Hardwick Game Farm v Suffolk Agricultural and Poultry Producers Association Ltd [1968] UKHL 3 (08 May 1968)

Young pheasants died after eating compound food containing toxic Brazilian groundnut meal. The case examined liability through the chain of supply under the Sale of Goods Act 1893 and Fertilisers and Feeding Stuffs Act 1926, establishing important principles on implied conditions of fitness for purpose and merchantability in commercial sales.

Facts

Young pheasants at Hardwick Game Farm died or were stunted after eating compound feeding stuffs supplied by Suffolk Agricultural and Poultry Producers Association Limited (S.A.P.P.A.). The harm was caused by aflatoxin contamination in Brazilian groundnut meal, which had been sold through a chain of merchants: Kendall and Holland Colombo (importers) sold to Grimsdale and Lillico (wholesalers), who sold to S.A.P.P.A. (compounders), who supplied the final compound food to Hardwick. The contamination was latent and unknown to all parties at the time of sale.

The Chain of Supply

S.A.P.P.A. settled the claim from Hardwick and sought to recover from their suppliers. Each party in turn sought indemnity from their suppliers. The contracts between the third and fourth parties were on the London Cattle Food Trade Association standard form, containing a latent defects clause.

Issues

1. Whether the implied condition under section 14(1) of the Sale of Goods Act 1893 (fitness for purpose) applied to sales between merchants on a commodity market.

2. Whether the goods were of merchantable quality under section 14(2).

3. Whether the latent defects clauses in the contracts excluded liability.

4. Whether the statutory warranty under section 2(2) of the Fertilisers and Feeding Stuffs Act 1926 applied to c.i.f. contracts.

5. Whether pheasants were ‘poultry’ within the meaning of the 1926 Act.

6. Whether damages for injury to pheasants were too remote.

Judgment

Section 14(1) – Fitness for Purpose

The House of Lords held that the implied condition of fitness for purpose arose in the sales between all parties. The purpose of reselling for compounding into food for cattle and poultry was a particular purpose within the section. The majority held that reliance on the seller’s skill and judgment could be inferred from the circumstances, even between fellow members of a trade association. Lord Guest dissented on this point regarding sales between Grimsdale and Kendall.

Section 14(2) – Merchantability

The trial judge’s finding that the goods were merchantable was upheld, though Lord Pearce considered the judge had applied an erroneous test by failing to consider whether buyers with knowledge of the defect would purchase without abatement of price.

Latent Defects Clauses

The House unanimously held that the latent defects clauses did not exclude the implied conditions. Following established authority, words excluding a warranty were insufficient to exclude a condition.

The 1926 Act and C.I.F. Contracts

The reasoning in Draper’s case was disapproved. The majority held that the statutory warranty under section 2(2) applied to contracts governed by English law where goods were delivered in the United Kingdom. The location of goods at the moment documents passed was an irrelevant and arbitrary test.

Pheasants as Poultry

The majority held that pheasants reared on a game farm were not poultry within the meaning of the 1926 Act.

Remoteness of Damage

Damages for injury to pheasants were not too remote. It was reasonably foreseeable that poultry food would be fed to pheasants, and the sellers should have contemplated this as a likely consequence.

Implications

This case clarified several important principles in commercial sales law. It established that the implied condition of fitness for purpose under section 14(1) can apply to sales between merchants on commodity markets where a particular purpose is made known, rejecting any automatic presumption that trade association membership negates reliance. The case also confirmed that exemption clauses referring to warranties do not exclude conditions, and that the statutory warranty under the Fertilisers and Feeding Stuffs Act 1926 applies to c.i.f. contracts where goods are delivered in the United Kingdom under contracts governed by English law.

Verdict: Both appeals dismissed. Kendall and Holland Colombo were liable to Grimsdale under section 14(1) of the Sale of Goods Act 1893 and section 2(2) of the Fertilisers and Feeding Stuffs Act 1926. Grimsdale was liable to S.A.P.P.A. on the same grounds.

Source: Hardwick Game Farm v Suffolk Agricultural and Poultry Producers Association Ltd [1968] UKHL 3 (08 May 1968)