MERCHANTABILITY: MARKET AND THE LAW

By Amaka Ezeno, MCIArb

The term ‘Merchantablilty’ could be said to be a portmanteau of merchantable and quality. Merchantable simply means saleable and fit for the market. Quality, on the other hand, is an inherent feature of a thing, say a commodity like rice. According to the Black’s Law Dictionary,   merchantability means that the article sold shall be of the general kind described and reasonably fit for the general purpose for which it shall have been sold, and where the article sold is ordinarily used in but one way, its fitness for use in that particular way is impliedly warranted unless there is evidence to the contrary.

If you get to the market and find a bag of rice blood red. Then such rice is not merchantable or fit for the market, since rice, as we know it, is not usually red, let alone, blood red. Assuming that the rice is bagged in a way no reasonable examination would reveal its colour, and you buy the same only to realize its true condition just after putting on the gas cooker; what does the law say? In ordinary parlance, therefore, merchantability means marketable.

In Nigeria, the principal laws regulating consumer protection are the Federal Competition and Consumer Protection Act 2018 and the Sale of Goods Act 1893. Section 131(1)  of the Federal Competition and Consumer Protection Act 2018, provides that every consumer has a right to receive goods that:

1. Are reasonably suitable for the purpose for which they are generally intended;
2. Are of good quality, in good working order and free of defects;
3. Will be useable and durable for a reasonable period, having regard to the use to which they would normally be put and to all the surrounding circumstances of their supply; and
4. Comply with any applicable standards set by industry sector regulators

In the same vein, Section 1 of the Sale of Goods Act 1893 defines Sale of Goods as, “A contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a money consideration called”. Therefore, sale of goods is a contract which creates a contractual relationship and the obligations therein between the seller and the buyer, and the breach of which attracts damages.

Amaka Ezeno, MCIArb

Section 15(2) of the Sale of Goods Act stipulates that,

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, except the buyer had examined the goods and such examination ought to have revealed defect.

From the foregoing, the following points should be noted:

1. The goods must have been bought by description

The Courts have given numerous meanings to the term ‘Sale by Description’. It applies particularly in cases where the buyer has not  seen the goods but is merely relying on the description as given by the seller. In Varley v. Wipp (1990) 1QC 513, the defendant bought a reaping machine by description. Shortly after delivery, he complained that it did not correspond with the plaintiff’s statement. The sale was held as a sale by description and the defendant was held entitled to reject the machine. However, the buyer will fail if it is proved that s/he did not rely on the description.

2. The seller must deal in goods of that description

In the case of British Overseas Credit Ltd v. Animashaun (1961) 1 ANLR 343, the court held that the failure to show that the sellers dealt in the tin tomatoes was fatal to the case.

3. There would be no protection where the buyer conducted an examination which ought to have revealed the defects in the goods.

This principle was applied in British Overseas Credit Ltd v. Animashaun supra. In  this case, after (to the knowledge of the defendant) the health authorities inspected 1000 tins of tomatoes in the defendant’s premises and seized 300 cases for being unfit for consumption. He went ahead to purchase the remaining 700 tins and started selling them. The health authorities inspected his store again and destroyed 311 more cases. The Court held that since the plaintiff had full opportunity of examining the goods and was aware of the defect in some tins, he must be taken to have examined them within the meaning of Section 14(b) of the Sale of Goods Act.

The same principle applies even where the examination was hasty/careless. In Thornet and Fehr v. Beer and Sons (1919) 1 KB 486, the buyer had examined the gallons of glue in a hurry without checking the internal contents (even when he was offered the opportunity)…, the Court held that there has been examination.

According to Farewll LJ in British Tramways v. Fiat Motors (1910) 2 KB 831, the question to ask is “Whether a reasonable man in the position of the buyer would accept the goods after full examination.”                              Godstime Nwaeze

However, if the goods are such that no reasonable examination would reveal its true quality, then there may be no satisfactory examination. This was the decision of the High Court in John Holt Ltd v. Ezefulukwe (1990) 2 NWLR (Pt. 133) 520 at 534, where the good in question was a tin geisha fish and no degree of external examination could disclose the soundness or merchantable quality of the contents or defects therein.

Again, Section 14(b) of the Sale of Goods Act 1893 (merchantability) would not apply where the buyer has been told/has knowledge of the defect in the goods. In Bartlett v. Sydney Marcus (1965) 1 WLR 1013, the plaintiff bought a second-hand car from the defendant. He was informed that the clutch was defective. Nevertheless, he elected to purchase the car. The clutch turned out to be more defective than imagined. The Court held that from the facts of the case, there was no breach.

4. Whether or not the buyer relied on the seller’s skill and judgement is irrelevant.

Merchantable quality is a controversial term and can only be determined on the merit of each particular case.  Buyers’ mishap has been recently summed up in the words: ‘What I ordered versus what I got.’ To avoid this, consumers are advised to deal (especially online vendors) with those who have a  traceable address. In which case, they could write them of their grievances, or resort to Court. However, to succeed in an action for merchantable quality, the buyer must have bought the goods by description–and have no knowledge of the defect therein–from the seller who deals in such goods.

Written by: Godstime Nwaeze & Amaka Ezeno, MCIArb. 08037413906.