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Benjamin's Sale of Goods 8th Ed.

Main Volume - Benjamin's Sale of Goods Part 4 - Defective Goods Chapter 13 - Exemption Clauses Section 3. - Interpretation of Exemption Clauses Strict Interpretation 13-020
Exemption clauses are, where (as is common) there is room for argument as to their meaning and coverage, strictly construed contra proferentem.73 The first justification for this is that a party seeking to rely on such a clause must prove that he comes within it.74 It can also be said that a person who puts forward a provision that is for his own benefit should only be allowed to rely on it if its meaning is clear, particularly if he participated in its insertion in the contract.75 It can also be said that there is: an inherent improbability that the other party to such a contract including such a clause intended to release the proferens from a liability that would otherwise fall on him.76 This assumes that there are rules whereby such a liability would arise independently of the contract, which is sometimes (e.g. where a bailment is involved or where there is a potential liability in tort) but by no means always true; and it moves towards the now abandoned doctrine of fundamental breach, which is discussed below.77 Whatever the basis of this strict interpretation, it is also applied to indemnity clauses78; though, as later explained,79 there is authority for applying less strict criteria to clauses which merely limit the amount recoverable. Such a technique for controlling the effect of exemption clauses is found in many legal systems. There are numerous examples in the area of sale of goods. Since the Unfair Contract Terms Act came into operation, there has been less need for stringency, at least in the cases where the Act applies (which include domestic sales of goods). There are indeed clear indications that the English courts will take a more relaxed approach than was sometimes taken before the Act,80 will not strain to detect ambiguities,81 will not ascribe tortured meanings to exemption clauses82 and will in general simply interpret such clauses in the context of the contract as a whole.83 But although the Act contains nothing preserving the rules of interpretation, as compared with the rules for formation of contract, which are expressly confirmed,84 it is clear that the rules of interpretation must still operate85; and it has been said that the true interpretation of a clause must be ascertained by normal techniques before its reasonableness is assessed.86 And the fact that the Act looks only to the reasonableness of including a particular clause in the contract rather than reasonableness of reliance on the clause in the case in question87 means that they may be particularly useful when the question is not as to whether a clause is reasonable in itself but as to whether it is appropriate that it should be invoked in a specific set of circumstances.88 It is, however, clear that all decisions prior to the Act of 1977 should be read in the light of the fact that the court has now in many cases the statutory power to declare exemption clauses ineffective on the facts.

Cases Where Unfair Contract Terms Act Inapplicable 13-021

The Unfair Contract Terms Act 1977 regulates clauses purporting to exempt from liability for negligence in situations of business liability, clauses in consumer contracts and in standard terms, and attempts to exclude or restrict the implied obligations of the seller under ss.12 to 15 of the Sale of Goods Act.89 It does not therefore apply to individually negotiated, non-consumer contracts which either do not involve business liability or else do not contain terms seeking to exempt from liability for negligence or for breach of the seller's obligations under ss.12 to 15 of the Act. Nor, more importantly, does it apply to international supply contracts, nor to contracts where English

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law is the proper law only by choice of the parties.90 In such situations the cases on strict interpretation are not in principle affected by the presence of powers conferred on the courts by the Act.91 But it should be noted that all these situations are more likely to have involved free negotiation between parties of equal bargaining power, so that a rigorous approach may well be less appropriate, whether or not this can be justified as a matter of law: After this Act, in commercial matters generally, when the parties are not of unequal bargaining power, and when risks are normally borne by insurance, not only is the case for judicial intervention undemonstrated, but there is everything to be said, and this seems to have been Parliament's intention, for leaving the parties free to apportion the risks as they think fit and for respecting their decisions.92

Negligence 13-022
Clear words are needed to exempt from liability for negligence, for it is inherently improbable that one party to the contract should intend to absolve the other party from the consequences of the latter's own negligence.93 This is especially so where (as is usual) the negligence liability stems from a different legal category, the law of tort.94 Thus it has been held that a term in a contract for the hire of a bicycle, purporting to exempt the owner from liability for personal injuries, only extended to his strict liability in contract and did not cover liability in negligence. A term specifically referring to negligence, or at least widely expressed (e.g. referring to loss howsoever caused) is necessary.95 The leading cases on this point do not relate to sale of goods,96 and clauses exempting from liability for negligence are in any case controlled by the Unfair Contract Terms Act 1977.97 But a seller may be liable in tort as well as in contract98; and where the Act does not apply this line of cases may well be relevant.

Exclusion of Particular Duties 13-023

Sometimes an exemption clause in a contract of sale relates only to certain specific implied duties: in such cases all other implied duties remain. Thus where there is an express disclaimer referring to quality alone, the duty as to compliance with description in a sale by description certainly remains,99 and in one case where the words no guarantee of quality or analysis is given were immediately followed by a requirement that the goods should be in sound merchantable condition at the time of shipment, it was held that the disclaimer did not even extend to merchantability, let alone to non-conformity with description.100 Again, a general clause such as Seller not accountable for weight, measure or quality the buyer takes the responsibility of any latent defects may be held too vague to exclude s.14 of the Sale of Goods Act 1979101 and in general to refer only to such defects as do not prevent compliance with the statutory conditions. At the other end of the scale, where a sale by sample is of goods guaranteed equal to sample only, though this phrase might exclude the provision of s.15(2)(c) of the Sale of Goods Act 1979 that the goods be of satisfactory quality,102 it might not, if the sale is also by description, exclude the requirement of s.13(1) that they correspond with description.103 Finally, it has been held that a clause purporting to exclude liability for misrepresentation does not exclude liability for a misrepresentation that has become also a warranty within the contract104; and that to exclude liability even for misrepresentation alone, the clause would have to be very clearly expressed.105

No Warranty Is Given 13-024

Sometimes the terms of a contract contain a provision to the effect that no warranty is given with goods sold, or a similar clause. It seems that this may simply operate to indicate that statements made at or about the time of contracting are not to be interpreted as express promises or warranties, and does not affect implied terms that are as a matter of law made part of the contract, unless circumstances indicate the contrary.106 Sometimes it merely gives notice that an agent has no authority to warrant, and so negatives the possibility of apparent authority.107 But even where it

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is more generally effective to exclude liability, there may be cases where such a clause is overridden by a prior collateral contract. Thus in Webster v Higgin,108 the words no warranty is given or implied were held not clear enough to exclude liability for a promise made prior to the formation of the contract, that a car was in good order.

Exclusion of Warranties 13-025

In many contracts, however, no collateral contract can be established, or the clause excluding warranties is drafted in more comprehensive terms. In such a case the word warranty will usually be regarded as bearing the same specialised meaning which it bears in the Sale of Goods Act 1979, i.e. a term breach of which only gives rise to a right in damages.109 Thus if only the word warranty is used the seller will normally be held not to have contracted out of liability for breach of conditions, e.g. those implied by ss.13,110 14111 and 15112 of the Act. It should be noted that this construction is to some extent peculiar to sale of goods and related transactions such as hire-purchase, for in other contracts the term warranty may be far less precisely used and indeed often refers simply to contractual promises.113 This interpretation will, however, be applied even where the goods have been accepted so that the breach of condition must be treated as a warranty by virtue of s.11(4),114 for the term broken is still in its nature a condition. The leading case on this point, Wallis, Son and Wells v Pratt and Haynes,115 involved a very strict interpretation of a widely drafted clause in a sale of seed, running: Sellers give no warranty express or implied as to growth, description, or any other matters, and they shall not be held to guarantee or warrant the fitness for any particular purpose of any grain, seed, flour, cake or any other article sold by them or its freedom from injurious quality or from latent defect. The sellers had purportedly sold by sample common English sainfoin seed. The seed supplied was identical with sample, but was giant sainfoin, a seed of inferior quality which was indistinguishable as seed. The House of Lords, reversing the Court of Appeal,116 held that the clause did not cover the breach of condition (presumably that in s.13117) which had been committed, despite the fact that most descriptive statements are by the Act made conditions,118 so that the exclusion of warranties as to description was made almost meaningless. So also in Henry Kendall & Sons v William Lillico & Sons,119 it was held that a clause reading: The goods are not warranted free from defect, rendering same unmerchantable, which would not be apparent on reasonable examination, any statute or rule of law to the contrary notwithstanding did not cover breaches of the condition as to merchantable (now, satisfactory) quality contained in s.14(2).120

Exclusion of Implied Conditions and/or Warranties 13-026

Sometimes the terminology has been wider and covered implied warranties and also implied conditions. In such cases it may still be held that express warranties and conditions are not affected. Thus in Andrews Bros (Bournemouth) Ltd v Singer & Co Ltd,121 a clause in a contract for the sale of cars read: All conditions, warranties and liabilities implied by statute, common law or otherwise are excluded. The contract was for new Singer cars but a car supplied was not a new car within the meaning of the contract. It was held that the clause did not cover the failure to deliver a new Singer car. Despite the fact that s.13(1) of the Sale of Goods Act 1979, which lays down a condition that goods correspond with description,122 refers to an implied condition, the court held that the term broken was not implied but express, and so not covered. The same reasoning would apply to an exclusion of implied warranties alone: express warranties would not be excluded.

Intermediate Terms

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13-027
The clauses to which the above two paragraphs relate were drafted at a time when it may have been assumed that, at least in the contract of sale of goods, all terms could be classified as conditions or warranties; or, if they were not drafted at that time, were based on that assumption. It has been explained that the last 25 years have shown that these categories are not exhaustive, and that one of the ways of formulating the law as it now stands is to say that there is a third type of term, the innominate or intermediate term.123 This may therefore give the courts, where the words condition and warranty are not accompanied by any other word such as term, statement or liability, a further opportunity of interpreting such clauses strictly: it may be said that the wording is not apt to cover innominate or intermediate terms. It is, however, possible to interpret the word warranty as intended to cover all terms which are not conditions. Indeed, as has been pointed out, this is an alternative way of formulating the law of breach of contract as it stands at present.124 The problem can from the draftsman's point of view be avoided by the use of a word such as undertakings.

With All Faults 13-028

In a number of cases this and similar phrases such as with all faults and imperfections have been interpreted as referring to matters of quality, merchantability, etc. only, and therefore not affecting the duty in a sale by description to deliver goods conforming to the description.125 Thus in an old case there was a sale of a copper-fastened vessel with all faults, without allowance for any defect whatsoever, it was held that the clause did not protect the seller where the vessel was not copper-fastened at all, for with all faults must mean with all faults which it may have consistently with its being the thing described.126 It has also been held that the phrase does not affect the duty in a sale by sample under s.15(2)(a) to supply goods that correspond with sample.127 Such a phrase would, however, negative the duties under s.14128 or in a sale by sample that under s.15(2)(c),129 unless there are indications to the contrary.130

Provisions Exempting for Errors of Description 13-029

Frequently, a clause has required the buyer to take goods with all faults imperfections and errors of description or made the seller not accountable for errors of description or the like. There is some authority that such a clause would exclude not only the provisions of s.14131 but also s.13132 (though presumably not the duty as to conformity with sample in s.15(2)(a)133 when this is applicable). Equally, however, there are cases where it is suggested that such terminology should be confined to minor errors of description and cannot affect the main duty of the contract.134 The chief difficulty here is that it seems that most descriptive statements are part of the condition as to description for the purposes of s.13 and will therefore rarely be lesser terms.135 It is submitted that it is unwise to try to solve the problem by laying down rules: too much turns on the context in which a clause is found. Where the general nature of the article to be sold is clear, a superimposed exemption clause referring to errors of description or the like may be interpreted to operate consistently with the main purpose of the contract. Thus it may be confined to minor errors of description, or treated as showing that words used are not intended to be part of the description but are merely puffs or names used for convenience of reference to the subject matter.136 It may perhaps also be held not to cover a deliberate misdescription.137 A clause allowing for 10 per cent variation in quantity, quality, design, finish, colour, ways, weight, combination, construction has been held ineffective to protect against complete non-conformity with sample.138 On the other hand, such an exemption clause may sometimes reasonably be interpreted as altering the main purpose of the contract by reducing the definitional content of the subject matter. It may well be that this latter method of interpretation has received insufficient attention, and that the tendency to determine the purpose of the contract without reference to the exemption clauses contained in it has been too indiscriminately employed.139 Thus it is certainly possible (statute apart) to sell seeds on the terms that the seller makes no guarantee that they really are the seeds described, and some cases have upheld the validity of such an arrangement.140 And a monetary limitation of liability in case of supply of the wrong seed has been held effective at common law.141 Some of the cases cited above may therefore be open to reconsideration in the light of more recent case

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142

Clauses in the Form of Acknowledgments and Non-reliance Clauses 13-030

Sometimes clauses which should really be classified as exemption clauses are couched in the form of acknowledgments of fact. Thus in Lowe v Lombank Ltd,143 a hire-purchase case, the hirer entered into a contract containing the clause: The hirer acknowledges that he has examined the goods prior to the signing of this agreement and that there are no defects in the goods which such examination ought to have revealed and that the goods are of merchantable quality. The hirer further acknowledges and agrees that he has not made known to the owners expressly or by implication the particular purpose for which the goods are required, and that the goods are reasonably fit for the purpose for which they are in fact required.

In some cases such clauses have simply been treated as exclusions of s.14 of the Sale of Goods Act 1979,144 and either held effective, held inapplicable under the doctrine of fundamental breach as then understood145 or under the Unfair Contract Terms Act 1977,146 or because of a collateral warranty.147 It has also been said that clauses excluding evidence ordinarily admissible are to be strictly construed.148 But such clauses do not purport to exclude terms from the contract, rather to establish facts that render terms inapplicable, and they are certainly not promissory in form.149 Therefore they should be treated as statements only, which may in appropriate cases tend to prove the truth of what they assert,150 and may sometimes raise an estoppel, which can be referred to as an evidential estoppel.151 But where the facts acknowledged are not true, the seller will not normally be able to rely on an estoppel, for to do so he must establish that the statement was intended to be acted upon and that he believed it to be true and acted in reliance on it. This will rarely be the case: it certainly was not in Lowe v Lombank Ltd.152 They may also be interpreted strictly.153 It seems therefore that such clauses will not be conclusive unless they can be regarded as genuinely representing the dealings between the parties; save that a clause like that quoted might estop the buyer from establishing that he had not examined the goods, even if he had not, provided the seller reasonably thought he had.154 A clause saying that goods are sold as seen tested and approved can be subjected to the same sort of analysis, save that it might in some cases reduce the description of the contract goods.155

A Different Approach 13-031

More recent authority has however played down such reasoning, explaining Lowe v Lombank as a special case directed towards an evasion of hire-purchase legislation,156 and sought to deal with such clauses by stressing the freedom of parties to agree on what were the facts surrounding the formation of a contract. It has arisen in the context of entire agreement clauses, which are considered below.157 The recent approach of English courts is well expressed by Moore-Bick L.J. in a case involving assumption of investment risks: There is no reason why parties to a contract should not agree that a certain state of affairs should form the basis for a transaction, whether it be the case or not I can see no reason in principle why it should not be possible for parties to an agreement to give up any right to assert that they were induced to enter into it by a misrepresentation, provided that they make their intention clear.158 This can be referred to as raising a contractual estoppel or an estoppel by contract.159 But there must be a limit to this: apart from exclusion of liability for fraud, which is referred to in more than one case,160 and misrepresentation as to the nature of the contract terms itself,161 it is difficult to see that a term could validly provide that there is consideration for a contract when there is not.

Exclusion of Conditions, Warranties and Liabilities Express and Implied

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13-032
It will be recalled that in Andrews Bros (Bournemouth) Ltd v Singer & Co Ltd,162 a clause excluding all conditions, warranties and liabilities implied by statute, common law or otherwise was held not to apply to express terms. Difficulty was, however, caused by the dictum in that case of Scrutton L.J.: If a vendor desires to protect himself from liability in such a case he must do so by much clearer language than this163; and it is sometimes said that such complete protection was achieved in L'Estrange v F Graucob Ltd.164 In this case, on the sale of a cigarette vending machine which proved unsatisfactory by reason of becoming easily jammed, the seller was held protected by a clause: This agreement contains all the terms and conditions under which I agree to purchase the machine specified above, and any express or implied condition, statement, or warranty, statutory or otherwise, not stated herein is hereby excluded.165 It is sometimes suggested that this case is authority for the possibility of excluding all express and implied conditions. But it is difficult to see that a contract which did this would have any content: there must be some basic contractual duty, though no doubt a widely drafted clause could reduce this to something very limited.166 In fact this particular clause seems (apart from the ever-present problems of unequal bargaining power) unobjectionable: it simply restricts the contractual terms to those stated on the paper. The contract was clearly stated elsewhere in the document as being for One Six Column Junior Ilam Automatic Machine and there can be little doubt that as a matter of interpretation the exemption clause did not give the seller the privilege of delivering anything except an article corresponding with that description.

Clauses Excluding the Right to Reject 13-033

Clauses frequently appear in commercial transactions excluding the right to reject. It is clear, first, that such clauses do not of themselves exclude the right to sue for damages,167 which might, where the goods are worthless, amount to the whole price paid; though they may be and often are accompanied by a clause which does bar that right.168 The question next arises how such clauses are to be analysed: whether they are contractual promises to waive the right to reject for breach of condition, or whether they indicate that the terms to which they apply are not conditions but warranties, and thus modify the normal contractual terms. The second interpretation seems preferable, in view of the fact that the cases treat them like other exemption clauses and hold that they do not, unless clearly drafted so as to achieve that effect, apply to complete failure to supply the contract goods,169 a breach of contract for which there seems no reason why the right to reject should not be waived.170 This view also has judicial support: an alleged usage to the same effect as such a clause has been said to prevent an implied condition arising, and to turn it from a condition into a mere warranty.171

Inapplicable to Goods Not of Contract Description 13-034

A line of cases relating to sales of timber has established that a clause such as, [b]uyer shall not reject the goods herein specified but shall accept and pay for them in terms of contract against shipping documents only prevents rejection where the goods herein specified have in fact been supplied and does not apply where the goods supplied do not conform with their description.172 Reasoning similar to that found in these cases applies also to other similar phraseology173 and to contracts relating to other commodities.174 The description of goods has in these cases been widely interpreted to cover not only the measurement and composition of the goods, but also stipulations as to when they are to be ready for shipment,175 as to their marks176 and their stowage, e.g. under deck.177 In one case when wider phraseology was used: whatever the difference of the shipment may be in value from the grade, type or description specified, it is understood that any such question shall notentitle the buyer to reject the delivery or any part thereof

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the court, however, fell back on a narrower definition of description, and held that terms as to shipment were independent and not part of the description so that rejection was still allowed.178 In Agroexport v NV Goorden Import Cy SA,179 Sellers J. rejected the suggestion that such clauses could not exclude the duty to deliver goods conforming with the contract description and said that the clause in that case clearly did so and was valid.180 It is submitted, however, that a clause will not easily be held to exclude this duty once the contract description has been determined, but that it may be relevant to the determination of what the contract description is; this seems the proper explanation of the clauses in that case, which formed a comprehensive code for rejection181 and forbade rejection for some deficiencies while permitting it in others. Similarly in Wilkinson v Barclay,182 another case of sale of timber, a clause: The lots are offered where and as they are, and the sum offered will be subject to no allowance for any faults, defects, errors of description, measurement, quantity or for any cause and without any warranty whatever was held to go to description and show that the amount was not a firm contractual amount. This view is consistent with the analysis of the nature of such clauses offered in the preceding paragraph. Doubts are expressed in some cases as to what such clauses do cover if they do not apply to failure to supply the contract goods183: the answer to this depends on the drafting of the clause, but in the goods herein specified clause considered above the exclusion seems to be of s.14 of the Sale of Goods Act 1979,184 and such clauses, by reference to quality, frequently make this clear.185 Terms to similar effect may be imported by custom or usage186: they can be regarded either as exclusion clauses incorporated by usage under s.55(1) of the Sale of Goods Act 1979,187 or as customs as to the meaning of the description of the particular goods in the trade.188

Clauses Excluding Any Right to Damages 13-035

A clause may appear to exclude any right to damages. It seems that such a clause would be interpreted if possible so as only to cover minor matters, or only to exclude rejection189; or to confine a buyer to claiming the return of the price and to exclude further liability.190 But if it clearly applies to an apparent contractual duty and makes no further provision, the effect must be to extinguish that duty191; it would then be a matter of construction whether the stipulation concerned would stand as a non-promissory condition precedent192 or have no effect at all. In Wilkinson v Barclay193 (the relevant wording of the contract in which is given above194), it was held at first instance that the effect of the clause used was to bar not only the right of rejection but also the right to claim damages for short delivery. On the other hand, the price paid had been based on the estimated measurements of the timber, and it was held at first instance that this was only payable in respect of timber delivered: the clause did not deprive the buyer of his right to recover back money paid for timber specified but not delivered.195 The Court of Appeal, however, held that there was an out-and-out sale at a price per cubic foot on the estimated quantity of timber and that it was not intended that there should be an allowance on either side if the estimate proved wrong.196

Cancelling Clauses 13-036

Cancelling clauses can take many forms. Sometimes they simply make the stipulation, on non-performance or non-occurrence of which cancellation can occur, a condition. Sometimes they can permit cancellation whether or not the non-performance or non-occurrence is serious enough to discharge the contract; and the event need not arise from a breach. Sometimes they provide facilities by which a party can effectively buy himself out of the contract. But in other cases they simply entitle one party to escape his obligations on payment of limited damages, or refund of expenses incurred, or even without redress to the other party. Clauses of the last type would no doubt be interpreted strictly197 unless they make the transaction into a delivery on approval.198

Clauses Limiting the Damages Recoverable 13-037

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Sometimes clauses limit the amount of damages recoverable. Where these are liquidated damages clauses they form a compromise between the parties and are enforceable whether the loss is greater or less than the sum agreed, and thus they may benefit either party.199 They are therefore not exemption clauses and do not come within the principles here discussed.200 They will, however, be interpreted only to cover the loss in respect of which they may be regarded as settling the damages. Thus demurrage clauses in contracts for carriage of goods by sea normally fix damages for delay but not for other matters,201 and on principle it seems that liquidated damages clauses do not bar the remedy of rejection nor the right to recover the price on doing so. Where, however, clauses simply fix a limit202 or exclude a particular head of damages, e.g. consequential loss,203 they are exemption clauses and where ambiguous204 interpreted contra proferentem.205 It has been stated, however, that the principles of strict interpretation are not applicable in their full rigour when considering the effect of clauses merely limiting [sc., the monetary extent of] liability.206 The reason given for this difference is that: they must be related to other contractual terms, in particular to the risks to which the defending party may be exposed, the remuneration which he received, and possibly also the opportunity of the other party to insure.207 It is, however, not easy to justify such a distinction as a tool of legal reasoning, and it has been rejected by the High Court of Australia208; and it has been said more recently that it is unlikely that there was any intention to introduce any mechanistic rule to mitigate the rigour of another.209 For a start, provisions relating to limitation may be intertwined with exemptions.210 Secondly, where the sum to which liability is limited is very low, the clause may amount in effect to an exclusion of liability. Thus in a leading case in which this principle was followed211 the relevant clause limited liability in the event to 0.33 per cent of the loss actually sustained. Nor, thirdly, is it clear which interpretative technique should be applied to clauses imposing time limits on claims. There seems no reason, if special principles are to apply to limitation clauses, why they should not sometimes apply here also.212 A special variant of clauses limiting the right to damages is the invoicing back clause, which is discussed elsewhere.213

Exclusion of Indirect or Consequential Loss 13-038

Commercial contracts frequently include clauses purporting to exclude liability for consequential loss, or indirect loss (which is interpreted as having the same meaning214) or both. The purpose of such clauses would appear to be to exclude liability beyond the difference in value between that of the goods supplied and the value which they ought to have had, together with direct physical damage caused by the goods; in particular, it may be thought that those who use them seek to exclude liability for loss of profits. English courts have however, interpreted such clauses strictly, regarding a straight claim for loss of profits as being direct rather than indirect or consequential. The current authority is that such clauses only exclude losses covered by the second part of the rule in Hadley v Baxendale,215 that is to say, unusual losses for which the defendant would not be liable unless aware of the danger of them. It seems that this is now so well established that only the House of Lords can reconsider the matter.216 Quite often such clauses reinforce what might be thought to be their purpose by a specific reference to loss of profits.217 In such cases a problem of interpretation arises as to whether the loss of profits referred to must be regarded as only covering those arising under the second part of Hadley v Baxendale, or whether the reference to profits must be given effect and the exclusion of consequential loss confined to matters outside the express words. There are also problems as to exactly what the second part of the rule in Hadley v Baxendale means in practice outside the straightforward examples normally given, in particular as to the requirement of special knowledge.218

Clauses Imposing Time Limits 13-039

Frequently commercial contracts contain provisions to the effect that legal proceedings, or arbitration,219 must be commenced, or that defects must be notified, within a certain period, otherwise any claim will be deemed to be waived. Other clauses may be held to impose such a

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limit impliedly: thus in cases on the sale of horses it has been held that the phrase warranted sound for one month did not imply any warranty that the horse would remain sound for one month but rather imposed a bar on claims as to its condition on sale made after the expiry of one month.220 There may also be customs to similar effect.221 It has been said that such clauses are releases rather than waivers,222 but it is difficult to see how a claim can be released or waived before it accrues and it is probably better to classify them as contractual promises to release or waive. Such clauses have again been interpreted strictly, for they take away normal rights. Thus, in Ernest Beck & Co v K Szymanowski & Co, a contract for the sale gross of 200 yard reels of sewing cotton contained the provision: The goods delivered shall be deemed to be in all respects in accordance with the contract and the buyers shall be bound to accept and pay for the same accordingly unless the sellers shall within fourteen days after arrival of the goods at their destination receive from the buyers notice of any matter or thing by reason whereof they may allege that the goods are not in accordance with the contract. The cotton on the reels proved on average seriously short in measurement and the buyers claimed damages outside the period. The Court of Appeal223 held simply that the clause did not affect a claim for damages, but only purported to forbid rejection: the House of Lords224 went further and held that it only applied to matters of quality and could not be used so as to convert goods undelivered into goods delivered.225 So also in Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co,226 a clause in a charterparty requiring the making of any claim and the appointment of an arbitrator to occur within three months of final discharge was held to apply only to breaches of specific terms in the contract, and not to the warranty of seaworthiness, which was not mentioned in the contract and took effect by implication of law only. But where the breach is less serious, such clauses will of course apply227: and there seems no reason why they should not be drafted so as to apply to even the most serious breaches,228 for it can be said that they do not exclude liability, but simply require that buyers take vigilant steps to finalise transactions. On the other hand a very short time limit can amount to a bar on rejection or complaint altogether.

Clauses Excluding the Right of Set-off 13-040

The right of set-off can be excluded,229 but the exclusion should be clear230 as it may be presumed that neither party intends to abandon any remedies for its breach arising by operation of law.231 Since however it is only a remedy that is excluded, a clause excluding set-off may extend to preventing set-off even for fraud.232

Certification and Testing Clauses 13-041

Provision is often made for certification and testing by various methods.233 Such clauses may be treated as exemption clauses and where appropriate subjected to strict interpretation.234 Sometimes, however, the contractual duty is itself simply to supply goods that satisfy the certifier,235 or fulfil certain contractual standards and also satisfy the certifier.236 Unless the contract so provides expressly or by necessary implication, however, approval of the certifier is not conclusive that the contractual terms have been duly performed.237 But the contract may so provide: provisions for conclusive certifications as to quality are common.238 Sometimes much more complex terms are laid down which require specific analysis. Thus in Agroexport v NV Goorden Import Cy SA239 there was what Sellers J. called: a comprehensive code for rejection or acceptance or allowance based on the evidence derived from the certificate of control and the certificates of the analysts as prescribed. The contract, for linseed expellers, provided inter alia for no rejection, but acceptance with allowance in the case of deficiency of oil and albuminoids and content of castor seed husk up to a certain percentage, but allowed for rejection beyond this percentage and also if the goods contained more than a certain percentage of sand and/or silica. To this extent it is submitted that it

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established, not modified,240 the description of the goods sold. It then provided for sampling and analysis by certain procedures: these operated like time limits and, since they were not followed, the buyer was held to have no valid claim as to the quality and nature of the goods delivered.241 Although certification will normally be interpreted as relevant to quality only,242 it can also cover matters of quality which are part of the description of the goods,243 and there seems no reason why it should not be extended by clear words to cover the nature of the goods, especially where by reason of admixtures it becomes difficult to determine at what point a deficiency in quality affects the nature of the goods.244 Similarly, it is submitted that an agreed procedure for conclusively ascertaining the amount of the cotton could have barred a claim in Ernest Beck & Co v K Szymanowski & Co discussed above.

Arbitration Clauses.245 13-042

Arbitration clauses are mere procedural provisions,246 and can normally be ignored by a party who wishes to sue in court instead,247 subject to the court's power (and usually duty) to grant a stay.248 Such clauses are not exemption clauses and thus not subject to the special rules for the interpretation of exemption clauses.249 This is true even of Scott v Avery clauses, i.e. clauses making an arbitral award a condition precedent to any right of action, which cannot normally be ignored except by consent of both parties.250 But where a time limit is involved, this aspect of the clause counts as an exemption,251 unless the time limit only relates to the appointment of the arbitrator and does not bar the right of action.252 And since they may be prejudicial to consumers, consumer arbitration agreements are controlled by statute.253

73.

For discussion of the extent to which the principle survives Lord Hoffmann's restatement of the principles of interpretation in Investors Compensation Scheme Ltd v West Bromwich BS [1998] 1 W.L.R. 896 see Treitel, Law of Contract (12th edn, edited by Peel), para.7-016.

74.

See Chitty on Contracts (30th edn, edited by), Vol.1, para.14-08.

75.

See Staughton L.J. in Youell v Bland, Welch & Co Ltd [1992] 2 Lloyd's Rep. 127 at p.134; see also Pera Shipping Corp v Petroship SA [1984] 2 Lloyd's Rep. 363 at p.365 per Staughton J.

76.

Ailsa Craig Shipping Co Ltd v Malvern Fishing Co Ltd [1983] 1 W.L.R. 964 at p.970, per Lord Fraser of Tullybelton.

77.

Below, paras 13-043 et seq.

78.

Canada Steamship Lines Ltd v R [1952] A.C. 192; Smith v South Wales Switchgear Co Ltd [1978] 1 W.L.R. 165; EE Caledonia Ltd v Orbit Valve Co Europe [1994] 1 W.L.R. 221 and 1515; and see Stent Foundations Ltd v MJ Gleeson Group Plc [2001] B.L.R. 134.

79.

Below, para.13-037.

80.

Howard Marine and Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978] Q.B. 574 at p.594; cf. 599; Photo Production Ltd v Securicor Transport Ltd [1980] A.C. 827 at p.843, 851; George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 A.C. 803 at p.814.

81.

Ailsa Craig Shipping Co Ltd v Malvern Fishing Co Ltd [1983] 1 W.L.R. 964 at p.966; and see Livingstone v Roskilly [1992] 3 N.Z.L.R. 230.

82.

George Mitchell case [1983] 2 A.C. 803 at p.810.

83.

See Swiss Bank Corp v Brinks Mat Ltd [1986] 2 Lloyd's Rep. 79 at pp.92-93; see also Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 C.L.R. 500.

Page11

84.

See s.11(2); above, para.13-012, below, para.13-088.

85.

See Green v Cade Bros Farms [1978] 1 Lloyd's Rep. 602; George Mitchell [1983] 2 A.C. 803.

86.

Watford Electronics Ltd v Sanderson CFL Ltd [2001] EWCA Civ 317; [2001] 1 All E.R. (Comm) 696 at [31] et seq.; and see Granville Oil and Chemicals Ltd v Davies Turner & Co Ltd [2003] EWCA Civ 570; [2003] 2 Lloyd's Rep. 356 (clause did not purport to cover fraud).

87.

Unfair Contract Terms Act s.11(1).

88.

cf. below, para.13-087.

89.

By ss.2, 3 and 6: below, paras 13-093, 13-095, 13-084. Section 6 also applies to hire-purchase; and transactions related to sale are covered by s.7: below, para.13-086.

90.

By ss.26, 27(1): below, paras 13-100 et seq. There are also exclusions of specific contracts, not relevant to sale of goods: see Sch.1.

91.

Nor by those under the Unfair Terms in Consumer Contracts Regulations: below, para.13-104.

92.

Photo Production Ltd v Securicor Transport Ltd [1980] A.C. 827 at p.843, per Lord Wilberforce. See also Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 C.L.R. 500; Hunter Engineering Co v Syncrude Canada Ltd [1989] 1 S.C.R. 426 at p.464; (1989) 57 D.L.R. (4th) 321 at p.343.

93.

Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd [1973] Q.B. 400 at p.419, per Buckley L.J.; see, e.g. AM Bisley & Co Ltd v Thompson [1982] 2 N.Z.L.R. 696. But cf. George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 A.C. 803 at p.814 (a case of a limitation clause: below, para.13-080). Since liability for fraud cannot be excluded (above, para.13-016) a clause may equally be interpreted as not covering fraud. This may become relevant when reasonableness is in issue: see Government of Zanzibar v British Aerospace (Lancaster House) Ltd [2000] 1 W.L.R. 2333 at pp.2346-2347, not following on this point Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All E.R. 573; Regus (UK) Ltd v Epcot Solutions Ltd [2008] EWCA Civ 361; [2009] 1 All E.R. (Comm) 586; Foodco UK LLP v Henry Boot Developments Ltd [2010] EWHC 358. But compare the position as to set-off, below, para.13-040.

94.

See Howarth, 36 N.I.L.Q. 101 (1985).

95.

White v John Warwick & Co Ltd [1953] 1 W.L.R. 1285 at p.1294.

96.

See Alderslade v Hendon Laundry Ltd [1945] K.B. 189; Canada Steamship Lines Ltd v R. [1952] A.C. 192; Hollier v Rambler Motors (AMC) Ltd [1972] 2 Q.B. 71; Smith v South Wales Switchgear Ltd [1978] 1 W.L.R. 165 HL. See also Producer Meats (North Island) Ltd v Thomas Borthwick & Sons (Australia) Ltd [1964] N.Z.L.R. 700; Hawkes Bay and East Coast Aero Club Inc v McLeod [1972] N.Z.L.R. 289; Chitty on Contracts (30th edn), Vol.1, paras 14-010 to 14-013; Treitel, Law of Contract (12th edn, edited by Peel), paras 7-033 et seq.

97.

Below, paras 13-093, 13-094.

98.

Above, para.12-123; cf. below, para.13-107.

99.

Josling v Kingsford (1863) 13 C.B. (N.S.) 447 (quality approved); Azemar v Casella (1867) L.R. 2 C.P. 677 (should the quality prove inferior to the guarantee, a fair allowance to be made); Pinnock Bros v Lewis and Peat Ltd [1923] 1 K.B. 690 (the goods are not warranted free from defect rendering the same unmerchantable, which would not be apparent on reasonable examination: s.13 unaffected. But see further as to this clause below, para.13-025).

100.

Wimble, Sons & Co v Lillico & Son (1922) 38 T.L.R. 296.

Page12

101.

Above, paras 11-024 et seq.; Henry Kendall & Sons v William Lillico & Sons [1969] 2 A.C. 31 at pp.90-91, 104-105, 114, 130.

102.

Above, para.11-080; Champanhac & Co Ltd v Waller Ltd [1948] 2 All E.R. 724.

103.

Above, paras 11-001 et seq. See Nichol v Godts (1854) 10 Exch. 191. The wording in this case was warranted only equal to samples. If these words were used nowadays, the question might arise as to whether they exclude even s.15(2)(c), which lays down a condition of satisfactory quality.

104.

Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All E.R. 573.

105.

He must bring it home that he is limiting his liability for falsehoods he may have told: Thomas Witter Ltd [1996] 2 All E.R. 573 at p.596 per Jacob J.

106.

See Clarke v Army and Navy Co-operative Society Ltd [1903] 1 K.B. 155.

107.

See Clarke v Army & Navy Co-operative Society Ltd [1903] 1 K.B. 155 at p.167; but cf. Mendelssohn v Normand Ltd [1970] 1 Q.B. 177.

108.

[1948] 2 All E.R. 127; see also Couchman v Hill [1947] K.B. 554 (giving no warranty whatever); Harling v Eddy [1951] 2 K.B. 739 (nothing is sold with a warranty unless specially mentioned at the time of offering); Mendelssohn v Normand Ltd [1970] 1 Q.B. 177 (no variation of these conditions will bind the [defendants] unless made in writing signed by their duly authorised manager).

109.

Sale of Goods Act 1979 ss.11(3), 61(1); above, para.10-023.

110.

Above, para.11-001; Wallis, Son and Wells v Pratt and Haynes [1911] A.C. 394, discussed above; W Barker (Jr) & Co Ltd v Edward T Agius Ltd (1927) 33 Com.Cas. 120 (no warranty is expressed or implied and sellers accept no responsibility in regard to the description, size, quality, condition or fitness); Nicholson and Venn v Smith Marriott (1947) 177 L.T. 189 (auction: no warranty is given or to be implied by the description in the catalogue); Elder Smith Goldsbrough Mort Ltd v McBride [1976] 2 N.S.W.L.R. 631 (auction).

111.

Above, paras 11-024 et seq.; Baldry v Marshall [1925] 1 K.B. 260 (exclusion of guarantee or warranty); Cammell Laird & Co v Manganese Bronze and Brass Co Ltd [1934] A.C. 402 at p.431 (to be guaranteed against defective material and workmanship); Harling v Eddy [1951] 2 K.B. 739; KB Bominflot Bunkergesellschaft, etc., mbH v Petroplus Marketing AG [2009] EWHC 1088 (Comm); [2009] 2 Lloyd's Rep. 679 at [46]-[48] (see also below, para.18-299).

112.

Above, paras 11-073 et seq.

113.

Above, para.10-015.

114.

Above, paras 12-040 et seq.

115.

[1911] A.C. 394.

116.

Wallis Son & Wells v Pratt & Haynes [1910] 2 K.B. 1003. The Court of Appeal had held that since the right to reject had been lost the condition had become a warranty ex post facto and so was covered by the clause.

117.

See Wallis Son & Wells v Pratt & Haynes [1911] A.C. 394 at p.398; as to s.13, above, paras 11-001 et seq.

118.

See above, paras 11-013 et seq.

119.

Page13

[1969] 2 A.C. 31 at pp.84, 95-96, 107, 109, 114, 126.

120.

Nor would it cover a breach of s.14(3), as held in the same case; nor of s.13: Pinnock Bros v Lewis and Peat Ltd [1923] 1 K.B. 690. But cf. WN Lindsay & Co Ltd v European Grain and Shipping Agency Ltd [1963] 1 Lloyd's Rep. 437 at pp.443-444, where a different view is taken of the significance of the word warranted. See also as to this clause Canada Atlantic Grain Export Co v Eilers (1929) 35 Ll. L.R. 206.

121.

[1934] 1 K.B. 17.

122.

As to which see above, paras 11-001 et seq.

123.

Above, paras 10-029 et seq., 12-023.

124.

Above, para.10-033.

125.

Above, paras 11-001 et seq.: see Peters & Co v Planner (1895) 11 T.L.R. 169 (Galician eggs); Robert A Munro & Co Ltd v Meyer [1930] 2 K.B. 312 (meat and bone meal).

126.

Shepherd v Kain (1821) 5 B. & A. 240 at p.241. See also Fletcher v Bowsher (1819) 2 Stark. 561. But cf. Taylor v Bullen (1850) 5 Exch. 779. But as to as seen with all its faults and without warranty, see below, para.13-068.

127.

Above, para.11-079; Champanhac & Co Ltd v Waller & Co Ltd [1948] 2 All E.R. 724 (as sample taken away with all faults and imperfections).

128.

Above, paras 11-024 et seq.; see, e.g. Champanhac & Co Ltd v Waller & Co Ltd [1998] 2 All E.R. 724 at p.726; Lloyd del Pacifico v Board of Trade (1930) 35 Ll. L.R. 217; Ward v Hobbs (1877) 3 Q.B.D. 150, affirmed (1878) 4 App.Cas. 13; Baglehole v Walters (1811) 3 Camp. 154. But see D & M Trailers (Halifax) Ltd v Stirling [1978] R.T.R. 468, where the Court of Appeal expressed doubts as to whether such a clause would exclude s.14. And positive concealment of a defect might give rise to an action in deceit: Ward v Hobbs (1877) 3 Q.B.D 150; Peters & Co v Planner (1895) 11 T.L.R. 169; above, para.12-012.

129.

Above, para.11-080; Champanhac & Co Ltd v Waller & Co Ltd [1998] 2 All E.R. 724.

130.

See Wimble, Sons & Co v Lillico & Son (1922) 38 T.L.R. 296, where an express term as to merchantability followed the with all faults clause; Elder Smith Goldsbrough Mort Ltd v McBride [1976] 2 N.S.W.L.R. 631, where the clause was preceded by a reference to the goods being available for inspection and was held only to cover defects discernible by inspection.

131.

Above, paras 11-024 et seq.

132.

Above, paras 11-001 et seq. See Freeman v Baker (1833) 5 B. & Ad. 797; Pettitt v Mitchell (1842) 4 Man. & G. 819; Taylor v Bullen (1850) 5 Exch. 779; Lloyd del Pacifico v Board of Trade (1930) 35 Ll. L.R. 217 at p.223 (but there was no misdescription); Couchman v Hill [1947] K.B. 554 at p.557. Faults and errors of description must be read disjunctively: Lloyd del Pacifico v Board of Trade (1930) 35 Ll. L.R. 217.

133.

Above, para.11-079.

134.

See Lloyd del Pacifico v Board of Trade (1930) 35 Ll. L.R. 217 at p.224 (the steamer shall be taken with all faults and errors of description without any allowance or abatement); Harrison v Knowles and Foster [1917] 2 K.B. 606 at p.610 (affirmed on other grounds [1918] 1 K.B. 608) (not accountable for errors in description); Cotter v Luckie [1918] N.Z.L.R. 811 at p.816 (auction: clause referred to error or misdescription as to age, number, sex or condition of any stock offered for sale); Nicholson & Venn v Smith Marriott (1947) 177 L.T. 189 at p.191 (auction: the genuineness or authenticity of any lot is not guaranteed No allowance whatsoever will be made for errors in description, quantity, weight or measurement, but the lots are to be cleared as shown at the sale).

Page14

135.

Above, paras 11-001 et seq.

136.

cf. Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 W.L.R. 989 (hull number of newbuilding ship).

137.

Below, para.13-053.

138.

Mohsin Abdullah Alesayi v Brooly Exim Pte Ltd [1993] 3 Singapore L.R. 433 (denim jeans).

139.

cf. below, para.13-045.

140.

Reynolds v Wrench (1888) 23 L.J.N.C. 27; Howcroft and Watkins v Perkins (1900) 16 T.L.R. 217 (sellers give no warranty express or implied as to description, quality, productiveness, or any other matter and will not be in any way responsible for the crop); cf. Howcroft v Laycock (1898) 14 T.L.R. 460. See also Carter v Crick (1859) 4 H. & N. 412; Rutherford & Son v Miln & Co, 1941 S.C. 125.

141.

George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 A.C. 803. But the clause was then held ineffective under statute: below, para.13-090.

142.

cf. above, para.13-020.

143.

[1960] 1 W.L.R. 196. See also Mohar Investment Co v Wilkins (1957) 108 L.J. 140; Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All E.R. 573 at p.597.

144.

Above, paras 11-024 et seq.; see Webster v Higgin [1948] 2 All E.R. 127; Yeoman Credit Ltd v Apps [1962] 2 Q.B. 508; Harper v South Island Holdings Ltd [1959] N.Z.L.R. 629; Cornwall Properties Ltd v King [1966] N.Z.L.R. 239; Francis v Trans-Canada Trailer Sales Ltd (1969) 6 D.L.R. (3d) 705; Western Tractor Ltd v Dyck (1969) 7 D.L.R. (3d) 535; Hall v Queensland Truck Centre Pty Ltd [1970] Qd. R. 231.

145.

Below, paras 13-043 et seq.

146.

Below, paras 13-063 et seq.; Lutton v Saville Tractors (Belfast) Ltd [1986] 12 N.I.L.R.B. 1 at p.19 (transparent attempts to escape the operation of s.6(2)(a) of the 1977 Act, per Carswell J.); Sovereign Finance Ltd v Silver Crest Furniture Ltd [1997] C.C.L.R. 76 (hire-purchase: tripartite transaction).

147.

Above, paras 10-012 et seq., 13-016.

148.

WN Lindsay & Co Ltd v European Grain & Shipping Agency Ltd [1963] 1 Lloyd's Rep. 437 at p.445; Nile Co, etc. v H & JM Bennett (Commodities) Ltd [1986] 1 Lloyd's Rep. 555 at p.588.

149.

See Lowe v Lombank Ltd [1960] 1 W.L.R. 196 at p.204.

150.

See Criss v Alexander (1928) 28 S.R. (N.S.W.) 297 (evidence of reliance held wrongly rejected).

151.

E Grimstead & Son Ltd v McGarrigan [1999] EWCA Civ 3029, per Chadwick L.J.

152.

Above. See also Mohsin Abdullah Alesayi v Brooks Exim Pte Ltd [1993] 3 Singapore L.R. 433 (clause stating (wrongly) that sellers were merely shippers in transit).

153.

Rorison v McKey [1952] N.Z.L.R. 398; Kemp v Dalziel [1956] N.Z.L.R. 1030 (inapplicable to matters not ascertainable on inspection).

Page15

154.

The question of such an estoppel was left undecided in Thornett and Fehr v Beers & Son [1919] 1 K.B. 486.

155.

See Beale v Taylor [1967] 1 W.L.R. 1193 at p.1196. In Hughes v Hall [1981] R.T.R. 430, a criminal case, the words sold as seen and inspected were held to imply an exclusion of s.13 of the Sale of Goods Act; but the case was doubted in Cavendish-Woodhouse Ltd v Manley [1982] L.G.R. 376. See below, para.13-068.

156.

See Morgan Chase Bank v Springwell Navigation Corp [2008] EWHC 1793 (Comm) at [537]-[539] (a very thorough discussion); followed in Trident Turboprop (Dublin) Ltd v First Flight Couriers Ltd [2008] EWHC 1686 (Comm); [2008] 2 Lloyd's Rep. 581 at [36], n.9.

157.

See paras 13-057, 13-058.

158.

Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] EWCA Civ 386; [2006] 2 Lloyd's Rep. 511 at [56], [57]. See an illuminating exposition by Trukhtanov, (2009) 125 L.Q.R. 648.

159.

For the difference between this and estoppel by convention see Trukhtanov, (2009) 125 L.Q.R. at pp.656-657.

160.

See above, para.13-016.

161.

cf. Curtis v Chemical Cleaning & Dyeing Co [1951] 1 K.B. 805.

162.

[1934] 1 K.B. 17; above, para.13-026.

163.

Andrew Bros (Bournemouth) Ltd v Singer & Co Ltd [1934] 1 K.B. 17 at p.23.

164.

[1934] 2 K.B. 394. Though, contrary to what is sometimes suggested, the clause in the second case cannot have been drafted with these words in mind, as the agreement in the second case was signed eight months before the hearing of the first. See also Mechanical Horse (Australasia) Pty Ltd v Broken Hill Council (1941) 41 S.R. (N.S.W.) 135.

165.

Emphasis added.

166.

cf. Suisse Atlantique Socit d'Armement Maritime v NV Rotterdamsche Kolen Centrale [1967] 1 A.C. 361 at p.432; below, para.13-046.

167.

Szymonowski & Co v Beck & Co [1923] 1 K.B. 457, affirmed on other grounds but approved on this point [1924] A.C. 43 at p.52, below, para.13-039; Ashington Piggeries Ltd v Christopher Hill Ltd [1972] A.C. 441 at p.471 (the goods shall be taken with all faults and defects, damaged or inferior, if any, at valuation to be arranged mutually or by arbitration). But if the goods are not supplied even the right to reject persists: below, para.13-034. And see further as to this clause below, n.174. Nor does a clause specifying how damages are to be assessed bar rejection: Roth, Schmidt & Co v D Nagase & Co Ltd (1920) 2 Ll. L.R. 36.

168.

Below, para.13-035. As to rejection clauses see also below, paras 18-318 et seq. (international sales).

169.

See below, para.13-034.

170.

Coote, Exception Clauses (1964), pp.150-152.

171.

See Re Walkers, Winser and Hamm and Shaw, Son & Co [1904] 2 K.B. 152 at p.158; Re North Western Rubber Co Ltd and Httenbach & Co [1908] 2 K.B. 907 at p.912 (actual decision overruled by Produce Brokers Co Ltd v Olympia Oil and Cake Co Ltd [1916] 1 A.C. 314).

172.

Montague L Meyer Ltd v Kivisto (1929) 35 Ll. L.R. 265; Montague L Meyer Ltd v Osakeyhtio Carelia Timber Co Ltd

Page16

(1930) 36 Com.Cas. 17; Montague L Meyer Ltd v Travaru (1930) 37 Ll. L.R. 204; Joseph Green v Arcos Ltd (1931) 39 Ll. L.R. 229; White Sea Timber Trust Ltd v WW North Ltd (1932) 44 Ll. L.R. 390; Vsesojwzoje Objedinenije Exportles v TW Allen & Sons Ltd [1938] 3 All E.R. 375.
173.

Vigers Bros v Sanderson Bros [1901] 1 K.B. 608 (buyers shall not reject any of the goods: the clause does not operate so as to force the buyer to take goods which are neither within nor about the specification nor commercially within its meaning: p.611); Wilensko, etc. v Fenwick & Co Ltd [1938] 3 All E.R. 429 (the goods herein named); Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [1953] 1 W.L.R. 1468 (the buyer shall accept the goods as shipped); C Leary & Co v Francis Briggs & Co (1904) 6 F. (Ct. of Sess.) 857. See further as to such clauses, below, paras 18-318 et seq. (international sales).

174.

Robert A Munro & Co Ltd v Meyer [1930] 2 K.B. 312 (meat and bone meal: the goods to be taken with all faults and defects, damaged or inferior, if any, at a valuation to be arranged mutually or by arbitration). But it is not clear that this clause is in any case clear enough to disallow rejection at all: see Modiano Bros & Son v HT Pearson & Co Ltd (1929) 34 Ll. L.R. 52; Ashington Piggeries Ltd v Christopher Hill Ltd [1969] 3 All E.R. 1496 at pp.1522-1523; [1972] A.C. 441 at p.471.

175.

Montague L Meyer Ltd v Osakeyhtio Carelia Timber Co Ltd (1930) 36 Com.Cas. 17. cf. Montague L Meyer Ltd v Kivisto (1929) 35 Ll. L.R. 265 (to be properly seasoned not part of description).

176.

Vsesojwzoje Objedinenije Exportles v TW Allen & Sons Ltd [1938] 3 All E.R. 375.

177.

Montague L Meyer Ltd v Travaru (1930) 37 Ll. L.R. 204; White Sea Timber Trust Ltd v WW North Ltd (1832) 44 Ll. L.R. 39.

178.

J Aron & Co v Comptoir Wegimont [1921] 3 K.B. 435.

179.

[1956] 1 Lloyd's Rep. 319; see also Duncombe v Porter (1953) 90 C.L.R. 295; WE Marshall & Co v Lewis and Peat (Rubber) Ltd [1963] 1 Lloyd's Rep. 562 (time limit on rejection); Gill & Duffus SA v Berger Co Inc [1983] 1 Lloyd's Rep. 622 at pp.626, 628-630, 632-633; [1984] A.C. 382 at pp.393-394. cf. WN Lindsay & Co Ltd v European Grain and Shipping Agency Ltd [1963] 1 Lloyd's Rep. 437 at p.437 (prescribed procedure not exclusive); NV Bunge v Cie Noga d'Importation et d'Exportation (The Bow Cedar) [1980] 2 Lloyd's Rep. 601; Daudruy v Tropical Products Sales SA [1986] Lloyd's Rep. 535 (certificate of analysis not conclusive as to description).

180.

See Agroexport v NV Goorden Cy SA [1856] 1 Lloyd's Rep. 319 at p.325.

181.

For an example of this in a shipbuilding contract see China Shipbuilding Corp v Nippon Yusen Kabukishi Kaisha (The Seta Masu) [2000] 1 Lloyd's Rep. 367.

182.

[1946] 1 All E.R. 387; actual decision reversed [1946] 2 All E.R. 337, below, para.13-035.

183.

See Montague L Meyer Ltd v Kivisto (1929) 35 Ll. L.R. 265 at p.268; Montague L Meyer Ltd v Osakeyhtio Carelia Timber Co Ltd (1930) 36 Com.Cas. 17 at p.27.

184.

Above, paras 11-024 et seq.

185.

See, e.g. Central Meat Products Co Ltd v JV McDaniel Ltd [1952] 1 Lloyd's Rep. 562 (should any dispute refer to quality or condition, the buyer shall accept the goods ); Smith Brothers (Hull) Ltd v Gosta Jacobsson & Co [1961] 2 Lloyd's Rep. 522 (Buyer's right of rejection shall not be exercised where the claim is limited to questions of quality unless the shipment as a whole is not in respect of such heads of claim a fair delivery under the Contract from a commercial stand-point); Oleificio Zucchi SpA v Northern Sales Ltd [1965] 2 Lloyd's Rep. 496; Modiano Bros & Son v HT Pearson & Co Ltd (1929) 34 Ll. L.R. 52.

186.

See Re Walkers, Winser and Hamm and Shaw, Son & Co [1904] 2 K.B. 152 at p.158; Re North Western Rubber Co Ltd and Httenbach & Co [1908] 2 K.B. 907 (actual decision overruled by Produce Brokers Co Ltd v Olympia Oil and Cake Co Ltd [1916] 1 A.C. 314); but such a custom may be unreasonable: see Sinidino, Ralli & Co v Kitchen & Co (1883) Cab. & El. 217 at p.220. As to custom and usage in general, see above, para.11-088.

Page17

187.

Above, para.1-013.

188.

Above, para.11-088.

189.

See cases cited above, para.13-033; cf. Szymonowski & Co v Beck & Co [1923] 1 K.B. 457 (affirmed [1924] A.C. 43 sub nom. Szymanowski), below, para.13-039.

190.

e.g. RW Green Ltd v Cade Bros Farms [1978] 1 Lloyd's Rep. 602.

191.

See Coote, Exception Clauses (1964), pp.152-153; Photo Production Ltd v Securicor Transport Ltd [1980] A.C. 827 at p.850.

192.

Above, para.10-039.

193.

[1946] 1 All E.R. 387; [1946] 2 All E.R. 337.

194.

Above, para.13-034.

195.

Wilkinson v Barcky [1946] 1 All E.R. 387. cf. Covas v Bingham (1853) 2 E. & B. 836.

196.

[1946] 2 All E.R. 337.

197.

See NF Lanitis & Co Ltd v Kyoda Shoji (UK) Ltd [1956] 2 Lloyd's Rep. 176 (right of seller to cancel c.i.f. contract should despatch shipment or delivery of the goods be delayed prevented or prohibited for any cause whatsoever); Docker v Hyams [1969] 1 W.L.R. 1060 (right to cancel sale of yacht for defects: test of whether defects existed objective).

198.

Above, paras 5-040 et seq.

199.

See below, paras 16-032 et seq.; Chitty on Contracts (30th edn), Vol.1, paras 26-124 et seq.; Treitel, Law of Contract (12th edn, edited by Peel), paras 20-121 et seq.

200.

See the Suisse Atlantique case [1967] 1 A.C. 361 at pp.420-421.

201.

See A/S Reidar v Arcos Ltd [1927] 1 K.B. 352; Suisse Atlantique Socit d'Armement Maritime v NV Rotterdamsche Kolen Centrale [1967] 1 A.C. 361; The Bonde [1991] 1 Lloyd's Rep. 136. But a demurrage clause may sometimes be a limitation of damages clause: see the Suisse Atlantique case at p.395.

202.

See Cellulose Acetate Silk Co Ltd v Widnes Foundry (1925) Ltd [1933] A.C. 20.

203.

See below, para.13-038.

204.

SGS (NZ) Ltd v Quirke Export Ltd [1988] 1 N.Z.L.R. 52; Victor Hydraulics Ltd v Engineering Dynamics Ltd [1996] 2 NZLR 235.

205.

e.g. WS Pollock & Co v Macrae, 1922 S.C. (HL) 192, below, para.13-052; cf. RW Green Ltd v Cade Bros Farms [1978] 1 Lloyd's Rep. 602. See further Tattersall v National SS Co Ltd (1884) 12 Q.B.D. 297; Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 A.C. 250, below, para.13-039; Leuw v Dudgeon (1867) L.R. 3 C.P. 17n.; RG MacLean Ltd v Canada Vickers Ltd (1971) 15 D.L.R. (3d) 15.

206.

Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd [1983] 1 W.L.R. 964 at p.970, per Lord Fraser of Tullybelton (and see Lord Wilberforce at p.966); followed in George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 A.C. 803

Page18

and Whitecap Leisure Ltd v John H Rundle Ltd [2008] EWCA Civ 429; [2008] 2 Lloyd's Rep. 216.
207.

Ailsa Craig Fishing [1983] 1 W.L.R. 964 at p.966, per Lord Wilberforce.

208.

Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 C.L.R. 500.

209.

HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6; [2003] 1 All E.R. (Comm) 349 at [63], per Lord Hoffmann, cited by Gross J. in Frans Maas (UK) Ltd v Samsung Electronics (UK) Ltd [2004] EWHC 1502 (Comm); [2004] 2 Lloyd's Rep. 251 at [131]. See also Ocean Chemical Transport Inc v Exnor Craggs Ltd [2000] 1 Lloyd's Rep. 446 at [38], per Evans L.J.

210.

As in W & S Pollock & Co v Macrae, 1922 S.C. (HL) 192.

211.

George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 A.C. 803. In the Court of Appeal Lord Denning M.R. had criticised this very distinction: [1983] Q.B. 284 at p.301.

212.

Below, para.13-039.

213.

Below, para.16-037.

214.

Saint Line Ltd v Richardsons, Westgarth & Co [1940] 2 K.B. 99.

215.

(1854) 9 Exch. 341: see Chitty on Contracts (30th edn), Vol.1, para.26-061; Treitel, Law of Contract (12th edn, edited by Peel), paras 20-088 et seq.

216.

Millar's Machinery Co Ltd v David Way & Son (1935) 40 Com.Cas. 204; Saint Line Ltd v Richardsons, Westgarth & Co [1940] 2 K.B. 99; Wraight Ltd v PH & T (Holdings) Ltd (1968) 13 B.L.R. 29; Croudace Construction Ltd v Cawoods Concrete Products Ltd [1978] 2 Lloyd's Rep. 55 CA (usually taken as the leading case); British Sugar Plc v NEI Power Products Ltd (1998) 87 B.L.R. 42; Deepak Fertilisers and Petrochemicals Corp v ICI Chemicals and Polymers Ltd [1998] 2 Lloyd's Rep. 139; [1999] 1 Lloyd's Rep. 387; BHP Petroleum Ltd v British Steel Plc [1999] 1 Lloyd's Rep. 583 (Rix J.), decision varied [2000] 2 Lloyd's Rep. 277; Hotel Services Ltd v Hilton International Hotels (UK) Ltd [2000] B.L.R. 235; Pegler Ltd v Wang (UK) Ltd [2000] B.L.R. 218 (even if Wang shall have been advised of the possibility of such potential loss); Watford Electronics Ltd v Sanderson CFL Ltd [2001] EWCA Civ 317; [2001] 1 All E.R. (Comm) 696. But a different view is suggested in Environmental Systems Ltd v Peerless Holdings [2008] VSCA 26.

217.

See BHP Petroleum Ltd v British Steel Plc [1999] 1 Lloyd's Rep. 583 at p.600. See also the clauses in Britvic Soft Drinks Ltd v Messer UK Ltd [2002] 1 Lloyd's Rep. 20 (losses, costs or expenses of a purely financial or economic nature (including, but not limited to, loss of profits, loss of use or other consequential loss)) and Bacardi-Martini Beverages Ltd v Thomas Hardy Packaging Ltd [2002] 1 Lloyd's Rep. 62; affirmed [2002] EWCA Civ 549; [2002] 2 Lloyd's Rep. 379.

218.

See the BHP case [1999] 1 Lloyd's Rep. 583, at first instance at pp.588 et seq. per Rix J. In Caledonia North Sea Ltd v Norton (No.2) Ltd [2002] UKHL 4; [2002] All E.R. (Comm) 321 at [100], Lord Hoffmann reserved the question of the correctness of this construction.

219.

But the limit here may only be as to the time within which a party can demand the benefits of arbitration, and not restrict the claim at law. See Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [1953] 1 W.L.R. 1468; Ayscough v Sheed, Thomson & Co Ltd (1924) 19 Ll. L.R. 104; below, para.13-042.

220.

Chapman v Gwyther (1866) L.R. 1 Q.B. 463. See also Buchanan v Parnshaw (1788) 2 T.R. 745; Mesnard v Aldridge (1801) 3 Esp. 271; Bywater v Richardson (1834) 1 A. & E. 508; Smart v Hyde (1841) 8 M. & W. 723; Head v Tattersall (1871) L.R. 7 Ex. 7; Hinchcliffe v Barwick (1880) 5 Ex.D. 177. But these are examples of interpretation according to usage: in appropriate cases goods can certainly be warranted to remain sound for a fixed period. See above, para.10-021.

221.

e.g. Sanders v Jameson (1848) 2 C. & K. 557. As to custom in general, see above, para.11-088.

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222.

Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 A.C. 250 at p.262.

223.

Ernest Beck & Co v K Szymanowski & Co [1923] 1 K.B. 457 (sub nom. Szymonowski).

224.

Ernest Beck & Co v K Szymanowski & Co [1924] A.C. 43. Atiyah, Sale of Goods (12th edn), p.222 suggests that this is the sort of strained interpretation which might require reconsideration today; cf. above, para.13-020.

225.

Ernest Beck [1924] A.C. 43 at pp.51, 52. See also Gorton v Macintosh & Co [1883] W.N. 103; Minister of Materials v Steel Bros & Co Ltd [1952] 1 All E.R. 522 (similar provision relating to claims for defects in quality held not to apply to claims in respect of damage caused by defective packing); Vsesojwzoje Objedinenije Exportles v T W Allen & Sons Ltd [1938] 3 All E.R. 375 (quality and condition does not apply to faulty manufacture); Bunge SA v Deutsche Conti-Handelsgesellschaft mbH (No.2) [1980] 1 Lloyd's Rep. 352 (limitation on quality claims did not cover technical claims); Mohsin Abdullah Alesayi v Brooks Exim Pte Ltd [1993] 3 Singapore L.R. 433 (clause requiring notification of complaints within 24 hours without stating consequences of non-compliance held a guideline only); cf. H & E Van der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 A.L.J.R. 157 (good commercial reason for short time limit).

226.

[1922] 2 A.C. 250.

227.

Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [1953] 1 W.L.R. 1468; Vsesojwzoje Objedinenije Exportles v T W Allen & Sons Ltd [1938] 3 All E.R. 375; W E Marshall & Co v Lewis and Peat Ltd [1963] 1 Lloyd's Rep. 562; H & E Van der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 A.L.J.R. 157; Whitecap Leisure Ltd v John H Rundle Ltd [2008] EWCA Civ 429; [2008] 2 Lloyd's Rep. 216.

228.

See Bank of Australasia v Clan Line Steamers Ltd [1916] 1 K.B. 39. The suggestion in Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [1953] 1 W.L.R. 1468, that the time limit clause would not have operated had the seller sent pine logs instead of mahogany logs seems misconceived. Why should a buyer have a longer time to complain of a totally false shipment than of a slightly defective one? See the Suisse Atlantique case [1967] 1 A.C. 361 at pp.400-401. On the other hand there could be circumstances where the tender could not be related to the contract at all: above, para.12-068.

229.

Halesowen Presswork and Assemblies Ltd v National Westminster Bank Ltd [1972] A.C. 785; Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] A.C. 689; Hong Kong and Shanghai Banking Corp v Kloeckner & Co AG [1990] 2 Q.B. 514; John Dee Group Ltd v WMH (21) Ltd [1997] B.C.C. 518.

230.

For a case where it was not see BOC Group Plc v Centeon LLC [1999] 1 All E.R. (Comm) 53; cf. Continental Illinois National Bank & Trust Co v Papanicolaou [1986] 2 Lloyd's Rep. 441. Such a clause is not effective in a direct debit situation: Esso Petroleum Co Ltd v Milton [1997] 1 W.L.R. 938.

231.

Gilbert-Ash (Northern) Ltd v Modern Engineering Co (Bristol) Ltd [1974] A.C. 689 at p.717, per Lord Diplock; see also Nile Co for Export of Agricultural Crops v H & JM Bennett (Commodities) Ltd [1986] 1 Lloyd's Rep. 555; John Dee Group Ltd v WMH (21) Ltd [1997] B.C.C. 518.

232.

Society of Lloyd's v Leighs [1997] C.L.C. 1398; Skipskreditforeningen v Emperor Navigation [1998] 1 Lloyd's Rep. 66; WRM Group Ltd v Wood [1998] C.L.C. 189. As to the position under the Unfair Contract Terms Act 1977 see below, para.13-091.

233.

There are various practical differences between certification and arbitration. There is no general rule of law prohibiting the influencing of certifiers: Minster Trust Ltd v Traps Tractors Ltd [1954] 1 W.L.R. 963. Certifiers less frequently perform judicial functions than arbitrators; and it seems that arbitrators acting judicially are not easily liable in negligence. See Sutcliffe v Thackrah [1974] A.C. 727; Arenson v Casson Beckman Rutley & Co [1977] A.C. 405; Palacath Ltd v Flanagan [1985] 2 All E.R. 161; Arbitration Act 1996 ss.29, 74; and generally Chitty on Contracts (30th edn), Vol.2, paras 32-176 et seq. Mustill and Boyd, Commercial Arbitration (2nd edn, 1989), pp.224-232; Russell, Arbitration (23rd edn), paras 2-028 et seq.

234.

See WN Lindsay & Co Ltd v European Grain and Shipping Agency Ltd [1963] 1 Lloyd's Rep. 437.

235.

See Minster Trust Ltd v Traps Tractors Ltd [1954] 1 W.L.R. 963.

Page20

236.

Cammell Laird & Co v Manganese Bronze and Brass Co Ltd [1934] A.C. 402.

237.

Newton Abbot Development Co Ltd v Stockman Bros (1931) 47 T.L.R. 616; Petrofina SA v Compagnia Italiana Trasporto Olii Minerali of Genoa (1937) 53 T.L.R. 650; Rolimpex Centrale Handlu Zagranicznego v Haji E Dobra & Sons Ltd [1971] 1 Lloyd's Rep. 380; and see Bird v Smith (1848) 12 Q.B. 786.

238.

See e.g. H Glynn (Covent Garden) v Wittleder [1959] 2 Lloyd's Rep. 409; Oleificio Zucchi SpA v Northern Sales Ltd [1965] 2 Lloyd's Rep. 496; Alfred C Toepfer v Continental Grain Co [1974] 1 Lloyd's Rep. 11 (effective though certifier later admitted he had been mistaken); Gill & Duffus SA v Berger & Co Inc [1984] A.C. 382; Jones v Sherwood Computer Services Plc [1992] 1 W.L.R. 277; Apioil Ltd v Kuwait Petroleum Italia SpA [1995] 1 Lloyd's Rep. 124; Galaxy Energy International Ltd v Eurobunker SpA [2001] 2 Lloyd's Rep. 725 (conclusive save for fraud and manifest error); Veba Oil Supply and Trading GmbH v Petrotrade Inc [2001] EWCA Civ 1832; [2002] 1 Lloyd's Rep. 295 (where there was such an error). But a certifier may not without authority delegate his function, and if he does the certification may be ineffective: Kollerich & Cie SA v State Trading Corp of India [1980] 2 Lloyd's Rep. 32. As to communication of certification by telex see Coastal (Bermuda) Ltd v Esso Petroleum Co Ltd [1984] 1 Lloyd's Rep. 11. Quality may not cover external condition on loading: Cremer v General Carriers SA [1974] 1 W.L.R. 341; nor other matters relating to loading: Kollerich & Cie SA v State Trading Corp of India [1980] 2 Lloyd's Rep. 32; but cf. Sale of Goods Act 1979 s.61(1).

239.

[1956] 1 Lloyd's Rep. 319. cf. WN Lindsay & Co Ltd v European Grain and Shipping Agency Ltd [1963] 1 Lloyd's Rep. 437, where the procedure was held not to be exclusive.

240.

As Sellers J. seems to suggest: Agroexport [1956] 1 Lloyd's Rep. 319 at p.325.

241.

Such a procedure was not followed, with the result that a sample taken was inadmissible, in Verheijdens Veevoeder Commissiehandel BV v IS Joseph Co Inc [1981] 1 Lloyd's Rep. 102.

242.

See NV Bunge v Cie Noga, etc., SA (The Bow Cedar) [1980] 2 Lloyd's Rep. 601 (not final as to nature of oil supplied).

243.

Toepfer v Continental Grain Co [1974] 1 Lloyd's Rep. 11; Gill & Duffus SA v Berger Co Inc [1984] A.C. 382.

244.

WN Lindsay & Co Ltd v European Grain & Shipping Agency Ltd [1963] 1 Lloyd's Rep. 437 at pp.445-446; cf. Kollerich & Cie SA v State Trading Corp of India [1980] 2 Lloyd's Rep. 32 (clause not so held); Gill & Duffus SA v Berger Co Inc [1984] A.C. 382 at p.394.

245.

Chitty on Contracts (30th edn), Vol.2, paras 32-019 et seq. Mustill and Boyd, Commercial Arbitration (2nd edn); Russell, Arbitration (23rd edn). Arbitration is now controlled by the Arbitration Act 1996.

246.

See Atlantic Shipping and Trading Co Ltd v Louis Dreyfus [1922] 2 A.C. 250 at p.259; Heyman v Darwins Ltd [1942] A.C. 356 at pp.373-374, 400.

247.

Doleman & Sons v Ossett Corp [1912] 3 K.B. 257 at p.267; Pinnock Bros v Lewis & Peat Ltd [1923] 1 K.B. 690.

248.

Arbitration Act 1996 ss.9, 86.

249.

Woolf v Collis Removal Service [1948] 1 K.B. 11 at pp.15-17. They are probably caught by s.3 of the Misrepresentation Act 1967: below, para.13-055; specifically excluded from the scope of the Unfair Contract Terms Act 1977: below, para.13-070; but caught by the Unfair Terms in Consumer Contracts Regulations 1994 (below, paras 13-104, 14-031 et seq.), as to which see also Arbitration Act 1996 s.90.

250.

Woolf v Collis Removal Service [1948] 1 K.B. 11.

251.

Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 A.C. 250; Mustill and Boyd, Commercial Arbitration (2nd edn), p.209.

252.

Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [1953] 1 W.L.R. 1468; Ayscough v Sheed, Thomson & Co

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Ltd (1924) 19 Ll. L.R. 104; above.

253.

Arbitration Act 1996 ss.89-91 (formerly Consumer Arbitration Agreements Act 1988); below, para.14-100.

2011 Sweet & Maxwell