Second-hand goods and Implied Condition as to Fitness
The Supreme Court has got buyers of second-hand goods beaming with smiles. The Apex Court on 22 March 2016 in the case of Andreas Bschor GMBH & Co KG v Birim Wood Complex Limited & Another[1] held that the condition as to fitness for purpose implied by the Sale of Goods Act, 1963 (Act 137) applies to second-hand goods. But on two conditions: if the seller sells the item in the ordinary course of his business and the buyer informs the seller of the purpose for which she requires the goods.
The Plaintiff, in this case, entered into an agreement for the supply and installation of a sawmill for the Defendants. It was agreed that the Defendants would pay the Plaintiff in kind – through the supply of timber products to the Plaintiff.
After the installation of the sawmill plant, the Defendants experienced some technical problems – some of which the Plaintiff fixed. The Defendants fixed some others.
Contrary to what was agreed, the Defendants did not stick to the payment plan. The Plaintiff, therefore, demanded payment of the amount as stated in the pro forma invoice it had sent to the Defendants. The Defendants then made part payment and afterwards supplied the Plaintiffs with some timber products as further payment. The timber products supplied, however, did not cater for the amount owed by the Defendants. The Defendants stopped further payments. The plaintiff sued for its balance. The Defendants filed their defence and counterclaimed for damages. The Defendants alleged that the Plaintiff had breached an implied condition of the contract of sale by supplying a plant that was not of the quality and fitness for a sawmill.
The High Court agreed with the Defendants and awarded them damages. The Court of Appeal disagreed with the finding of the High Court. The Court of Appeal in coming to its conclusion relied on the English case of Bartlett v. Sidney Marcus Ltd [1965] 2 All ER 753 CA which noted that “a buyer should realize that when he buys a second-hand car, defects may appear sooner or later and in the absence of an express warranty, he has no redress.”
The Supreme Court noted that the Bartlett case did not reflect Ghanaian law. The court stated that the condition as to fitness for purpose implied by law applies even to the sale of second-hand goods if the seller sells the second-hand goods in the ordinary course of his business and the buyer makes him aware of the purpose for which the goods were required. The court noted that in determining what constituted “ordinary course of business”, a certain degree of regularity by the seller in the supply of the goods must be established as distinct from a one-off sale.
It is therefore clear that for a buyer to enjoy the statutory protection offered under the Sale of Goods Act, the buyer must be mindful of who she buys from and must also inform the seller of the purpose for which the goods are required.
[1] CIVIL APPEAL: NO.J4/9/2015
