The claimant bought machinery from the defendant which proved defective. The defendant took back the equipment and repaired it to “factory gate” standard but refused, despite repeated requests, to tell the claimant what had been wrong with it. The claimant found out informally what the problem had been, and was concerned about what effect using the defective equipment might have had on other parts of the equipment and what the effect on the manufacturer’s guarantee period might be. The claimant rejected the machinery. Was it entitled to do so?

The House of Lords held that it was. When the equipment was taken away to be repaired, the parties had entered into a separate inspection and repair agreement. It was an implied term of that agreement that, so long as the defendant performed its obligations under the agreement, the claimant would not exercise its right to rescind the contract of sale. The right to reject would be lost once the claimant accepted the goods. However, the claimant was entitled to make an informed choice as to whether to accept the goods. The defendant was under an implied obligation to provide the information sought, and failure to do so amounted to a material breach of the inspection and repair agreement entitling the claimant to reject the equipment. This was so even though the court accepted that the equipment had been repaired to “factory gate” standard.

This judgment could also be relevant in a hire purchase scenario where a borrower alleges unsatisfactory quality and demands knowledge of the defects and repairs undertaken to rectify the position. If the information is sought, it needs to be provided.

J & H Ritchie Ltd v Lloyd Ltd