But we were stopped short, as other readers may have been, in the fourth paragraph, dealing with the Sale of Goods Act 1979, which began: "Section 14(2) of the act provides for an implied condition of 'merchantable quality'."
We could not think of a less blunt response than: "No, it doesn't." Section 14(2) of the Sale of Goods Act provides that "where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality". That wording was amended in the Sale and Supply of Goods Act, which came into effect in 1995.
If you look back through the law reports, you can certainly find construction cases which, like Medivance, deal with the 1979 law. Rotherham Metropolitan Borough Council vs Frank Haslam Milan (1996) was a Court of Appeal decision of 22 March 1996, over a year after the Sale and Supply of Goods Act had come into force. The contracts in question had, however, been entered into between the council and its contractors in 1979. The Court of Appeal decided that there was an implied condition in Rotherham's contract that the fill material supplied should be of merchantable quality. The steel slag that had been used by the contractors had led to the cracking of reinforced concrete slabs because of its tendency to expand. But the court held that the slag could be used for other purposes, such as road building: "It was, therefore, commercially saleable; it was, therefore, of merchantable quality. The contractors were not in breach".
So could we use all the case law on these pre-1994 contracts to state the modern legal position, just crossing out the words "merchantable quality" and substituting "satisfactory quality" throughout?
There are indications that it may not be safe to do so. In the Rotherham case, the judge acknowledged that the BRE (and slag production firms) did not accept that steel slag was "safe or satisfactory" for use as hardcore in confined areas because of its expansive properties, but the court still accepted that the slag was "merchantable" because it could have been sold for road building.
As yet, there is a shortage of cases, especially construction cases, applying the "satisfactory" test. But that does not mean there is nothing to go on. The 1994 act offers a definition of satisfactory quality: "For the purposes of this act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances." This was the test that enabled the court to find there was breach of the Section 14(2) implied term in Alpha Chauffeurs vs Citygate Dealership (2002), where "intractable problems with the dashboard warning lights" (among other things) meant the car delivered to Alpha "did not meet the standard that a reasonable person would consider satisfactory for a new Rolls-Royce motor car costing £112,000". No wonder the Court of Appeal in Rosengrens Tann Ltd vs RJ Ayres (2002), in ordering a retrial, gave the reminder that "the various circumstances described in Section 14 (2A) would have to be taken into account and might prove to be of crucial importance". The various factors set out in Section 14 (2B) as determinative of quality will also assist. We can see from Peakman vs Express Circuits (1998) that, where a purchaser contracts to buy a hydraulic press with a vacuum function, the fact that the purchaser uses the hydraulic press, despite the vacuum function's failure, does not prove that the equipment was satisfactory.
We agree that implied terms of quality and fitness are worthy of more attention and it may be that the latter can have the "crucifix to a vampire" effect. But we believe that the way forward in achieving better understanding is to focus on the standard the law requires rather than the standard it required.
Ellis Baker is a partner and Anthony Lavers is a professional support lawyer at White & Case.