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Fitness for Purpose and the losses claimed
Jewson brought an action against Thomas Michael Kelly ("TMK")
for monies due in respect of the sale of 12 Amptec electrical
boilers intended to be fitted into a number of converted flats.
TMK had withheld the monies on the grounds that the boilers
supplied were not fit for the purpose for which Jewson knew they
were being supplied. At a meeting before the sale of the boilers,
Jewson had been informed of the intended use of the boilers and
were assured by a representative of Jewson that the boilers would
be suitable for those requirements, despite the low SAP rating, (a
rating which gives guidance on the energy efficiency of the heating
system).
Surveyors advised potential purchasers of the converted flats
that it would be difficult to obtain mortgages on flats with low
SAP ratings. This led to an inability to sell the flats. Thus, MTK
could not meet his finance repayments and the properties were
repossessed. MTK counterclaimed for damages.
Jewson contested the counterclaim, denying knowledge of the
specific purpose for which TMK required the boilers and relying on
their terms and conditions to exclude liability for indirect and
consequential loss.
The Trial Judge considered the facts in light of the Sale of
Goods Act, which implies terms of satisfactory quality of goods and
fitness for purpose into the contract. The Judge found that because
of the low SAP rating, the boilers were not of satisfactory
quality, despite operating correctly. Further, Jewson must have had
the requisite knowledge of the specific purpose for which MTK
required the boilers following the meeting, and that the boilers
were not fit for that specific purpose made clear by MTK.
Finally, the Judge held that all losses claimed by MTK were
deemed direct losses and therefore were not excluded by the
Jewson's terms and conditions. Accordingly, Judgment was given in
favour of MTK.
Conclusion
The court found that losses could extend to a claim for losses
as a result of repossession of the premises as the boilers were not
of satisfactory quality, and that such losses were direct losses.
The case illustrates the need to more closely define the limit on
liability that a business imposes in its terms to trade customers,
so that the effects of a claim can be minimised. Had liability been
limited to the cost of the boilers such a claim may have been
upheld.