Fit for Purpose
In the recent case of Activa DPS Europe v. Pressure Seal Solutions Limited t/a Welltec Systems (UK), the Court of Appeal considered the issue of whether a buyer of goods was entitled to claim that the goods purchased were unfit for purpose, within the meaning of the Sale of Goods Act 1979, when they had nonetheless managed to re-sell them to their customers.
Pressure Seal Solutions Limited ("PSSL") had supplied various items of postal machinery, equipment and spare parts to Activa for re-sale abroad, including within the EU. It was common ground that the equipment was delivered and was not defective, but Activa had withheld payment on the basis that most of the items supplied did not have the requisite form of certification for re-sale within the EU. Accordingly, Activa alleged that PSSL had supplied goods which were not fit for purpose because, without the necessary certification, they were unsaleable.
However, Activa had managed to sell the majority of the equipment both within and outside the EU, using a form of generic certificate for EU sales, and selling a large quantity of the equipment into Norway and Africa, where no such certification was required. In the circumstances, the Court of Appeal held that Activa could not refuse payment for the goods as it was clear from the evidence that the equipment was not unsaleable and there was no breach by PSSL of the term as to fitness for purpose.
This case provides useful guidance on the issues which the Courts will take into account in determining whether there has been a breach of the terms implied by the Sale of Goods Act. Notably, buyers should exercise caution in claiming that goods are not fit for purpose, in circumstances where it can be shown that they have, in fact, been able to sell the goods to end customers, and they have not suffered any loss.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.