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'Merchantable Quality' in the Sale Of Proceeding of International Conference on Contemporary Management - 2016 (ICCM-2016), pp 274-281 'MERCHANTABLE QUALITY' IN THE SALE OF GOODS ORDINANCE OF SRI LANKA: DOES IT FIT ANYMORE? Wijerathna.Y ABSTRACT Sale of Goods Ordinance No 11 of 1896 (SGO) of Sri Lanka is the statute which amends and codifies the law relating to the sale of goods in Sri Lanka which is based on the United Kingdom's Sale of Goods Act of 1893 (SGA). Unlike, the SGA, the SGO has not been amended since 1896. Due to the static nature of the statute, any practitioner, a law student or a layman when making reference to the SGO, without any doubt, would encounter problems enhanced, inter alia, due to ambiguity of the terms in the statute. This paper specifically discusses the term 'merchantable quality' as specified by the SGO under Conditions and Warranties in S. 15 (2) and S. 16 (2) (c ) .The same term was included in SGA and in 1987UK Law Commission Report on Sale and Supply of Goods stated that the term 'merchantable quality' should be reviewed. Later it was substituted by the term 'satisfactory quality” in 1995 by an amendment made to the act and has been in effect for over two decades. In this context a set of inevitable problems arises with regard to the retention of this term. The main research objective of this research is to find out whether Sri Lanka should also follow the footsteps of the English legislatures and change the term from 'merchantable quality' to 'satisfactory quality'. The methodology of the research is based on the traditional black letter approach and the legal research methodology. It is submitted that it is the high time to alter the term following the English example as provided by the SGA coupled with the establishment of a proper test and guidelines to measure the 'satisfactory quality. Keywords: Merchantable Quality, Sale of Goods, Satisfactory Quality 1. INTRODUCTION (SGA) which consolidated the Act of 1893 Sale of Goods Ordinance No 11 of 1896 and subsequent legislation in the field. The (SGO) of Sri Lanka is the statute which English Act, was further subjected to many amends and codifies the law relating to the statutory amendments over time in order to sale of goods in Sri Lanka which is based on reflect the changing nature of the the United Kingdom's Sale of Goods Act of commercial transactions. 1893 drafted by Sir Mackenzie Chalmers. The Act of 1893, even though was a well- As correctly emphasized by jurists like drafted piece of legislation, was later Roscoe Pound the law is not static and it is amended by the Sale of Goods Act of 1979 always changing. The law in fact should Faculty of Law, General Sir John Kotelawala Defence University,Rathmalana, Sri Lanka [email protected] 274 reflect the needs and the changes of the reviewed. Later it was substituted by the society. Over the late 19th and early 21st term 'satisfactory quality” in 1995 by an centuries, influenced by the factors such as amendment made to the act and has been in the rapid growth of population and the effect for over two decades. S. 14 (2) of the industrial and technological development, SGA states that “Where the seller sells goods the field of commerce developed at an in the course of a business, there is an unimaginable pace, both in international and implied term that the goods supplied under national scope. However, from 1896, even a the contract are of satisfactory quality”. century and two decades later, SGO of 1896 Many countries all around the globe have still remains the same without following the followed the example given by the UK lead taken by the SGA. legislators. For instance, Singapore, through an amendments in 1996 replaced the old Due to the static nature of the statute, any concept of 'merchantable quality' in the Sale practitioner, a law student or a layman when of Goods Act with the novel implied term of making reference to the SGO, without any 'satisfactory quality'. doubt, would encounter problems enhanced, inter alia, due to the ambiguity of the terms in In this context, a set of inevitable problems the statute. This paper specifically discusses arises with regard to the retention of this term the term 'merchantable quality' as specified in the SGO. The main research objective of by the SGO under conditions and warranties this research is to find out whether Sri Lanka in S. 15 (2) and S. 16 (2) (c). should also follow the footsteps of the English legislatures and substitute the S.15 (2) specifies that where goods are implied term of 'merchantable quality' with bought by description from a seller who the term 'satisfactory quality'. deals in goods of that description, there is an implied condition that the goods shall be of 2. METHODOLOGY merchantable quality and S. 16 (2) (c) The overall approach to this research is specifies that “there is an implied condition based on the traditional black letter approach that the goods shall be free from any defect and the legal research methodology. The rendering them merchantable, which would relevant statutory provisions and case law not be apparent ona reasonable examination are critically analyzed through the of the sample”. comparative analysis method. Qualitative data was collected through a review of The same term was included in the SGA and primary sources; national and foreign in 1987 the UK Law Commission Report on statutes, case law, and secondary sources; Sale and Supply of Goods stated that the books with critical analysis, law journals and term 'merchantable quality' should be conference papers. The scope of this 275 research is limited to the impact of changing Further, it should be examined whether the the implied term in a contract for sale of term 'merchantable quality' matches the goods from 'merchantable quality' to current business world. Since the enactment 'satisfactory quality'. Inaccessibility of Sri of the SGO and Sale of Goods Act of 1893, Lankan case law and scholarly work in the Nature of the goods sold and bought has relation to the SGO, operated as the main varied and number of consumer sales have restriction for the development of this drastically grown. As pointed out correctly research. by the UK Law Commission Reporton the Sale and Supply of Goods in 1987, this term 3. RESULTS AND DISCUSSION reflects the 19th century trade and concepts 3.1 Definition of the Term of law. As mentioned earlier, the Sale of Goods Act of 1893 was adopted almost Even though the S. 15(2) specifies that good verbatim in the SGO and the former act can should of merchantable quality, the Act has be seen as a statement of principles derived not provided a definition of the term. from case law in 19th century based on However, it is defined by the Schedule 1 to disputes between merchants. Therefore, this the SGA as 'goods of any kind are of term seems more appropriate to the contracts merchantable quality within the meaning of between merchants and less appropriate in subsection (2) above if they are as fit for the the context of consumer sales. In Bristol purpose or purposes for which goods of that Tramways v. Fiat Motors Ltd (1910), Farwell kind are commonly bought as it is reasonable LJ has observed that, “merchantable quality to expect having regard to any description seems more appropriate to a retail purchaser applied to them, the price (if relevant) and all buying from a wholesale firm than to private the other relevant circumstances.' buyers, and to natural products, such as grain, wool, or flour, than to a complicated In the Sri Lankan case Assen Cutty V. Brooke machine”. Bond (1934), the judges, deriving from English cases such as Randall v. Newson 3.2 The test and the guidelines (1877) and Jones v. Just (1868) relied on the definition, “reasonably fit for the particular In addition to the absence of a definition of purpose for which it is bought". However, it the term 'merchantable quality', the SGO, in should be noted that while merchantability nowhere, has attempted to provide a hint as relates to the sale of a particular item, which to how this particular kind of quality should can be applied to many possible uses, fitness be assessed. Following this gap, parties to a for purpose covers the sale of a particular gap would have to depend upon the judicial item, whether ascertained or not, for a interpretation of the term and the judge will particular purpose. have to take the terms of the contract in to consideration while making reference to a 276 myriad of English case law to find a criteria. description of the product. These indications In some cases, judges have referred to expert made by the section, provides much clarity. testimony to assess the quality. For instance, in Kearley & Tonge v. Peter (1922), the judge The S. 2B further extends this by specifying relied on the evidence provided by a that aspects of the quality of goods includes surveyor to assess the merchantable quality their state and condition and inter alia, of the goods in question, some jam tins. several other factors, namely, This defect in the Act takes away the quality 1. Fitness for all the purposes for which of predictability in law. Further, this can goods of the kind in question are result in inconsistency. However, the same commonly supplied. fault has been remedied in the United 2. Appearance and finish. Kingdom by the SGA. After substituting the 3. Freedom from minor defects. term 'satisfactory quality' in place of 4.
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