Arcos v EA Ronaasen & Son  AC 470
The right to reject goods under a contract of sale.
English purchasers concluded a contract for the sale of staves of timber wood from the English agents of a Russian company for the purposes of making cement barrels, specifying staves of Russian redwood and whitewood to be of half-an-inch in thickness. A large proportion of the staves delivered were over half-an-inch and the buyer rejected them on the grounds that they did not conform to the contract’s requirement. An arbitration found that the staves were still commercially within and merchantable under the contract as they remained fit for the purposes of making cement barrels, thus the buyer could not reject them.
The question arose as to whether the buyer had the right to reject goods that do not conform to specifications within the contract for sale, yet are commercially within and merchantable under the contract’s description.
The Court held that a buyer in a contract for sale has the right to demand goods of certain specifications and is not, accordingly, bound to accept goods that do not conform to contractual specifications merely due to them being merchantable or commercially equivalent to that specification. Rather, the goods must conform to the specifications to which the parties have agreed and the contract cannot be constructed as to add a qualification of commercial equivalence that is not otherwise stipulated. On the facts, the contract for timber wood provided no elasticity in its terms and expressly specified the thickness of the wood. As the staves of wood did not conform to the contractual requirements, despite the possibility of their commercial equivalence and merchantability under the contract, the buyer had the right to reject the goods.
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