Jones v. Just (1868)

Caveat emptor is the rule that s. 16 states in its opening words: subject to the Act and any other law, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows. The exceptions then follow — fitness for a disclosed purpose where the buyer relies on the seller's skill or judgment, and merchantable quality on a sale by description by a dealer in goods of that description.

Students often treat the maxim as a general licence for the seller. Jones v. Just shows that it never was. Mellor J. sorted the authorities into five classes, and that classification is still the clearest map of the subject in the books. Two of his five classes became s. 16(1) and s. 16(2); his condition for the maxim's operation became the proviso to s. 16(2).

The plaintiffs, through their brokers, contracted with the defendant for the purchase of a quantity of Manilla hemp, to arrive. The shipping documents were duly delivered and the price paid. All the vessels named in the contract arrived in due course carrying the numbers of bales with the marks specified, and the bales were delivered.

On examination the bales bearing one particular mark were found to be in a state affording strong evidence that they had at some time — probably from a shipwreck on the voyage from Manilla to Singapore — been wetted through with salt water, afterwards unpacked and dried, and then repacked in the bales that were subsequently shipped at Singapore.

Manilla hemp is divided into several qualities. If in good condition the hemp would have been what is called fair current Manilla hemp, which is not the lowest quality. In all the bales it was damaged to some extent, though not so far as to lose the character of hemp.

After correspondence, the plaintiffs sold the hemp by auction as Manilla hemp, with all faults, and it realised about 75 per cent of the price similar undamaged hemp would have fetched. Because the price of hemp had risen considerably since the contract, the proceeds were very nearly equal to the invoice price.

There was no attempt to show that the defendant knew of the state in which the hemp had been shipped at Singapore, and neither party had had the opportunity of inspecting it.

For the defendant. Under this written contract there was no further condition or warranty than that the bales on arrival should answer the description of bales of Manilla hemp — which they did, as was shown by the fact that even sold with a stigma on them they fetched a price only 25 per cent below sound hemp. As to quality or condition there was no warranty, and consequently the maxim caveat emptor applied. It was pressed that there being no fraud, both parties being equally ignorant of the past history and actual condition of the article, and neither having had the opportunity of inspecting it, it was the duty of the buyers to have stipulated for a merchantable article if that was what they intended to contract for.

The trial judge's direction. Blackburn J. left it to the jury whether what was supplied under the contract was, when shipped at Singapore, such as to answer the description of reasonably merchantable Manilla hemp, that being the warranty which the law implies in a contract to supply of this kind; adding that it would be different in a sale of specific things which the purchaser might examine, or of things sold by sample, and that whether the goods are fairly and reasonably merchantable is a question of more or less, to be left to the jury as reasonable men.

On damages the jury were told that the measure was the rate the hemp was worth when it arrived compared with the rate the same hemp would have realised had it been shipped in the state in which it ought to have been shipped — in effect giving the plaintiffs the benefit of the rise in the market.

Blackburn J.'s direction was substantially correct, and the measure of damages was right, because it put the plaintiffs in the position in which they would have been if the contract had been fulfilled.

The court drew at the outset the distinction on which everything turns: there is a great distinction between the present case and the sale of goods in esse, which the buyer may inspect, and in which a latent defect may exist although not discoverable on inspection.

The five classes

The cases, said Mellor J., are not in conflict when the circumstances of each are considered, and may be classified as follows.

First. Where goods are in esse and may be inspected by the buyer, and there is no fraud on the part of the seller, the maxim caveat emptor applies, even though the defect which exists in them is latent and not discoverable on examination — at least where the seller is neither the grower nor the manufacturer. The buyer in such a case has the opportunity of exercising his judgment; and if the result of inspection is unsatisfactory, or if he distrusts his own judgment, he may if he chooses require a warranty. In such a case it is not an implied term that the goods are of any particular quality or are merchantable. So where diseased meat unfit for food was sold in a market and inspected by the buyer, the defect not being apparent and the seller not being aware of it, there was held to be no implied warranty of fitness.

Second. Where there is a sale of a definite existing chattel specifically described, the actual condition of which is capable of being ascertained by either party, there is no implied warranty.

Third. Where a known, described and defined article is ordered of a manufacturer, then although it is stated to be required by the purchaser for a particular purpose, still, if the known, described and defined thing is actually supplied, there is no warranty that it shall answer the particular purpose intended by the buyer.

Fourth. Where a manufacturer or dealer contracts to supply an article which he manufactures or produces, or in which he deals, to be applied to a particular purpose, so that the buyer necessarily trusts to the judgment or skill of the manufacturer or dealer, there is an implied term or warranty that it shall be reasonably fit for the purpose to which it is to be applied. In such a case the buyer trusts to the manufacturer or dealer and relies upon his judgment and not upon his own.

Fifth. Where a manufacturer undertakes to supply goods manufactured by himself, or in which he deals, but which the buyer has not had the opportunity of inspecting, it is an implied term of the contract that he shall supply a merchantable article.

The limiting principle

The court then stated the proposition that fixes the true scope of the maxim: it is aware of no case in which the maxim caveat emptor has been applied where there has been no opportunity of inspection, or where that opportunity had not been waived.

That sentence is the answer to the whole of the defendant's argument. The plaintiffs bought hemp to arrive; they had no chance to see it; and the maxim has no application to such a bargain.

Caveat emptor is a residual rule confined to cases where the buyer had an opportunity of inspecting the goods and took it, or waived it. Where the buyer has had no opportunity of inspection, there is an implied term that the seller shall supply a merchantable article; and where a manufacturer or dealer supplies goods to be applied to a particular purpose so that the buyer necessarily trusts to his skill or judgment, there is an implied term that they shall be reasonably fit for that purpose.

The correspondence is close enough to be worth setting out as a table in an answer.

| Jones v. Just | Sale of Goods Act 1930 | |---|---| | Fourth class: manufacturer or dealer supplying goods to be applied to a particular purpose, buyer necessarily trusting to his skill or judgment; implied term of reasonable fitness | s. 16(1) — buyer makes the particular purpose known so as to show reliance on the seller's skill or judgment, and the goods are of a description it is in the course of the seller's business to supply | | Third class: a known, described and defined article ordered of a manufacturer, that article being supplied | proviso to s. 16(1) — no implied condition of fitness on the sale of a specified article under its patent or other trade name | | Fifth class: goods supplied by a manufacturer or dealer which the buyer has had no opportunity of inspecting; implied term of a merchantable article | s. 16(2) — goods bought by description from a seller who deals in goods of that description shall be of merchantable quality | | First and second classes: goods in esse which the buyer may inspect, or a specific chattel whose condition may be ascertained; caveat emptor applies | proviso to s. 16(2) — if the buyer has examined the goods, no implied condition as regards defects which such examination ought to have revealed |

Two refinements are worth carrying. First, the proviso to s. 16(2) turns on defects the examination ought to have revealed, so a buyer who examines carelessly loses the protection he could have had, but a latent defect remains covered. Second, Blackburn J.'s reservation about things sold by sample is now s. 17, which supplies its own three implied conditions, including the buyer's right to a reasonable opportunity of comparing the bulk with the sample.