CONTINENTAL PLASTICS ENGINEERING CO LTD V IMC INDUSTRIES-TECHNIK GMBH FACT- In July 1998, the plaintiff company sold a plastics

machine HBD to the defendant company. The equipment was sold to the defendant company as is, as seen/inspected without warranty; delivered to factory without inspection. The cost of the machine was $40,000. The plaintiff company contended that before the machine was sold the defendant company inspected machine and certified it to be in good and perfect condition. The defendant company also held itself out as an experienced plastics engineering company capable of doing so itself. The defendant company asserts that it could only rely on the plaintiffs representation at the time of the purchase, as the machine has not been installed, and was only when the machine was installed and test run that it discovered the latent defect. The plaintiff company sued the defendant company at the High Court for the contract sum. The High Court upheld the plaintiff claimed. The COA affirmed the High Court decision. The defendant appealed to Supreme Court. ISSUES- (1) Whether or not the Defendant appellant can successfully pray on its aid Section 13 (1) of Sale of Goods Act (Act137). (2) Whether or not the defendant was unable to establish the presence of defect at the time of the contract. (3) Whether or not there were any defects in the machine. HELD The applicability of Section 13 (1) of Act 137, which states as follow

(1) Subject to the provisions of this Act and any other enactment there is no implied warranty or
condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale except as follows (a) There is an implied condition that the goods are free from defects which are not declared or known to the buyer before or at the time when the contract is made: Provided that there is no such implied condition (i) where the buyer has examined the goods, in respect of defects which should have been revealed by the examination; (ii) in the case of a sale by sample, in respect of defects which could have been discovered by a reasonable examination of the sample; (iii) where the goods are not sold by the seller in the ordinary course of his business, in respect of defects of which the seller was not, and could not reasonably have been aware. (b) Where the goods are of a description which are supplied by the seller in the course of his business and the buyer expressly or by implication makes known the purpose for which the

goods are required there is an implied condition that the goods are reasonably fit for that purpose. Whether or not at the time of the sale contract, there were defect, latent or otherwise, in the goods complained of. It follows that if there are no defects at a time; a party cannot take advantage of it. The defendant company led no evidence to prove that at the time the machine was sold there were the defect complained of. A careful examination of the defendants version of the circumstances under which it came into the transaction throws light on the improbability of its claim that the machine was, unknown to it, defective at the date of purchase. The Managing Director of the defendant company, who described himself as a competent plastic engineer who could determine whether the machine was good or not went round the machine and asked many questions which were answered and was satisfied. The plaintiff company described the defendant company assessment of the equipment as positive and that the machine was in perfect technical condition as when it was tested and repossessed. In answering the question, on the first issue as to whether or not the appellant can rely on Section 13(1) of Act 137, the Court was right because the proviso there is no such implied condition where, i) ii) iii) Goods are examined and defects should have been revealed, Sale by sample, reasonable examination should have revealed same, Where goods are not sold in the ordinary course of his business in respect of defects that the seller was not aware, The issue is did the examination reveal any defects which the appellant/defendant complains of? Or whether the examination conducted should have revealed the defects of which the appellant/defendant seeks to complain? The appellant did inspect the machine and could not detect any defect and pride themselves as an expert. Moreover the plaintiff did not induced the defendant to enter into the contract neither did the plaintiff made any misrepresentations about the quality of the machine.