The producer or manufacturer of a product requires legal and commercial certainty in order to make suitable arrangements for contingencies in the form of product liability in the course of business planning.
One of the problems faced by such producers is the possibility that their manufactured product, once installed in a building or on land, may be deemed by the law of the country where the product is installed to have become part of the land. If this occurs, the product may fall outside of the definition of 'goods' under that country's sale of goods legislation, or outside the definition of 'product' under its consumer protection legislation. In such cases all of the statutory rights and liabilities that were once known to and relied upon by the producer become uncertain.
The ground-breaking Chubb Case is outlined and commercially analyzed in Background to Landmark Case Explained, and has also been examined in relation to the issue of concurrent claims in contract and tort (delict) (Key to Suing for Tort), and the overlap between the concepts of merchantable/satisfactory quality and fitness for purpose under the Singapore Sale of Goods Act (Judgment Clarifies Concept of 'Merchantable Quality'). However, the case is also interesting as regards another aspect of the law relating to the sale of goods: the formulation of an appropriate test to determine whether an item is a 'good' for the purposes of the Singapore Sale of Goods Act. The judge in the Chubb Case has proposed a new element to the traditional test, which should be seriously considered.
The facts of the Chubb Case are set out in Background to Landmark Case Explained. In the course of deciding the dispute between the collective owners of the condominium estate and the suppliers of an allegedly defective videophone system, the judge considered the question of whether the videophone system, which was installed throughout the condominium estate, was a 'good' within the meaning of the Sale of Goods Act.
Under the inherited concepts of English land law in Singapore, a thing must be either a fixture - that is, land (immovable property) - or a chattel (movable property). The question that the judge considered was whether the videophone system had, by reason of it being installed in and attached to the condominium estate, become a fixture and had ceased to be a 'good' for the purpose of the Singapore Sale of Goods Act.
Under the Singapore Sale of Goods Act:
"'goods' includes all personal chattels other than things in action and money; and in particular 'goods' includes emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale and includes an undivided share in goods."
The judge approached the question systematically. First, he ruled that the inclusive definition of 'goods' means that the traditional concepts of land law are applicable to the meaning of 'good' or 'goods'. The traditional test of determining whether a thing is a fixture or a chattel is for the court to consider the degree to which the thing has been annexed (fixed) to the land and the purpose of the annexation.
After applying the traditional test, the judge came to the conclusion that the videophone system was not a fixture to the condominium estate by a chattel. He ruled that mere attachment of the videophone system to the condominium estate by its installation throughout the condominium did not exclude the videophone system from being considered as a 'good' within the meaning of the Singapore Sale of Goods Act, and that the act was thereby applicable to the dispute.
In the course of examining the traditional test of determining whether a thing was a fixture or a chattel - that is, the test of degree and purpose of annexation - the judge proposed that a third test be added. Under the proposed third test, the court would consider the functionality of the thing in question and consider a thing a 'good' if its functionality is not indefinite, but limited and intended to be replaced periodically without causing substantial damage to the immovable property.
The judge stated that under this test, things such as curtains, telephones, air conditioners, cable-television systems and sound systems (which are to some degree and purpose annexed to the land) would be considered as 'goods' within the meaning of the Singapore Sale of Goods Act.
There are two ways in which to view the third test which the judge proposed. The first is to view the judge as laying down a new interpretation of the meaning of 'good' under the Singapore Sale of Goods Act. The second is to regard the judge as merely clarifying and developing the traditional test of determining whether a thing is a fixture or a chattel. Whichever view is taken, the Chubb Case is useful in that it provides clear practical reasons why a thing, although affixed onto a building or onto land, should nevertheless be regarded as a 'good' under the Sale of Goods Act.
For further information on this topic please contact Lawrence Teh at Rodyk & Davidson by telephone (+65 225 2626) or by fax (+65 225 1838) or by email ([email protected]).