reason-
ably fit for the purpose made known. There was ample evidence to support
the conclusion that they were not.

Liability was also claimed both as between the defendants and the third
parties and as between the third and fourth parties under the provisions
of section 14 (2). The respective sellers did deal in goods of the description
of Brazilian Groundnut Extractions. The respective buyers did buy by
description. There was therefore an implied condition under section 14 (2)
that the goods should be of merchantable quality. No question arises
under the proviso to the subsection. Even if the goods had been examined
by the respective buyers the defects in the goods would not have been
revealed. So the issue which arises is whether the goods were of
” merchantable quality “. By ” the goods ” I mean the goods which were
received by the respective buyers. When considering section 14 (2) there
need not be the circumstance that goods will have been asked for by a
buyer in order to satisfy or to meet some stated purpose. Some goods
which are bought by description may be capable of being used in many
different ways. It can happen, therefore, that if a buyer just orders goods
generally by description he may want them for only one or possibly for more
than one of several uses. It would not be reasonable to require the seller
to deliver goods which would do for all the possible purposes. If the buyer
wants goods that are suitable for each one of several purposes he must
make that clear to the seller and make it clear that he is relying upon the
seller to let him have goods that would be suitable for each one of the
purposes. If the buyer merely orders goods by description all that he can
expect is that he will get goods that correspond with the description and
goods of such a quality that they could be used for one of the purposes

for which such goods are normally used. In the old case of Gardiner v.
Gray 4 Camp. 144 Lord Ellenborough said:

” He cannot, without a warranty, insist that it shall be of any

” particular quality or fineness, but the intention of both parties must

” be taken to be that it shall be saleable in the market under the

” denomination mentioned in the contract between them. The purchaser

” cannot be supposed to buy goods to lay them on a dunghill.”

Sometimes there may only be one use for an article. The provisions of

subsections (1) and (2) of section 14 will overlap. As Lord Wright said

(at pages 99 and 100) in Grant v. Australian Knitting Mills Ltd. (supra)—

” whatever else merchantable may mean it does mean that the article

” sold, if only meant for one particular use in ordinary course, is fit

” for that use; merchantable does not mean that the thing is saleable

” in the market simply because it looks alright; it is not merchantable

” in that event if it has defects unfitting it for its only proper use

” but not apparent on ordinary examination.”

In Niblett v. Confectioners Materials Co. [1921] 3 K.B. 387 Atkin L.J.
at page 404 used the words ” No one who knew the facts would buy them
” in that state or condition ; in other words they were unsaleable and
” unmerchantable “. This passage brings out the point that in deciding
whether goods are merchantable it has to be considered whether some
buyer or buyers could reasonably be contemplated who would wish to buy
goods which were in the actual condition of the goods tendered and who
had knowledge of defects in them which might be hidden. The goods
must of course comply with the description. If therefore, goods of the
contract description are tendered and if the tendered goods though having
certain defects are reasonably capable of being put to a use for which a
buyer knowing of the defects would be likely to buy them, then they are of
merchantable quality. This I think is what was indicated by Lord Wright
(at page 430) in his speech in the Cammell Laird case. I prefer his approach
to that which was expressed by Farwell L.J. in Bristol Tramways etc.
Carriage Co. Ltd. v. Fiat Motors Ltd. [1910] 2 K.B. 831, 841.

In the earlier case of Canada Atlantic Grain Export Company (Inc.) v.
Eilers and Others 35 Com. Cases, 90, Lord Wright at page 102 had said:
” It seems to follow that if goods are sold under a description
” which they fulfil, and if goods under that description are reasonably
” capable in ordinary use of several purposes, they are of merchantable
” quality within section 14 subsection (2) of the Act if they are reason-
” ably capable of being used for any one or more of such purposes
” even if unfit for use for that one of those purposes which the particular
” buyer intended. No doubt it is too wide to say that they must be of
” use for some purpose, because that purpose might be foreign to their
” ordinary user.”

If a buyer wants more than this he must get his seller to sell on the basis
that the goods are reasonably fit for some stated purpose. The buyer
may not fare so well if he cannot bring himself within section 14 (1).

In my view, the learned judge applied the correct tests when considering
the question of liability under section 14 (2). As I consider that section
14 (1) was operative not only as between the defendants and the third
parties but also as between the third and fourth parties liability rests as
a result of breaches of the implied conditions arising under section 14 (1).
The question of liability under section 14 (2) has to be approached on the
assumption that no particular purpose was made known. The learned judge
analysed the evidence carefully. He came to the conclusion that though
the meal was unfit for use for one purpose (i.e. for use in a compound
food for poultry) it could not be said that in the form in which it was
tendered the meal was of no use for any purpose for which the meal (in
its defective state) would normally be used: accordingly he could not hold
that under its description it was unsaleable. The learned judge had a great
deal of evidence to consider and as there was evidence which warranted
his conclusion I do not think that it can be disturbed.

Liability on the part of the respective sellers is also claimed by virtue
of the provisions of section 2 (2) of the Fertilisers and Feeding Stuffs Act,
1926. By that subsection it is provided:

” On the sale for use as food for cattle or poultry of an article
” included in the first column of the First or Second Schedule to this
” Act there shall be implied, notwithstanding any contract or notice
” to the contrary, a warranty by the seller that the article is suitable
” to be used as such, and does not, except as otherwise expressly stated
” in the statutory statement, contain any ingredient included in the
” Third Schedule to this Act.”

It is necessary to consider, in the first place, the position as between the
defendants and the third parties. In my view, section 2 (2) applied. The
sales of Brazilian groundnut meal were made for the purpose for which
the defendants required the meal i.e. to be compounded into feeding stuffs
for various kinds of poultry and pigs. It is said, however, that as the meal
would not normally be given as food in its neat stage but would only be
an ingredient in what was later to be used as food, the meal was not an
” article” which was sold for use as food. The question that arises was
thus formulated in the Court of Appeal: ” Does the Act apply to a
“substance which is sold for the purposes of resale as an ingredient
” in some compounded food and not as a foodstuff itself? “

On this question there has been a division of opinion. The learned
judge and Sellers L.J. answered the above question in the affirmative
while Davies and Diplock L.JJ. answered it in the negative. In support
of the negative view it was contended that the compounders (S.A.P.P.A.)
were free to select the ingredients for their compounds and the percentages
of their inclusion but that Lillico and Grimsdale would not know nor be
concerned to know how the compounds were to be composed. Kendall
and Holland Colombo it was submitted would be even further removed
from any knowledge or control over the compounds into which the ground-
nut extractions would be introduced. It was further submitted that the
1926 Act draws a distinction between an “article” and its “ingredients”
(see section 1 (l)(c) section 2 (2), section 2 (4), section 2 (5), section 7 (1),
section 20 (2) and (3) and the Third and Fifth Schedules) and that accord-
ingly the warranty given by section 2 (2) is limited to the sale of an
” article ” which is intended to be used in its existing state (and as the same
article) as food for cattle and poultry.

It would appear that many of the articles set out in the Schedules of
the Act are generally used as ingredients in some compound. This would
suggest that the warranty was to apply both to any articles used as food
in their existing state and to articles which would go into a compound
which would be used as food. The articles were, in my view, sold with a
warranty that they would be suitable to be used as food for cattle or
poultry: that would cover use as food for cattle or poultry in a form
which a reasonably competent user would adopt: they would be so used if
used in a compound food for cattle or poultry provided always that the
compound was made in a reasonable or normal or recognised manner. I
agree, therefore, with Sellers L.J. that the warranty applies whether the use
as food is with or without admixture with other articles or substances.

It is submitted, however, that section 2 (2) does not apply to any c.i.f.
contract of imported goods. The various contracts between the fourth and
third parries were contracts for the sale of goods on c.i.f. terms. Thus for
example there was a contract (on printed form No. 6 of the London Cattle
Food Trade Association) made between Kendall and Grimsdale on the 28th
March, 1960. It was for 500 tons of Brazilian groundnut extractions at a
specified price ” cost freight and insurance to London.” Shipment was to
be made in Santos during April, 1960. There was a provision as to quality.
There was the Latent Defect clause already noted. There were express
provisions relating to sampling and analysis. Payment was to be made by
cash in London not later than 30 days from date of Bill of Lading or on
arrival of steamer at destination, whichever was the earlier, of 98 per cent.

of the provisional invoice amount in exchange for documents: the small
balance to be settled on rendering final invoice. There was a provision
whereby buyers and sellers agreed that for the purpose of proceedings, either
legal or by arbitration, the contract should ” be deemed to have been made
“in England and to be performed there”: exclusive jurisdiction (in the
terms of clause 26) was given to English courts and disputes were to be
settled according to the law of England. In fact the contract was made
in England between trading concerns carrying on business in England. In
accordance with the requirement of the contract the shipping documents
were taken up and paid for in London.

It is alternatively submitted that section 2 (2) does not apply to any c.i.f.
contract where the property in the goods has passed before the goods have
crossed the ship’s rail on discharge. A further alternative submission is
that section 2 (2) does not apply to any c.i.f. sale (on contract form No. 6)
whether the property in the goods has passed before or after the goods have
come within the territorial limits of the United Kingdom. Reliance was
placed upon the decision in Draper’s case (supra) to the extent that it decided
that section 2 (2) does not apply to sales under c.i.f. contracts where the
property in the goods passes at a time when the goods are outside the
territorial limits of the United Kingdom.

My Lords, these submissions require a study of the provisions of section
2 (2) in its context in an Act which clearly was intended (inter alia) to
prevent unsuitable food being given to cattle or poultry. When section 2 (2)
refers to a sale of an article I think the reference is to a sale which takes
place within the United Kingdom. Reading the Act as a whole the provisions
mainly relate to transactions which take place at a time when the articles
referred to in the Schedules are within the United Kingdom, but I do not
think the Act is limited so as to relate only to such transactions. The
Act by section 24 gives exemption in the case of a certain, rather limited,
class of sales. If section 2 (2) applies to sales which are not exempted I
see no justification for ignoring it even if it is thought that some of the
provisions of some sections of the Act do not or may not apply to sales
which are covered by the words of section 2 (2).

In Draper’s case it was held that the sale of goods under a c.i.f. contract
(in the form now being considered) took place where the goods were when
the property in them passed. That meant that in the case of goods being
carried across an ocean the sale would take place at the place on the ocean
where the moving ship happened to be at the moment when, on payment,
documents were handed over. The learned judge was bound by this
decision and accordingly became bound to investigate the positions of the
various ships at the respective dates of payment with the remarkable result
that warranties applied to goods in those cases where payment was made
(and the documents received) after a ship was within territorial waters but
that warranties did not apply if a ship was not within territorial waters. I
cannot think that Draper’s case was correct in so deciding.

The opening words of section 2 (2) are ” on the sale “. In my view,
the subsection applies to any sale made within the territorial limits of the
United Kingdom. That was fully recognised in Draper’s case. But in that
case the court pointed to the distinction between a contract for sale and a
sale and held that the sale (as opposed to the contract for sale) took place
where the goods happened to be at the time of payment. Even on that
somewhat refined approach I would not agree with the conclusion. Section 1
of the Sale of Goods Act provides that ” a contract of sale of goods ” may
be either (a) a contract whereby the seller transfers the property in goods
to a buyer: such a contract of sale is called a sale; or (b) a contract
whereby the seller agrees to transfer the property in the goods to a buyer
at some future time or subject to some condition to be fulfilled: such a
contract of sale is called an agreement to sell. An agreement to sell becomes
a sale when the time elapses or the conditions are fulfilled subject to which
the property in the goods is to be transferred. These provisions must be
considered in relation to a contract for the sale of goods on c.i.f. terms.

Where there is a contract for the sale of goods on c.i.f. terms a seller may
either arrange for the shipment of goods (of contract description and
quality) on a ship bound for the destination stated in the contract or he
may buy (when afloat) goods which have been so shipped and in accordance
with the terms of the contract he must tender the shipping documents to
the purchaser. While on the voyage the goods are at the purchaser’s risk
but one of the shipping documents which the purchaser will receive will be
a policy of insurance. The incidence of the risk is not linked with the
passing of the property. Such a contract for the sale of goods is, therefore,
implemented by the seller by the transfer by him of the proper documents.
The general nature of c.i.f. contracts has frequently been defined (see the
judgment of Kennedy LJ. in Biddell Brothers v. E. Clemens Horst Company
[1911] 1 K.B. 934 approved in [1912] A.C. 18, the speech of Lord Wright in
Ross T. Smyth & Co. Ltd. v. T. D. Bailey Son & Co. [1940] 3 AH E.R. 60,
the speech of Lord Porter in The Julia [1949] A.C. 293). It can of course
happen that at the time when payment is made in exchange for documents
the goods have already been lost. In his speech in Ross T. Smyth & Co. Ltd.
(supra) Lord Wright pointed out that that did not mean that a c.i.f. contract
was a sale of documents not goods. The contract ” contemplates the transfer
” of actual goods in the normal course, but, if the goods are lost, the insur-
” ance policy and bill of lading contract—that is, the rights under them—
” are taken to be, in a business sense, the equivalent of the goods.” If the
word ” sale ” in section 2 (2) is being regarded as the transaction which
brings about a transfer of property, then in the present case there was such
a transaction when, on payment in London, there was receipt of the docu-
ments in London. The sale was therefore in London. Nothing happened
on the various ships. The particular location of a particular ship was an
entirely irrelevant circumstance. The transaction which consisted of making
payment in exchange for the documents was effective to pass the property.
The delivery of a Bill of Lading operated as a symbolical delivery of the
goods that it covered (see Sanders v. Maclean 11 Q.B.D. 327, 341). If there
were a sale in England of a chattel which was in a foreign country there
might be questions as to whether there were provisions of the local law which
would affect the passing of property. No such points here arise.

If, therefore, the technical approach of the Court of Appeal in Draper’s
case is followed and if the word ” sale ” in section 2 (2) is considered by
reference to section 1 of the Sale of Goods Act, then the parties made
” a contract of sale ” of goods which was called ” an agreement to sell ”
until such time as the conditions were fulfilled subject to which the property
in the goods was to be transferred but which became a ” sale ” when those
conditions were fulfilled. On this basis there was an agreement to sell which
was made in England by parties carrying on business in England who made
conditions to be fulfilled in England. Those conditions were fulfilled in
England and the contract of sale (or agreement to sell) then became a sale.
It became a sale in England. There was the further consideration (if it
advances the matter) that the goods were destined for England.

It seems to me, therefore, that section 2 (2) was applicable.

The same result is reached by a slightly different approach. The word
” sale ” in section 2 (2) may reasonably be considered to be referring to a
contract of sale or an agreement to sell. A warranty is in its nature a
contractual term. In section 14 (1) and (2) of the Sale of Goods Act the
implied conditions are referable to a contract of sale. An implied warranty
under section 2 (2) would seem, therefore, to be something implied in a
contract of sale. The various contracts (which begin with the words ” We
have this day sold “) were all made in England between parties who were in
England. The implied warranty would therefore arise at the time of and
be a term of the contract of sale although it would only be effective when
the contract became a sale.

In my opinion, therefore, the provisions of section 2 (2) applied and there
was a warranty in the terms of the section. I do not consider that in this
case dependence need be placed upon clause 26 of the contract to reach
this conclusion.

I do not find it necessary to express any final conclusion in regard to the
questions whether various other sections of the Act apply in the case of
this or other c.i.f. contracts. A question may arise whether every seller
under a c.i.f. contract must give the prescribed statutory instrument. The
obligation is to give one to the purchaser on or before delivery. In the
case of a c.i.f. contract a seller will not be making actual delivery of the
goods: he will have handed over documents which will entitle the holder of
them to obtain the goods from the Master of a ship. But delivery in
section 1 may cover delivery of documents. As Sellers L.J. pointed out,
shippers and exporters are not unaccustomed to meeting the requirements
of importing countries in respect of such matters as certificates of origin or
licences in respect of goods shipped. I see no special difficulty in the
application of section 1. Much discussion took place as to the applicability
of section 5 and the keeping of a register in cases of c.i.f. contracts. I
consider that the provisions of section 5 and, indeed, those in various other
sections are primarily referable to sales in this country of goods which had
arrived in this country prior to such sales. There are certainly difficulties
in applying the section in the case of many sales on c.i.f. terms. Seller A
might sell on c.i.f. terms to B: if B paid A and received the shipping
documents he might sell on c.i.f. terms to C: C after payment to B and
receipt of the shipping documents from him might sell to D who after
payment and receipt of the shipping documents might present a Bill of
Lading to the Master of the carrying ship and receive the goods. Section 5(2)
refers to ” The seller of an article … so delivered or consigned “. That
is a reference to subsection (1) which refers to ” an article delivered or
consigned direct ” from a quay or a ship to a purchaser “. The section
is not wholly clear, but it would appear to denote a seller who delivers or
consigns to a purchaser direct from a quay or a ship. In the illustrations
that I have mentioned the respective sellers would hardly seem to be sellers
who deliver or consign to a purchaser direct from a quay or a ship.
Furthermore, the respective sellers, in the above illustrations, would not neces-
sarily know the date of delivery from ship to purchaser and could not enter
such date in a register so as to comply with section 5(2)(a).

Without endeavouring to express an opinion as to various possible
situations that may arise, I consider that the words of section 2(2) are clear
and that the warranty specified did in this case arise. It was a warranty
that the Brazilian groundnut extraction was suitable for use as food for
cattle or poultry. There is no definition of ” poultry ” in the Act. Are
partridges and pheasants included within the word? The competing con-
tentions in regard to this matter are comprehensively contained in the
judgments now under consideration. I do not think that any useful purpose
would be served by doing more than to state the conclusion which I have
reached, which is that partridges and pheasants are not within the description
of ” poultry “.

Was the warranty broken? In my view, it was. The groundnut extraction
was not suitable for use as food for cattle and poultry. What, then, was
the measure of damages for the breach? The problem is the same as that
which arises if the damages are claimed in this case for breach of the
condition implied under section 14(1) of the Sale of Goods Act. When the
sellers decided to sell they must be taken to have known (for they either
knew or are not excused if they did not) that if they sold there would be
(a) a condition implied by statute that what they sold would be reasonably
fit for the particular purpose for which it was being bought, i.e., as between
the fourth and third parties, that it was being bought to resell in smaller
quantities to be compounded into food for cattle and poultry ; and (b) a
warranty implied by statute that what they sold would be suitable for use
as food for cattle or poultry. The circumstance that in one case there could
be no contracting out makes no difference. In either case if there is a
breach the measure of the damages that flow is to be determined by an
application of recognised legal principle. The evidence showed that it was
normal and reasonable to give poultry food to young partridges and
pheasants and the contracting parties must have contemplated that it was

reasonably likely that what was sold as fit for poultry would be fed to
young partridges and pheasants. I think, therefore, that the damages as
claimed did flow from the breach.

For the above reasons I would in each case hold the sellers liable both
under section 14(1) of the Sale of Goods Act and under section 2(2) of the
Fertilisers and Feeding Stuffs Act. 1926.

Lord Guest

MY LORDS,

Section 14 (I) of the Sale of Goods Act, 1893

Different considerations may apply according as to whether the question
arises as between S.A.P.P.A. and Grimsdale, on the one hand, or as between
Grimsdale and Kendall and Holland Colombo, on the other hand.

S.A.P.P.A. and Grimsdale

Section 14 (1) provides as follows: —

” Where the buyer, expressly or by implication, makes known to the
” seller the particular purpose for which the goods are required, so as to
” show that the buyer relies on the seller’s skill or judgment, and the
” goods are of a description which it is in the course of the seller’s busi-
” ness to supply (whether he be the manufacturer or not), there is an
” implied condition that the goods shall be reasonably fit for such
” purpose, provided that in the case of a contract for the sale of a
” specified article under its patent or other trade name, there is no
” implied condition as to its fitness for any particular purpose: “

I have little doubt that the Court of Appeal were right in holding that
S.A.P.P.A. were entitled to recover from Grimsdale in respect of Grimsdale’s
breach of warranty under section 14 (1). S.A.P.P.A.’s representative, Mr.
Golden, made known to Grimsdale the particular purpose for which the
Brazilian ground nut meal was required, namely, for use in compounds for
pig and poultry rations. S.A.P.P.A. was the compounder and the learned
judge was, in my view, entitled to draw the inference that S.A.P.P.A. relied
on Grimsdale’s skill and judgment. Brazilian ground nut meal was of a
description which it was in the course of Grimsdale’s business to supply.
There was a breach of the warranty because it was not reasonably fit for
the purpose.

In the case of S.A.P.P.A. and Grimsdale there was a verbal contract
followed on the next day by a Sold Note which contained a condition in the
following terms:

” Sellers not accountable for weight, measure or quality after delivery
” from ship, mill or granary. The buyer under this contract takes the
” responsibility of any latent defects.”

In the course of dealing between the parties the practice was that on each
occasion when a deal was effected between Mr. Golden on behalf of
S.A.P.P.A. and Mr. Thearle on behalf of Grimsdale the Sold Note invariably
followed the verbal contract. All the judges in the Court of Appeal expressed
the view that the conditions in the Sold Note were incorporated in the
contract between the parties. I agree with this conclusion. Havers J. held
that the Sold Note was not incorporated in the contract by reason of some
observations by Lord Devlin in McCutcheon v. David Macbrayne [1964]
1 W.L.R. 125 at page 134 when he said:

” Previous dealings are relevant only if they prove knowledge of the
” terms, actual and not constructive, and assent to them. If a term
” is not expressed in a contract, there is only one other way in which it
” can come into it and that is by implication. No implication can be
” made against a party of a term which was unknown to him. If previ-
” ous dealings show that a man knew of and agreed to a term on 99

” occasions there is a basis for saying that it can be imported into
” the hundredth contract without an express statement. It may or may
” not be sufficient to justify the importation—that depends on the
” circumstances; but at least by proving knowledge the essential begin-
” ning is made. Without knowledge there is nothing.”

The rest of the members of the House did not concur in this obiter dictum
of Lord Devlin and there is nothing, in my view, in McCutcheon to conflict
with the decision of the Court of Appeal. In McCutcheon there was a verbal
contract for the carriage of a motor car by sea, but the course of dealing
between the parties differed from previous occasions in that on the relevant
occasion a Risk Note was not, as before, signed by the consignor of the motor
car. In the present case S.A.P.P.A. by continuing to conduct their business
with Grimsdale on the basis of the Sold Notes which contained the relevant
condition and by not objecting to the condition must be taken to have assented
to the incorporation of these terms in the contract. The remaining question
is whether the clause applies so as to exempt Grimsdale from liability. Exemp-
tion clauses must be construed strictly (Adamastos Shipping Co. v. Anglo
Saxon Petroleum Co. Ltd. [1959] A.C. 133) and the exception must be ex-
pressed in sufficiently clear words. I cannot find that condition 17 is in
sufficiently clear terms to exempt Grimsdale of responsibility.

Grimsdale and Kendall and Holland Colombo

In this situation I am content to follow the Court of Appeal to this extent,
that the purpose for which Grimsdale required the meal was made known to
Kendall and Holland Colombo, namely for re-sale in smaller quantities for
compounding as a food for cattle and poultry and that this purpose was
sufficiently specific to come within the meaning of ” particular purpose “,
under section 14 (1). In the Irish case of Wallis v. Russell [1902] 2 I.R. 585
it was held that on a sale of fresh crabs to a customer the purpose indicated
for which the goods were required was for human consumption and that this
was a particular purpose within section 14 (1). Palles C.B. at page 598 said:

” So much for the first ground of limitation relied upon. I come now
” to the second—on the meaning of ‘ particular purpose’. As to that
” I have but little to say. The well-known judgment of Best, C.J. in
” Jones v. Bright 5 Bing. 853 points out the distinction between two
” classes of warranty, or, strictly speaking, of warranty and condition,
” that are dealt with in the two sub-sections under consideration: 1, fit-
” ness for a particular purpose ; 2, that the goods shall be of a merchant-
” able quality. Where no purpose is mentioned, there is a warranty, or
” condition, as the case may be, that the goods are, in the words of Best
” C.J. ‘ fit for some purpose’ or, in other words, merchantable as such;
” where a particular purpose is mentioned, the warranty or condition is
” that they shall be reasonably fit for that purpose. I think that that
” distinction, which has been established by the course of legal decision
” for a century, shows that the words ‘ particular purpose’ in a case of
” this description have a technical meaning; that it is not so much par-
” ticular purpose as distinct from general purpose; but it is purpose
” stated to the seller, as distinct from absence of purpose stated to the
” seller. In the absence of purpose stated, the warranty is that the article
” shall be fit for some purpose—in other words, merchantable ; where
” the purpose is stated, the warranty is that it shall be fit for that purpose.
” I cannot doubt that the purpose of using for human food is a ‘ par-
” ‘ ticular purpose’ within the meaning of the sub-section.”

The Court of Appeal affirmed the decision of the Chief Baron.

While it may be clear that the particular purpose for which the goods were
required was made known to the supplier, the difficult question arises in
connection with the subsequent part of section 14 (1). The particular pur-
pose must be made known ” so as to show that the buyer relies on the
” seller’s skill and judgment”. I have difficulty in acceding to what I
understand to be the views of the rest of your Lordships on this point. In
Manchester Liners v. Rea Ltd. [1922] 2 A.C. 74 the fact that the particular
purpose was made known to the seller was sufficient to raise the inference

that the buyer relied on the seller’s judgment and skill. In Grant v. Australian
Knitting Mills [1936] AC 85 Lord Wright at page 99 said:

” The first exception, if its terms are satisfied, entitles the buyer to
” the benefit of an implied condition that the goods are reasonably fit
” for the purpose for which the goods are supplied, but only if that
” purpose is made known to the seller ‘ so as to show that the buyer
” ‘ relies on the seller’s skill or judgment’. It is clear that the reliance
” must be brought home to the mind of the seller, expressly or by
” implication. The reliance will seldom be express: it will usually arise
” by implication from the circumstances: thus to take a case like that
” in question, of a purchase from a retailer, the reliance will be in
” general inferred from the fact that a buyer goes to the shop in the
” confidence that the tradesman has selected his stock with skill and
” judgment: the retailer need know nothing about the process of manu-
” facture: it is immaterial whether he be manufacturer or not: the main
” inducement to deal with a good retail shop is the expectation that the
” tradesman will have bought the right goods of a good make: the
” goods sold must be, as they were in the present case, goods of a
” description which it is in the course of the seller’s business to supply:
” there is no need to specify in terms the particular purpose for which
” the buyer requires the goods, which is none the less the particular
” purpose within the meaning of the section, because it is the only
” purpose for which any one would ordinarily want the goods.”

It must depend on the circumstances of each case whether that inference
can fairly be drawn. In Cammell Laird v. Manganese Bronze and Brass Co.
[1934] A.C. 402 at page 423 Lord Wright said:

” But the more difficult question remains whether the particular pur-
” pose for which the goods were required was not merely made known,
” as I think it was, by the appellants to the respondents, but was made
” known so as to show that the appellants as buyers relied on the sellers’
” skill and judgment. Such a reliance must be affirmatively shown ; the
” buyer must bring home to the mind of the seller that he is relying
” on him in such a way that the seller can be taken to have contracted
” on that footing. The reliance is to be the basis of a contractual
” obligation.”

I can well understand where the sale is by a manufacturer or a retailer to a
customer that the inference can easily be drawn. But Grimsdale and Kendall
and Holland Colombo were all dealers on the London Cattle Food Market
buying and selling goods of the same description possibly on the same day,
certainly from day to day. The section may apply to dealers inter se as
Shields v. Honeywell & Stein [1953] 1 Lloyd’s Rep. 359 shows. But there
is an air of unreality, in my view, in the idea that either of these dealers relied
on the other’s skill and judgment. It may well be that they trusted each
other’s honesty, as one of them said, but that is not the same thing as relying
on each other’s skill and judgment to select goods suitable for the particular
purpose for which they were required. There is, in my view, great force
in the judgment of Diplock L.J. in the Court of Appeal when he analyses
his reasons for saying that the implied warranty in section 14 (1) did not
apply to ordinary sales between dealers on the London Cattle Food Trade
Market, and I respectfully agree with his conclusion.

In the case of Grimsdale and Kendall and Holland Colombo the latent
defect clause is in the following terms:

” LATENT DEFECT—The Goods are not warranted free from de-
” fect, rendering same unmerchantable, which would not be apparent
” on reasonable examination, any statute or rule of law to the contrary
” notwithstanding.”

A long line of authority has decided that an exemption from breach of
warranty will not exempt for breach of condition (see Wallis v. Pratt &
Haynes [1910] 2 K.B. 1003; [1911] A.C. 394: Baldry v. Marshall [1925]
1 K.B. 260). I agree with the Court of Appeal that the latent defects clause
does not exempt Kendall and Holland Colombo.

As an addendum to these remarks I wish to mention a Scottish case
which was referred to in argument (Flynn v. Scott [1949] SC 442). This
decision appears to run counter to the principle in Wallis v. Russell (supra)
upon the construction of section 14 (1) which case has been followed in
many subsequent English cases. Flynn v. Scott which was decided by Lord
Mackintosh in the Outer House would appear to conflict with the decision in
the English case of Bartlett v. Sidney Marcus Ltd. [1965] W.L.R. 1013.
Both were cases of the sale of secondhand motor cars.

Section 14 (2) of the Sale of Goods Act, 1893

The judges in the courts below are unanimous that the goods were not
proved to be of unmerchantable quality under section 14 (2). The same
considerations affect the issue as between S.A.P.P.A. and Grimsdale and as
between Grimsdale and Kendall and Holland Colombo. Havers J. having
examined the authorities came to the conclusion that the test which fell
to be applied to the question of merchantability was that of Lord Wright
expressed in Canada Atlantic Grain Export (Inc.) v. Eilers [1929] 35 Com.
Cas. (Wright J. at 102) and in Cammell Laird Co. Ltd. v. Manganese Bronze
& Brass Co. Ltd. (supra) at 430 when he used these words:

” What subsection 2 now means by ‘ merchantable quality’ is that the
” goods in the form in which they were tendered were of no use for
” any purpose for which such goods would normally be used and hence
” were not saleable under that description.”

Applying these principles the learned judge found as a fact that the Brazilian
ground nut meal as compounded had been used without harm for older
cattle and that there was still a market for it on the continent in large
quantities. He further found that it did no harm to breeding hen pheasants.
For these reasons he was unable to find that the meal was of no use for any
purpose for which it would normally be used and that accordingly it was
not unmerchantable. The basis of his decision was adhered to unanimously
by the Court of Appeal.

Two criticisms were made of the learned judge’s decision. It was said
that by applying the wrong test his decision was vitiated and that his finding
was invalidated by his reliance on certain inadmissible factors. So far
as the proper test is concerned there is, in my view, considerable force in
the criticism first advanced. The test under section 14 (2) must be whether
the article is saleable in the ordinary market for such goods under that
description. The test put forward by Lord Wright may be one factor or
one guide in the determination of merchantability but it cannot be the deter-
mining factor since purpose is not the sole test of merchantability and the
test omits all reference to price. It the test of unmerchantability is that the
article is fit for no use, few goods would be unmerchantable because use can
always be found for goods at a price. The case of Grant v. Australian
Knitting Mills [1936] AC 85 decided in the Privy Council was on appeal
from the High Court of Australia. Section 41 of the South Australian Sale
of Goods Act, 1895, was in similar terms to the United Kingdom Sale of
Goods Act, 1893. In the High Court, Dixon J., as he then was, expressed
the test in this way:

” The condition that goods are of merchantable quality requires that
” they should be in such an actual state that a buyer fully acquainted with
” the facts and therefore knowing what hidden defects exist and not
” being limited to their apparent condition would buy them without
” abatement of the price obtainable for such goods if in reasonably
” sound order and condition and without special terms.”

He then referred to certain English cases which it is unnecessary to quote.
This case is reported in Australia in 50 Com. Law Reports at page 387.
It appears to me that this is a preferable test to apply.

But even assuming that the trial judge applied the wrong test it does not,
in my view, invalidate his decision. Upon the basis of the test applied by
Dixon J. his decision can still stand. There is no evidence that the price at
which the goods were sold after the defect had been discovered was other

than the ordinary price for the goods and the onus was on the buyer to
prove unmerchantability. There was thus, in my view, evidence to justify
the judge’s finding.

The second criticism which was made was that the learned judge took
into consideration the fact that when the goods were sold after the defect
was known, it was discovered that they could be safely fed to some animals
at a limited rate of inclusion. It is clear that the quality of the goods
has to be assessed at the time of the trial when the latent defect has become
known. But it is said you must not, in ascertaining the condition of the
goods and their merchantability, attribute the knowledge that they would
not be harmful if compounded at a low rate of inclusion. This is, in my
view, to approach the true situation with blinkers. The defect as ultimately
discovered must be taken with its qualifications. It is not possible to stop
half way and say ” We know there is a defect” without proceeding to say
” Although there is a defect we know it can be cured by a limited rate of
” inclusion “. The defect was thus of only a limited character and did
not in that state detract from the merchantability of the goods. I would,
therefore, hold that the judge was entitled to view the matter in the state
of knowledge at the date of the trial, namely, that the goods were saleable
for a limited purpose at a limited rate of inclusion.

The latent defect clause cannot exempt either suppliers or the dealers.

Fertilisers and Feeding Stuffs Act, 1926: c.i.f. contracts

The position under the 1926 Act is affected in relation to Grimsdale and
Kendall and Holland Colombo upon the question whether the Act covers
goods delivered in the United Kingdom under c.i.f. contracts. The Court
of Appeal considered themselves bound by the decision in Draper & Son
Ltd. v. Turner & Son Ltd. [1965] 1 Q.B. 425 where the Court of Appeal
decided that the 1926 Act could apply to c.i.f. contracts but that whether
it does so depends upon the fortuitous circumstance whether the goods at
the time of sale had reached the United Kingdom or the territorial waters
thereof. This led Havers J. into making fine distinctions as between the
various cargoes. It is right to say that the Court of Appeal viewed the
decision in Draper as leading to whimsical and illogical distinctions and,
if they had been free to do so, would have reached a different result, but they
felt themselves bound by the decision (see Sellers L.J. [1966] 1 Lloyd’s Rep.
at 216). I agree with the criticisms of the decision in Draper. This House
is free to consider the matter afresh. I have found the arguments whether
the 1926 Act applies to c.i.f. contracts to be finely balanced on either side.
I see the force of the suggestion made by Grimsdale’s counsel that the
Schedules to the Act contain a number of substances which normally reach
this country from overseas and to refuse the protection of the Act to these
goods might go very largely to defeat some of its purposes. But if the Act
is to apply to c.i.f. contracts, these must somehow be fitted into the framework
of the Act.

I take the description of a c.i.f. contract from Biddell Brothers v. E.
Clemens Horst Company [1911] 1 K.B. 214. Hamilton J. at page 220 in
which he used the following words :

” A seller under a contract of sale containing such terms has firstly
” to ship at the port of shipment goods of the description contained in
” the contract; secondly to procure a contract of affreightment, under
” which the goods will be delivered at the destination contemplated by
” the contract; thirdly to arrange for an insurance upon the terms
” current in the trade which will be available for the benefit of the
” buyer ; fourthly to make out an invoice as described by Blackburn J.
” in Ireland v. Livingston (L.R. 5 H.L. at page 406) or in some similar
” form ; and finally to tender these documents to the buyer so that he
” may know what freight he has to pay and obtain delivery of the
” goods, if they arrive, or recover for their loss if they are lost on the

” voyage.”

(See also Manbre Saccharine Co. v. Corn Products [1919] 1 K.B. 198 at
page 202.) It is clear that the delivery of the goods is effected symbolically

by the tendering of the documents in this country but the c.i.f. seller does
not make delivery of the goods in this country. Counsel for Grimsdale
put forward several possibilities as to the test in the application of the 1926
Act to a c.i.f. contract, but ultimately he conceded that there were really
only two effective possibilities—first that the Act did not apply to any
c.i.f. importations into this country or that it applied where the sale was
completed by the delivery in the United Kingdom. In the light of the
decisions to which I have referred it is impossible, in my view, to say that
delivery on a c.i.f. contract takes place in the United Kingdom. An argument
was advanced that section 26(2) of the Fertilisers and Feeding Stuffs Act,
1926, supplied the deficiency. Section 26(2) is in the following terms :

” An article consigned to a purchaser shall not for the purposes of
” this Act be deemed to be delivered to him until it arrives at the place
” to which it is consigned whether the consignment is by direction of
” the seller or the purchaser.”

This section does not, in my view, have that result as the goods in a c.i.f.
contract are not consigned to a purchaser.

There are, however, other reasons why, in my view, the 1926 Act cannot
apply to a c.i.f. contract. The general tenor of the Act is that it is to apply
to goods within the United Kingdom for use in this country. The administra-
tive provisions stress the domestic nature (see sections 11(1), 12(1), 15 and
27(1)). The scheme of the Act is that under section 1 the seller of articles
mentioned is bound to give the purchaser, before delivery or as soon there-
after as may be practicable, a statutory statement giving certain particulars.
This statutory statement then has the effect, under section 2(1), as a warranty
that the particulars contained in the statutory statement are correct. There
follow in sections 4 and 5 the provisions regarding criminal liabilities.
Section 4 provides that any article mentioned when prepared for sale or
consignment for use as food for cattle or poultry shall be marked in the
prescribed manner. Section 5 contains a sanction in the case of an article
delivered or sent direct from a ship or quay to a purchaser for the particulars
in the statutory statement being true. Section 7 provides that it is an offence
to sell or offer or expose for sale for use for food for cattle or poultry any
article which contains a deleterious ingredient. Proceedings for this offence
cannot be instituted unless the article was sampled by the inspector in
accordance with the Act on the premises where it was exposed or offered
for sale. These sections, in my view, lead to two conclusions: (1) the Act was
intended to deal with fertilisers and feeding stuffs in the United Kingdom
for use in this country, and (2) that in order to secure the proper application
of the Act the civil and criminal liabilities are intended to go hand in hand.
I reach the conclusion that the 1926 Act does not apply to c.i.f. importations.

Fertilisers and Feeding Stuffs Act, 1926: Are pheasants “poultry”?

This is a pure question of statutory construction. ” Poultry” is not
defined in the 1926 Act although ” cattle ” is and includes a wide variety of
animals which ordinarily would not be so denoted (section 26 (1)). In the
absence of indications to the contrary words of a statute must be interpreted
according to the ordinary and natural meaning of the words used. None of
the dictionary definitions of ” poultry “, apart from that contained in Websters
Third New International Dictionary (1961) includes pheasants as poultry.
In the ordinary use of words, poultry would not, in my view, comprehend
pheasants or other game. Certain evidence was led that in the poultry food
trade, poultry was understood to include pheasants. The trial judge, in my
view rightly, rejected such evidence. In any event it was of little assistance
to him. All that it amounted to was that there was not in the animal food
trade a separate food for pheasants. They came under the general umbrella
of poultry food. It is said, however, that in view of the method of rearing
young pheasants, which is similar to young chickens. Parliament must have
intended that pheasants would be comprehended by the term ” poultry “. The
process of rearing is described in detail in the evidence. It is sufficient to
say that wild hen pheasants are caught in the woods and after the laying
season their eggs are put into an incubator. After the pheasants have hatched

out they are put in an electric brooder. Thereafter when the chicks are
strong enough they are let out and eventually at the age of about 5 or 6 weeks
let out wild into the fields and woods. The difficulty about S.A.P.P.A.’s
construction that ” poultry ” includes pheasants is that it involves that a
wild hen pheasant, until caught, is not poultry, but when it is caught it
becomes poultry. The chicks remain poultry after having hatched out but
cease to be poultry when they are let out wild. Such an artificial and illogical
construction of ” poultry ” does not appear to me to be justified. It would
mean that while pheasants were fed with meal in the field the Act did not
apply, but when the birds came within the pheasantry the food would have
to comply with the Act. The essential difference between the pheasants
involved in this case and poultry is that poultry are normally reared for table
use, while these pheasants are reared not for table use but for sporting
purposes.

The case of Regina v. Garnham 1860 2 F. & F. 347; 175 E.R. 1090 was
founded on by S.A.P.P.A.’s counsel as showing a distinction between young
pheasants hatched under a hen and wild pheasants. While the young
pheasants were within the confines of the farmyard they were not game and
as being the property of the farmer could be the subject of larceny (see
Regina v. Head 1857 1 F. & F. 350; 175 E.R. 759). But these cases were
not concerned with the question whether young pheasants were poultry. I
can find nothing in the Act to indicate that the ordinary and natural meaning
of the word ” poultry ” was not intended. The majority of the Court of Appeal
were right, in my view, in holding that pheasants are not poultry within the
1926 Act.

Remoteness of Damage

The final question is whether, assuming that pheasants are not ” poultry ”
within the meaning of the Fertilisers and Feeding Stuffs Act, 1926, damages
can be recovered as against the vendors for breach of the statutory warranty
contained in section 2 (2). The question of liability falls to be decided upon
the principle of whether, in the terms of the Sale of Goods Act, 1893, section
53 (2), the loss directly and naturally in the ordinary course of events resulted
from the breach, in other words are the damages too remote. The goods were
sold for use as food for poultry ; the goods were unfit for use as food for
poultry. There was thus on this argument a breach. Can it be an answer
to a claim that when fed to young pheasants it killed them? In my view, a
reasonable and competent seller would have realised that it might be fed to
young pheasants even though the seller did not know positively that it would
be fed to pheasants.

Upon the whole matter I would allow the appeal of Kendall and Holland
Colombo, but I would dismiss the appeal of Grimsdale as against S.A.P.P.A.

Lord Pearce

MY LORDS,

Young pheasants on the Hardwick Game Farm were killed or stunted
through eating food which was compounded and supplied by Suffolk Agricul-
tural and Poultry Producers Association Limited (” S.A.P.P.A. “). Nobody
has doubted that the Hardwick Game Farm had a good cause of action or
that S.A.P.P.A. were right in admitting it. The question is, how far that loss
can be handed on to the various merchants up the line of supply. The
claims are based on breaches of condition or warranty under the Sale of
Goods Act, 1893, and the Fertilisers and Feeding Stuffs Act, 1926.

The damage came from a latent toxin in Brazilian ground nut meal which
S.A.P.P.A. used as an ingredient in their compound food. They had bought
the meal from Grimsdale (and from Lillico who have not appealed from the
judgment against them and have therefore passed out of the picture). Grims-
dale have been held liable under section 14 (1) of the Sale of Goods Act

in that the meal was not reasonably fit for the purpose, but not liable under
section 14 (2) since the meal was held to be merchantable. Grimsdale bought
the meal from Kendall who have likewise been held liable under section
14 (1) but not under section 14 (2). Kendall appeal against this liability.
Grimsdale are content to accept their own liability so long as they can hand
it on to Kendall. But if Kendall succeed in disclaiming liability, then
Grimsdale in turn seek to disclaim their own liability to S.A.P.P.A.

When Grimsdale orally sold to S.A.P.P.A., it was in the course of Grims-
dale’s business to sell cattle and poultry feeding stuffs to the manufacturers of
compound feeding stuffs. (Judgment of Havers J. [1964] 2 Lloyd’s Rep.
at 269). Grimsdale knew that the meal was ” liable to be used in the
” manufacture of compound feeding stuffs for cattle or poultry “. They were
further aware that S.A.P.P.A. ” only compounded feeding stuffs for poultry,
” pheasants and pigs ” and ” did not compound feeding stuffs for cattle “. It
was held that the particular purpose was made known so as to show that
S.A.P.P.A. relied on Grimsdale’s skill and judgment. It has been held
unanimously by the trial judge and the Court of Appeal that the condition
of fitness implied by section 14 (1) has been proved and that the meal was
not fit for the purpose for which it was supplied. In my opinion, that view
is right. And it is clear that the injury to the pheasants was well within the
range of damages recoverable. Therefore, whether or not Grimsdale can
hand on their liability to Kendall, they cannot avoid liability themselves.

The only matter on this point which has given rise to real difficulty is the
question whether Grimsdale were protected by the latent defect clause in
the conditions of sale printed on the contract note which they sent to
S.A.P.P.A.: ” The Buyer under this contract takes the responsibility of any
” latent defects “. The trial judge held that these printed conditions did not
apply to this oral sale of meal. In so doing he relied on a dictum of Lord
Devlin in McCutcheon’s case [1964] 1 Lloyd’s Rep 16. That case was,
however, different from the present case. For there was no contractual docu-
ment in that case. The carrier orally accepted goods for transport without
importing written conditions. On some previous dealings with the plaintiff’s
agent the carrier had imported conditions by a written contract. On such
occasions the carrier could have relied on the ticket cases and had the benefit
of the conditions, although the consignor was not aware of their extent. But
since he did not import any written terms on the particular occasion in ques-
tion, he could not get the benefit of unknown conditions which were not
imported into the transaction. The ordinary course of business was therefore
no help to the carrier, since the transaction did not follow the ordinary course.
And in that case the plaintiff’s agent, acting in good faith, was unaware that
the carrier was intending to import written conditions.

In the present case, S.A.P.P.A. had regularly received more than a hundred
similar contract notes from Grimsdale in the course of dealing over three
years. They knew of the existence of the conditions on the back of the
contract note. They never raised any query or objection (Havers J. page
267). The Court’s task is to decide what each party to an alleged contract
would reasonably conclude from the utterances, writings or conduct of the
other. The question, therefore, is not what S.A.P.P.A. themselves thought
or knew about the matter but what they should be taken as representing
to Grimsdale about it or leading Grimsdale to believe. The only reasonable
inference from the regular course of dealing over so long a period is that
S.A.P.P.A. were evincing an acceptance of. and a readiness to be bound by,
the printed conditions of whose existence they were well aware although they
had not troubled to read them. Thus the general conditions became part
of the oral contract.

On the other hand, although S.A.P.P.A. must in general be bound by
the printed conditions (so far as applicable) in their oral purchases from
Grimsdale, these wide and varied conditions had to be adapted to the
particular transaction in each case and some of them were obviously
inapplicable. Those which are capable of applying do not carry the

same weight and precision as they might have done had they been part
of a written contract in which they had been deliberately inserted in a
special context. The Court has to find out, as best it may, what the
parties should be taken to have intended. There is no doubt that there
was an implied condition between the parties that the meal in question was
suitable as an ingredient in feeding stuff for cattle or poultry, unless it was
effectively excluded. Is one to deduce that at the same time they were
agreeing that if it contained a concealed poison which rendered the meal
unfit, the condition was to be abrogated to that extent by the general condi-
tions? Was the resulting composite condition intended to be that the meal
was fit in so far only as it looked fit, and that if its unfitness was hidden,
it need not be fit? In my opinion, that is not a satisfactory or necessary
effect of the latent defects clause nor does the clause necessarily abrogate in
part the condition as to fitness. The goods might have had defects of
quality which did not make it unfit for its purpose. It is to these defects
that the clause should be read as applicable. If it was intended to cut
down the condition as to fitness in respect of all latent defects, the clause
should have said so in clear and unambiguous terms, referring expressly to
the condition which it was limiting. For the same reasons I would not
read it as limiting the condition as to merchantability.

The more difficult question is whether Grimsdale’s purchase from Kendall
contained under section 14 (1) or 14 (2) conditions which were broken.

There is in this contract also a ” latent defects ” clause:

” The goods are not warranted free from defect rendering same unmer-
” chantable which would not be apparent on reasonable examination,
” any statute or rule of law to the contrary notwithstanding.”

This clause is confined to questions of merchantability. It certainly cannot
affect the implied condition as to fitness. Moreover, there is a consistent
body of authority from the early years of this century which has construed
exclusions narrowly and declined to accept exclusions of warranty as sufficing
to exclude conditions. (See Clark v. Army and Navy Co-operative [1903]
1 Q.B. 155 C.A. ; Wallis v. Pratt [1911] A.C. 394 ; Baldry v. Marshall [1925]
1 K.B. 260 ; Barker v. Agius 28 Lloyd’s Rep. 282, and Cammell Laird v.
Manganese Bronze and Brass Co. Ltd. [1934] A.C. 402 at 432). On these
authorities I do not think the clause protects Kendall against an implied
condition as to merchantability.

When Kendall sold to Grimsdale they were aware that the purpose of
Grimsdale was ” to resell in smaller quantities to be compounded into food
” for cattle and poultry ” (Havers J. page 272). If, therefore, a condition
resulted under section 14 (1) from that knowledge, the food must be fit
both for cattle and poultry. Fitness for one coupled with unfitness for the
other would not suffice.

The judge and the Court of Appeal held that the purpose of Grimsdale
was a ” particular purpose” within section 14 (1). It was argued that such
a purpose was too wide and had not enough particularity to constitute a
particular purpose. I do not accept this contention. Almost every purpose
is capable of some sub-division, some further and better particulars. But a
particular purpose means a given purpose, known or communicated. It is
not necessarily a narrow or closely particularised purpose (see Benjamin on
Sale 8th edition at 630: ” A particular purpose is not necessarily distinct
” from a general purpose “). A purpose may be put in wide terms or it
may be circumscribed or narrowed. An example of the former is to be
found in Bartlett v. Sydney Marcus Ltd. [1965] 1 W.L.R. 1013 where the
purpose was that of a car to drive on the road. See also Baldry v. Marshall
(supra) [” a comfortable car suitable for touring purposes “]. A somewhat
narrower purpose was to be found in Bristol Tramways v. Fiat Motors Ltd.
[1910] 2 K.B. 841 [” an omnibus for heavy traffic in a hilly district “]. The less
circumscribed the purpose, the less circumscribed will be, as a rule, the
range of goods which are reasonably fit for such purpose. The purpose
of a car to drive on the road will be satisfied by almost any car so long
as it will function reasonably ; but the narrower purpose of an omnibus

suitable to the crowded streets of a city can only be achieved by a narrower
range of vehicles. This, however, is a question of fact and degree. Lord
Herschell said in Drummond v. Van Ingen 12 App. Cas. 284 at 293:

” Where the article may be used as one of the elements in a variety
” of other manufactures I think it may be too much to impute to the
” maker of this common article a knowledge of the details of every
” manufacture into which it may enter in combination with other
” materials.”

In general it would be wrong to say, as was suggested in argument, that a
wide purpose is unfair to the seller because it purports to require fitness for
every conceivable subdivision of purpose within the main purpose.

I would expect a tribunal of fact to decide that a car sold in this country
was reasonably fit for touring even though it was not well adapted for condi-
tions in a heat wave : but not, if it could not cope adequately with rain.
If, however, it developed some lethal or dangerous trick in very hot weather,
I would expect it to be found unfit. In deciding the question of fact the
rarity of the unsuitability would be weighed against the gravity of its
consequences. Again, if food was merely unpalatable or useless on rare
occasions, it might well be reasonably suitable for food. But I should
certainly not expect it to be held reasonably suitable if even on very rare
occasions it killed the consumer. The question for the tribunal of fact is
simply ” were these goods reasonably fit for the specified purpose?”.

” To resell in smaller quantities to be compounded into food for cattle and
” poultry” was, therefore, a particular purpose within section 14 (1). If a
particular purpose is made known, that is sufficient to raise the inference
that the buyer relies on the seller’s skill and judgment unless there is some-
thing to displace the inference. There is no need for a buyer formally to
” make known ” that which is already known. See Manchester Liners Ltd.
v. Rea Ltd. [1922] 2 A.C. 74 at 92: Cammell Laird & Co. v. Manganese
Bronze & Brass Co. [1934] A.C. 402 ; Mash and Murrell v. Joseph Emanuel
Ltd. [1961] 1 W.L.R. at 867 (a sale from one merchant to another). The
reliance need not be exclusive. Partial reliance will suffice.

The judge considered that the inference that the buyer relied on the seller’s
skill and judgment was displaced by the fact that Grimsdale and Kendall
were members of the same Association, the London Cattle Food Traders
Association. I do not, with respect, accept this view. The whole trend
of authority has inclined towards an assumption of reliance wherever the
seller knows the particular purpose. And where there are several subsales
and the purpose is obvious, the liability is frequently passed up the line. To
cut the chain of liability at one particular point is not fair unless there is
some cogent reason for doing so. In the present case I see no grounds
for holding that Kendall were in any relevantly different position from
Grimsdale. The fellow-membership of the C.F.T.A. was irrelevant. One
member may rely on another member just as much as he relies on an outside
trader. The fellow-membership may even increase his reliance.

Reliance is not excluded by the fact that the seller may not himself have
seen the goods he sells. In Brigg v. Parkinson [1862] 7 H. & N. 955 ; 158
E.R. 750 where it was implied that stores for troops in India must be fit
for their purpose, Cockburn C.J. at 760 said:

” Where a person undertakes to supply provisions, and they are
” supplied in cases hermetically sealed, but turn out to be putrid, it is no
” answer to say that he has been deceived by the person from whom
” he got them.”

The seller, not the buyer, is aware of the provenance of the goods and has
chosen to acquire them for disposal. It would, therefore, be not unreasonable
that the buyer should rely on the seller’s ” knowledge and trade wisdom ”
to use a phrase quoted in Grant v. Australian Knitting Mills (50 C.L.R.
387 at page 447) by Evatt J. from Ward v. Great Atlantic (231 Mass. 90).
And Walton J. in Priest v. Last 89 L.T. 35 refers to the buyer’s reliance that
the seller will not sell him ” mere rubbish “. This expression is echoed

in the evidence in the present case where Mr. Brown of Lillico said that
they relied on Kendall ” not to sell what they knew was rubbish ” (App. 2,
208).

It is argued that the width of the purpose should prevent one from inferring
that there was reliance. I do not think so. The compounders of food for
cattle and poultry need healthy ingredients, as the sellers knew. The parties
were not considering what admixture of healthy ground nut meal would be
good for particular animals or birds, but whether assuming a certain quantity
of ground nut meal would be a fit ingredient, the goods delivered would be
healthy or harmful ground nut meal. It was reasonable that the buyer
should rely on the seller to deliver ground nut meal which would, as ground-
nut meal, be a healthy and not a harmful ingredient in a compound.

In my opinion, there was on the circumstances of this case sufficient to
establish reliance by Grimsdale on Kendall and a resulting condition.

The condition did not mean that the food was fit, however strange or
unsuitable the proportions of the compound might prove to be. It meant
that the food was fit if compounded reasonably and competently according
to current standards. Goods are not fit if they have hidden limitations
requiring special precautions unknown to the buyer or seller. The ground
nut meal delivered was plainly not fit for the purpose of reselling in smaller
lots to compounders of food for cattle and poultry. It was highly toxic.
It is beside the point that Kendalls were unaware of the proportions in
which it was to be compounded. It was unfit for use in the normal range
of proportions. The evidence shows that 10 per cent, was included in the
feeding stuff for pheasants. This was not abnormal. When the toxicity
had been discovered and investigated the recommendation of a reputable
working party was that not more than 5 per cent, of meal with a high toxicity
should be included even in cattle rations and none should be included in rations
for birds. Moreover, while its toxicity was unknown, the meal was thereby
far more harmful and dangerous. Even had the buyer known of its toxic
qualities, it was not fit for compounding for poultry. For a compounder’s
business is to mix healthy foods in suitable compounds. It is quite unsuitable
that he should get toxic meal which can only be used by inserting it in
quantities so abnormally small that the dilution of other compounds removes
its lethal effect. All the courts below have held rightly, without any dissent,
that this meal was not reasonably fit for the purpose for which it was
supplied by Kendall to Grimsdale.

Kendall are therefore liable in breach of the condition under section 14 (1).
The resulting damage was injury to young pheasants who ate the compound.
Was this too remote? Although the intention of the compounders to use
the meal in compounds for pheasants was not known, the meal would be
harmful for the known particular purpose which was compounding into food
for cattle and poultry since it would be harmful to poultry. The use of
poultry compounds for rearing pheasants was a generally known use. In
my opinion, the damage was in the natural course of events and also was
within the contemplation of the parties. Kendall are therefore liable for it.

Were these goods merchantable? Merchantability is concerned not with
purpose but with quality. The judge found that the ground nut meal was
of merchantable quality and the Court of Appeal has upheld this finding.
That finding does not, as it happens, affect the result of the case. Therefore,
no purpose could be served by a detailed investigation of the complicated
evidence and considerations involved. But in my opinion the judge arrived
at this conclusion on an erroneous view of the principles applicable. He
found (page 271) that the goods “were capable in their ordinary user of
” being ultimately compounded into food for cattle (including a wide variety
” of animals under that description) or into food for poultry (including a
” wide variety of birds under that description). As compounded into food
” for cattle, certainly older cattle, it has been used without harm, though
” some of it has been injurious to calves and pigs. There was at any rate
” a limited market in this country after the troubles arose in 1960, inasmuch
” as B.O.C.M. sold some of their Brazilian ground nut meal which they

” had left on their hands for food for cattle but not for poultry “. Again
” On the other hand since the trouble in 1960, the London cattle food trade
” market has not imported any ground nut meal into this country from Brazil
” and … the word Brazilian as applied to ground nut meal in this country
” is a dirty word. As a compound food for poultry quantities of it have been
” proved to be lethal to very young birds, such as day-old ducklings, turkey
” poults, and pheasant chicks and poults, and injurious to chickens in a
” much less degree. The Plaintiffs’ breeding hen pheasants, however,
” suffered no ill effects. Though the meal was unfit for use for one purpose
” as a compound food for poultry, I cannot find that the meal in the form
“in which it was tendered, was of no use for any purpose for which the
” meals would normally be used and hence was unsaleable under that
“ description.”

The words which I have underlined come from Lord Wright’s opinion
in Cammell Laird v. Manganese Bronze [1934] A.C. 402 at 430. He used
similar expressions in Canada Atlantic Grain Export Co. v. Eilers [1929]
3 Lloyd’s List Law Reports 206 at 213 where he upheld a finding of
merchantability with which he was obviously out of sympathy and in
Grant v. Australian Knitting Mills Ltd. [1936] AC 85 at 99. Havers J.
preferred these dicta to the definition of Farewell L.J. in Bristol Tramways v.
Fiat Motors Ltd. [1910] 2 K.B. 831 at 840 that a merchantable article is
” of such quality and in such condition that a reasonable man acting
” reasonably would, after full examination, accept it under the circumstances
” of the case in performance of his offer to buy that article whether he
” buys for his own use or to sell again.” The latter definition has been
amplified by Dixon J. (as he then was) in Grant v. Australian Knitting Mills
(supra) where he said at page 418.

” The condition that goods are of merchantable quality requires that
” they should be in such an actual state that a buyer fully acquainted
” with the facts and, therefore, knowing what hidden defects exist, and
” not being limited to their apparent condition, would buy them
” without abatement of the price obtainable for such goods if in reason-
” ably sound order and condition and without special terms. (See
” Bristol Tramways v. Fiat Motors [1910] 2 K.B. 831 at page 840;
” Jackson v. Rotax Motor and Cycle Co. [1910] 2 K.B. 937 at 950;
” Morelli v. Fitch [1928] 2 K.B. 636; Beecham v. Howard [1921]
” V.L.R. 428, 27 A.L.R. 276 “.

In my opinion, the definition of Farwell L.J. as amplified by Dixon J. is
to be preferred to that of Lord Wright which has, I think, the following
weakness. The suggestion, without more, that goods are merchantable
unless they are of no use for any purpose for which they would normally
be used and hence would be unsaleable under that description may be mis-
leading, if it contains no reference to price. One could not say that a new
carpet which happens to have a hole in it or a car with its wings buckled
are of no use for their normal purposes and hence would be unsaleable
under that description. They would no doubt, if their price was reduced,
find a ready market. In return for a substantial abatement of price a
purchaser is ready to put up with serious defects, or use part of the price
reduction in having the defects remedied. In several classes of goods there
is a regular retail market for “seconds”, that is, goods which are not good

enough in the manufacturer’s or retailer’s view to fulfil an order and are
therefore sold off at a cheaper price. It would be wrong to say that
” seconds” are necessarily merchantable.

Sir Owen Dixon was clearly right in saying (above) that in order to judge
merchantability one must assume a knowledge of hidden defects, although
these do not manifest themselves or are not discovered until some date
later than the date of delivery which is the time as at which one must
estimate merchantability (see also Atkin J.J. in Niblett v. Confectioners
Materials Co. [1921] 3 K.B. 387 at 404: “No one who knew the facts
” would buy them in that state or condition ; in other words they were
” unsaleable and unmerchantable.”) But what additional after-acquired

37.

knowledge must one assume? Logic might seem to indicate that the court
should bring to the task all the after-acquired knowledge which it possesses
at the date of trial. But I do not think that this is always so. For one
is trying to find what market the goods would have had if their subsequently
ascertained condition had been known. As it is a hypothetical exercise,
one must create a hypothetical market. Nevertheless the hypothetical market
should be one that could have existed, not one which could not have existed
at the date of delivery. Suppose goods contained a hidden deadly poison
to which there was discovered by scientists two years after delivery a simple,
easy, inexpensive antidote which could render the goods harmless. They
would be unmarketable at the date of delivery if the existence of the poison
was brought to light, since no purchaser could then have known the antidote
to the poison. Hypothesis is no reason for complete departure from
possibility. One must keep the hypothesis in touch with the facts as far as
possible. But I do not think that the point is important on the present
facts.

In the present case, if on the day of delivery one had immediately com-
pounded from it and fed the mixture from it to turkeys or young chickens
or young pheasants it appears from the evidence that the birds would have
died. One would then have had to label the goods for the market ” This
” food contains toxin so that if compounded in normal proportions it is fatal
” to turkeys, young chickens, or young pheasants or ducklings “. And also,
I think, ” The nature of and strength of the toxin are unknown.” I find it
hard to believe that there was on the date of delivery a market for it so
labelled without abatement of price, even without the addition of the last
sentence. On such evidence as there is it seems unlikely.

There is a further important point which the judge, I think, disregarded.
The above argument is on the basis that the goods had a label setting out
the courts’ after-acquired knowledge of their toxin. But goods sold as fit
for food and containing toxin of which no mention is made are quite
different from goods which are labelled with a warning. Food which will
be consumed by humans generally may be merchantable even though it
will be dangerous to young children, provided, but only provided, that clear
warning of that fact is given (or that the fact is so universally known that a
warning is unnecessary). Food which was thought to be innocuous and
whose normal purpose was for general consumption by cattle and poultry
would be a hidden trap if unknown to the buyers it was lethal when used
on some classes of its potential consumers. Thus the absence of a warning
was in itself a serious defect, which can make goods unmerchantable even
though they would have been merchantable if sold with due notice of the
hidden defect. On this point it is irrelevant to consider whether, with a
warning, it would have found buyers at the price. In my opinion, the real
question for the court to consider is whether this ground nut meal with its
particular toxicity but without any warning to buyers was merchantable
as ground nut meal, which normally was fit for consumption by cattle and
poultry without discrimination.

In arriving at his finding on merchantability, the judge erroneously left
out of account both the trap element and the question of price and as a
result of that I think he arrived at a wrong decision on the point.

The question of liability under the Fertilisers and Feeding Stuffs Act,
1926, presents several problems.

I agree with the majority of the Court of Appeal that pheasants are not
poultry within the meaning of the Act.

I cannot, however, agree that food sold for use as an ingredient is outside
the intention of section 2 (2). Food is sold for use as food for cattle or
poultry whether it is to be fed neat to them or to be compounded into a mix-
ture which will be eaten by cattle or poultry. To exclude ingredients from
the Act would seriously weaken its effectiveness. And I find no sufficient
indications in the Act to justify excluding from the ambit of section 2 (2)

food sold for compounding, which would come within a natural interpreta-
tion of the words of the section. No such discrimination was made in Dobell
v. Barber and Garrett [1931] 1 K.B. (see the judgment of Scrutton L.J. at
225 and 228). See also Pinnock v. Peate [1923] 1 K.B. 690 at 699.

The more difficult question is whether the Act applies to c.i.f. contracts.
Both sides contend that Draper’s case [1965] 1 Q.B. 424 is unsatisfactory and
neither seeks to support it. I agree with them that the reasons on which it
is based are wrong. The Act cannot have intended to allow the existence of
a warranty to depend on the fortuitous position of a ship on the ocean at the
moment when the documents are taken up. That would be too whimsical a
test. The words of the Act do not compel one to such a conclusion.

I do not accept the hypothesis which underlay the judgments in Draper’s
case, namely, that the sale occurs in the place where movable goods are at
the moment when the property passes. If one Englishman in London sells
to another Englishman in London some movable goods which he owns
abroad, I do not accept that the sale takes place abroad. I would rather
incline to the view that it takes place in England where the contract takes
effect and the property passes from vendor to purchaser. But I do not think
that an exploration of this problem will show what the Act intended. The
c.i.f. contract is unlike other sales of goods. It is completed when the bill
of lading is transferred (in this case in London) and this constitutes construc-
tive delivery. The legal situation is clearly analysed in the judgment of
Kennedy L.J. in Biddle Bros. v. E. Clemens Horst Co. [1911] 1 K.B. 934 at
955-6. The situation of the goods is irrelevant.

Moreover, I doubt if the differentiation between sale and agreement for
sale in Draper’s case is justified for the purpose of this Act. It is more likely
I think that sale is intended to include an agreement to sell. (See Lambert v.
Rowe [1914] 1 K.B. 38 and at 47 where there is quoted the complaint of
Crompton J. in Stretch v. White 25 J.P. 485 that the justices ” enchanted by
” the niceties of the law of sale ” are ” too recondite in their law by far ” for
the construction of the Act there in question.) Section 7 of the 1926 Act
confirms this. It creates an offence in a person who sells or offers or exposes
for sale. It seems likely that an agreement for sale must have been included,
had it not been intended that it should be covered by the word ” sells “.
Moreover, the appropriate occasion for the importation of a warranty under
section 2 (2) would be the contract or agreement for sale and under that sub-
section it would be more appropriate to read ” sale ” as including agreement
for sale.

The general intention of the Act does not give any certain guidance on
whether s. 2 (2) was intended to apply to c.i.f. contracts. Obviously the Act
intended to protect the English farmer in his purchases of food for his animals.
It could have intended to do this by merely providing warranties at the
bottom end of the chain of food purchases. Or it could have intended to
keep the English market throughout clean from harmful foodstuffs, which
would be an equally sensible and more reliable way of achieving the ulti-
mate end in view. In the latter case it may have intended to take precautions,
as soon as it could in practice do so, against harmful food imported into the
market from abroad. All the indications seem to point in this direction.

The words of section 2 (2) contain no limitation in this respect. ” On
” the sale for use as food for cattle or poultry . . . there shall be implied,
” notwithstanding any contract or notice to the contrary, a warranty by the
” seller . . .” Prima facie this would apply to every contract in this
country. In the present case one has the following facts. The contract was
made in England between two parties who carried on business in England.
The contracts were governed by English law. The documents were taken
up and paid for in London. The goods came to England. And it was
English animals who would eat the food. Why, therefore, asks Mr. McCrindle,
should clause 2 (2) not apply to this particular case, wherever the line may
be drawn in cases which have different ingredients?

The most powerful argument against applying section 2 (2) to c.i.f. con-
tracts is the difficulty of also applying the criminal provisions. For instance,

it is clear that the enforcement by county councils and county boroughs
(section 11), and the sections relating to samples (ss. 12-18) are simply directed
to goods in this country. And in section 5 there seems good ground for
assuming that the criminal responsibility goes no further back than sales
ex-ship or ex-quay. But that section makes it clear that the Act intends to
catch the goods as soon as they leave the ship since it applies in the case of
articles delivered or consigned ex-ship or quay to a purchaser. A further
difficulty is caused by cases where it might seem absurd to apply even section
2 (2) to c.i.f. contracts e.g. (to take an extreme example) where both parties
are foreigners abroad or the goods having come here from one foreign country
are to be sold by a foreigner to another foreign country.

Admittedly there is a link between the criminal provisions and section 2 (1).
Section 2 (2), however, is a purely civil warranty. It is stated in explicit
terms. And I cannot find from the terms of the criminal sections sufficient
grounds for cutting down the express words of the civil warranty, more
especially since it is far from clear what is the exact extent of any resulting
limit.

At common law there is delivery of the goods when the bill of lading is
handed over. Prior to that there is no delivery. By section 26 (2), how-
ever, ” An article consigned to a purchaser shall not for the purposes of this
” Act be deemed to be delivered to him until it arrives at the place to which
” it is consigned, whether the consignment is by direction of the seller or the
” purchaser “. Although the language of the section is not very happy the
goods bought by Grimsdale might be considered goods “consigned to a
” purchaser ” when the documents were taken up under the contract of sale.
If so, they were deemed to be delivered in London.

Since, therefore, prima facie section 2 (2) applies to all English contracts
and all its ingredients are English, in my opinion section 2 (2) applies and
there was a statutory warranty. It may be that different ingredients might
give rise to other considerations some of which have been explored in argu-
ment, but I do not find it necessary to consider them in the present case.

The statutory warranty under the 1926 Act was broken in that the food
sold for the use of cattle or poultry was not suitable to be used as such.
Grimsdale suffered damage in that they became liable to damages to
S.A.P.P.A. They are entitled to recover this damage unless it was too
remote. On the facts it was not too remote. The considerations are
precisely the same as those under section 14(1) of the Sale of Goods Act.
I see no ground for limiting the statutory warranty under the 1926 Act
or treating it differently from the warranty under the Sale of Goods Act.
It was not a warranty that if used by cattle or poultry only it would do them
no harm. It was a warranty that the food sold was suitable for use as
food for cattle or poultry. That warranty has the same effect as an express
warranty (Dobell v. Barker and Garrett [1931] 1 K.B. at 237 per Lawrence J.).
Once that warranty was broken the purchasers were entitled to normal
damages. The mere fact that the statute allowed no contracting out of the
warranty produced no abnormal limitation on damages. Nor is there any-
thing to be deduced from other parts of the Act which would indicate that
it intended any such limitation.

I would therefore dismiss the appeals.

Lord Wilberforce

MY LORDS,

The findings of Havers J. at the trial unequivocally established that the
death and stunting of the Plaintiffs’ (Hardwick’s) pheasants was caused by
the presence of the toxin ” aflatoxin ” in part of the groundnut extractions
sold by Kendall and Holland Colombo to Lillico and Grimsdale, resold
by the latter to Suffolk Agricultural and Poultry Producers Association
Limited and used by S.A.P.P.A. in the compound feeding stuffs supplied to

Hardwick. The presence of this toxin was not known to, and in the state
of expert knowledge at the relevant time could not have been reasonably
detected by any of the sellers, but it is agreed that this circumstance does not
affect their liability. On this set of facts, the appropriate remedy of the
Plaintiffs, and of the successive buyers up the chain of supply against their
respective sellers would, one would think, naturally arise under the Fertilisers
and Feeding Stuffs Act, 1926, a piece of legislation passed to deal specifically
with this type of situation. This has in fact been invoked, but since a claim
under this Act involves a number of separate ingredients as to each of
which some doubt exists, a parallel set of claims has also been made under
the Sale of Goods Act, 1893, and moreover—to complicate the issues further
—under both section 14(1) and 14(2) of that Act. I shall deal first with
these and I shall do so as they arise between the parties to the main appeal,
namely, as between Grimsdale and (in so far as they are involved) Lillico
as buyers and Kendall or Holland Colombo as sellers. Inasmuch as Kendall,
or their representative acted, for all relevant purposes, for Holland Colombo,
it is fortunately not necessary to distinguish between the two sellers.

The buyers’ claim is based, in the alternative, upon section 14(1) or upon
section 14(2) of the Sale of Goods Act, 1893, and there is nothing surprising
about this. These two subsections, together with subsection (3), state excep-
tions to the general rule supposed to exist at common law, of caveat emptor,
a rule of which little now remains. They cover the main situations in which
most buyers find themselves: either (section 14(2)) a buyer goes to a seller
who deals in goods of a particular description and makes his purchase with
nothing said or implied on either side: in that case the condition of ” mer-
” chantability ” arises. Or a buyer, who wants goods for a particular purpose,
makes this known to the seller, so as to show that he relies on his skill and
judgment, in which case the narrower condition of fitness arises.

The words in which these simple situations, and their legal consequences,
are described are plain, untechnical words: they are contained in an Act
which is supposed (and generally thought with success) to codify this branch
of our law. It should be possible to apply them directly to the given situation
without the use of fact to fact analogies and fact from fact distinctions
drawn from reported cases. Many of these were cited in the lengthy argument
in this House: but I shall not refer to them because there is really no contro-
versy as to what, relevantly, they show. They demonstrate, as one would
assume, that both subsections are readily and untechnically applied to all
sorts of informal situations—such as retail sales over the counter of articles
whose purpose is well known—and are applied rather more strictly to large
scale transactions carried through by written contracts : further, that the legal
consequences stated by the subsection may arise from the use of informal
words, or without any words from a course of practice or through common
knowledge. They confirm, too, that “particular” in section 14(1) is not
used in contrast to ” general ” or so as to require a quantum of particularity,
but more in the sense of ” specified ” or ” stated “. The word takes its
colour from those that follow: the ” particularity” must be such as to
show to the seller the extent and manner in which his skill and judgment is
relied on.

That the ” fact to fact” approach is not merely circuitous but perilous
is well shown in the present case. The sales here were from Kendall to
Grimsdale (or Lillico) both members of and traders on the London Cattle
Food Trade Association. Now in Draper’s case (Draper & Son Ltd. v.
Edward Turner & Son [1965] 1 Q.B. 424) the Court of Appeal was con-
cerned with another contract between members of the same Association. The
learned trial judge, after an examination of the evidence, which clearly
disposed him towards a finding that the condition of fitness under section
14(1) ought to be implied, felt himself bound to hold otherwise because of
observations in Draper; and when the present case reached the Court of
Appeal much of the argument, and some of the difference of opinion which
emerged, was related to the effect of the earlier decision. This approach
has led to some confusion. To treat Draper’s case as deciding, either
expressly or by implication, that section 14(1) does not apply to sales on

a market, is to convert a decision on fact into a rule of law and to ignore
the fact that not all sales, even on a given market, not to mention sales
on different markets, bear the same character, or involve the same incidents.
There may be sales as between dealers, engaging in the same kind of
activity where, nothing being said or implied, the conclusion ought to be
that the parties stand on a level footing, neither relying on the skill or
judgment of the other. There may equally be sales where, either, the two
parties are fulfilling different functions, or they are requiring the goods
for different purposes, and where some reliance is expressed or implied.
What is necessary first, and probably last, is to find out the nature and
circumstances of the bargain. Such difficulty as there is in the present
case arises from the fact that, no doubt because the parties were so largely
preoccupied with other difficult issues, the evidence as to the relevant sale
fe exiguous. But there is enough, in my opinion, to support the conclusion,
to which I think Havers J. would have arrived ” unaided” by Draper’s
case, that there was a particular purpose made known to Kendall so as to
show that their skill and judgment was relied upon.

As regards the relationship of the parties, it was shown that, in relation
to the Brazilian ground nut extractions, Kendall were acting as shippers,
Grimsdale as wholesalers. These shipments in 1960 were, it appears, among
the earliest shipments of extractions of Brazilian origin: they were arranged
by Kendall, by them communicated to Grimsdale. This, to my mind, creates
an initial area of responsibility on the part of Kendall.

Then was there a particular purpose made known to Kendall so as to show
reliance? The purpose for which the goods were required and the know-
ledge of it was found by the learned judge in the following terms:

” I am satisfied that Kendall on their own account and as brokers
” for Holland Colombo knew the particular purpose for which Lillico
” and Grimsdale respectively required the Brazilian ground nut meal,
” namely to resell in smaller quantities to be compounded with food for
” cattle and poultry.”

He went on to say that if the particular purpose is made known that raises
a presumption of reliance but that in this case the presumption was rebutted
by common membership of the London Cattle Food Trade Association—a
conclusion supported by Draper’s case. In the Court of Appeal, Diplock
L.J. who agreed with him on this point went further in attaching importance,
where sales take place on an international commodity market on the terms
of a standard printed contract, to maintaining uniformity of obligation as
between seller and buyer.

With this general proposition I entirely agree. On many commodity
markets, where business or speculative dealings take place between persons
on the market, it would no doubt be true that each buyer relies on his own
judgment and it would be wrong to seek to impose on sellers any implied
condition based on reliance. To do so would impede the play and working of
the market and would be in opposition to commercial reality. But that does
not mean that in individual cases the possibility of reliance may not exist.
If the buyer can show that a particular purpose was made known so as to
show reliance, the condition may attach: and, because the transaction takes
place in the context of a market, between two persons of generally equal
competence and knowledge and on the basis of a standard contract which
incorporates no such condition and the terms of which may indeed suggest
that no such condition applies, the buyers’ task may not be an easy one.
In seeking to discharge it, it is not sufficient merely to show that the seller
knew of the purpose ; of course he may: business men do not work in a
vacuum, they know their trade and their customers and they are not to be
saddled with conditions merely because they are competent and knowledge-
able. The purpose must be made known so as to show reliance. Was it,
then, so here? The finding of the judge quoted above does not in its terms
go as far as this, though I note that the following passage contains the phrase
” if the particular purpose is made known ” which suggests that he thought
that it was. So we must look at such evidence as there is. On the seller’s

side Mr. Macleod’s evidence was that, without any detailed knowledge of
the precise mixtures or proportions in which the extractions would be used,
he knew they were going into the compound trade where they would finish
up inside the turkey or the duck, that food was sold without reservation as
fit to be fed to all stock, that a firm like Grimsdales would split it up for the
country trade. On the buyer’s side Mr. Waterfall, a director of Grimsdale,
said that they had never bought Brazilian ground nut extractions before and
that they got on to them because they were offered by Kendall, they were
chased by Kendall. Mr. Brown, Lillico’s representative, said that Mr.
MacLeod told him that Kendall had a nice line of ground nut extractions and
that he placed great reliance on their integrity and knew that they would
not sell anything he knew was rubbish. This, taken together with the evidence
as to the respective roles of Kendall on the one hand and Grimsdale and
Lillico on the other, I think is so far sufficient to establish the required
degree of reliance.

But there remains the point that the parties entered into a written contract
on the London Cattle Food Trade Association form 6 and this contained
(Clause 10) a latent defect clause in the following terms: —

” The goods are not warranted free from defect rendering same un-
” merchantable which would not be apparent on reasonable remunera-
” tion, any statute or rule of law to the contrary notwithstanding.”

The Appellants relied strongly on this clause: they had the support of
Diplock L.J. who thought it offended common sense to believe that the buyer
was prepared to accept total unmerchantability from latent defect, but not a
more limited unsuitability.

While I feel the force of this, I think that the difficulty to which this clause
gives rise disappears when one considers the way in which the bargain was
made. This standard contract exists in order to regulate the normal situa-
tion of dealing on a market inter pares where no particular purpose is made
known. In this situation, as I have suggested above, section 14 (2) is the
statutory provision which normally operates, and so the clause is inserted
to exclude it. But then, in relation to an individual bargain a particular
purpose is made known: this attracts section 14 (1). Is, then, the fact that,
in a different situation (viz. no particular purpose stated), the buyer accepts
the risk of unmerchantability, relevant to the question whether the condi-
tion as to fitness (implied under section 14 (1)) is to be introduced? I
think not. The question of course remains whether the contractual clause 10
excludes the new special condition. As to this see below (1).

I come therefore on balance to the conclusion that the buyers (Grimsdale
and Lillico) were entitled to rely on the implied condition as to fitness
imported by section 14 (1) of the Sale of Goods Act, 1893.

The remaining questions under this heading I would deal with as follows:

1. 1. The implied condition is not excluded by Clause 10 of the standard
    contract. The reasons for this are classical, and on it I agree with the
    judgments of Sellers L.J. and Davies L.J.
  2. The condition (treated as a warranty) was broken by the sellers because,
    as the judge found and there was evidence in support, the food was unfit
    for use as a compound food for poultry.
  3. The buyers are entitled to damages whether or not ” pheasants”
    are in this context to be included in the description ” poultry”. This
    follows on normal principles and is one point on which no difference of
    opinion exists in the courts below.
  4. The further question whether the buyers could recover under section
    14 (2) of the Sale of Goods Act on the ground of unmerchantability does
    not, in my view, arise. On the interpretation of the subsection, however,
    I agree with the views expressed by my noble and learned friend, Lord
    Pearce.

I next come to the separate question whether the buyers are entitled
to damages under the statutory warranty contained in section 2 (2) of the
Act of 1926. I shall deal briefly with all of the points arising under this
Act except one, which is said to involve questions of general importance
and on which the learned judges below have differed. I wish to make clear
that this is a separate and independent ground of decision and not subsidiary
or obiter to that under the Sale of Goods Act, 1893.

1. Whether ” pheasants ” are ” poultry ” within the meaning of the Act.
This question, though emotive, is a short one and I shall answer it shortly.
In common or dictionary parlance pheasants are clearly not poultry (see
the judgments in the Court of Appeal), but to rest there might attract a
charge of literalism, so one must relate this question to the purpose of
the Act. If the normal meaning is to be extended, that must be on
one of two grounds. The first might be that the Act is intended to apply
to all domesticated birds, so that a pheasant reared and fed in captivity
is, during that period, to be regarded as poultry, becoming ” game ” when
released. This solution involves the difficulty that it would include as
poultry a large class of other birds which can never have been intended,
such as parrots or budgerigars. Then, alternatively, can it be said that
the Act is intended to protect all birds fed with a view to table consumption?
This definition would commend itself to Dr. Johnson and Mrs. Beeton
and the statutory intention reflected by it would be intelligible if anthropo-
centric. But it will not meet the present case. For ————— Hardwick’s

business was that of a game farm and their pheasants were reared for
sale to landowners. Their ultimate fate might not differ from that of
their cousin, the common fowl, but the business of producing the two
species is too widely different for both to be within the Act. On this I
agree with Davies L.J. and Diplock L.J.

1. 1. Does the Act apply to substances not intended to be fed to animals
    or poultry, but to be used as ingredients in a compound food? In my
    opinion clearly yes. I am content to agree in this with the reasons given
    by Sellers L.J.
  2. Is the statutory warranty broken although the animals killed or injured
    are not poultry? In my opinion, yes. While, with Diplock L.J., I appreciate
    that the warranty is statutory and that the seller cannot contract out of it,
    it still is a warranty, imported as such into the contract of sale, and I
    can see no reason for not applying the normal rules as to damages to its
    breach. I agree on this with Sellers L.J.
  3. The final question, as stated by the Court of Appeal, is whether the
    Act of 1926 applies to sales under a c.i.f. contract. More precisely I think
    the question should be whether the statutory warranty which arises under
    section 2 (2) of the Act ought to be imported into the contract of sale
    (c.i.f. London) between Kendall or Holland Colombo and Grimsdale made
    on Form 6 of the London Cattle Food Trade Assn., but I recognise
    that in seeking to answer this question it may be necessary to enlarge the
    enquiry and consider both other provisions in the Act and c.i.f. contracts
    of sale generally. Havers J. and the Court of Appeal answered this question
    in the negative considering that they were bound by the previous decision
    in the Court of Appeal in Draper’s case. [C. E. B. Draper & Son Ltd. v.
    Edward Turner & Son Ltd. and Others [1965] 1 Q.B. 424] though two
    of the learned Lords Justices expressed some doubts with regard to it.

In Draper’s case the contract was, as here, made in England between
two English companies on the printed form No. 6 of the London Cattle
Food Trade Association (Inc.). This form of contract is described as a
” contract for imported feeding stuffs and meals” and is expressed to be
governed by English law. The question there arose as to the liability of
the sellers (Fifth parties) to the buyers (Fourth parties) under the statutory
warranty (section 2 (2) of the Act of 1926) in respect of contamination
of the goods and it may be noted that the buyers had, in that case, resold
on c.i.f. terms, to other parties (the third parties) before the goods arrived
in the United Kingdom. Lyell J. held that the warranty should be implied.
He pointed out that there is no express limit on the class of contracts to

which section 2 (2) applies and said that whatever limitation might have
to be made with respect to contracts for the sale of goods in one foreign
country to another foreign country he could see nothing in the section
which would exclude a contract between an English buyer and seller for
the sale of goods to be shipped to an English port. To me this argument
seems persuasive.

The Court of Appeal, however, took the opposite view. Lord
Denning M.R. in his judgment did not decide that the section cannot
apply to c.i.f. contracts as such: on the contrary, he clearly thought that
it might do so. His reasoning that the subsection was not applicable was
based on a construction of the words ” on the sale ” which he interpreted
to mean on the transfer or passing, of the property in the “goods”:
the next step was to hold that the transfer, or passing of the property
in the goods, takes place where the goods are at the time, so that if they
are outside the United Kingdom (including territorial waters) the sub-
section does not attach. Diplock L.J. adopted a similar process of reasoning.

This argument was not supported by counsel for the Appellants and I
cannot think that it is sound. Even if one accepts that the section is
distinguishing between the ” sale” and the ” contract of sale”, and is
referring by the former words to the passing of the property, I cannot
find satisfaction in the statement that the transfer of the property
takes place where the goods are, or that the property passes there. In the
case of a c.i.f. contract of sale, what takes place between seller and buyer,
by way of completion of the contract, is a transfer of the bill of lading,
which, ” in fact and in law represents the goods ” and which transfer is a
constructive delivery of the goods: see the judgment of Kennedy L.J. in
Biddell Bros. v. E. Clemens Horst Company [1911] I K.B. 934, 956 which
was approved by this House [1912] A.C. 18. No other delivery or transfer
takes place. This constructive delivery takes place, if locality is relevant,
where the transfer of documents occurs. Physical delivery of the goods
occurs when the buyer takes the goods from the Master of the ship—but this
delivery is not delivery by the seller but delivery by and under the contract
of affreightment—from the buyer’s bailee. No doubt the contract of sale
generally becomes a sale when the documents are handed over and the
price is paid (section i (4) of the Sale of Goods Act): no doubt the risk
passes when the documents pass: but to all these matters the physical
situation of the goods is irrelevant: indeed the sale is just as effective though
the goods may be at the bottom of the sea (see Manbre Saccharine Co. v.
Corn Products Co. [1919] 1 K.B. 198, 204).

The difficulty of applying the test of locality of the goods is vividly illus-
irated in the case under appeal: for it forced Havers J. into a detailed
investigation, in relation to each shipment of the locality of each ship at
the moment when the documents were taken over, with the result that
distinctions, which one can only describe as arbitrary, arose between different
consignments according to whether at the precise moment when documents
passed the ship was on the high seas, in the port of destination, or in some
other port. I think that Diplock L.J. really recognised this, for though
he adhered to his former view that the subsection did not apply if the
goods were on the high seas, he refused to accept the (one would think
natural) converse that it did apply if the goods were in territorial waters,
introducing in that case an additional test of whether property passed
before the goods had passed the ship’s rail.

My Lords, rather than this enchantment by the niceties of the English
law of sale of goods (I borrow from Crompton J.) I think that a simpler
approach is called for. I do not think that section 2 (2) in its introductory
words ” on the sale ” is making a technical distinction between the sale and
the contract It is, after all, introducing a warranty the impact of which
is upon the contract of sale: it operates by adding, compulsorily, a term to
the contract. The natural prima facie inference should be that it applies
to all contracts governed by, i.e. the proper law of which is, English law.
One may test this by comparison with the statutory warranties under the

Sale of Goods Act. 1893. Nobody disputes that they should (the facts so
admitting) be introduced into this contract—and that must be because the
proper law of the contract is English law. Why, then, should the same
not be true of this statutory warranty? The only difference is that the
parties may contract out of one but not of the other, but that difference
does not seem a relevant distinction.

One starts, then, from the inference that the subsection applies to all
English contracts, but one must next consider—recalling the reservations
made by Lyell J. in Draper’s case—whether there should be some additional
requirement such as that the place of performance should be in this
country. To do so would at least fit in both with the evident purpose
of the Act which must be concerned with the quality of foodstuffs for
animals in the United Kingdom, and with the wording of section 2 (2)
which refers to sale for use as food for cattle and poultry (sc. as I would
read it. in the United Kingdom). In order to answer this, I think it
desirable to look at those subsections of the Act which impose criminal
liabilities, for though there is no necessary reason why, in an Act which
both imposes penalties and creates a civil liability, the scope of the two
remedies should be exactly the same (for in relation to the latter it is
evidently desirable that the chain of responsibility under the statutory
warranty should be carried as far as possible up the chain of supply) there
are some linkages between the two parts, particularly through those provi-
sions which require the seller to furnish a statutory statement (see sections
1, 2, 5, 8 (2)). Section 5 of the Act is the provision which most directly
appears to deal with imported goods. It relates to articles delivered or
consigned direct from a ship or quay to a purchaser. From this is appears
fair to deduce that the Act, in both its parts, is intended to apply to sales
ex-ship or ex-quay. From this in turn it ought to follow that the Act
should apply to sales c.i.f. (U.K.) where the goods are in fact delivered
ex-ship to a purchaser and in that case section 26 (2) would appear to
meet the difficulty, that under a c.i.f. contract ” delivery ” takes place by
documents, by extending the date of ” delivery ” until the article reaches
the purchaser. The obligation to keep a register in this case falls without
difficulty on the seller, and the rest of the machinery provisions as to
sampling and analysis etc., follow. The terms of the standard contract
itself are, in fact, well designed to ensure that the seller, after his ship
arrives in the U.K., has access to all information necessary to meet his
statutory obligations. On the other hand, if the provisions of the Act are
to be applied a stage further back e.g. to a sale on documents while the
goods are in transit to a buyer who does not take delivery of the goods,
difficulties may arise in working the machinery of the Act. The goods
in the present case were delivered ex-ship to the buyers (Grimsdale) for use
in the United Kingdom ; so that on the minimum view the Act would, in
my opinion, apply. As regards other cases, of c.i.f. sales at earlier stages,
or sales made otherwise than on the standard (No. 6) contract I would, as
at present advised, find some difficulty in seeing how the statutory warranty
can be said to arise.

On the second appeal, between Suffolk Agricultural and Poultry Producers
Association and Grimsdale, I am of opinion—

1. That the implied condition under section 14 (1) arose. This is an a
fortiori case as compared with that discussed above. All the learned judges
below were of the same opinion.

2. That the conditions contained in the Sold Note became incorporated in
the contracts. I agree with Sellers L.J. and Diplock L.J. that McCutcheon’s
case (McCutcheon v. David Macbrayne Ltd. [1964] 1 WLR 125) relates
to a very different situation and that in the present case the course of
dealing was evidently and plainly such as to import the conditions.

3. That the latent defect clause contained in the Sold Notes is not apt to
exempt the third party sellers from liability. I agree on this with my noble
and learned friend, Lord Pearce.

In the result both appeals should, in my opinion, be dismissed.

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