Solah Blue Metal Pty Ltd v Tecma Pty Ltd

Solah Blue Metal Pty Ltd (the appellant) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation of a contract for the supply of blue metal, specifically whether the appellant was entitled to charge an additional sum for the supply of blue metal that was not of the specified grade. The respondent, Tecma Pty Ltd, had accepted and used the blue metal despite it not meeting the contractual specifications.

The primary legal issue before the Court of Appeal was whether the respondent's acceptance and use of the non-conforming blue metal constituted a waiver of its right to reject the goods and an acceptance of the goods as being in accordance with the contract, thereby entitling the appellant to payment at the contract rate. Alternatively, the court had to consider whether the appellant was entitled to payment on a quantum meruit basis for the value of the goods supplied and used, notwithstanding the breach of contract.

The Court of Appeal held that the respondent's conduct in accepting and using the blue metal, without protest or reservation, amounted to an acceptance of the goods as fulfilling the contract. This acceptance meant that the appellant was entitled to payment for the goods at the contract rate. The court reasoned that where a buyer accepts non-conforming goods without rejecting them, they are deemed to have accepted the goods, and the seller is entitled to the contract price. The court distinguished this situation from one where a buyer might be liable on a quantum meruit basis, as the contract remained on foot and the goods were treated as conforming.

The appeal was allowed, and the Supreme Court's decision was set aside. The appellant was awarded the sum claimed under the contract.