Ploughing through the fine print is worth it

Catchwords: Business law, Sale of Goods Act, implied conditions, good must correspond with description, quality, fitness, sample, consumer protection, 2nd limb Hadley v. Baxendale, defect, damages in reasonable contemplation, Consumer Protection Code, exemption clause, negligence claim, mitigate loss, the “tractor factor”

New tractors these days are expensive articles. What can a farmer do if the tractor turns out to be defective after it has been purchased?

Most contracts of sale for goods of this type, exclude liability for defects on the part of the dealer. In a lot of cases, the terms and conditions of the contract will be contained on the back of the invoice for the tractor. Protection under the Sale of Goods Act – that the goods must correspond with the description (S18); that the goods are of a certain quality or fitness (S19); that the goods correspond to the sample (S20) overrides any attempt in a written contract to exclude liability. But this protection is only available to consumers. (S64) And farmers are generally non-consumers.

 However, the upside to this lack of consumer protection is that of available damages to the farmer. And they can be big, when you are dealing with large crop losses, caused by a defective tractor.

If a farmer, who is in business, makes it known to the dealer, the special purposes for which the tractor is required e.g. a cash crop, the economic loss caused by any defect, say the lost harvest, may not be too remote to claim as contractual damages, if the damages were in the reasonable contemplation of the parties. (Hadley v. Baxendale- 2nd limb)

There may also be a claim against the manufacturer or the dealer in negligence. Here again, if the damages are reasonably foreseeable and not too remote, because tractors are used for farm commerce, big damages maybe claimable.

Again any exemption clause for dealer or manufacturer liability for defects in the contract will be relevant. But the Courts have the habit of construing them against the person who is relying on the exemption clause to escape liability. So an exemption clause may not be fatal to the farmer. This is also the situation if the farmer claims for misleading or deceptive conduct in the course of business (Consumer Protection Code) by the dealer or the manufacturer because of any misrepresentation as to suitability.

Because the damages may be big, and bigger than a consumer’s damages, it is not surprising that many reputable tractor dealers are quick to supply replacement tractors to farmers, if there is a problem or defect after purchase. This gives the farmer the opportunity to mitigate any loss. The dealer and manufacturer can also avoid expensive litigation with a large downside for damages if they lose.

So if you are confronted with the “tractor factor”, call the dealer. If there’s no action, consult your Solicitor or Barrister immediately and the response maybe electric for these reasons.

Jonathan de Vere Tyndall

Article updated 7 January 2015, originally published in The Land on 7 September 2000

Editors note: The articles published contain comment only and not legal advice, for which you should retain a solicitor. No responsibility is accepted for the accuracy of the contents.