In the every day life of people buying and selling is an action that takes place very often . Law exists ( the Sales of Goods Act 1979 ) that regulates the above and there are clear points in it which regulate differences between parties when it comes to default products and what happens in such a case, do they repair them or renew them or refund the amount paid , which means cancelling the contract .
The question in the case of Art Design & Co is if the faulty equipment can be rejected and demand damages from Dryitout Ltd on the ground of breach of contract. ‘’The Act provides that the buyer does not accept the goods simply because he asks for or agrees to their repair.”
In the case of J&H Ritchie Ltd v Loyd, 2007 the buyer bought machinery from Loyd, a seed drill and harrow. At the very early stages of delivery and using the machinery it showed that it was facing problems and not working properly and there was a problem with the harrow which the users could not identify fully. The use of the machinery continued for two more days when they realised of the serious problem it was facing and stopped using until informing the sellers. The faulty part was removed by the sellers and taken for repair.
Lloyd had the harrow repaired and informed Ritchie that it was ready for collection . Ritchie requested to know what was wrong with the part but the seller refused to provide such information saying just that the part is “factory gate specification”. Ritchie discovered by someone involved in the repair that the problem with the harrow was due to missing bearings from the manufacture stage on i.t
Ritchie knowing the problem, unofficially , and worrying about the situation ,decided to reject the part but on the basis that the seller failed to inform him about the problem of the harrow despite the efforts to be properly informed and demanded a full refund . Lloyd refused and claimed that their responsibility was to deliver the part as new and as properly working as it should have been in the beginning therefore the part should be accepted.
The Scottish Inner House stated that the part could and should have been rejected as faulty in the very early stages of the delivery as not conforming to the signed contract. Repairing the faulty part was a remedy to the breach of the contract therefore this action removed Ritchies right to reject the product and cancel the agreement.
The House of Lords approached the matter differently . Lord Hope stated that the Act identified that the repairing of the product can not be considered as an agreement acceptance of it by the buyer and ‘’ it was silent as to what should happen after the parties agree to investigate possible repair. Lord Hope considered that the situation was to be regulated by an implied term that Lloyd was under a duty to provide Ritchie with the information it sought”.
Lloyds refusal to supply the requested information was a breach of the obligation to do so and this action was consider to be a deprivation of important information that Ritchie required in order to decide between accepting or rejecting the equipment . The above justified the decision of Ritchie to proceed with the rejection even though the equipment was perfectly repaired at factory standard.
This case was approached by Lord Rodger from a different point of view . He claimed that the acceptance from the part of Lloyd to repair the equipment consisted of a new contractual agreement between the two parties and that the new agreement contain ‘’the implied term that while Lloyd performed the repairs that Ritchie would not rescind the agreement” The question at this point was if this agreement also contained any obligation from the part of Lloyd to inform Ritchie of the exact problem with the equipment. Lord Rodger did decided positive and that Lloyds behaviour was unreasonable .