(c) That's wrong. This question involves performance and breach of statutorily implied terms.
Except in relation to consumer sales in NSW, the concept of 'merchantable quality' is not defined in the state and territory sale of goods legislation. However, the courts have defined the term in various cases, thus providing tests which can be applied to establish whether or not the jars in this case are of merchantable quality.
In Australian Knitting Mills v Grant the court said: "The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, therefore, knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonably sound order and condition and without special terms."
The facts in the case study are sufficient to indicate that this test is satisfied. In particular, it is stated that the jars are successfully used to bottle many different food products, which indicates that other buyers, acquainted with the qualities of the jars, are happy to buy them as standard jars.
In David Jones v Willis the test was differently stated. The court said: "Goods are not of 'merchantable quality' if, in the form in which they are tendered, they are of no use for any purpose for which such goods are normally used, and hence are not saleable under that description." Again, applying this test to the known facts leads to the conclusion that the glass jars, which are of use for many purposes for which such goods are normally used, are merchantable.