(a) That's right. This is a sale of goods by a seller who deals in that type of goods (B is a sawmill operator). The sale of goods legislation implies terms into such contracts, regulating the quality of the goods supplied. If the goods are described in the contract as belonging to a class or kind of goods (e.g. building timber) the sale of goods legislation makes it a condition that the goods delivered shall be of 'merchantable quality'. This condition becomes part of the contract unless the buyer inspected the goods before buying them and the defects would have been obvious. See a list of the relevant sections.
In the example, the goods bought were described as 'building timber' and A did not have the opportunity to inspect them before the sale. Accordingly the wood delivered had to be of merchantable quality.
When are goods of merchantable quality? When other buyers, knowing of any defects, would buy those goods under the same description and for about the same price such goods would fetch when in reasonably sound order. In the present case, the timber had defects that made it unusable as building timber and nobody else would buy it, even at a reduced price. Therefore the wood supplied was not of merchantable quality.