Summary

A supplier of polycarbonate mouldings to be used as housings for lights had breached express terms in its contract with a manufacturer and implied terms under the Sale of Goods Act 1979 where it had used material that did not conform to the specification required by the manufacturer. Where defects were not patent and obvious and the manufacturer had had no reason to suppose them present, he had not been negligent in failing to detect them.

Facts

The claimant lighting manufacturer (T) claimed damages for breach of contract under the Sale of Goods Act 1979 against the first (M) and second (R) defendant polycarbonate plastic moulding companies. T made floodlights with housings of polycarbonate moulded by R, who was later taken over by M. T stipulated that R should buy a specified, high quality, blended polycarbonate from a named compounder. T subsequently agreed that R could use an alternative supplier as long as the specification remained the same. R then bought polycarbonate from the first part 20 claimant/defendant (P), who had in turn bought it from the second part 20 claimant/defendant (C). The material appeared to have a quality specification generically similar to that specified by T but was in fact a low-grade polycarbonate. The specification of the materials supplied by P carried a disclaimer that the properties of the polycarbonate supplied were not guaranteed. Subsequently, many of T's customers returned the floodlights complaining of brittleness and breakage of the housings, which occurred because of the low grade of the plastic. T submitted that R knew of the specifications of polycarbonate required for the housings and not merely that the named supplier was to be used, and had failed to ensure that those specifications were met. R submitted that if there was a break in the chain of causation between it and P, then T also had broken the chain of causation between it and R by failing to test the housings, which was the true cause of T's loss. P submitted that it would have been plain and obvious to R that the polycarbonate was low-grade when it began to mould it, thus breaking the chain of causation.

Held

(1) It was an express term of T's contract with R that the polycarbonate used for the housings be of high quality, as specified, and it was an implied term that the housings would correspond with description, be of satisfactory quality, and be reasonably fit for the purpose. In breach of these terms and of s.13(1) , s.14(2A) and s.14(3) of the Act, R had supplied housings of low grade polycarbonate of insufficient quality for T's purpose and in order to save R's own costs. There were similar breaches by P of the express or implied terms in its contract with R. R had relied on the skill and judgment of P to procure polycarbonate that was fit for T's purpose. P's disclaimer did not give it or R the right to depart from the specification to such an extent that it became meaningless. (2) The poor quality of the material was the cause of the failure of the housings. T had not been negligent in failing to discover the defects and had not had a duty to test the housings, Lambert v Lewis (1981) 125 SJ 310 applied. (3) For P to succeed in its argument that there had been a break in the chain of causation there had to be a failure akin to a reckless disregard of the obvious. On the facts, R had no reason to suppose that P had supplied poor quality material, and had not gone on using it regardless. The defects were not patent and obvious. (4) C had been unaware of the ultimate use of the polycarbonate it supplied to P and was not in any breach of contract by supplying low-grade material.

Judgment accordingly.