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FactsEdit

Wallis viewed a used Buick car that was being sold by Stinton for £600. Wallis found the car to be in excellent condition, and agreed that he would buy the car if Stinton would arrange financing through a hire-purchase company. Karsales (Harrow) Ltd. bought the car and sold it to Mutual Finance Ltd., which then finally lent the car to Wallis on hire-purchase terms. Wallis had not seen the vehicle since his first viewing.

About a week later, the car was left outside, late at night. The following morning, Wallis inspected the car and found it to be in a substantially different state than it was when he first saw the vehicle: the bumper was being held on by a rope, the new tires were taken off and old ones put on, the radio had been removed, the chrome strips around the body were removed, and the car would not run. Wallis refused to pay for the car since it was not in the same condition as when he agreed to make the purchase.

At trial, the judge found for Karsales and entered an order requiring Wallis to make the remaining payments, which he appealed.

IssueEdit

  1. Does an exemption clause excuse a fundamental breach?

DecisionEdit

Appeal allowed.

ReasonsEdit

Denning held that Karsales was under an obligation to deliver the car in the condition that it was in when seen. Even with an exemption clause, there is always an implied term under the Sale of Goods Act that goods will be fit for their purpose and will correspond with the description, and the seller cannot rely on the exemption. As this breach goes to the root of the contract, i.e. a fundamental breach, the exemption clause does not apply.

RatioEdit

If a breach goes to the root of the contract (a fundamental breach), the exempting clause takes no effect.

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