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Issues: (i) Whether, on a sale of goods by description where the buyer had no opportunity to inspect the goods, there was an implied condition of merchantable quality and a breach thereof when the goods delivered were rotten and inferior; (ii) Whether damages for breach of warranty were to be assessed by reference to the difference between the market value of good goods and damaged goods on the date of delivery, and whether the contract was unenforceable as opposed to public policy.
Issue (i): Whether, on a sale of goods by description where the buyer had no opportunity to inspect the goods, there was an implied condition of merchantable quality and a breach thereof when the goods delivered were rotten and inferior.
Analysis: The goods were sold as masur of that year's harvest, and the buyer had no opportunity to inspect them before the bargain. In such a case, the law implies a condition that the goods shall be of merchantable quality. The goods delivered were found to be rotten and not fit for ordinary commercial use. The Court also held that the property in the goods did not pass on the date of the agreement, but only on delivery, so the deterioration could not be placed on the buyer.
Conclusion: The implied condition of merchantable quality was breached, and the buyer was entitled to rely on that breach.
Issue (ii): Whether damages for breach of warranty were to be assessed by reference to the difference between the market value of good goods and damaged goods on the date of delivery, and whether the contract was unenforceable as opposed to public policy.
Analysis: The Court rejected the public policy objection, holding that the contract did not require any illegal act and was not a contract of carriage in contravention of the control order. On damages, it applied the settled principle that compensation must place the injured party in the position he would have occupied if the contract had been properly performed. The proper measure was therefore the difference between the market value of goods of the contracted quality and the market value of the damaged goods at delivery, not the contract price. Applying that rule, the damage figure had to be recalculated on the basis of the correct market rate of the damaged goods.
Conclusion: The public policy challenge failed, and damages were payable on the market-difference basis; the decree was reduced accordingly.
Final Conclusion: The buyer's defence in diminution of price succeeded, but only to the extent of the correct market-based assessment of damages, resulting in a partial allowance of the defendant's appeal and an overall reduction of the decree.
Ratio Decidendi: Where goods are sold by description and the buyer has no real opportunity to inspect them, an implied condition of merchantable quality applies, and for breach of that condition or warranty the buyer's compensation is measured by the difference in market value between the goods as contracted for and the goods as delivered on the date of delivery.
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