You poor SAP

I bet builder's merchants Jewson is a tad bewildered about why property developer Thomas Kelly won't pay his bill. Mr Kelly is holding on to £53,000 for bricks and blocks because of £6000 worth of boilers he bought from them. The boilers were made by Amptec Heating Technology and Mr Kelly is very pleased with them (as he told the court); they are good, very efficient and are working to the reasonable satisfaction of the occupants. Yet when Jewson asked Mr Kelly to pay up, he still said no. Mr Kelly is well on his way to being proved right.

The story is this. Thomas Kelly bought a convent in north Devon to convert into 13 flats. He put himself in hock to do so. Ordinary. Providing heating for the flats proved a dilemma so Kelly asked his local Jewson branch for ideas. Jewson's man came up with what looked like an ideal electric boiler. They arranged for Amptec's rep to meet Kelly. Jewson came too. Kelly placed his order for the boilers; in due course he installed the units. The change to electric heating from oil-fired boiler meant that the Building Inspectorate required new SAP ratings. Heard of that? Mr Kelly hadn't, Jewson hadn't, nor had Amptec. Anyway, an expert SAP calculator did his stuff.

SAP, which stands for standard assessment procedure, is designed to give a home energy rating to a particular residential dwelling. Marks out of 100 are awarded. A range of factors are put into the computer to fathom energy efficiency: thermal insulation of the building fabric, efficiency and control of the heating system, ventilation, solar gain, the price of fuels for space and water heating and more besides. The results were disappointingly low for the overall SAP. It was, I think, something to do with Amptec using peak-rate electricity.

Mr Kelly now found himself in difficulties. The luxury flats didn't quite sell like hot cakes. Why? Perhaps because of their low SAP rating. The position became critical, not least because the money borrowed for the venture was racking up interest. So Kelly decided to sell out to another property company. Well, said Kelly to Jewson, it's all your fault. The losses include loss of profit on the venture, increased interest payments, the diminished market value of the flats arising from the installation of the Amptec boilers and of course repayment of the £6k for the boilers. Hence, Mr Kelly refused to pay his account balance for bricks and blocks of £53,000. Jewson sued.

The most interesting point in the case is the change in law that took place in 1994. The Sale and Supply of Goods Act replaced the "merchantable quality" obligation on suppliers with the idea that goods had to be "satisfactory quality". Not many cases have arisen that help to explain the meaning of that phrase. The Jewson case does. Counsel for Jewson was quite firm in his explanation. A boiler that works reliably, is aesthetically acceptable, is safe, complies with relevant regulations, makes efficient use of electricity and does not affect the marketability or mortgageability of the flat will be of "satisfactory quality".

The boilers are good, efficient and working to the reasonable satisfaction of the occupants. Yet when Jewson asked Mr Kelly to pay up, he said no

Mr Kelly's barrister argued, however, that a product sold by a builders merchant who knew it would be incorporated in a development of flats for financial gain, not only had to have no actual defects, but also must not do anything that made that profit harder to gain.

The judge accepted that mechanically the boilers worked satisfactorily. But Amptec had a duty to address the question of SAP ratings; there was no duty in law to submit the boiler for comparison testing, but there was a duty to tell a potential purchaser that it had not. Amptec's literature was silent here. This, said the judge, lulled purchasers into a false sense of security. A reasonable person would therefore conclude, against this background, that these splendid little boilers were, in law, not "satisfactory quality".

Jewson, of course, said that it was only a conduit for supply between maker and builder and therefore was not liable. Not true, said the court. The builder who buys from a merchant is entitled to rely on the merchant to choose their sale goods properly. Prima facie, a sale is made with a silent label that the goods are satisfactory quality, and fit for the purpose. The exception is to show that the buyer didn't rely on the merchant. But he had done here.