Nick Dowse Sale of Goods – Implied Terms
Implied Terms (Sale of Goods) – Structure of Answer
1. “[Buyer] may get a remedy against [seller] on the basis that it breached a term implied by statute.
This will depend on which statute applies, if any, and what terms can be implied.”
2. Does the Sale of Goods Act (Qld) (SGA), or the Trade Practices Act (Cth) (TPA) apply, or
a. NOTE: Both the TPA and the SGA can apply simultaneously to the same transaction
because of s 75(1) TPA.
i. SGA prima facie applies to all sales within Queensland or where the buyer is not a
SGA “consumer” under the TPA.
ii. Applies where there is:
SGA 1. A contract of sale
SGA 2. Of goods
SGA 3. By which property passes
SGA 4. For money consideration
SGA 5. SGA not excluded by agreement
SGA iii. Contract of Sale
SGA 1. Written or oral contract to sell something, or an agreement to sell something
SGA in the future (s 3 SGA)
SGA 2. If goods are not ascertained, there must be an agreement to sell as opposed
SGA to a sale (s 4(3)); Jansz)
SGA a. An agreement to sell becomes a sale when the time has elapsed or
SGA the conditions have been fulfilled subject to which the property in the
goods is to be transferred (s 4(4)).
SGA 3. If there is no reference to money consideration, or it is by reference to barter,
SGA exchange or trade-in, it is not a sale of goods (s (4)(1)).
SGA a. However, if the parties value the respective goods in money terms,
SGA and then transfer equally valued items, this may constitute a sale
SGA (Aldridge v Johnson).
SGA 4. If it is a hire-purchase agreement under which the hirer merely as an option to
purchase, then it is not a sale of goods.
SGA a. But if it can be construed as a sale condition on payment, then that is a
SGA sale of goods.
SGA 5. If it is under a floor plan, where an agent in possession is authorised to buy
SGA and sell goods on behalf of a financier, then it is not a sale of goods (Motor
SGA Credits v Pacific Motor)
SGA 6. If it is under a bailment, this is not a sale of goods, because property in the
SGA is defined to mean the general property in goods (s 3), not some special
SGA interest as a mere bailee.
SGA iv. Of Goods
SGA 1. The term ‘goods’ is defined in s 3(1) SGA to mean all chattels personal, other
SGA than things in action and money, but includes emblements and things
SGA attached to or forming part of the land, which are agreed to be severed before
SGA sale, or under a contract of sale (s 3(1) SGA)
a. Emblements = crops and fruit, but not crops/fruit growing naturally on
SGA the land – must be sown by human hand (Scully v South).
SGA 2. Includes clothes, jewellery, cattle, and furniture etc – any physically moveable
SGA 3. Can extend so far as to include fixtures, if parties agree to sever from the
SGA land a chattel which would otherwise be a fixture (Symes v Laurie)
SGA 4. Can include things like timber, minerals, sand and gravel
SGA a. Agreement to fell timber on land is contract of sale: Egmont Box v RG
SGA of Lands
Page 1 of 20 Nick Dowse Sale of Goods – Implied Terms
SGA b. Agreement to sever a known and defined mound of rock/mineral is a
SGA sale of goods: Mills v Stokman
SGA c. Agreement to locate and extract sand, gravel, or minerals for an
SGA agreed price per ton from soil is NOT a sale of goods: Amco
SGA Enterprises v Wade.
SGA i. It is a profit a prendre.
SGA d. HC in Mills v Stokman set out three scenarios, here it is the
SGA [first/second/third] that applies:
SGA i. If the residue is still separate from the realty, it can be
SGA transferred under the SGA.
SGA ii. If the residue has become reintegrated (the mound has sat
SGA there for a long time and it looks as though it is part of the earth
SGA again) then it can only be a contract for a sale of goods if under
SGA the contract the buyer is obliged to sever the mound and that is
SGA stated in the contract.
SGA iii. Where a mound over time has become indistinguishable from
SGA land, then no contract for its sale can be a sale of goods
SGA contract whether or not there is an obligation to sever – it is a
SGA profit a prendre rather than a sale of goods.
SGA 5. Does not apply to choses in action, such as shares, debts, negotiable
SGA instruments, copyrights, patents, trade marks etc (s 3(1) SGA).
SGA 6. Does not apply to a contract for services
SGA a. SGA does not apply to contracts for the supply of services, only goods.
SGA b. There are two tests for distinguishing goods from services:
SGA i. Substance test: is the substance of the K the production of
SGA something to be sold, and the exercise of skill, though high, is
SGA primarily for the purpose of merely producing the goods?
SGA 1. If so, then the K is one for the sale of goods (Robinson v
SGA Graves; applied in Re Amlink)
SGA 2. This is the better view (according to Traves).
SGA 3. Painting of portrait = not SOG (Robinson)
SGA 4. Blood transfusion, billed itemised = not SOG (Perlmutter)
SGA 5. Meal in restaurant = SOG, service incidental to supply of
SGA meal (Lockett)
6. If mass produced hardware + software = SOG (Toby
SGA a. But would be different for customised, specially
SGA written (bespoke) software.
SGA ii. Alternative test: Where the end result is the sale of a chattel,
SGA then no matter how great the skill involved, it is a SOG” (Lee v
SGA 1. Sale of dentures by test = SOG (Lee v Griffin)
SGA 7. Contracts for the installation/work and supply of materials:
SGA a. Prima facie not a SOG (Robinson v Rothfield)
SGA b. However, if property passes at the time the K is made and then the
SGA goods are simply installed later, there will be a SOG (Aristoc).
SGA c. i.e. where build and install cocktail cabinet = not SOG because cabinet
SGA became a fixture (Robinson v Rothfield)
SGA d. i.e. where supply and install lifts into building, or where supply and fit
SGA special seats for theatre = SOG, if built first, property passes, then
SGA installed (Aristoc).
Page 2 of 20 Nick Dowse Sale of Goods – Implied Terms
SGA 8. Classify the type of goods
SGA a. Specific
SGA i. Goods that are identified and agreed upon at the time a K of
SGA sale is made (s 3 SGA)
SGA 1. Eg a particular item from the seller
SGA 2. But need not exist, can be future
SGA 3. But need not be in seller’s title or possession (seller can
SGA acquire title and possession later)
SGA b. Ascertained
SGA i. Not defined in SGA
SGA ii. Is goods which are not specific at the time of K, but have
SGA become identified and/or apparent and/or appropriated to the K
SGA after the K of sale was made (Staplyton v Fletcher).
SGA 1. i.e. where K of sale for 100 tonnes of wheat, 200 tonnes
SGA in silo, becomes ascertained after 100 tonnes loaded into
SGA the buyer’s vehicle
SGA iii. If there is to be no delivery, and merely a segregation in the
SGA seller’s hands, upon such segregation, the goods will become
SGA ascertained (Staplyton v Fletcher)
SGA c. Unascertained
SGA i. Not defined in SGA
SGA ii. At CL: not identified or agreed upon at the time a K of sale is
SGA made (Re Goldcorp Exchange)
SGA iii. Applies to generic goods which are sold as generic goods, i.e.
SGA where sold on terms allowing seller to obtain them from any
SGA source/stock, as opposed to particular stock (Re Goldthorpe)
SGA iv. Applies to quasi-specific, ex-bulk sales, i.e. where sold a portion
SGA of a fixed and predetermines source but from which the seller
SGA may make their own choice (eg “I sell you 60 of the sheep now
SGA on my farm which has 500”)
SGA v. Cannot transfer property in these unascertained goods,
SGA because the buyer cannot acquire title to things which are
SGA unascertained (s 19 SGA).
SGA d. Future
SGA i. Are goods to be manufactured or acquired by the seller after the
SGA making of the K of sale (s 3, s 4(3); s 8(1) and (2) SGA)
SGA ii. i.e. goods not yet in existence, or which the seller does not yet
SGA iii. Under s 8(3) SGA, where the seller purports to effect a K of sale
SGA of future goods, the K operates as an agreement to sell, not a K
SGA of sale.
SGA v. By Which Property Passes (don’t mention unless necessary)
SGA 1. Property must pass from the seller to the buyer
SGA 2. Means both the legal and equitable title, not some specific or limited interest
SGA such as that of a bailee or a security interest (s 3(1) SGA).
SGA vi. For Money Consideration (Price)
SGA 1. Transfer of goods must be for money consideration
SGA 2. Consideration can be
SGA a. Fixed in the contract (s 11(1) SGA)
SGA b. Fixed by a formula in the contract (s 11(1) SGA)
SGA c. Determined by a course of dealing between the parties (s 11(1) SGA)
SGA d. If not in contract, must pay a reasonable price (s 11(2) SGA)
SGA i. Question of fact, depends on circumstances, but is usually just
SGA market price (s 11(3) SGA)
Page 3 of 20 Nick Dowse Sale of Goods – Implied Terms
3. No money consideration where there is a trade in, because the consideration
is the seller’s partial release of a debt (Warmings Used Cars v Tucker)
SGA 4. In the sale of goodwill and assets of business, description of price as “at
SGA valuation” is sufficient under s 11(1) SGA (Wenning v Robinson).
SGA vii. SGA Not Excluded By Agreement
SGA 1. The implied terms and conditions in the SGA are all capable of being
SGA excluded by express or implied agreement between the parties: s 56 SGA (by
SGA either express agreement or by course of dealing between parties)
SGA viii. Overall conclusion: does the SGA apply?
Page 4 of 20 Nick Dowse Sale of Goods – Implied Terms
TPA i. TPA is the proper statute for interstate sales, or sales by a corporation engaged in
TPA trade and commerce, or sales via the post, telegraph or the internet (s 51(1), (5) and
TPA (20) Commonwealth Constitution)
TPA ii. Applies to:
1. A contract
TPA 2. For the supply
TPA 3. Of goods or services
TPA 4. To consumers
TPA iii. A contract
TPA 1. Offer, acceptance, consideration, i.e. based on general principles of K law
TPA iv. By a Corporation (or natural person otherwise caught)
1. Defined in s 4(1) TPA to include:
TPA a. (a) is a foreign corporation;
TPA i. A corporation incorporated outside Australia.
TPA b. (b) is a trading corporation formed within the limits of Australia or is a
TPA financial corporation so formed;
TPA i. To determine whether a corporation is a “trading corporation”
TPA need to use the current activities test (Hughes v WACA).
1. Trading denotes providing goods or services for reward”
TPA 2. Must be “substantial” trading in relation to corporation’s
TPA overall activities, but not necessarily its sole or main
TPA a. Can still be a “trading corporation” if your core
TPA business does not result in “reward” but you still
receive a large proportion of revenue from other
TPA trading activities (E v Australian Red Cross).
TPA ii. A “financial corporation” is also defined in s 4(1) to mean:
TPA 1. Banking (other than state banking)
TPA a. Must be interstate banking
TPA 2. Insurance (other than state insurance)
TPA a. Must be interstate insurance
3. Lending or borrowing money, as distinct from
TPA transactions that merely involve the use of money (Ku-
TPA ring-gai Co-op Building Society (No 12))
TPA 4. Needs to be significant activities but not necessarily sole
TPA or main activities
TPA 5. The term “financial corporation” is not a term of act, no
TPA special or settled legal meaning; merely describes a
corporation which engages in financial activities or is
TPA intended to do so (State Superannuation Board v TPC).
TPA c. (c) is incorporated in a Territory; or
TPA i. A company incorporated in Australian Capital Territory or
TPA Northern Territory.
TPA d. (d) is the holding company of a body corporate of a kind above.
TPA 2. Can also apply to natural persons
a. Part V TPA extends to the engaging in conduct outside Australia by
TPA bodies corporate incorporated or carrying on business within Australia
TPA or by Australian citizens or persons ordinarily resident within Australia
TPA (s 5(1)).
TPA b. The effect of s 6(2) is to extend the operation of Part V Div 2 TPA to:
TPA i. Trade or commerce where:
TPA 1. Conduct overseas where the person involved is an
Australian citizen (s 6(2)(a)(i)); or
TPA Page 5 of 20 Nick Dowse Sale of Goods – Implied Terms
TPA 2. Conduct occurring in interstate trade or commerce (s
TPA 6(2)(a)(ii)); or
TPA 3. Conduct occurring in trade or commerce in a territory,
TPA between a state and territory, or between two territories
TPA (s 6(2)(a)(iii)); or
TPA 4. Conduct supplying goods or services to the
TPA Commonwealth (s 6(2)(a)(iv)); and
TPA ii. Contracts made, or goods supplied:
TPA 1. in the course of, or in relation to, trade or commerce
TPA between Australia and places outside Australia (s 6(2)(c)
TPA (i)); or
TPA 2. (ii) in the course of, or in relation to, trade or commerce
TPA among the States (s 6(2)(c)(ii)); or
TPA 3. (iii) in the course of, or in relation to, trade or commerce
TPA within a Territory, between a State and a Territory or
TPA between two Territories (s 6(2)(c)(iii)).
TPA c. Section 6(3) (telephonic services extension) does not apply to Part V
TPA Div 2.
TPA v. For the Supply
TPA 1. The term “supply of goods” is wider than “sale of goods” under the SGA.
TPA 2. Includes contracts of sale, exchange, lease, hire or hire-purchase (s 4(1)
TPA vi. Of Goods and Services
TPA 1. Goods: same as SGA + ships, aircraft and other vehicles, animals, fish,
TPA minerals, trees and crops, whether on, under or attached to the land or not,
TPA and gas and electricity (s 4 TPA)
TPA 2. Services: rights, benefits, privileges or facilities provided, granted or
TPA conferred in trade or commerce
TPA a. Includes supplying blood (E v Aust Red Cross)
TPA vii. To consumers
TPA 1. Goods or services must be supplied to a consumer.
TPA 2. Consumer is defined in s 4B TPA (exhaustive).
TPA 3. Essentially, a consumer is a person/corporation where either:
TPA a. The price of the goods does not exceed $40K (s 4B(1)(a)(i)); OR
TPA b. If they do exceed $40K, then they are of a kind ordinarily acquired for
TPA personal, domestic or household use or consumption (regardless of
TPA price) (s 4B(1)(a)(ii))
TPA i. OA4PDOHUOC is a Q of fact (Carpet Call)
TPA ii. Focus is on ordinary use, not the actual intended use
TPA iii. Things not OA4PDOHU:
TPA 1. Airseeder (Jillawarra)
TPA 2. Large tractor (Atkinson)
TPA 3. Reduction photocopier (Four Square Stores)
TPA 4. Prime Mover (Minchillo)
TPA 5. Ostrich egg incubator (Crago)
TPA 4. May be a consumer even where goods are purchased second hand
TPA (Atkinson v Hastings Deering)
TPA 5. Not a consumer if the goods are purchased for resale, or to be used in the
TPA process of production or manufacture (s 4B(1)(a))
TPA 6. Just because something is used on a farm or purchased for a nightclub, does
TPA not make it lose its character as OA4PDOHUOC (Carpet Call)
TPA a. And just because used in a business does not make it lose those
TPA qualities (Crago)
TPA viii. Operation of the TPA can be extended:
Page 6 of 20 Nick Dowse Sale of Goods – Implied Terms
TPA 1. Non-corporate traders engaged in
TPA a. interstate or overseas trade or commerce (s 6)
TPA b. trade or commerce within or involving a Territory (s 6)
TPA c. dealings with the Cwth govt or any of its instrumentalities (s 6)
TPA 2. Persons who aid, induce or conspire in a contravention of the TPA may incur
TPA liability (s 75B TPA)
TPA a. Includes employees, salespersons, or ISPs
TPA ix. The TPA cannot be excluded:
TPA 1. Section 68 prevents the ousting of the TPA
TPA 2. However, s 68A TPA provides a mechanism for corporations to limit their
TPA liability in relation to goods or services that are not ordinarily acquired for
TPA personal, domestic or household use or consumption.
TPA a. This would otherwise be prohibited under s 68 TPA.
TPA 3. This essentially means that corporations can limit their liability to other
TPA corporations. But it also means a corporation can limit its liability to
TPA “consumers” (within its s 4B definition) where the good/service is below
TPA $40,000 (in s 4B(1)(a)(i) TPA) but is not ordinarily acquired for personal etc
TPA x. Overall conclusion: does the TPA apply or not?
TPA d. NOTE: Both the SGA and the TPA can apply simultaneously to the one transaction
because of s 75(1) TPA. Section 109 of the Constitution does not invalidate the SGA
to the extent of any inconsistency in the SGA with that of the TPA.
Page 7 of 20 Nick Dowse Sale of Goods – Implied Terms
3. What terms are implied by the statute?
i. Express stipulations in the contract may render the need to imply a term redundant!
SGA 1. Point out express terms of the K that mean a term need not be implied under
SGA the SGA.
SGA ii. Implied Condition That Seller Has The Right To Sell (s 15(a) SGA)
SGA 1. Breached where seller has no title to the goods (Rowland v Divall)
SGA 2. Liability imposed is strict and does not depend on the knowledge of the seller.
SGA 3. If the seller does not have title, they may perfect their title later but before the
SGA buyer rescinds the K, in which case there is no breach of s 15(a) (Patten v
SGA 4. If the seller does not have title because:
SGA a. Goods stolen, then breach of s 15(a) (Rowland v Divall)
SGA b. Goods under hire-purchase and option to purchase not exercised,
SGA unless title later “feeds” down, breach of s 15(a) (Butterworth)
SGA 5. If seller does have title, but cannot sell because:
SGA a. Infringing a trademark, then breach of s 15(a) (Niblett)
SGA b. Goods impounded at time of sale, then breach of s 15(a) (Egekvist)
SGA c. Some other fact restricts their sale, then breach of s 15(a)
SGA 6. Remedy for breach:
SGA a. As a condition, the implied term is fundamental to the K, and a breach
will entitle the buyer to rescind the K and claim for damages (Rowland
SGA v Divall)
SGA b. Section 14(3), which otherwise converts a condition to a warranty in
SGA these circumstances, has been held not to apply to s 15(a) (Rowland v
SGA Divall; Butterworth v Kingsway)
SGA iii. Implied Warranty That Buyer Shall Have Quiet Possession (s 15(b) SGA)
SGA 1. “Quiet possession” includes, but extends beyond, freedom from physical
interference with the goods by the seller
SGA 2. The goods are the buyer’s to have and enjoy at and after the sale (Keetley)
SGA 3. Will be breached where:
SGA a. Goods are sold and delivered on credit, but still within the terms of
SGA credit, the goods are seized by the seller wrongfully (Healing v Inglis)
SGA b. Patentee of a patent affecting the goods claims infringement by buyer
SGA against patent (Microbeads)
c. Buyer must modify goods in order to avoid copyright infringement
SGA against a 3 party (Niblett)
SGA 4. This implied warranty is often relied on together with s 15(a) (above).
SGA 5. Remedy for breach:
SGA a. As a mere warranty, the buyer is limited to a claim for damages, and
SGA cannot rescind the K (s 54 SGA).
SGA i. The quantum of damages is the estimated loss directly and
SGA naturally resulting from the breach of warranty: s54(2).
SGA iv. Implied Warranty That Goods Are Free From Encumbrances (s 15(c) SGA)
SGA 1. Breached where the seller does not disclose a tax owing or a charge etc over
SGA the chattel (Steinke v Edwards)
SGA 2. Will not be breached where encumbrance disclosed to buyer by seller
SGA 3. Remedy for breach:
a. As a mere warranty, the buyer is limited to a claim for damages, and
SGA cannot rescind the K (s 54 SGA).
SGA i. The quantum of damages is the estimated loss directly and
SGA naturally resulting from the breach of warranty: s54(2).
SGA 1. But is limited to amount of expenditure required to
SGA Page 8 of 20
SGA Nick Dowse Sale of Goods – Implied Terms
discharge the encumbrance or charge plus any legal
v. Implied Condition That Goods Correspond With Their Description (s 16 SGA)
1. STOP: Check if there is an express or implied stipulation as to conformity
with description. If the parties intended for spoken words to that effect were to
SGA form part of the contract, the court will give effect to it (Oscar Chess).
SGA 2. Section 16 requires a sale by description before the condition is implied.
SGA 3. Were the goods sold by description?
SGA a. Will be a sale by description where the basis for goods being selected
or identified is their correspondence to a description (Aust Knitting).
SGA b. If the goods are unascertained, usually sold by description, otherwise
SGA there would be nothing to determine the subject matter of the contract
SGA c. If the goods are future goods, usually sold by description, but not
SGA necessarily (i.e. where seen and requested by the buyer in the hands
SGA of a 3 party and then later obtained by the seller).
SGA d. If specific goods:
i. Usually sold by description, but not necessarily so.
SGA ii. Sale in a self-service store will constitute a sale by description,
SGA provided the goods are described in some way on the outside of
SGA the packaging or by sign, notice or label (Grant v Aust Knitting)
SGA iii. There is no distinction between self-selection and a sales
SGA assistant handing over an article in response to a request
(Pacific Tea v Walker)
SGA e. Examples:
SGA i. Bull seen and described as breeding bull = SBD (McBride)
SGA ii. Buy underwear self-selected from shelf, packaging described as
SGA underwear = SBD (Aust Knitting)
SGA iii. Buy painting described as “Munter” but seller professes not to
SGA be an expert, turns out to be fake = artist does not form part of
description (Chris Hull)
SGA 4. Did the buyer rely on the description?
SGA a. Not strictly correct in principle to say that reliance is required, but
SGA relevant as far as intention of parties for description to form part of the
SGA K (Chris Hull).
SGA 5. What words form part of the contractual description?
SGA a. The words must go to the kind, class or species of the goods, and not
to their quality, state or other attribute (Taylor v Combined Buyers).
SGA b. Must go to their identity, not quality (Ashington Piggeries)
SGA c. Examples:
SGA i. If K to buy “cask of port wine” but get beer = difference of kind,
SGA so breach
SGA ii. If K to buy “cask of port wine in sound condition” but get in poor
SGA condition = difference is only in quality, therefore no breach
iii. If K to buy specific chairs described as “antique mahogany
SGA chairs” but receive modern imitations = difference in kind,
SGA iv. If K to buy stud bull (breeding bull) but bull sterile = breach of
SGA condition because essential
SGA 1. But if desc “pedigree Jersey bull” and sterile = pedigree
does not equal fertile, therefore no breach (Dell v Quilty)
SGA v. If K to buy 14-horse-power engine, but get less horse-power =
SGA difference in quality, no breach (Parson v Sexton)
SGA vi. If K to buy specific “stock of coal or Cumberland and small
SGA Welsh coal mixed” but get mixture of inferior coal = difference of
SGA Page 9 of 20
SGA Nick Dowse Sale of Goods – Implied Terms
quality only, therefore no breach (Kirkpatrick v Gowan)
vii. If K to buy a new machine, from the previous year, only used for
SGA 50 acres but machine doesn’t work = difference as to kind,
qualitative description may form part of description (Ashington
SGA viii. If K to buy new car, but receive 2 hand car where technology
SGA has changed = goes to kind, not quality
SGA ix. If K to buy a particular model of car, but car received is two
SGA bodies of same model welded together = breach (Beale v
SGA 1. Even though this prima facie goes to quality, it was so
SGA important to the parties to the TX that it was considered
SGA to go to the identity of the goods.
SGA d. Words that describe the purpose for which goods are suitable will
SGA usually not form part of the description, but if something is described
SGA as “oysters, fit for eating” and they are not, will not conform with their
SGA e. Go through and state which words form part of the description, which
SGA words do not.
SGA 6. Do the goods in fact correspond with their description?
SGA a. This is a question of fact, determined my reference to the particular
SGA circumstances (Ashington Piggeries)
SGA b. If order food to be made of “fair, average quality of the season” and
receive toxic food for mink = description goes to quality, not kind,
SGA therefore no breach of this implied term (Ashington Piggeries)
SGA 7. Remedy for breach:
SGA a. Go to Remedies for Breach of Implied Terms on page 18.
SGA vi. Implied Condition That The Goods Will Be Fit For Their Purpose (s 17(a) & (b) SGA)
SGA 1. The buyer must have made known, expressly or by implication, the particular
SGA purpose for which he wanted the goods
a. Rationale: the seller is entitled to know the purpose so they can ensure
SGA the goods are fit for that purpose.
SGA b. “Particular purpose” = their given purpose, known or communicated.
SGA c. Go through circumstances surrounding the TX and examine them.
SGA d. The purpose can be a narrow or general purpose (Regal Pearl)
SGA i. Important which purpose the court adopts as it can affect
SGA whether or not there has been a breach
ii. i.e. in Regal Pearl trial judge defined it as “prawns for cooking in
SGA prawn dishes for customers to eat” (narrow), but appellate court
SGA defined it as “prawns for human consumption” (general)
SGA iii. If too general/broad, might not be enough to enable the seller to
SGA exercise its skill and judgement (Hardwick)
SGA e. If the goods have multiple purposes, it is enough for the goods to be fit
for at least one of those purposes, not all (Hardwick Game Farm)
SGA f. Even if the buyer does not make the purpose for which they are buying
SGA the goods expressly known to the seller, the purpose can be inferred if
SGA the goods are suitable for only one normal purpose (Priest v Last).
SGA i. i.e. if buy hairbrush, obviously to brush hair
SGA ii. i.e. if buy ship propeller, obviously for propelling ship (Cammell)
SGA iii. i.e. if buy underwear, obviously to be worn (Aust Knitting)
iv. i.e. if buy carton of milk, obviously to be drunk by human (Frost)
SGA g. The converse also applies: if you have a good that can be used for a
SGA variety of purposes, need to particularise when disclosing (Priest v
SGA Page 10 of 20
NicSGAowse Sale of Goods – Implied Terms
SGA h. But if the buyer has an abnormality which is not disclosed to the seller,
SGA then there can be no implication (Griffiths v Peter Conway)
SGA i. If the parties have a sufficient history of dealings together, this may be
SGA enough to imply a disclosure for purpose by the buyer (Hardwick
SGA Game Farm)
SGA 2. The particular purpose must be disclosed in such a way that it is clear that
SGA the buyer is relying on the seller’s skill and judgement, and, does in fact rely
SGA a. Must disclose the purpose to the seller with a sufficient degree of
SGA b. There must be actual reliance on the seller’s skill and judgement and
SGA this must be evidence to a reasonable seller at or before the time the K
SGA is formed (Frank v Grosvenor)
SGA i. i.e. it is an objective test.
ii. Where reliance is in issue as between two related corporations,
SGA it will be difficult to show reliance where the buyer knows the
SGA seller simply on-sells goods which they (the seller) themselves
SGA have not exercised any skill/judgment (Dowdell v Knispel).
SGA c. There is no presumption of reliance (Claude B Fox), but can arise by
SGA implication from the surrounding circumstances (Ashington Piggeries)
SGA d. Reliance can be inferred from the fact that a buyer goes to a shop in
the confidence that the tradesmen selected the stocked goods with