Hamble Fisheries Ltd v Gardner ('The Rebecca Elaine') [1999] 2 Lloyd's Rep 1

Facts

• Hamble Fisheries Ltd purchased a second-hand fishing vessel, The Rebecca Elaine, from Gardner for £155,000.
• The sale contract included a clause stating the vessel was sold "as is, where is."
• After the purchase, Hamble Fisheries discovered several significant defects, including faults with the engine, hull, and electrical systems, rendering the vessel unseaworthy.
• Hamble Fisheries brought legal proceedings, claiming breach of implied terms under the Sale of Goods Act 1979, specifically that the vessel was not of merchantable quality.
• Gardner argued that the "as is, where is" clause exempted liability for any defects present at the time of sale.
• The Court of Appeal was required to determine the effect of this contractual clause and assess liability under the statutory regime.

Issues

1. Whether the "as is, where is" clause in the contract was sufficient to exclude the implied terms of satisfactory quality and fitness for purpose under the Sale of Goods Act 1979.
2. Whether the defects discovered rendered The Rebecca Elaine unmerchantable and unfit for use as a fishing vessel.
3. Whether Gardner was liable for damages arising from the sale of a defective vessel, notwithstanding the contractual exclusion clause.

Decision

• The Court of Appeal held that the "as is, where is" clause did not exclude the implied terms under the Sale of Goods Act 1979.
• The court found that, unless exclusion clauses are clear and unambiguous, statutory protections remain in effect.
• The defects in the vessel were significant enough to breach the implied terms of satisfactory quality and fitness for purpose.
• Gardner was held liable for breach of the implied terms, and damages were awarded to Hamble Fisheries.

Legal Principles

• Implied terms under the Sale of Goods Act 1979, particularly section 14(2) (satisfactory quality) and section 14(3) (fitness for purpose), apply to commercial sales unless explicitly and clearly excluded.
• General clauses such as "as is, where is" are insufficient to override statutory protections unless expressed with specific and unambiguous language.
• Liability for defective products in commercial transactions cannot easily be excluded by vague or general exclusion clauses.
• The objective standard for merchantable quality is based on a reasonable buyer’s expectations in the context of the transaction.

Conclusion

The Court of Appeal reaffirmed that sellers in commercial sale contracts cannot rely on general exclusion clauses to avoid liability for supplying goods that do not meet standards of satisfactory quality and fitness under the Sale of Goods Act 1979. Explicit and unambiguous contractual language is required to override statutory buyer protections, and significant defects rendering goods unmerchantable will result in liability, as demonstrated by the award of damages to Hamble Fisheries.