J & H Ritchie Limited (Appellants) v. Lloyd Limited (Respondents) (Scotland)
51. The circumstance giving rise to this case is that the buyer was never given the chance to comment on the seller's findings on inspection of the harrow. The next contact between seller and buyer after 29th April 1999 came only when the seller had obtained and installed new bearings. The seller at that point (on or around 17th May 1999) contacted the buyer and informed it that the harrow had been repaired and was ready for return. So it was only then that the buyer had the chance to air any concerns. The buyer not surprisingly asked what had been wrong with the harrow, but the seller was unwilling to say. Only informally did the buyer receive information from one of the seller's employees that bearings had been missing. The buyer then asked that the seller obtain and present an engineer's report to show that there had been no consequential damage. This was refused. The buyer in these circumstances claimed on 26th May 1999 to reject the drill and harrow and to recover their price.
52. In my view, the buyer's rejection was justified. The harrow was, after its delivery to the buyer and payment of the price in March 1999, the buyer's property and at the buyer's risk, subject in each case to the buyer's right to reject it as defective. The arrangement made on 29th April 1999 was in the first instance for inspection by the seller of the buyer's harrow, to ascertain the cause of a problem which the buyer had experienced in use. The parties no doubt hoped that satisfactory repair would be possible. But in my view it was a natural implication of the arrangement made that the seller would, at least upon request, inform the buyer of the nature of the problem which required to be remedied. Indeed, I would normally have expected the seller to report such information before any repair, although it is not necessary here to decide whether the implication went so far as to require this.
53. By failing to report the result of the inspection, and by presenting the buyer with the fait accompli of repaired goods, the seller short-circuited the procedure I would have expected. By refusing to inform the buyer of the cause of the problem on request after repair, the seller was on any view in breach of the implicitly agreed procedure, and also aroused suspicion. By failing to agree to supply an engineer's report, the seller lost the opportunity to persuade the buyer to accept the goods notwithstanding the seller's failure to follow the procedure implicitly agreed.
54. In my opinion, the failure to disclose the nature of the problem was on any view a material breach of the arrangement made on 29th April 1999. Even assuming that the arrangement made on 29th April 1999 committed the buyer to accept the goods if and when the harrow could be and was satisfactorily repaired and returned, it was implicit that the buyer would be informed of the nature of the problem on request at that stage, if only to enable the buyer to decide when and how to examine or test the harrow in order to determine whether it had been satisfactorily repaired. Assuming, alternatively, that there was a duty to report the nature of the problem to the buyer before any repair, and that the buyer retained a right at that earlier point (by when the seller would have incurred very little if any extra expense) to decide whether to have the harrow repaired or to reject, the failure to disclose was material for even more fundamental reasons. There may be other possible analyses, and it is not material in this case to consider precisely which analysis might apply. All that here matters is that there was a duty to disclose which was not performed. Even though the harrow after repair was (the Sheriff Principal found) in as good as new condition, the seller's failure to follow the procedure implicitly agreed justified the buyer in refusing to accept the goods sold. The buyer was still prepared to accept the goods, if the seller at its expense obtained a clean engineer's report, but the seller refused to do this either. The buyer was in this situation justified on 26th May 1999 in rejecting the goods.