George Wills & Co Ltd v Davids Pty Ltd (1957) 98 CLR 77
Contract; contents; terms implied by legislation; sale of goods; implied condition requiring delivery of goods of merchantable quality.
Facts: Davids Pty Ltd, a wholesale grocer, purchased 360 cases of beetroot canned in vinegar from George Wills. Davids intended to resell the beetroot as a retail product. However, only about a third of the cans were resold within a year. Some time later, it was found that the remaining cans had swollen and started to leak, and that bacteria had found its way into some of the cans. The cans were condemned as unfit for human consumption and had to be destroyed. Davids sued George Wills for breach of contract, alleging that the canned beetroot should have had a longer shelf life, and that having gone bad after a year, the canned beetroot was not of merchantable quality.
Issue: Did the lack of 'lasting quality' make the canned beetroot unmerchantable?
Decision: The canned beetroot was of merchantable quality.
Reason: The court found that beetroot canned in vinegar has a normal shelf life of 12 months. The court said (at [7]): "The expression 'merchantable quality', in relation to goods the subject of a contract of sale, must, obviously, constitute a reference to their condition or quality. Consequently, goods are said to be of merchantable quality 'if they are of such a quality and in such a condition that a reasonable man, acting reasonably, would, after a full examination, accept them under the circumstances of the case in performance of his offer to buy them, whether he buys them for his own use or to sell again'." Applying this test, and because the tins of beetroot supplied to Davids had a normal shelf life for this product, the court found that they were of merchantable quality.
See also Australian Knitting Mills Ltd v Grant (1933) 50 CLR 387 and David Jones Ltd v Willis (1934) 52 CLR 110.