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1. Breach of implied terms in sale of goods contract 1
There is a contract here between the seller of the petrol (the supermarket, ‘S’) and the buyer of the petrol, Jack. As S is selling in the course of its business, there is an implied term in that contract that the petrol is of satisfactory quality and is fit for purpose (Rule 1) 2. If 3 the television reports are correct (this must be verified) 4, and the petrol S has sold to Jack has caused his car to break down, then there has been a breach by S of this implied term as the petrol is not of satisfactory quality and is not fit for its purpose. Jack will have a cause of action against S for breach of contract.
Possible defence?
5S will not be able to use the defence that the petrol was contaminated at the terminal before it reached S, and not through any fault by S (Rule 2).
Available remedies in contract
6 a) Damages 7Jack will be able to use this cause of action to recover loss or damage resulting from the breach, that is, the sale of contaminated petrol which caused Jack’s car to break down (Rule 3). We can advise Jack that he does have the right to damages. He can seek these from S, the other party to the contract (Rule 7). The measure of damages is to put Jack into a position as if the contract had been properly performed, that is to say had the petrol been of satisfactory quality and fit for its purpose (Rule 4).
Limiting factors: remoteness and mitigation 8
In advising Jack what he can claim for, we need to consider the two limiting factors of remoteness and mitigation. The effect of Rule 5 is that Jack cannot seek to recover any loss which is too remote. The effect of Rule 6 is that Jack cannot seek to recover any loss which reasonably he could have avoided incurring. Taking each of Jack’s losses in turn: 9
- The £60 Jack paid for petrol which made his car break down is a loss directly related to the breach and so Jack should be able to recover this amount from S.
- If the television reports are correct, and the contaminated petrol caused Jack’s car to break down, this is also a loss flowing directly from the breach, and Jack should be able to recover the amount required to repair his car. However, it is likely that S will resist paying Jack the full £700. S should argue that it would have been reasonable to expect Jack to have obtained at least one other quote to check that the figure of £700 was reasonable. Jack may be able to counter this argument by finding out the average repair cost for other cars which suffered similar damage, and he can also point out that garages were busy meeting increased demands on their time as a result of the extent of the contamination (as evidenced by the fact that the garage he used ran out of spare parts). S should also want to analyse the extent of the work done by the garage. It will probably find out that Jack made the problem worse by driving the car after the damage was apparent, rather than calling breakdown services, and may resist compensating Jack for this element of the repair.
- Jack will also be able to claim damages for any other loss directly flowing from the breach, so we should ask him what other expenses he has incurred due to the breakdown. From the facts provided, we know that Jack has missed his flight. We need to advise him that while he could seek to claim this loss from S, S is likely to be advised to resist this, on the basis that it is too remote and does not flow directly from the breach. We also know that Jack is a taxi driver. On the facts it does not appear that Jack missed any work due to the breach. However if he did, again, S is likely to be advised to argue that any loss relating to this is too remote. Unless S and Jack can come to some agreement on these matters, they would have to ask a court to decide.
It may be that Jack is also party to other contracts which could help him to recover his loss. A contract of insurance may give Jack the ability to recover certain costs from the other party to that contract, the insurer. A contract of warranty may give Jack the right to recover certain costs from the other party to that contract, the car manufacturer. Jack should be asked if any such contracts exist. 10
2. Tortious action in negligence
Under Rule 7, Jack cannot claim for contractual damages against the supplier and distributor (‘D’) who supplied the contaminated petrol to S, because Jack is not a party to any contract with D 11. However, if Jack can show that D owed him a duty of care, then Jack could seek ‘compensation’ from D in the law of tort (Rule 8). Jack would have to prove that by supplying contaminated petrol to S, D breached its duty of care to Jack, the ultimate consumer of that petrol.
Available remedy in tort: damages
The measure of tortious damages would be to put Jack in the position that he would have been in had D not provided the contaminated petrol to S (Rule 9).