Individual Components Are Goods But Not Bespoke System As A Whole

Trebor Bassett Holdings Ltd & Cadbury UK Partnership v ADT Fire & Security plc [2012] EWCA Civ 1158

ADT supplied, for £9,000, a fire suppression system for Trebor's popcorn plant (Trebor is a subsidiary of Cadburys). A fire developed in a hopper, ADT's system did not put it out, the fire spread and the entire manufacturing plant, including Cadbury's adjacent chocolate confectionary production lines, dissolved into a sticky mess and was destroyed. Trebor/Cadburys sued in contract and tort. The High Court found that the design of the system was negligent, in that ADT had failed to use reasonable care and skill in the design. However, the Judge also found that Cadburys was negligent, indeed "woefully at fault" and "even reckless" in its failure to segregate the oil pop production area from the rest of the building and to install sprinklers. Since the contractual duty of ADT was co-extensive with its tortious duty, the Judge applied Section 1 of the Law Reform (Contributory Negligence Act) 1955 to reduce the damages payable by 75%. To avoid taking this reduction, Trebor was therefore left in the position of having to show that ADT owed contractual duties that went beyond the tortious obligation of reasonable care and skill. It raised a number of arguments, with the two relevant for this bulletin being that (i) the system was a supply of goods and so was subject to the conditions of satisfactory quality and fitness for purpose implied by S4 of the Sale of Goods and Services Act 1982 and (II) the specification amounted to a guarantee that the fire suppression system would extinguish fires.

The contract was on Cadburys' standard terms which stated that "all Goods supplied and/or Services carried out shall be of good quality and subject to the Buyer's approval and in particular must meet the governing Specification and CTB standards but without limitation must also be as required by law in respect of title, quantity, quality, purpose or description...". The opening line of the specification stated: "For the protection of the above hazard, we propose the design, supply, delivery, installation, testing and commissioning of a CO2 fire fighting system".

The Court of Appeal rejected Trebor's appeal. In relation to the two issues:

Implied terms. This was not simply the supply of an off the shelf system or product. That was clear from the specification. What was offered was, at best, a bespoke product. The important element was not so much the inherent...