Ronaasen & Son v Arcos Ltd [1933] UKHL 1 (02 February 1933)

Facts

The appellants, Arcos, Limited (‘the sellers’), entered into a contract to sell a quantity of Russian redwood and whitewood staves to the respondents, W. N. Ronaasen & Son (‘the buyers’), for the purpose of making cement barrels. The contract specified, amongst other dimensions, that the staves were to be of “1/2 an inch” thickness. Upon delivery, the buyers measured the staves and discovered that while they corresponded with the contract in other respects, a significant proportion did not conform to the specified thickness. Only around 5% of the staves were precisely 1/2 inch thick; the vast majority (over 80%) were between 1/2 inch and 9/16 inch, with a smaller portion being even thicker. The buyers consequently purported to reject the entire consignment on the basis that the goods did not correspond with their contractual description. The sellers disputed the rejection, arguing that the staves were still commercially fit for their intended purpose and that such minor deviations were common and acceptable in the timber trade. The dispute was referred to arbitration, where the umpire found that the staves were merchantable and fit for purpose, but also found that they did not conform to the 1/2 inch description. The question for the court was whether the buyers were entitled to reject the goods.

Issues

The central legal issue before the House of Lords was whether the buyers were entitled to reject goods that were commercially usable and merchantable but did not strictly conform to the measurements specified in the contract description. This raised several key questions:

1. Does a stipulation of measurement in a contract for the sale of goods by description constitute a condition of the contract, the breach of which gives the right to reject, or is it merely a warranty, the breach of which only gives a right to claim damages?
2. Is conformity with the contractual description under section 13 of the Sale of Goods Act 1893 to be interpreted with absolute strictness, or is a ‘commercial’ or ‘substantial’ compliance sufficient?
3. Is the fact that the goods are merchantable and perfectly fit for their intended purpose relevant in determining whether there has been a breach of the condition to correspond with the description?

Judgment

The House of Lords unanimously allowed the appeal, reversing the decision of the Court of Appeal and restoring the trial judge’s finding in favour of the buyers. The court held that the buyers were entitled to reject the entire shipment of staves.

Reasoning of the Court

The Law Lords affirmed the principle of strict compliance with the contractual description in a sale of goods. The core of the judgment was delivered by Lord Atkin, who provided a definitive analysis of section 13 of the Sale of Goods Act 1893.

Lord Atkin firmly rejected the sellers’ argument that ‘substantial’ compliance was sufficient or that merchantability could cure a defect in description. He stated that the descriptive words were conditions of the contract, not mere warranties.

If the written contract specifies conditions of weight, measurement and the like, those conditions must be complied with. A ton does not mean about a ton, or a yard about a yard. … No doubt there may be microscopic deviations which business men and therefore lawyers will ignore. … But apart from this, which is protected by the rule de minimis, the question is not whether the article provided is merchantable, but whether it is the article contracted for.

He further clarified that the motive of the buyer in rejecting the goods (such as a fall in the market price) was legally irrelevant. If a contractual condition is breached, the buyer has the right to reject, regardless of their underlying reasons. The judgment emphasised that a buyer is entitled to demand goods that precisely match the contractual specification.

It was contended that in all commercial contracts the question was whether there was a “substantial” compliance with the contract: there must be some margin and the right margin is to be ascertained by the jury. In my opinion this is a mistake… If the seller wants a margin he must and in my experience does stipulate for it.

Lord Buckmaster and Lord Thankerton delivered concurring speeches, reinforcing that the words of the contract were clear and the goods tendered did not match them. The finding of the arbitrator that the staves were commercially fit for purpose was deemed irrelevant to the question of whether they met the contractual description. The buyers had contracted for staves of 1/2 inch thickness and were entitled to receive exactly that.

Implications

The decision in Ronaasen & Son v Arcos Ltd is a landmark authority in English contract law, establishing a stringent standard for compliance in the context of sale by description. Its primary implication is that stipulations as to the attributes of goods in a contract (such as quantity, measurement, or quality) are generally to be treated as conditions, not warranties. This gives the buyer a powerful right to reject goods for what might seem like minor discrepancies.

The case sharply distinguishes the condition of correspondence with description (under what was then s. 13 of the Sale of Goods Act 1893) from the conditions of merchantable quality and fitness for purpose (s. 14). It clarifies that compliance with the latter two conditions cannot remedy a breach of the first. A buyer is entitled to the precise goods they bargained for, not merely something that is ‘just as good’.

While foundational, the uncompromising strictness of this rule was later seen as capable of creating commercial injustice, allowing buyers to escape from bad bargains on purely technical grounds. This led to statutory reform in the form of the Sale and Supply of Goods Act 1994, which introduced section 15A into the Sale of Goods Act 1979. This section limits the right of a non-consumer buyer to reject goods for a breach of sections 13, 14, or 15 where the breach is so slight that it would be unreasonable for them to do so. Despite this modification, Ronaasen remains the leading authority for the default common law position and a crucial illustration of the importance of precise contractual drafting.

Verdict: Appeal allowed; the judgment of the Court of Appeal was reversed, and the judgment of Wright J., finding that the buyers were entitled to reject the goods, was restored.