LONDON: The Court of Appeal last month handed down its judgment in BSS Group plc v Makers (UK) Limited, finding that BSS failed to provide goods fit for purpose.
The court found that the buyer, Makers, was entitled to rely on BBS to use its skill to supply materials fit for purpose, in this case, compression adaptors for Uponor piping.
Makers was contracted to carry out plumbing work for a pub renovation. This included replacing old copper piping with a new plastic piping system from Uponor. Makers ordered various items from BSS, including Uponor piping, Uponor compression adaptors and valves. A month after the initial order, Makers asked BSS for a quote for more items, some of which were identified as Uponor items. Rather than providing Uponor valves, BSS quoted for and supplied its own manufactured brand of valves. These valves differed from the valves previously supplied by BSS.
The system was installed and Makers, through its sub-contractor, sealed one of the pipes with a Uponor compression adaptor bought from BSS and a BSS manufactured valve. Shortly after installation, the water pressure increased and the valve failed resulting in a substantial flood and damage to the pub.
At trial, an expert gave evidence that the BSS valve was incompatible with the Uponor adaptor. Makers therefore argued that the BSS manufactured valves were unfit for purpose.
The issues raised in the Court of Appeal's judgment apply to all supply contracts where there is an implied term that goods will be fit for purpose, say layers, Russell Kelsall and Elaine Black from law firm, Squire Sanders & Dempsey in a written comment on the case.
"From our experience, it is often the case that debtors have had considerable discussions with dealers (particularly when buying commercial goods like plant and machinery) before eventually selecting goods. The lender that decides to buy the goods from the dealer and provide them to the debtor under a finance agreement like a hire purchase, conditional sale, credit sale or hire agreement must then ensure that the goods are fit for that purpose," the lawyers say.
"Given the Court of Appeal's re-statement that if goods are unfit for purpose the burden is on the seller to show that the debtor relied on its own skill and judgment or it is unreasonable for the debtor to rely on the dealer's skill and judgment, lenders should take steps to minimise the risk of such claims by ensuring that (a) any particular purpose is made known to it before the finance agreement is concluded or (b) the debtor relies on its own skill and judgment.
"BSS had known that Makers was using a Uponor system. It had previously bought goods for a Uponor system. This meant there was an "irresistible inference" from Maker's request for a further quote that it intended to use the valves for the same project. It had to be, at the very least, apparent to BSS that Makers was likely to use the valves for the project. Makers therefore made a particular purpose for the valves known to BSS."
