Kennerson v Barry
[1992] TASSC 68
•18 March 1992
Serial No 10/1992
List “A”
CITATION: Kennerson v Barry [1992] TASSC 68; A10/1992
PARTIES: KENNERSON, Gregory Leonard
KENNERSON, Helen Elizabeth
v
BARRY, Peter Lawler
COURT: SUPREME COURT OF TASMANIA
FILE NO/S: 1047/1987
DELIVERED ON: 18 March 1992
JUDGMENT OF: Zeeman J
Judgment Number: A10/1992
Number of paragraphs: 47
Serial No. 10/1992
List "A"
File No 1047/1987
GREGORY LEONARD KENNERSON and HELEN ELIZABETH KENNERSON v PETER LAWLER BARRY
REASONS FOR JUDGMENT ZEEMAN J
18 March 1992
Contract – Termination pursuant to express right conferred by contract – Mode of termination.
Sale of goods – Implied conditions – Correspondence with description – Fitness for particular purpose – Merchantable quality – Exclusion of implied conditions by inconsistent express term.
This action arises out of the purchase by the plaintiffs from the defendant of a stallion known as "Cusop Safeguard" in February 1986. The stallion is a Welsh pony Section B. The defendant conducts the Mirinda Stud at Narre Warren in Victoria. The plaintiffs conduct a pony stud at Cygnet. At the time that they purchased "Cusop Safeguard" the plaintiffs were in the process of setting up their stud business, intending to breed Welsh ponies Section B. With a view to obtaining appropriate breeding stock, the second plaintiff, accompanied by two women friends, made a trip to Victoria where they visited a number of studs, including the Mirinda Stud. The second plaintiff's intention was to endeavour to purchase brood mares and a stallion suitable for breeding purposes. The plaintiff and her friends visited the Mirinda Stud on two occasions during the course of their travels in Victoria. On those occasions she spoke to the defendant and observed "Cusop Safeguard". Some discussions and negotiations as to the possible purchase by the plaintiffs of this stallion occurred on the occasion of the second of those visits, but no final agreement was reached. Upon her return to Tasmania, the second plaintiff discussed the possible purchase of the stallion with her husband, the first plaintiff, subsequent to which it was agreed between the parties that the plaintiffs would purchase "Cusop Safeguard" for the sum of $3,500.00. In due course the plaintiffs paid the purchase price and took delivery of the stallion. The plaintiffs found "Cusop Safeguard" to be quite unsuitable for breeding purposes. The stallion showed little interest in covering mares, and, when he did so, generally did not ejaculate. Whilst at the plaintiffs' stud he managed to sire one foal only. It is agreed between the parties that, at least after delivery, "Cusop Safeguard" was unsuitable for stud breeding purposes, but that he was not sterile.
The substantive relief claimed by the plaintiffs by their Statement of Claim as finally amended is as follows:
(a) a declaration that the plaintiffs validly determined the contract;
(b) repayment of the purchase price;
(c) damages for negligent misrepresentation;
(d) damages for breach of contract.
Whilst the Statement of Claim also contains a claim for damages for fraudulent misrepresentation that claim was abandoned during final addresses. No basis for such a claim was disclosed by the evidence.
As a first step in considering the plaintiffs' claim, it is necessary to identify the contract between the parties and its express terms. In their Statement of Claim the plaintiffs have pleaded the agreement as being one made on or about 19 February 1986 whereby the plaintiffs agreed to purchase from the defendant and the defendant agreed to sell to the plaintiffs a stallion described as a stud stallion and/or a stallion suitable for breeding purposes and/or a stallion ideally suited for any stud and known as "Cusop Safeguard" for the price of $3,500.00.
Paragraph 2 of the Statement of Claim sets forth the following particulars of the agreement:
"Particulars of Agreement
The Agreement was partly oral and partly in writing and partly implied.
Insofar as it was oral it is constituted by:
(a)a telephone conversation between the First–named Plaintiff and the Defendant on or about 19th February, 1986 the substance of which was, the Plaintiffs would purchase the stallion for $3,500.00 and the Defendant would guarantee the fertility of the stallion and if the stallion was infertile the Defendant would refund the purchase monies back to the Plaintiffs.
(b)conversations between the Second–named Plaintiff and the Defendant in and around late January, 1986 the substance of which the Second–named Plaintiff informed the Defendant inter alia that she required the stallion for breeding purposes.
Insofar as it was in writing it is constituted by the Defendant's letter to Plaintiffs dated 11th February, 1986 and an advertisement inserted by the Defendant in The Welsh Society Action magazine in August, 1985.
Insofar as implied it is implied as a matter of law pursuant to the Sale of Goods Act 1896 Section 18 and 19 respectively or alternatively the Goods Act (VIC.) 1958 Section 17 and 18 respectively and/or by the need to give business efficacy to the parties agreement."
Those particulars do not specify all the alleged terms of the agreement. However, para.2A of the Statement of Claim is in the following terms:
"2A. It was inter alia an express and/or implied term of the agreement that:
(a)the Defendant guaranteed the fertility of the stallion and that should be infertile (sic) the Defendant would refund the sum of $3,500.00 to the Plaintiffs;
(b) the stallion was ideally suited for any stud;
(c)the stallion should correspond with the description referred to in paragraph 2 hereof;
(d)the stallion would be reasonably fit for the purposes of breeding and/or use as a stud stallion;
(e) the stallion shall be of merchantable quality."
I infer that the terms numbered (a) and (b) are alleged to be express terms of the agreement, and that the terms numbered (c), (d) and (e) are said to be implied by operation of relevant provisions of the Sale of Goods Act 1896.
I consider all witnesses to have been witnesses of the truth. Where there were inconsistencies, they were generally differences of emphasis, or explained by faulty recollection. Each of the witnesses endeavoured to tell the truth as he or she saw it. Unless otherwise indicated, the statements of fact which follow represent my findings of fact.
The defendant purchased "Cusop Safeguard" as an 8 month old colt, having imported him from England. At the time of that purchase it was the defendant's intention to use him to stand at stud when he attained the appropriate age. Normally a colt is ready to stand at stud when he is three years old. Prior to purchasing "Cusop Safeguard", the defendant had made a number of attempts to buy another stallion, "Keston Royal Occasion", in England. The defendant described him as being "quite a famous stallion". Some little time after the defendant had purchased "Cusop Safeguard" he was successful in acquiring "Keston Royal Occasion". Upon making that acquisition, the defendant no longer required "Cusop Safeguard" for his original purpose. Nevertheless he was retained by the defendant. For some time prior to the sale to the plaintiffs the defendant used "Cusop Safeguard" as a "teaser". The term "teaser" is used to describe a stallion who is placed in close proximity to a mare to determine whether she is in full oestrus. Before having a mare covered by a stallion, it is necessary to determine whether the mare is in full oestrus. A failure to take that precaution may result in a mare who is not in full oestrus being covered. That creates a risk of injury to the handler or the stallion by the mare kicking out. Nevertheless, at the time that the second plaintiff visited the defendant at his stud, "Cusop Safeguard" had covered one mare during the preceding season, but had not managed to get her in foal. During the preceding season, this mare had been covered by "Keston Royal Occasion" with a similar lack of result. After the defendant's discussions with the second plaintiff, but before "Cusop Safeguard" was delivered to the plaintiffs, he covered two mares. In each case pregnancy resulted, although one mare slipped her foal. It is common ground that "Cusop Safeguard" suffers from no physical defect which might affect his use as a stallion. For the reasons which I have indicated, he was used only rarely to cover mares. Whilst being used as a "teaser" he showed all the traits of a good stallion, being active as a "teaser" and showing a lot of enthusiasm. At all times from the defendant's discussions with the second plaintiff until there came into existence a concluded contract between the parties, the indications were that "Cusop Safeguard" would be a useful and suitable stallion, albeit that he had no proven record.
The second plaintiff knew that the defendant bred Welsh ponies and that he had paid a world record price for a stallion (presumably "Keston Royal Occasion"). She was very interested in seeing what he had for sale. She told the defendant she wished to view his stock. Her particular interest was in brood mares and colts. In the course of her inspection during the course of her first visit she noticed "Cusop Safeguard", whom she thought was "quite a stunning little chap". Nevertheless the second plaintiff had not asked to see a stud stallion. It was in the course of being shown the defendant's stock of brood mares and progeny (presumably including colts and fillies) that she noticed "Cusop Safeguard". One of the second plaintiff's friends, Mrs Nicholas, enquired of the defendant as to the identify of that pony. Little was said about him on the occasion of the first visit beyond the defendant saying that he was an imported stallion. No indication was given that he was for sale.
The second plaintiff and her two companions inspected "Cusop Safeguard" more closely upon returning to the defendant's stud on their second visit. It appears that this visit followed a telephone enquiry of the defendant made by a Miss Ireland on the plaintiffs' behalf. I infer that in response to that enquiry the defendant as least indicated that he might be prepared to sell "Cusop Safeguard". During the course of that inspection he was ridden by the defendant's son. The defendant was asked about "Cusop Safeguard"'s temperament. He told the second plaintiff and her companions that he had been broken to saddle and to harness, that he was a very good jumping pony and that he was a very good "teaser". The defendant was asked whether "Cusop Safeguard" had any progeny on the ground. He said that there was not. He told the second plaintiff (as was the fact) that "Cusop Safeguard" had covered one mare only; that that mare had missed; that the particular mare was a poor breeder and that an attempt to cover that mare with "Keston Royal Occasion" during the previous season had also been unsuccessful. The defendant told the second plaintiff that the asking price for "Cusop Safeguard" was $3,500.00; that he would guarantee him; and that "if he turned out to be no good" he would refund the purchase price. The second plaintiff inspected a number of documents relating to "Cusop Safeguard", including documents disclosing his date of birth and his pedigree. She also made enquiries of the defendant as to "Cusop Safeguard"'s pedigree and blood lines. I am satisfied that all information provided by the defendant was accurate and that the defendant had no reason to believe that "Cusop Safeguard" was other than perfectly suitable to stand at stud. During the course of conversation the defendant made it plain to the second plaintiff that the stallion was not a proven breeder. Having carried out her inspections and having had her discussions with the defendant, the second plaintiff returned to Tasmania. I infer that the defendant had been told that the plaintiffs would advise him in due course as to whether they would proceed with the purchase of "Cusop Safeguard". The defendant had made an offer to sell him on the terms to which I have referred.
On her return to Tasmania, the second plaintiff discussed the matter with the first plaintiff. Mrs Nicholas participated in those discussions. Mrs Nicholas had made a number of notes relevant to the inspection of "Cusop Safeguard" and those notes were before the plaintiffs during their discussions. One note was in the following terms, "A written guarantee of money back if not fertile". I am not persuaded that the defendant had used those words during discussion. The note did two things. It recorded Mrs Nicholas' interpretation of the defendant's statement that he would guarantee the stallion and that if he "turned out to be no good" he would refund the purchase price. It also recorded Mrs Nicholas' view that such a term ought to be confirmed in writing. That the reference to something being "written" was not part of the defendant's offer is confirmed by the later request by the first plaintiff that there be written confirmation of this term. During the course of discussion, Mrs Nicholas drew the plaintiffs' attention to an advertisement which had appeared in the August 1985 edition of a publication called "Action", which was published by the Welsh Pony Society of Australia. So far as is relevant, that advertisement was in the following terms:
"MIRINDA STUD
offers for sale
'CUSOP SAFEGUARD' (IMP) SECTION B STALLION
Sire – CUSOP BANKNOTÉ
Dam – CUSOP SNOWDRIFT
by COED COCH PAWL
BAY 6 yr old STALLION – 13 HANDS
BROKEN TO SADDLE AND HARNESS
IDEALLY SUITED FOR ANY STUD
VERY QUIET TO HANDLE
REASONABLY PRICED ––––––––––––––$4,000:00
.....
CONTACT – PETER BARRY
MIRINDA STUD
PRINCES HIGHWAY
NARRE WARREN V
3805
'Phone – (03) 704 6203
OR WRITE TO –
PO BOX 59
NARRE WARREN V
3805"
As a result of their discussions, the plaintiffs determined that they would purchase "Cusop Safeguard". The first plaintiff telephoned the defendant and informed him that the plaintiffs would agree to purchase the stallion for $3,500.00, subject to the defendant confirming, in writing, that he would refund the purchase price in the event that the stallion was found to be infertile, and subject to the stallion being found to be satisfactory upon examination by the defendant's veterinary surgeon. The defendant agreed. On 11 February 1986 the defendant relevantly wrote to the second plaintiff in the following terms:
"Many thanks for your letter of 2.2.86 Enclosed are certificates from Graham Jeffries.
...
Re Cusop Safe Guard (IMP.)
Mirinda Stud hereby guarantees the fertility of Cusop Safe Guard.
Should he be infertile we guarantee to refund the Three Thousand Five Hundred Dollars.
(signed) Peter L. Barry"
It appears that the report of the veterinary surgeon accompanied that letter. I infer that its terms were satisfactory. The letter refers to "certificates from Graham Jeffries" being enclosed. The evidence is that a Dr Jeffries was the veterinary surgeon who was to examine "Cusop Safeguard". On 19 February 1986 the plaintiffs forwarded to the defendant a cheque for the purchase price. By agreement between the parties, the defendant did not immediately deliver "Cusop Safeguard" to the plaintiffs, but he did so in about April 1986 when the plaintiffs were in a position to receive him.
The contract between the parties was made during the course of the telephone conversation between the first plaintiff and the defendant. During that conversation the first plaintiff indicated that the plaintiffs would accept the defendant's offer made on the occasion of the second plaintiff's visits to the defendant's stud, subject to the defendant agreeing to two further terms (the plaintiffs thereby making a counter–offer) to which the defendant agreed (thereby accepting the counter–offer). Those further terms were that the contract was to be made subject to two conditions precedent, namely:
(a) the provision of a satisfactory report by a veterinary surgeon; and
(b)the defendant confirming, in writing, that he would refund the purchase price in the event that "Cusop Safeguard" should prove to be infertile.
Both those conditions were satisfied by the defendant's letter of 11 February 1986, upon receipt of which the contract became unconditional.
I do not consider the letter of 11 February 1986 to import or confirm any contractual term not already contained in the defendant's original offer. The defendant had made it a term of his offer that if "Cusop Safeguard" "turned out to be no good" he would refund the purchase price. In the context of the negotiations between the parties, the expressions "no good" and "infertile" are to be treated as being interchangeable. The Shorter Oxford Dictionary defines "infertile" as "not fertile; unproductive, barren, sterile." In the context of the negotiations, I do not consider that the word ought to be construed as being the equivalent of "sterile". It is clear that the parties used the expression "infertile" in the sense of the stallion being unproductive in the sense of falling far short of having the reproductive capacity normally expected of a stud stallion. A stallion unproductive in that sense is "no good" in the sense meant and understood by the parties.
I do not consider that anything contained in the advertisement is to be taken as having been incorporated into the contract entered into between the parties. No doubt if the plaintiffs had offered to purchase "Cusop Safeguard" by reference to that advertisement, and if their offer had then been accepted by the defendant without further ado, the statements of fact therein contained might well have been taken to have been conditions or warranties deemed to have been incorporated into the contract (see Re Gloucester Municipal Election Petition [1901] 1 KB 683). However, that is not the situation in the present case. Even leaving aside the length of time which elapsed from the publication of the advertisement until the parties entered into negotiations, and the lack of reference to the advertisement during the course of negotiations, there are reasons why the advertisement ought not to be treated as a contractual document. The course of negotiations and the terms agreed between the parties clearly superseded anything contained in the advertisement. The advertisement described the pedigree of "Cusop Safeguard", stated his age and height, stated that he was broken to saddle and harness, described his suitability for stud and his temperament, and stated his price. All those matters were the subject of express discussion or representation during the course of negotiations. The second plaintiff was shown documents as to the pedigree and age of the stallion. The age was incorrectly stated in the advertisement although I accept the defendant's evidence that that came about through inadvertence. During the course of negotiations the second plaintiff was shown a document which recorded the correct age. His height was to be observed in the course of inspection. Mrs Nicholas noted that the stallion was "about 12.3 – 13.0 h." and that note recorded her estimate of height upon inspection. The fact that he had been broken to saddle and harness was expressly stated by the defendant to the second plaintiff. Those of the stallion's known attributes as were relevant to his suitability for stud purposes were observed by the second plaintiff, or were the subject of express statements by the defendant. One matter was unknown. That was the stallion's actual ability to cover mares which had not been put to the test. As to that, the defendant expressly told the second plaintiff that "Cusop Safeguard" was not a proven breeder and did not have progeny on the ground. Those statements, coupled with the offer to sell upon the basis that the purchase price would be refunded in the event that the stallion proved to be "no good", amounted to a disclaimer of any assertion that "Cusop Safeguard" was a proven stallion and modified any representation that he was suitable for stud. The price referred to in the advertisement was not the price at which the plaintiffs agreed to purchase "Cusop Safeguard". All express terms of the contract are to be found in the discussions between the second plaintiff and the defendant at the defendant's stud and the telephone conversation between the first plaintiff and the defendant some little time thereafter.
The relief claimed by the plaintiffs may be divided into three separate categories:
1.Claims for a declaration that the plaintiffs validly determined the contract and for an order for the repayment of the purchase price. That relief is sought in reliance upon the express term of the contract that the purchase price would be refunded in a certain event. Such reliance was not pleaded. Nevertheless counsel for the plaintiffs made it clear that the declaration was sought solely in reliance upon that term. Relevantly the plaintiffs have pleaded that by letter of 10 June 1987 they determined the agreement and demanded a refund of the purchase moneys of $3,500.00. An order for the repayment of the purchase price is also sought upon the basis that there has been a total failure of consideration.
2.A claim for damages for negligent misrepresentation. As pleaded, that relief is sought upon the basis that two misrepresentations were made negligently by the defendant, namely that "Cusop Safeguard" was ideally suited for any stud and that he was 6 years old. For the making of the first misrepresentation the plaintiffs rely on the advertisement. For the reasons already expressed, the plaintiffs cannot rely on that advertisement. During the course of his closing address, counsel for the plaintiffs abandoned any reliance on the second misrepresentation. It follows that this claim cannot succeed and it does not require any further consideration.
3.A claim for damages for breach of contract. That relief is sought upon the basis that the defendant was in breach of the terms set forth in para.2A of the Statement of Claim, the contents of which I have already set forth.
The agreement is to be construed as conferring upon the plaintiffs the right to terminate the agreement in the event that "Cusop Safeguard" was found to be unsuitable for stud in the sense of proving to be unable or disinclined to perform stud duties to any reasonable extent. In such event it would be established that he was "no good" or "infertile". Upon such termination having been validly effected, the plaintiffs were to be entitled to a refund of the purchase price and, by necessary implication, the defendant was to be entitled to have the stallion back. The term did not operate so as to effect an automatic termination of the contract upon the ascertainment of the relevant state of affairs. Termination was a matter of election to be communicated by the plaintiffs as promisees. Whilst authorities for those propositions relate to cases where the right to terminate was not expressly conferred by the contract (eg Heyman v Darwins Ltd [1942] AC 356 at p361; Holland v. Wiltshire (1954) 90 CLR 409 at pp419 – 422), there is no reason in principle why they ought not to have equal application where such a right is expressly conferred by the contract. The present contract provides no requirements as to how and when such an election might be exercised beyond providing that the right arose in a certain event.
It is necessary to return to the facts relating to the plaintiffs' experiences with the stallion after they took delivery. Not long after taking delivery of the stallion, he was used by the plaintiffs to cover a mare by way of hand service. Thereafter the stallion and the mare were permitted to run together in a paddock for some two weeks. "Cusop Safeguard" was observed mounting the mare on a number of occasions during this period. Although the first plaintiff said that he was conscious of an absence of signs indicating that the stallion had ejaculated on any occasion, he also said that he fully expected that the mare would be in foal. In fact no pregnancy occurred. As these events occurred towards the end of the breeding season the plaintiffs were not unduly concerned.
The plaintiffs resumed using "Cusop Safeguard" for stud studies in September 1986 which was at the commencement of the following breeding season. Almost 250 hand services were effected. On only two of those occasions were signs of ejaculation observed. It was a dismal performance. Much better could be expected from any stallion remotely suitable for stud. The plaintiffs were very concerned. In early November 1986 they called in a veterinary surgeon, Dr Crook, who examined the stallion. His findings were embodied in a report provided to the plaintiffs. That report is in evidence. Relevantly, it reported as follows:
"Welsh Section B pony stallion Cusop Safeguard:
fertility assessment
On 2 and 3.11.86 I carried out a physical examination of the genitalia of the abovenamed stallion and observed him serving a 13.23 HH chestnut pony mare, Miss Moselle. On 5.11.86 I collected serum samples from a 13.2 HH grey pony mare, Ameda, and submitted the same for pregnancy testing by the AZ test. I subsequently examined your breeding records for mares served by Safeguard since September, and I report as follows on this evidence as to the fertility of the stallion.
1. Physical examination
The pony appears to be in general good health, being in excellent body condition and bright and alert on all the occasions I have seen him.
The external genitalia are grossly normal. The testes are of normal and similar size and feel normal on palpation. The penis appears normal and the pony readily achieves and maintains full penile erection.
2. Sexual behaviour and performance
For a stallion Safeguard's general demeanour is quiet. He would be best described as a well–mannered horse and is readily controlled even in the presence of oestrus mares. On presentation to a mare in full behavioural oestrus his sexual behaviour was normal though he did not show evidence of particularly high levels of excitement. He gave the impression that it would have been possible at all times easily to divert his attention from the mare and the job in hand.
Nevertheless the pony readily mounted the mare, achieving intromission on five occasions over the two days on which the examination was conducted. His sexual activity following intromission was less vigorous than that preceding it. Lack of evidence of seminal secretion, urethral peristalsis and 'tail–flagging' indicated that the pony did not ejaculate successfully during any of the mating sequences observed.
.....
4. Pregnancy Test
The pregnancy test carried out on Ameda indicates that, in the absence of service by any other stallion during that oestrus period, she is in foal to Safeguard as a result of service during the period 10–12 September.
5. Conclusions
The evidence of the positive pregnancy test on Ameda, with the proviso noted in 4 above, indicates that Safeguard is technically fertile, ie capable of siring foals. The observation of a normal mating sequence culminating in ejaculation of semen on three occasions of service of Lady Playful is a further indication of his capability of successfully mating mares. His general demeanour, repeated failures to ejaculate during service and the frequent returns to service of his mares might be best regarded at this stage as evidence of a low sex drive.
6. Recommendations
Further evidence confirming the fertility of the stallion should be sought by carrying out pregnancy testing of Lady Playful. The mare has not returned to service since her last observed oestrus period of 15/21 October.
In view of your opinion of the value of the stallion as a potential Section B Welsh pony sire further investigation of the cause and possible treatment of the problem of his sex drive should be considered. To this end I would be pleased to refer you to or consult on your behalf appropriate specialist colleagues."
The first plaintiff kept the defendant informed of the problems with "Cusop Safeguard" in the course of a number of telephone conversations. The last of those occurred towards the end of 1986. Whilst various possible solutions were discussed, at no time did the first plaintiff say that the plaintiffs wished to terminate the contract. I am satisfied that the defendant made it plain to the first plaintiff that he stood by the terms of the contract and that during the course of at least one of those telephone conversations the defendant said "Look, if you are prepared and you want to carry on and try this horse and get him right, you know, go for your life, but [if] at any stage you decide you've had enough send him back and you can have your money back". It was then that the first plaintiff indicated that he might wish to have the defendant pay a number of expenses (now claimed by way of damages) and the defendant disagreed. On the occasion of the last telephone call the defendant said that he had a possible purchaser for the stallion as a harness pony at a price of $2,000.00. On 10 December 1986, following that advice, the plaintiffs wrote to the defendant in the following terms:
"Enclosed are the two veterinary reports outlining their observations and our efforts to place our mares in foal to Cusop Safeguard.
Our first attempt began on April 8th after Safeguards (sic) arrival from Victoria. One of our mares Ameda was cycling, so we handserved her and then ran her in the paddock with Safeguard for the next two weeks. He served the mare in the paddock for the 4 days following the hand service. This mare failed a manual pregnancy test at approx. 60 – 70 days.
At the time of hand serving, Helen and I and another experienced stud owner commented upon the lack of seminal fluid on either the mare or on Safeguards (sic) penis.
We waited until the 10th Sept '86 and placed four mares with him in the paddock. Only one of these, Ameda failed to return to service.
The others all returned to service.
The only ejaculation observed during the following handserving regime with the other 3 mares was with Cefn Parc Lady Playful on Oct 17th.
Both Ameda and Lady Playful have produced positive blood pregnancy tests.
The other 2 mares, Burrabong Filligree and Miss Moselle are now in foal to other stallions, indicating their fertility.
Since the time of Vet. Ian Crook writing his report, another mare Shanameer Mistral has returned to service after being served by Safeguard.
These observations and those of the two attending vets. conclusively prove to us that Safeguards (sic) performance as a stud stallion is not good at all.
His frequency of ejaculation is only low and at this stage seems to be a behavioural problem, not a physiological one or more to the point a physiological problem at intermittent times caused by a behavioural problem, quite well being a function of his role as a teaser for many seasons.
We believe Safeguard is not ideally suited for stud duties as you had advertised and sold him to us as such.
His lack of performance has already caused us to incur considerable expense in consultations with vets, lengthy interstate, intrastate and overseas phone calls, the service to some of our mares by outside stallions and the loss of income from refusal of services.
We are still prepared to persist with Safeguard and consult, Art Meeker the recognised veterinary expert in Tasmania to further investigate his lack of ejaculatory performance. This would again be further expense to us.
In all fairness and given your guarantee of fertility to us, we are willing to purchase Safeguard as a Harness Pony for $2,000 not $3,500 and would then surrender any further demand upon you regarding his lack of performance and fertility.
Given his history of performance this season and the reports herein, any professional advice you maybe able to obtain from Weribee or from your Vet. would be very appreciated by us.
We await your consideration and reply."
That letter set forth an accurate account of the plaintiffs' experiences with "Cusop Safeguard". The defendant did not reply to it. The plaintiffs did not act on the suggestion, made by Dr Crook, to consult specialists. The plaintiffs did not persevere with their endeavours with "Cusop Safeguard". They had ceased "trying this horse" (using the defendant's words) by December 1986. At the time that the plaintiffs wrote this letter they knew that the stallion was quite inadequate. On 30 March 1989, which was towards the end of the breeding season, the plaintiffs' solicitors wrote to the defendant in the following terms:
"We act on behalf of Mr. and Mrs Kennerson.
Our instructions indicate the following:–
1. In February last year you contracted to sell the stallion 'Cusop Safeguard' for $3,500.00 to our clients.
2. It was represented to our clients at the time of the sale that the horse was suited for any stud. This is clearly not the case as you will be aware from correspondence from our clients direct to you. In addition, you guaranteed a refund of our clients (sic) money.
3. Further a series of veterinary reports (of which you have been given details) clearly supports the proposition that the horse is unsuitable for stud purposes.
In all the circumstances it is abundantly clear that the horse does not comply with the contractual terms and the representations made about him to our clients. Our clients are entitled to rescind the contract and sue for the refund of the purchase price together with all the extra expense they have incurred for, amongst other things, veterinary services and advice, transportation costs, time taken up with hand services and so on.
Our clients reserve their rights to rescind the contract and initiate legal proceedings against you as indicated including a claim for their legal costs incurred. They reserve such rights in that regard pending the outcome of the next breeding season when it is anticipated that the unfortunate performance of the horse will be confirmed."
By letter of 28 April 1987 the defendant wrote to the plaintiffs' solicitors in the following terms:
"I am in receipt of your letter of 30th March, 1987. Firstly, I was under the impression that Mr. Kennerson was prepared to wait and see if there was further improvement in the performance of the stallion. The last time we spoke on the telephone some mares were in foal, and as Mr. Kennerson was very fond of the pony, hormonal treatment might be successful.
In Mr. Kennerson's letter to me of 10th December, 1986, he offered to purchase the pony as a harness pony for $2,000.00. I believe that this is a fair price and is acceptable to me.
Please advise by return if this is agreeable so that the matter can be finalised."
In response to that letter the plaintiffs' solicitors wrote to the defendant on 10 June 1987 in the following terms:
"We refer to your letter dated 28th April last.
We advise that the offer as to selling the horse to our clients as a harness pony is not acceptable. Further, given the latest veterinary advice and evidence it is readily apparent that the horse is clearly not suited for any stud purposes. That being so our clients rescind the contract.
In addition and as previously pointed out, our clients have incurred significant expenses as a result of acting on the representations made by you about the horse and entering into the contract and for a breach of the term of the contract as to the horse allegedly being 'ideally suited for any stud': refer advertisement 'Welsh Society Action' Magazine, August 1985. Our clients' claim is as itemized below:–
1. Refund of the purchase price of 'Cusop Safeguard' $3,500
2. Veterinary Costs:
Dr Barry Wells 50
Dr Geoff Baxter 104
Dr Ian Crook 85
Lyndhurst Vet Hosp 55 294
3. Insurance – Wallace Livestock Insurance 338
4. Transportation – Melbourne to Cygnet 577
Chapmans & Mathews Transport Co.
5. Service to Outside Stallion and travel and agistment 490
6. Lease of another Stallion and associated costs
including visiting studs to view stallions with
respect to leasing 303
7. Costs of specially made rug and bridle 226
8. Feeding and upkeep of extra leased stallion 368
9. Numerous lengthy phone calls e.g.
interstate Mirinda Stud
intrastate Vets
overseas Other Studs
(conservatively estimated at) 355
10. Costs of trip to Victoria to find another Stallion
and discuss leasing stallions as well 890
11. Solicitor's fees to date 69
12. Feeding, upkeep of Stallion 'Cusop Safeguard' 650
(including wormers and footcare) – ongoing.
13. Advertising ACTION magazine and artwork 30
$4,590
Plus
Loss of services to outside mares –
8 refusals at $300 2,400
Performing repeated hand services with mares
200 hours at $10 per hour 2,000
Loss of one and possibly two or three breeding
seasons and loss of stud credibility and
prestige 2,000
We advise that upon payment of the foregoing amounts suitable arrangements may be made by you to collect the horse. We further advise that if such payment is not made within 10 days of the date hereof we will institute Supreme Court proceedings against you without further notice."
The final piece of correspondence was the defendant's letter of 16 July 1987 to the plaintiffs' solicitors. That letter was in the following terms:
"In reply to your letter of 10th June 1987 about 'Cusop Safeguard'.
Mr. Kennerson discussed the problem of the stallion's fertility with me and he informed me he was very fond of the Pony and wanted to perservere (sic) with the pony, rather than return him.
I told Mr. Kennerson that if he was not satisfied with the pony he could return the pony and I would return his money in full. This conversation took place about last October.
Mr. Kennerson said he would like to keep him as we were both hopefull (sic) that the stallion may improve as the weather warmed up and the stallion and the mares normally become more fertile. I agreed with his request & indeed it appears that some improvement has been achieved as some mares are in foal.
In my letter of 28th April I offered to accept Mr. Kennersons (sic) offer made in his letter of 101286 (copy enclosed) to purchase Safeguard for $2000 as a saddle and harness pony & he would then surrender any further demand regarding the lack of performance and fertility.
I am anxious to avoid any unplesant (sic) & costly Court Proceedings however your latest detailed account is in my opinion not reasonable.
If Mr. Kennerson no longer wants to keep the pony & has again changed his mind I would like to return his money in full, as I offered some months ago, after checking that the pony is not injured. I am prepared to pay all expenses involved in transporting the pony."
Neither the plaintiffs nor their solicitors replied to this letter. It was received by the plaintiffs' solicitors on 23 July 1987. On 14 August 1987 the writ was filed. In the circumstances as I have recited them can it be said that the plaintiffs elected to terminate the contract? That the right to terminate arose is plain. At the latest it had arisen in December 1986. By then it had been established that "Cusop Safeguard" was quite unsuitable for stud. In endeavouring to establish that unsuitability the plaintiffs did not seek to rely upon later events or experiences. By that time their experiences were sufficient to establish unsuitability. Nevertheless, the letter of 30 March 1987 made it plain that the plaintiffs were not then electing to terminate the contract. They expressed an intention to carry on during the next breeding season reserving "their rights to rescind the contract and initiate legal proceedings ... pending the outcome of the next breeding season ..." They did not wait for the next breeding season. There is no evidence that anything occurred after December relevant to establishing the stallion's unsuitability. The plaintiffs' Statement of Claim asserts that their solicitors' letter of 10 June 1987 constituted a termination of the contract and they argued their case upon the basis that that termination was effected pursuant to the relevant express term of the contract.
The plaintiffs' solicitors' letters to the defendant proceeded upon the basis that the defendant was in breach of contract and in particular in breach of an express term that the stallion was "ideally suited for any stud". I have already expressed my reasons for concluding that the contract contained no such express term. The defendant was not in breach of any express term of the contract. For reasons I express shortly the defendant was not in breach of any implied term of the contract. The contract proceeded upon the basis that the parties were unaware as to whether the stallion was suitable as a stud stallion and therefore agreed upon an express term the effect of which was that in the event that the stallion proved to be unsuitable the plaintiffs had a right to terminate the contract. That term is to be categorized as a condition subsequent. The obligations of the parties under the contract were immediately binding. If a certain state of affairs was subsequently found to exist, i.e. that the stallion was unsuitable, then the plaintiffs were to have the right to terminate the contract.
At no time until the final amendment of the plaintiffs' Statement of Claim during their counsel's closing address did the plaintiffs claim to be relying on the express term of the contract as giving rise to a right of termination. Prior to that their conduct had been quite inconsistent with such reliance. Particular relevant conduct was:
(a)the first plaintiff expressly disclaimed present reliance upon that term during a telephone discussion with the defendant in late 1986;
(b)the plaintiffs' solicitors' letters proceeded upon the basis that the plaintiffs were entitled to, and later did, rescind for breach of an express term of the contract (which term I have found not to have been contained in the contract);
(c)the defendant's letter of 16 July 1987, which invited the plaintiffs to rely upon the express term, did not result in such reliance but rather in the issue of a writ accompanied by a Statement of Claim which did not assert that the plaintiffs had terminated pursuant to the express term.
The plaintiffs rely upon their solicitors' letter of 10 June 1987 and upon nothing else as constituting notice whereby they exercised their contractual right to terminate the contract. The right to terminate was conferred if the stallion was "no good". That related to an existing state of affairs but one which could not be ascertained except by subsequent experience. It was ascertained by December 1986 that the stallion was "no good". Thereupon it was a matter for the plaintiffs to determine whether they wished to exercise their right to terminate. They were under no obligation to do so. The plaintiffs say that they exercised that right on 10 June 1987. The letter of 10 June 1987 purported to rescind the contract and indicated that the defendant might have the stallion back but only upon payment of substantial damages and repayment of the purchase price. Termination pursuant to a contractual term permitting that course is quite different from rescission which is a remedy conferred in certain cases of misrepresentation or mistake. In the latter case there is a rescission ab initio which generally has retrospective effect. In the former case it is incorrect to speak of the contract ceasing to have effect through termination. The termination has its source in the contract and depends upon the existence of the contract. Whilst not concerned with a contractually conferred right to terminate by way of a condition subsequent, reference may be had to Johnson v Agnew [1980] AC 367 at p396, adopting the dictum of Dixon J (as he then was) in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at pp476 – 7.
The letter of 10 June 1987 is inconsistent with an exercise of the right to terminate. Not only does it not purport to exercise that right, but it seeks to assert a different right. By its nature the right asserted contradicts the continuing existence of the contract. That may be contrasted with the exercise of the right to terminate which invokes the terms of the contract and looks to the contract to establish the rights of the parties consequent upon termination. A termination pursuant to the contract would have left the parties owing one another fresh obligations of which the contract was the source. The letter makes it clear that the plaintiffs were not prepared to return the stallion upon repayment of the purchase price. They demanded the payment of damages many times the purchase price and expressed a willingness to return the stallion only upon payment of those damages. The plaintiffs did not elect to terminate the contract pursuant to its terms. It follows that they are not entitled to be repaid the purchase price consequent upon such termination. The plaintiffs do not rely upon the belated amendment to their Statement of Claim to constitute notice of any election to terminate so that I need not give any consideration to that. It follows from my conclusions that it cannot be said that there was a total failure of consideration.
I turn to the plaintiffs' claim for damages for breach of contract. That requires an examination of the terms pleaded in para.2A of the Statement of Claim.
The first term pleaded is an express term that "the Defendant guaranteed the fertility of the stallion and should [he] be infertile the Defendant would refund the sum of $3500.00 to the Plaintiffs". I have already made my findings as to the relevant term and expressed my conclusions as to its proper construction and classification. The only breach of this term alleged by the plaintiffs is that the defendant did not refund the sum of $3,500.00 when the stallion was found to be "infertile". The facts asserted as constituting the breach are established by the evidence. Nevertheless the plaintiffs' argument suffers from the following defects:
(a)as I have already found, the defendant did not ever become obliged to refund the purchase price; and
(b)even if the defendant had become so obliged, his obligation would have been categorized as one requiring him to pay a liquidated sum pursuant to the provisions of the contract and not as one requiring him to pay damages for breach of any term of the contract.
The second term pleaded is an express term of the contract providing "that the stallion was ideally suited for any stud". I have already expressed my reasons for concluding that the contract contained no such express term. It follows that the question of any breach of such a term cannot arise.
The remaining terms are said to be implied by virtue of the provisions of the Sale of Goods Act 1896. Those terms and the bases upon which it is said that they ought to be implied are as follows:
(a)the contract is one for the sale of goods by description, the description being "a stud stallion and/or a stallion for breeding purposes and/or a stallion ideally suited for any stud", so that there ought to be implied a condition that the stallion corresponded with that description (s18);
(b)the plaintiffs made known to the defendant the particular purpose for which the stallion was required, namely for breeding and/or use as a stud stallion, so as to show that the plaintiffs relied upon the defendant's skill or judgment, the stallion being of a description which it was in the course of the defendant's business to supply, so that there ought to be implied a condition that the stallion was reasonably fit for breeding and/or use as a stud stallion (s19(a));
(c)the stallion was bought by description, the description being that referred to in para(a), so that there ought to be implied a condition that the stallion was of merchantable quality (s19(b)).
No doubt because there was thought to be some doubt as to the law applicable to the contract, the plaintiffs relied upon the Sale of Goods Act 1896, ss18 and 19, or, in the alternative, upon equivalent provisions to be found in the Goods Act 1958 (Vic) which, for all relevant purposes, are in identical form. Whilst on the basis of the findings of fact which I have made, it appears that the contract was made in Tasmania (see Entores Ltd v Miles Far East Corporation [1955] 2 QB 327), it might yet be said that the proper law of the contract is the law of Victoria, it being the law "with which the transaction has the closest and most real connection" (Bonython v Commonwealth of Australia [1951] AC 201 at p219). I do not find it necessary to express any concluded opinion as to what is the proper law of the contract as it is common ground between the parties that this Court has jurisdiction to entertain this action and as there appear to be no relevant differences between the law of Tasmania and the law of Victoria. As a matter of convenience, my references are to the relevant sections in the Tasmanian Sale of Goods Act without determining that those sections, rather than the equivalent sections contained in the Victorian Goods Act, have application.
The portions of ss18 and 19 relied upon by the plaintiffs are in the following terms:
"18Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description; ...
19Subject to the provisions of this Act and of any Act in that behalf, 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:–
(a) Where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose:...
(b) 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: Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed; ..."
It has been rightly observed that "the phrase 'sale by description' has been interpreted to cover almost all sales" (Benjamin's Sale of Goods 3rd ed, para756). All sales of unascertained goods and most sales of future goods are sales by description. Sales of specific goods which have not been seen at the time that the relevant contract is entered into are sales by description (Varley v Whipp [1900] 1 QB 513). However the term has been held to have even more extensive application. "[A] thing is sold by description, though it is specific, so long as it is sold not merely as the specific thing but as a thing corresponding to a description, eg woollen under–garments, a hot water bottle, a second hand reaping machine, to select a few obvious illustrations" (Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49 at p61). Nevertheless a sale is not a sale by description unless the description is one going to the identity of goods and not to their quality (Christopher Hill Ltd v Ashington Piggeries Ltd [1972] AC 441). The plaintiffs have pleaded that three relevant modes of description were employed. The third of those is to be found in the advertisement to which I have referred. I have already expressed my reasons for concluding that nothing contained in that advertisement was incorporated into the contract. I do not accept that either of the other two modes of description were ever used by the parties to the contract. The second plaintiff noticed "Cusop Safeguard" whilst inspecting other stock. It was not specifically shown to her as part of the stock which was for sale. She asked to examine him more closely on a later occasion. That inspection was sought after the second plaintiff had caused enquiries to be made of the defendant whether that particular stallion was for sale. On the occasion of that examination the defendant made frank disclosure of the qualities of the stallion as they were known to him as to which I have already made findings of fact. She did not ask for a stallion or to look at stallions. She asked to look at "Cusop Safeguard" having earlier noticed him in a paddock. Not only did the defendant not describe "Cusop Safeguard" as "a stud stallion" or "a stallion suitable for breeding purposes" he expressly told the second plaintiff that the stallion was not a proven breeder and the parties entered into a specific contractual arrangement as to what was to occur if it were to transpire that he was not suitable for breeding. There was no sale by description.
I turn to s19(a). Plainly, the second plaintiff made known to the defendant the purpose for which the stallion was required, ie as a stud stallion at the plaintiffs' stud. For present purposes I will assume that the stallion was of a description which it was in the course of the defendant's business to supply. The question is whether the circumstances were such as to show that the plaintiffs relied on the defendant's skill or judgment. The reliance must be such as to constitute "a substantial and effective inducement leading" the buyer to agree to purchase the item (Dependable Motors Pty Ltd v Ashford Shire Council (1958 – 1959) 101 CLR 265 per McTiernan J at p280 approving the dictum of Lord Sumner in Medway Oil and Storage Co Ltd v Silica Gel Corporation (1928) 33 Com Cas 195 at p196). The fitness of "Cusop Safeguard" for stud purposes fell to be judged by a number of criteria. The principal criterion was the ability of the stallion to effectively cover an appropriate number of mares. The defendant expressly told the second plaintiff that the stallion was not proven in that regard, and, by offering to refund the purchase price in the event that the stallion should prove unsatisfactory in that regard, made it quite plain that he was not exercising any skill or judgment by way of expressing a view that the stallion would appropriately perform such functions. Other relevant although subsidiary criteria were the subject of statements by the defendant. Nevertheless the plaintiffs did not accept these at face value. They acted on the observations of the second plaintiff, the observations made by Mrs Nicholas, and the results of an examination by a veterinary surgeon. They were not relying on the defendant's skill or judgment. The terms of the contract entered into disclosed an acknowledgment on the part of the parties that the ultimate suitability of the stallion could only be judged by experience, and that, rather than relying upon the defendant's skill or judgment in that regard, the plaintiffs relied upon an express contractual term to protect them in the event that the stallion proved unsuitable for stud purposes. I do not consider that s19(a) has any application.
I turn to a consideration of s19(b). The proviso to that paragraph does not apply as by its very nature the stallion's disinclination or inability to cover mares adequately would not have been disclosed by any examination. At no time did counsel for the plaintiffs identify what was the "description" relied upon by the plaintiffs. The pleadings are silent on this matter. I assume that it is the same description as that relied upon for the purposes of s18. For the reasons I have expressed in relation to that section I am not prepared to find that any such description was employed. Even if I were to be wrong about that the plaintiffs still face a fundamental difficulty. If the stallion had been bought by any one or more of the descriptions contended for by the plaintiffs, they must establish that the defendant was a person who dealt in goods of that description. The seller must be shown to be a dealer in goods of the same contractual description as the subject matter of the contract. In a passage subsequently approved by a number of their Lordships in the House of Lords Christopher Hill Ltd v Ashington Piggeries Ltd (supra), Davies LJ, in the course of his judgment in that case in the Court of Appeal ([1969] 3 All ER 1496 at p1518) in dealing with the equivalent English section, said:
"There are, then, two requirements. First, the goods must have been bought by description. Secondly, they must have been bought from a seller who deals in goods of that description. The first requirement cannot be read in any different sense from the opening words of s. 13: 'Where there is a contract for the sale of goods by description'. The only reason why 'contract of sale' is not mentioned in s. 14 (2) is that the reference to the contract of sale is already incorporated in the opening words of the section, as applicable to both sub–s. (1) and sub–s. (2). In this case, admittedly, the goods were bought by description. We have discussed the relevant description when we dealt with the case as put under s. 13. For present purposes we can take the relevant description as 'vitamin–fortified mink food called King Size made pursuant to the formula'.
The learned judge treated this matter as concluded in favour of the defendants by reason of his finding in respect of the third requirement of s. 14 (1) coupled with his finding that the goods were not merchantable. If we are right in the view which we have expressed as to the third requirement of sub–s. (1), viz., that 'a description' does not extend beyond mink food, then, even if 'that description' in sub–s. (2) could somehow be construed to be as wide as 'a description' in sub–s. (1), the defendants would equally fail to show that this second requirement of sub–s. (2) has been established. However, we are unable to accept that 'that description' in sub–s. (2) has the same meaning or effect, on its true construction and in relation to the facts of the case, as 'a description' in sub–s. (1).
However curious may be the consequences of giving a different meaning to the two phrases as to 'description' in the somewhat similar sub–clauses of the two subsections, we are unable to see how, on any acceptable principle of construction or interpretation, that conclusion can be avoided. The demonstrative adjective 'that' in the words 'that description' in sub–s. (2) must refer back to the words 'by description' in the opening words of the subsection. 'Description' there must be the contractual description which is relevant for the purposes of s. 13. Hence, even if in sub–s. (1) 'a description' should be extended to mean 'animal foodstuffs', and not merely mink food, 'that description' in sub–s. (2) cannot be so extended. Hence the plaintiffs are justified in saying that, even if they are within the third requirement of sub–s. (1), because it was in the course of their business to supply animal foodstuffs, they are not within the second requirement of sub–s. (2), because they did not deal in goods of 'that description', viz., 'vitamin–fortified mink food [called "King Size"] made pursuant to [the] formula'."
I am not able to find that the plaintiff dealt in stallions which were of an age when they had ceased to be colts or in stallions having the particular attributes contained in the descriptions pleaded. I find that the defendant dealt in Welsh pony Section B mares, fillies and colts. The evidence leads me to the conclusion that the defendant had "Cusop Safeguard" as a surplus stallion merely because he had managed to purchase a particularly outstanding stallion to perform stud duties. Had it not been for that unexpected purchase, "Cusop Safeguard" would have been used for that purpose. There was no evidence that the defendant has ever sold or offered for sale any other stallion. The mere offering for sale of a stud stallion unexpectedly surplus to the defendant's requirements, being a stallion acquired for use by the defendant and not for resale, did not make the defendant a dealer in goods of the description of stud stallions (see J S Robertson (Aust) Pty Ltd v Martin (1955 – 1956) 94 CLR 30, per Dixon CJ at pp43 – 44).
It may be that the plaintiffs' reliance on s19(b) fails for a third reason and that is that it has not been shown that the stallion was not of merchantable quality. Many tests of merchantable quality have been expressed. One frequently approved (see eg George Wills & Co Ltd v Davids Pty Ltd (1957) 98 CLR 77 at p89 and Anthony v Esanda Ltd (1981) 55 ALJR 17 at p21) is that expressed by Farwell LJ in Bristol Tramways etc Carriage Co v Fiat Motors Ltd [1910] 2 KB 831 at p841, in the following terms:
"The phrase in s. 14, sub–s. 2, is, in my opinion, used as meaning that the article is of such quality and in such condition that a reasonable man acting reasonably would after a full examination accept it under the circumstances of the case in performance of his offer to buy that article whether he buys for his own use or to sell again."
It may be that the circumstance of the case must be taken as including the terms upon which the goods are purchased, including any special term such as that included in the present contract. The essential quality of the stallion had not been proved and there was conferred upon the plaintiffs an express right to terminate the contract if the stallion proved not to possess that essential quality. In those circumstances it may be permissible to take account of that special term in determining whether the stallion was of merchantable quality because it is one of the circumstances of the case. If that is permissible it might be said that the stallion was of perfectly merchantable quality if sold on those terms.
I have considered the Sale of Goods Act, ss18, 19, upon the basis that none of the conditions referred to in those sections were excluded by the terms of the contract and concluded that upon the facts of this case none apply. Nevertheless I am of the view that if any of those implied conditions could otherwise be said to arise they were excluded by the terms of the contract. The basis of that exclusion is as explained by Jordan CJ in Gemmell Power Farming Co Ltd v Nies (1935) 35 SR(NSW) 469 at pp476 – 7, in the following terms:
"The implication of fitness is negatived by an express provision excluding implied conditions: L'Estrange v. Graucob ([1934] 2 K.B. 394); Eccles v. Mills ([1898] A.C. 360). The implied promise may also be negatived by an express provision which is inconsistent with it: cf. Sale of Goods Act, 1923, s. 19 (4). This occurs where the contract is found to contain in the same field an express promise in different terms: Dickson v. Zizinia (10 C.B. 602 at 610–11); Stephens v. Junior Army & Navy Stores Ltd. ([1914] 2 Ch. 516 at 526); F. A. Tamplin Steamship Co. Ltd. v. Anglo–Mexican Petroleum Products Co. Ltd. ([1916] 2 A.C. 397 at 422–3, 427–8); The Penelope ([1928) P. 180 at 195). The fact that there is an express provision dealing to some extent with the same subject is not, of itself, sufficient, in every case, to negative the implied promise: s. 19 (4). It may appear that the express term is intended only to supplement it: Bigge v. Parkinson (31 L.J. Exch. 301). But if the express term appears to be intended to cover the field that would otherwise be occupied by the implied term, the implied term is excluded."
In the present case the stallion was bought by the plaintiffs so that they might use him at stud. The only quality called for and which might be the subject of any conditions implied by statute was the stallion's ability to adequately perform stud duties. The descriptions relied upon by the plaintiffs (albeit unsuccessfully) for the purposes of ss18 and 19(b) were all descriptions going to that ability. Any lack of merchantability found its source in the absence of that ability. The only quality of the stallion to which s19(a) might be said to apply related to that ability as all other qualities were the subject of an examination by the second plaintiff. Whilst the stallion was not lacking as to any such other qualities, had he been so lacking the relevant defect ought to have been revealed by the examination thereby attracting the operation of the proviso to s19(b). During the course of negotiations the defendant acknowledged that the stallion was not a proven breeder. By their contract the parties proceeded upon the basis that the breeding capacity of the stallion was unknown and for that reason special rights were conferred upon the plaintiffs in the event that the stallion was found wanting in that regard. That special term was intended to cover the field which otherwise might have been occupied by the implied terms.
For these reasons I have concluded that the plaintiffs' action fails. There will be judgment for the defendant.
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