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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Harlingdon and Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1989] EWCA Civ 4 (15 December 1989)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1989/4.html
Cite as: [1991] 1 QB 564, [1991] QB 564, [1989] EWCA Civ 4, [1990] 1 All ER 737

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JISCBAILII_CASE_CONTRACT

BAILII Citation Number: [1989] EWCA Civ 4
Case No. 8171309

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE WEST LONDON COUNTY COURT
(HIS HONOUR JUDGE ODDIE)

Royal Courts of Justice
15th December 1989

B e f o r e :

LORD JUSTICE SLADE
LORD JUSTICE NOURSE
and
LORD JUSTICE STUART-SMITH

____________________

HARLINGDON AND LEINSTER ENTERPRISES LIMITED
Plaintiffs (Appellants)
and

CHRISTOPHER HULL FINE ART LIMITED
Defendants (Respondents)

____________________

(Transcript of the Shorthand Notes of the Association of Official Shorthandwriters Ltd., Room 392, Royal Courts of Justice and 2 New Square, Lincoln's Inn, London WC2A 3RU. Tel: 01-405 9884/5)

____________________

MR. J. CRYSTAL (instructed by Messrs. Cameron Markby, Solicitors, London EC3N 4BB) appeared on behalf of the Plaintiff (Appellant).
MR. PHILIP RUEFF (instructed by Messrs. Child & Child, Solicitors, London SW1X 8LE) appeared on behalf of the Defendant (Respondent).

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HTML VERSION OF JUDGMENT
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Crown Copyright ©

    LORD JUSTICE NOURSE: It is a matter of common knowledge that the market value of a picture rests largely on its authorship. Frequently the seller makes an attribution to an artist, although the degree of confidence with which he does so may vary considerably. In some cases the attribution may be of sufficient gravity to become a condition of the contract. In others it may be no more than a warranty, either collateral or as a term of the contract. Or it may have no contractual effect at all. Which of these is in point may depend on the circumstances of the sale; there being, for example, a difference between a sale by one dealer to another and one by a dealer to a private buyer. Remarkably, there is little authority as to the legal consequences of these everyday transactions. Here, in a sale by one London dealer to another of a picture which was later discovered to be a forgery, the judge in the court below, finding that the buyer did not rely on the seller's attribution, gave judgment for the seller. The buyer nevertheless contends that there was a contract for the sale of goods by description and a breach of the condition implied by s. 13(1) of the Sale of Goods Act 1979. He also claims that there was a breach of the condition as to merchantable quality implied by s. 14(2) of the 1979 Act.

    The trial took place in the Mayor's and City of London Court before His Honour Judge Oddie. On 19th January 1989 the learned judge delivered a very thorough judgment, in which he reviewed the evidence at length and made full and careful findings. In this court the facts can be stated comparatively briefly, mainly in the judge's own words.

    The defendant company carries on business from a gallery in Motcomb Street, London SW1, being owned and controlled by Mr. Christopher Hull. In the autumn of 1984 he was asked to dispose of two oil paintings which were described in a copy of an auction catalogue of 1980 as being the work of Gabriele Münter (1877-1962), an artist of the German expressionist school. The true position was that the painting with which this action is concerned was not a work of hers but a forgery. Mr. Hull, who specialises in the works of contemporary British artists of the younger generation, had no training, experience or knowledge which would have enabled him to conclude from an examination of the paintings whether they were by Münter or not. He took them to Christies, who expressed interest. Before that he had been told by Mr. Evelyn Joll, a director of Thomas Agnew & Sons Limited, that the plaintiff company, which carries on business as Leinster Fine Art from a gallery in Hereford Street, London W2, had a good reputation as dealers in German art. In fact they had a special interest in buying and selling German expressionist paintings. The plaintiff company is owned and run by Mr. and Mrs. Holger Braasch and in the autumn of 1984 one of their employees in the business was Mr. Klaus Runkel.

    Mr. Hull, acting on Mr. Joll's recommendation, telephoned the plaintiffs and spoke to Mr. Braasch. Mr. Hull said that he had come across, and was in the position to sell, two paintings by Gabriele Münter. Having seen the auction catalogue and consulted Christies, Mr. Hull had reasonable grounds for believing, and did believe, that they had been executed by that artist. Mr. Braasch expressed interest in the paintings. On some date at the end of November 1984 Mr Runkel visited Motcomb Street in order to view them. There he met Mr. Hull, who did not need to repeat, and did not repeat, what he had already said to Mr. Braasch about having two paintings by Münter. It was obviously and clearly understood between Mr. Runkel and Mr. Hull that the former had come to decide whether the plaintiffs might purchase a painting or paintings which the latter had said were by Münter. Mr. Hull said that he did not know much about the paintings, that he had never heard of Gabriele Münter and that he thought little of her paintings. He made it absolutely plain that he was not an expert in them. By some form of words which neither party could precisely remember at the trial, Mr. Hull to a certain extent made it clear that he was relying on Mr. Runkel.

    Mr. Runkel examined the paintings. Neither he nor Mr. Braasch had special expertise or training in the assessment of German expressionist painting, and Mr. Runkel's examination neither would nor ought to have revealed that the painting in question was not by Münter. Mr. Runkel saw a copy of the auction catalogue, in which the relevant entry (translated from the German) was:

    "VILLAGE STREET IN UPPER BAVARIA 22 000.-
    Oil on cardboard. 39 x 48 cm. - Framed. Monogrammed, bottom left: MÜ
    . Gummed label on back with stamp of the estate of Gabriele Münter.
    Alongside a massive wall surrounding a yard the street leads steeply into the background.
    Three separate women on the path. Warm sunlight from the right.
    Reproduction Table 25"

    Mr. Runkel asked no questions about the provenance of the paintings. He did not ask for any opportunity to make further enquiries. He expressed no reservations about the degree of his own knowledge or experience. Neither he nor Mr. Hull expressed any doubt as to whether either or both of the paintings were executed by Muhter. There was bargaining as to price, but Mr. Hull kept to his asking price of £6,000 for the painting in dispute. By the end of the meeting Mr. Hull and Mr. Runkel had agreed that that painting should be sold by the defendants and purchased by the plaintiffs at a price of £6,000 if and when the plaintiffs found a customer of their own who agreed to purchase it from them, failing which the painting would be returned to the defendants. That is the agreement with which this case is concerned.

    On 1st December 1984 both pictures were delivered to the plaintiffs' gallery in Hereford Street. On 3rd December the plaintiffs notified Mr. Hull that they had found a customer of their own who had agreed to purchase the painting from them and they requested Mr. Hull to make out an invoice to them. The invoice was in these terms:

    "Leinster Fine Art
    9 Hereford Road
    London W. 2.
    FFAI 84208
    3rd December 1984
    GABRIELE MÜNTER, 1877-1962
    Dorfstrasse in Oberbayern
    oil on board, 39x48cm,
    MS No 961
    £6,000 "

    The judge found that no addition was made to the terms of the sale when the invoice was made out. It merely gave effect to the earlier agreement between Mr. Hull and Mr. Runkel. The judge found that both at the time when the agreement was made and subsequently when the invoice was made out both Mr. Hull and Mr. Runkel believed that the painting was by Milnter and that, if either had not believed that, the deal would not have been made. He made the following further findings:

    "In my judgment Runkel must have known and accepted that Hull was disclaiming any judgment, knowledge or private information which would or could have grounded the latter's earlier statement to Braasch that he had two paintings by Gabriele Mtinter for sale ...
    "I think the only conclusion which can be drawn from the unusual facts of this case is that it was Runkel's exercise of his own judgment as to the quality of the pictures, including the factor of the identity of their painter, which induced him to enter into the agreement he made with Hull. However, I am not satisfied that without the attribution, given what followed in the circumstances in which it was made, Runkel would not have purchased the painting. If it had never been made, Runkel would never have gone to see the paintings. But when he did go and examine the painting, he considered whether it was a Münter or not; he did agree to buy it, regardless of the attribution, because he relied upon his own judgment ...
    "It was reliance on his own assessment and not upon anything said by a man who had gone out of his way to stress his ignorance of the paintings which led Runkel astray."

    Thus did the judge find as a fact that the plaintiffs did not rely on the description of the painting as one by Gabriele Münter. They relied only on their own assessment. The rest of the story can be briefly told. In February 1985 the plaintiffs' purchaser sent the painting for examination by the Gabriele Münter - und Johannes Eichner - Stiftung in Munich, which is the keeper of the entire estate of Gabriele Münter. By a letter of 26th February the Stiftung's director, Dr. Armin Zweite, informed the purchaser that he and two other experts had independently of one another formed the view that the painting was a forgery. This information was passed back to Mr. Braasch, who in March took the picture back and refunded the purchase price to the purchaser. Mr. Braasch then asked Mr. Hull to take back the picture and refund the £6,000, but that request was refused. Proceedings were commenced by a writ issued on 11th September 1985, claiming repayment of the £6,000 plus expenses of £250, alternatively damages.

    Before Judge Oddie and initially in this court the plaintiffs' case was put in four different ways. First, it was said that there was a contract for the sale of goods by description within s. 13(1) of the 1979 Act; secondly, that the painting was not of merchantable quality within s. 14(2) and (6); thirdly, that there was a breach of the implied condition that the painting would be reasonably fit for a particular purpose made known to the defendants within s. 14(3); and, fourthly, that the defendants made an actionable misrepresentation inducing the plaintiffs to enter into the contract and entitling them to recover damages under the Misrepresentation Act 1967. Judge Oddie held in favour of the defendants on all four points. In this court the third and fourth points were abandoned by Mr. Crystal, for the plaintiffs. We have therefore to consider only the questions of sale by description and merchantable quality.

    S. 13(1) of the Sale of Goods Act 1979 is in these terms:

    "Where there is a contract for the sale of goods by description, there is an implied condition that the goods will correspond with the description."

    The sales to which the subsection is expressed to apply are sales "by description". Authority apart, those words would suggest that the description must be influential in the sale, not necessarily alone, but so as to become an essential term, i.e. a condition, of the contract. Without such influence a description cannot be said to be one by_ which the contract for the sale of the goods is made.

    I think that the authorities to which we were referred are consistent with this view of section 13(1). In Varley v. Whipp (1900) 1 QB 513 the defendant agreed to buy from the plaintiff a reaping machine, which the defendant had not seen, but which the plaintiff told him had been new the previous year and had only been used to cut 50 or 60 acres. On delivery the machine was rejected by the defendant, who complained that it was very old and had been mended. He returned the machine and the plaintiff sued to recover the price. It was held by the Divisional Court of the Queen's Bench Division, on appeal from the county court, that there had been a contract for the sale of goods by description and, there having been no acceptance of the machine by the defendant, that the property had not passed to him, so that the plaintiff could not recover the price. At p.516,Channell J. said:

    "The term 'sale of goods by description' must apply to all cases where the purchaser has not seen the goods, but is relying on the description alone. It applies in a case like the present, where the buyer has never seen the article sold, but has bought by the description. In that case, by the Sale of Goods Act, 1893, s.13, there is an implied condition that the goods shall correspond with the description, which is a different thing from a warranty. The most usual application of that section no doubt is to the case of unascertained goods, but I think it must also be applied to cases such as this where there is no identification otherwise than by description."

    Bucknill J. agreed. In that case section 13 was held to apply to a contract for the sale of specific goods, that is to say goods identified and agreed on when the contract was made, which had not been seen by the buyer. Channell J. said that the buyer had been "relying" on the description alone, and that he had bought "by" the description. The buyer's reliance on the description showed that it was an essential term of the contract. Other authorities show that s.13(l) may apply to a contract for the sale of specific goods which have been seen by the buyer, provided that their deviation from the description is not apparent on a reasonable examination; see Chalmers' Sale of Goods 18th edition p.120 and the cases cited in footnote (a), to none of which we were referred in argument. We were, however, referred to another authority in the same category; see Couchman v. Hill (1947) 1 KB 554, where the plaintiff purchased from the defendant at auction a heifer which was described in the sale catalogue as "unserved". Later, having been found to be in calf, she died as a result of carrying it at too young an age. After the plaintiff had overcome an objection which is immaterial for present purposes, it was held by this court that the description of the heifer as unserved constituted a condition of the contract. At p.559, Scott L.J., with whose judgment Tucker and Bucknill L.JJ. agreed, said:

    "..... as a matter of law, I think every item in a description which constitutes a substantial ingredient in the 'identity' of the thing sold is a condition ...."

    We may be sure that the heifer had been seen by the buyer, but that the fact of her being in calf was not apparent on a reasonable examination. The buyer must have relied on the description. Although he did not rely on the description alone, it was held to be a substantial ingredient in the identity of the heifer or, if you prefer, an essential term of the contract.

    The authority whose facts bear the closest resemblance to those of the present case is Leaf v. International Galleries (1950) 2 KB 86, where the decision went off on another point and is something of a disappointment to our present enquiry. In 1944 the plaintiff purchased a painting of Salisbury Cathedral from the defendants, who erroneously, although innocently, represented to him that it had been painted by John Constable. In 1949 the plaintiff, having been informed that the painting was not by Constable, returned it to the defendants and asked for a refund of the price. On the defendants' refusal to make a refund, the plaintiff sued in the county court for rescission of the contract and repayment of the price. He did not make an alternative claim for damages. This court, without deciding whether the equitable remedy of rescission on the ground of innocent misrepresentation was available to a buyer who had taken delivery of the goods, held that the plaintiff, not having rejected the painting within a reasonable time, must be deemed to have accepted it within what is now s.35 of the 1979 Act. The claim for rescission was therefore bound to fail.

    That ground of decision, and herein lies the disappointment, made it unnecessary for the court to decide whether the attribution to Constable was a condition of the contract or a warranty, a question on which the views expressed were not unanimous. Moreover, there was no reference to a sale by description. At p.89, Denning L.J., who delivered the leading judgment said:

    "In my opinion, this case is to be decided according to the well known principles applicable to the sale of goods. This was a contract for the sale of goods. There was a mistake about the quality of the subject-matter, because both parties believed the picture to be a Constable; and that mistake was in one sense essential or fundamental. But such a mistake does not avoid the contract: there was no mistake at all about the subject-matter of the sale. It was a specific picture, 'Salisbury Cathedral'. The parties were agreed in the same terms on the same subject -matter, and that is sufficient to make a contract: see Solle v Butcher.

    "There was a term in the contract as to the quality of the subject-matter: namely, as to the person by whom the picture was painted - that it was by Constable. That term of the contract was, according to our terminology, either a condition or a warranty. If it was a condition, the buyer could reject the picture for breach of the condition at any time before he accepted it, or is deemed to have accepted it; whereas, if it was only a warranty, he could not reject it at all but was confined to a claim for damages.

    "I think it right to assume in the buyer's favour that this term was a condition ..."

    At p.92, Jenkins L.J. thought that the representation was of great importance and that it went to the root of the contract and induced the plaintiff to buy. Later he agreed with the county court judge that the representation amounted to a warranty. At p.95, Evershed M.R. thought that the representation was either a warranty or not, or equivalent to a warranty or not. These observations are not very helpful. For present purposes, the most that can be made of the case is to say that, had it been necessary, Denning L.J. would very probably have held that there had been a sale by description within s.13(1).

    In Gill & Duffus S.A. v. Berger & Co. Inc. (No. 2) (1984) AC 382, the facts of which need not be stated, Lord Diplock, with whose speech the other members of the House of Lords agreed, said this of s.13, at p.394 B:

    " ... while 'description' itself is an ordinary English word, the Act contains no definition of what it means when it speaks in that section of a contract for the sale of goods being a sale 'by description'. One must look to the contract as a whole to identify the kind of goods that the seller was agreeing to sell and the buyer to buy. ... where, as in the instant case, the sale (to use the words of section 13) is 'by sample as well as by description', characteristics of the goods which would be apparent on reasonable examination of the sample are unlikely to have been intended by the parties to form part of the 'description' by which the goods were sold, even though such characteristics are mentioned in references in the contract to the goods that are its subject matter."

    These observations, in emphasising the significance to be attached to the word "by", show that one must look to the contract as a whole in order to identify what stated characteristics of the goods are intended to form part of the description by which they are sold.

    We were also referred to the decision of Sellers J. in Joseph Travers & Sons Ltd. v. Longel Ltd. (1947) 64 TLR 150, where it was held that, since the buyers had placed no reliance on a descriptive name for rubber boots, the sale was not one by description. The decision is chiefly of value for Sellers J.'s approval of the following passage in Benjamin on Sale 7th edition, at p.640:

    "Sales by description may, it seems, be divided into sale: 1. Of unascertained or future goods, as being of a certain kind or class, or to which otherwise a 'description' in the contract is applied. 2. Of specific goods, bought by the buyer in reliance, at least in part, upon the description given, or to be tacitly inferred from the circumstances, and which identifies the goods.

    "So far as any descriptive statement is a mere warranty or only a representation, it is no part of the description. It is clear that there can be no contract for the sale of unascertained or future goods; except by some description. It follows that the only sales not by description are sales of specific goods as such. Specific goods may be sold as such when they are sold without any description, express or implied; or where any statement made about them is not essential to their identity; or where, though the goods are described, the description is not relied upon, as where the buyer buys the goods such as they are."

    It is suggested that the significance which some of these authorities attribute to the buyer's reliance on the description is misconceived. I think that that criticism is theoretically correct. In theory it is no doubt possible for a description of goods which is not relied on by the buyer to become an essential term of a contract for their sale. But in practice it is very difficult, and perhaps impossible, to think of facts where that would be so. The description must have a sufficient influence in the sale to become an essential term of the contract and the correlative of influence is reliance. Indeed, reliance by the buyer is the natural index of a sale by description. It is true that the question must, as always, be judged objectively and it may be said that previous judicial references have been to subjective or actual reliance. But each of those decisions, including that of Judge Oddie in the present case, can be justified on an objective basis. For all practical purposes, I would say that there cannot be a contract for the sale of goods by description where it is not within the reasonable contemplation of the parties that the buyer is relying on the description. For those purposes, I think that the law is correctly summarised in these words of Benjamin, which should be understood to lay down an objective test:

    "Specific goods may be sold as such ... where, though the goods are described, the description is not relied upon, as where the buyer buys the goods such as they are."

    In giving his decision on this question, Judge Oddie said:

    "There can clearly be a sale by description where the buyer has inspected the goods if the description relates to something not apparent on inspection. Every item in a description which constitutes a substantial ingredient in the identity of the thing sold is a condition."

    Later, having said that he had not been referred to any similar case where a sale in reliance on a statement that a painting was by a particular artist had been held to be a sale by description, the learned judge continued:

    "In my judgment such a statement could amount to a description and a sale in reliance upon it to a sale by description within the meaning of the Act. However, on the facts of this case I am satisfied that the description by Hull before the agreement was not relied upon by Runkel in making his offer to purchase which was accepted by Hull. I conclude that he bought the painting as it was. In these circumstances there was not in my judgment a sale by description."

    I agree. On a view of their words and deeds as a whole, the parties could not reasonably have contemplated that the defendants were relying on the plaintiffs' statement that the painting was by Gabriele Münter. On the facts which he found the judge could not, by a correct application of the law, have come to any other decision.

    I turn to the claim under s. 14, subsections (2) and (6) of which are in these terms:

    "(2) Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition -
    (a) as regards defects specifically drawn to the buyer's attention before the contract is made; or
    (b) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal.
    "(6) Goods of any kind are of merchantable quality within the meaning of subsection (2) above if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances."

    As to these provisions, it is clear that neither of the exceptions from subsection (2) applies to this case. The defendants therefore accept that there was an implied condition that the painting should be of merchantable quality. The dispute is as to whether there was a breach of the condition or not, for which purpose it is necessary to consider subsection (6). The first question which arises out of the words of s.14(6) is for what purpose or purposes are paintings of this kind commonly bought. The second question is whether this painting was as fit for that purpose or those purposes as it was reasonable to expect having regard to any description applied to it, the price (if relevant) and all the other relevant circumstances. Those were both questions of fact to be decided by the judge, who answered them thus:

    "In my view the purpose or purposes for which goods of this kind are commonly bought are the aesthetic appreciation of the owner or anyone else he permits to enjoy the experience when the picture is displayed for view. Having regard to ... the description before the agreement was entered, the price and all other relevant circumstances disclosed by the material facts of this transaction, I am not satisfied that this painting was not of merchantable quality."

    The first of these findings was attacked by Mr. Crystal on the ground that the purpose for which a painting is commonly bought by one dealer from another is resale. I see some force in that attack, but all that it means is that the purpose or purposes contemplated by s.14(6) are either resale alone or resale and aesthetic appreciation together. In either case, I do not think that Judge Oddie's second finding is invalidated. It is true that the painting was defective in that it was not the work of the artist by whom it appeared to have been painted. I agree with Denning L.J. in Leaf v. International Galleries that that was a defect in the quality of the painting. But it was not one which made it unsaleable. The evidence was that it could have been resold for £50 to HOC Admittedly that would have been a very long way below the &6,000 which the plaintiffs paid for it. But the question whether goods are reasonably fit for resale cannot depend on whether they can or cannot be resold without making a loss. Nor did the defect make the painting unfit for aesthetic appreciation. It could still have been hung on a wall somewhere and been enjoyed for what it was, albeit not for what it might have been.

    I do not think that the views which I have so far expressed are affected by the regard which s.14(6) requires there to be had to the description applied to the painting, its price and any other relevant circumstances. I will take those matters in turn. I will assume that a description which is not relied on by the buyer can nevertheless be one which is "applied to" the painting. But having held that the sale was not made by_ that description, I cannot think that it would be right, in having regard to it, to give it the significance which it would have had if s.13(1) had applied. I arrive at a similar view in regard to the price. Having been prepared to pay £6,000 in reliance only on their own assessment, the plaintiffs cannot use their own i error of judgment as a basis for saying that a painting which would otherwise be reasonably fit for resale or for aesthetic appreciation is thereby rendered unfit for those purposes. As for any other relevant circumstances, I do not think Mr. Crystal suggested that there were any in the present case. In the result, I would also reject the plaintiffs' claim under s.14(2). Judge Oddie advanced two further grounds for rejecting the claim under s.14(2), of which only one is now relied on by Mr. Rueff on behalf of the defendants. As to that ground, the judge said:

    "I am not persuaded that the meaning of the words 'merchantable quality' relate to anything beyond the physical qualities of the goods sold. In my view such physical qualities would not include the fact that the painting was executed by a particular artist. If so, the fact that it was not so executed would not mean that it was not of merchantable quality."

    In seeking to support the judge's view of this question, Mr. Rueff relied on the decision of the Court of Session in Buchanan-Jardine v. Hamilink (1983) SLT 149. But the facts there were very different and I do not think that the decision can be said conclusively to support the general proposition advanced by the judge. Since it is unnecessary for me to express a view as to that proposition, I prefer not to do so. Although that is enough to dispose of this appeal in favour of the defendants, I desire to add some general observations about sales of pictures by one dealer to another where the seller makes an attribution to a recognised artist. The huge additional value of an authentic attribution has, from the earliest periods of European art, seduced a corresponding volume of skill and energy into the production of fakes, even in the lifetime of the artist. An early example was Durer (1471-1528), who had to enlist the support of the Emperor Maximilian I in order to prevent the imitation of his woodcuts and engravings. With the great expansion in royal and noble collections which took place in the 18th century, faking became an art of its own. It has even been known for a faker, Hans van Meegeren who between 1935 and 1945 produced forgeries of the works of Vermeer, to become almost as famous as the artist himself. Modern advances in technology, while in some respects increasing the possibilities of detection, have in others assisted the faker to apply his skill with ever increasing ingenuity. Even if fakes are put on one side, many old master paintings cannot be safely attributed to a particular member of a group of artists, some of whom may still remain obscure.

    All this is a matter of common knowledge amongst dealers in the art market and, I would expect, amongst all but the most inexperienced or naive of collectors. It means that almost any attribution to a recognised artist, especially of a picture whose provenance is unknown, may be arguable. In sales by auction, where the seller does not know who the buyer will be, the completeness with which the artist's name is stated in the catalogue, e.g. "Peter Paul Rubens", "P.P. Rubens" or "Rubens", signifies in a descending scale the degree of confidence with which the attribution is made. Nowadays an auctioneer's conditions of sale usually, perhaps invariably, so declare and, further, that any description is an opinion only. But in sales by private treaty by one dealer to another there is no such practice. That would suggest that there the seller's attribution is not a matter of importance. Indeed, Mr. Evelyn Joll, who gave evidence at the trial as to the professional practices of art dealers, went further. The effect of his evidence was that neither of the conditions implied by ss.13(1) and 14(2) could apply to a sale by one dealer to another. He said that an art dealer's success depended on, and was judged by, his ability to exercise his own judgment. It was not customary for a dealer to rely in any way on the judgment or representations of the dealer from whom a picture was being purchased.

    Understandably enough, the judge was not satisfied on Mr. Joll's evidence that there was any usage or custom in the London art market which would exclude the application of the material provisions of the 1979 Act. But he did, I think, accept it as showing that many dealers habitually deal with each other on the principle caveat emptor. For my part, being confident that that principle would receive general acceptance amongst dealers, I would say that the astuteness of lawyers ought to be directed towards facilitating, rather than impeding, the efficient working of the market. The court ought to be exceedingly wary in giving a seller's attribution any contractual effect. To put it in lawyers' language, the potential arguability of almost any attribution, being part of the common experience of the contracting parties, is part of the factual background against which the effect if any, of an attribution must be judged.

    I would dismiss this appeal.

    LORD JUSTICE STUART-SMITH: The principal issue in this appeal is whether the sale of the painting Dorfstrasse in Oberbayern was a sale by description, the name of the artist, Gabriele Münter, being part of that description. If it was, it is common ground that the painting did not correspond with the description; it was a fake.

    S.13(l) and (3) of the Sale of Goods Act 1979 provide:

    "(1) Where there is a contract for the sale of goods by description, there is an implied condition that the goods will correspond with the description.
    (3) A sale of goods is not prevented from being a sale by description by reason only that, being exposed for sale or hire, they are selected by the buyer."

    Every item in a description which constitutes a substantial ingredient in the "identity" of the thing being sold is a condition. (See per Scott L.J. in Couchman v. Hill (1947) 1 KB 554 at p.559). That the identity of the artist who painted a picture can be a substantial ingredient in the identity of the thing sold seems to be beyond question. And it was so regarded by Denning L.J. in Leaf v. International Galleries (1950) 2 KB 86 in which at p.89 he said:

    "There was a term in the contract as to the quality of the subject matter; namely as to the person by whom the picture was painted - that it was by Constable."

    Most of the essential facts are to be found clearly set out in paragraph 9 of the judge's careful judgment and have been fully set out in the judgment of Nourse L.J.; I need not repeat them.

    The learned judge's conclusion on the question of sale by description is to be found in the following passage of his judgment (page 30 of the bundle):

    "In my judgment such a statement (that the painting was by Münter) could amount to a description and a sale in reliance upon it to a sale by description within the meaning of the Act. However on the facts of this case I am satisfied that the description by Hull before agreement was not relied upon by Runkel in making his offer to purchase which was accepted by Hull. I conclude that he bought the painting as it was. In these circumstances there was not in my judgment a sale by description. It follows that there was no breach of it even though the painting did not correspond with the description. Even if contrary to my earlier conclusion the description in the invoice was made prior to the agreement I am satisfied that in those circumstances Runkel did not rely upon it and there was still no sale by description or breach of any implied condition under Section 13."

    I have not found this last sentence easy to follow since the judge had already expressly held that the invoice gave effect to what had been orally agreed earlier and nothing was added. Be that as it may, the nub of his conclusion is that Runkel did not rely on the description but on his own judgment as to the authorship of the painting. For my part I have great difficulty in understanding how the concept of reliance fits into a sale by description. If it is a term of the contract that the painting is by Münter, the purchaser does not have to prove that he entered into the contract in reliance on this statement. This distinguishes a contractual term or condition from a mere representation which induces a purchaser to enter into a contract. In the latter case the person to whom the representation is made must prove that he relied upon it as a matter of fact. Mr. Rueff sought to support the judge's conclusion that reliance was an essential ingredient in a sale by description. He referred us to Joseph Travers & Sons Ltd. v. Longel Ltd. (1948) 44 TLR 150, where Sellers J. cited with approval a passage from Benjamin on Sale 7th Ed. p.641 as follows:

    "Sales by description may, it seems, be divided into sales: 1. Of unascertained or future goods, as being of a certain kind or class, or to which otherwise a 'description' in the contract is applied. 2. Of specific goods, bought by the buyer in reliance, at least in part, upon the description given, or to be tacitly inferred from the circumstances, and which identifies the goods.
    "So far as any descriptive statement is a mere warranty or only a representation, it is no part of the description. It is clear that there can be no contract for the sale of unascertained or future goods except by some description. It follows that the only sales not by description are sales of specific goods as such. Specific goods may be sold as such when they are sold without any description, express or implied; or where any statement made about them is not essential to their identity; or where, though the goods are described, the description is not relied upon, as where the buyer buys the goods such as they are."

    In that case although the footwear were described as "waders" both parties knew that they were not waterproof, this being apparent from the nature of their construction having been specially made to go over boots and protect the wearer from gas. It could not therefore be implied from in the description "waders" that the goods would be waterproof. If both parties know that the description is in fact a misdescription, then no doubt there is not a sale by description. But that was not the position here. The judge found in terms that both parties believed that the painting was by Münter and Runkel made his offer on the basis that it was.

    In my judgment the matter can be tested in this way. If following the telephone conversation Runkel had arrived at the Respondent's gallery, seen the painting, bargained about the price and agreed to buy it, it seems to me beyond argument that it would have been a sale by description. And indeed Mr. Rueff was at one time disposed to concede as much. Had the invoice been a contractual document, as it frequently is, again it seems to me clear that the sale would have been a sale by description. In fact the invoice was written out subsequently to the oral contract; but the judge held, rightly as it seems to me, that it gave effect to what had been agreed. It was cogent evidence of the oral contract.

    How does it come about that what would otherwise be a sale by description in some way ceased to be one? It can only be as a result of the conversation between Hull and Runkel before the bargain was actually struck. If Hull had told Runkel that he did not know one way or the other whether the painting was by Hunter in spite of the fact that he had so described it or that he could only say that the painting was attributed to Münter, and that Runkel must make up his mind for himself on this point, I can well see that the effect of what had previously been said about the identity of the painter might have been cancelled or withdrawn and was no longer effective at the time of the contract. But Hull did not say that, as the judge found. And I cannot see that this is the effect of what was said. Merely to say that he knew nothing of the painter and did not like her paintings does not in any way to my mind necessarily mean that he was cancelling or withdrawing what he had previously said, based as it was on the auction catalogue. Nor does the fact that it was recognised that the appellants were more expert in German expressionist art than Hull advance the matter. It would in my judgment be a serious defect in the law if the effect of a condition implied by statute could be excluded by the vendor's saying that he was not an expert in what was being sold or that the purchaser was more expert than the vendor. That is not the law; it has long been held that conditions implied by statute can only be excluded by clear words. There is nothing of that kind in this case.

    Moreover, the question has to be asked: expert in what? No doubt the appellants were knowledgeable and experienced in the sort of prices at which a painting by Gabriele Hunter could be sold and might well know where to find a buyer. These would be important matters in an art dealer's expertise. It does not follow that such a dealer has expertise in deciding whether a picture is genuine or a fake; and the judge found that the appellants did not have such expertise.

    No doubt the initial telephone conversation was an invitation to treat; but it was an important part of the negotiations. It was, as the judge said, obvious and clearly understood by both Runkel and Hull that the former had come to decide whether the appellants might purchase a painting described by Hull as by Hunter. That being so, I can see no reason why Runkel should apply his mind to the question whether the picture was genuine or not and there was nothing in the subsequent conversation that required him to do so or put him on notice that he should. No doubt he exercised his judgment to the effect that the appellants could find a buyer and make a profit on the deal; but that was on the basis that the painting was genuine. I can find no evidence that justified the judge in finding that he made up his own mind and relied upon his own judgment to the effect that the painting was genuine. And it seems to me to be quite contrary to his evidence.

    The respondents adduced the evidence of Mr. Joll to the effect that on the London art market it was the custom and practice as between dealers for the purchaser to make up his mind as to the genuineness of a painting whatever was said by the vendor, and he took the risk of its being a fake, even if the vendor described the painting as having been by a named artist. In other words, despite the Sale of Goods Act, caveat emptor. If this evidence had been accepted, then no doubt the appellants would have failed. But the judge rejected it.

    For these reasons I consider that the judge reached the wrong conclusion on this issue and I would allow the appeal. In reaching this conclusion I am in no way influenced by the fact that the judge's decision appears to produce an unjust result. It is trite that hard cases make bad law. But it is undoubtedly a hardship on the appellants, who have refunded the price to their purchaser, that they are left holding the loss, when the respondents or their client would appear to have a claim over against those who sold the painting to them. In these circumstances I propose to deal quite briefly with the alternative claim that the goods were not of merchantable quality. S.14(2) of the Sale of Goods Act 1979 provides as follows

    "Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition-
    a) as regards defects specifically drawn to the buyer's attention before the contract is made; or
    (b) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal."

    The respondent admitted that there was such a term; but they denied breach.

    Whether goods are of merchantable quality is determined by s.14(6) as follows:

    "Goods of any kind are of merchantable quality within the meaning of subsection (2) above if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances."

    The judge rejected the appellants' arguments on two grounds. First, he held that merchantable quality did not relate to anything beyond the physical quality of the goods sold. It was a picture and fit for use as such. He cited no authority for this proposition. Mr. Rueff has relied upon the case of Buchanan Jardin v. Hamilink (1983) SLR 149. In that case the seller had sold a farm together with the livestock. There was an implied term that the livestock should be of merchantable quality. The vendor contended that there was a breach because after the sale the Health Authority had issued a "stop notice" which prevented the animals for the time being from being moved from the farm. The First Division of the Court of Session rejected this argument. The animals were not unsaleable. There was merely a temporary ban on their movement. At page 153 Lord Cameron said:

    "These provisions in subsections (1) and (2) (of s.14 of the Sale of Goods Act) would appear to me to lead to the inference that merchantable quality relates to the physical quality of the goods themselves and not to external circumstances which might affect their saleability."

    While I have no doubt that his decision in that case was correct, I cannot see that it is necessary to confine quality to the physical quality. In that case the stop notice did not affect the quality of the goods at all. It was quite external to them. But the question whether something is genuine or a fake is a quality of the goods themselves. I do not therefore agree with the judge on this ground.

    Secondly, he held that the painting was of merchantable quality because the purpose or purposes for which pictures are commonly bought is for aesthetic appreciation of the owner or anyone else he permits to enjoy the experience when the picture is displayed for view; and the painting was fit for that purpose. If the sale was simply for the specific picture an article consisting of oil on board without any description as to the identity of the artist, then I would agree with the judge's conclusion. The question of merchantability of goods was considered recently in this court in Rogers v. Parish (Scarborough) Ltd. (1987) QB 933, a case referred to in Mr. Rueff's skeleton argument but upon which no argument was addressed to us by counsel. In that case the goods were a Range Rover bought for a sum in excess of £14,000. At p.944 D Mustill L.J. said:

    "Starting with the purpose for which 'goods of that kind' are commonly bought, one would include in respect of any passenger vehicle not merely the buyer's purpose of driving the car from one place to another but of doing so with the appropriate degree of comfort, ease of handling and reliability and, one might add, of pride in the vehicle's outward and interior appearance. What is the appropriate degree and what relative weight is to be attached to one characteristic of the car rather than another will depend on the market at which the car is aimed.
    To identify the relevant expectation one must look at the factors listed in the subsection. The first is the description applied to the goods. In the present case the vehicle was sold as new. Deficiencies which might be acceptable in a secondhand vehicle were not to be expected in one purchased as new. Next, the description of 'Range Rover' would conjure up a particular set of expectations, not the same as those relating to an ordinary saloon car, as to the balance between performance, handling, comfort and resilience. The factor of price was also significant. At more than £14,000 this vehicle was, if not at the top end of the scale, well above the level of the ordinary family saloon. The buyer was entitled to value for his money."

    These words are appropriate here. If for the reason given by the judge this was not technically a sale by description within s.13(1) of the Act because of the absence of reliance, the court is nevertheless entitled and required to consider the matters listed in the subsection. These include the description of the painting as being by Münter and the price. Moreover both parties knew perfectly well that the purpose of the sale was resale as dealers, and not merely putting the picture on the wall and enjoying its aesthetic qualities. I cannot think that it is a reasonable expectation in these circumstances that a fake which is virtually worthless is fit for the purpose of being sold as a painting by Münter at a price of £6,000. Accordingly in my judgment the appellant is entitled to succeed on this ground also. I would allow the appeal.

    LORD JUSTICE SLADE: The facts of this case appear very clearly from the judgments of Nourse L.J. and Stuart-Smith L.J., and I need not repeat them.

    I will consider first the claim based on s.13(1) of the Sale of Goods Act 1979. The contract whereby the defendants agreed to sell and the plaintiffs agreed to purchase the picture was concluded at the meeting between Mr. Runkel and Mr. Hull at Motcomb Street.

    It is common ground that in a telephone conversation which preceded and led up to this meeting, Mr. Hull had told Mr. Braasch that he was in a position to sell two paintings "by Gabriele Münter". The fact that this information had been given must be very relevant in considering whether the contract concluded at the subsequent meeting was "a contract for the sale of goods by description" within the meaning of s.13(1) of the Sale of Goods Act 1979. However, it cannot be conclusive. The question must fall to be determined by reference to the circumstances as they existed when the contract was actually made.

    There is no statutory definition of the phrase "a contract for the sale of goods by description". One has to look to the ordinary meaning of words and the decided cases for guidance as to its meaning. I think that the guidance to be derived from the cases cited to us which have been referred to by my Lords is surprisingly limited. There may be little difficulty in applying the phrase in the case of a sale of unascertained or future goods, since there can be no contract for the sale of goods of these categories, except by reference to a description of some sort. The greater difficulty is likely to arise in cases such as the present where the sale is of "specific goods" within the meaning of s.61 of the Sale of Goods Act 1979 - that is to say, "goods identified and agreed on at the time a contract of sale is made".

    There is no doubt that a contract for the sale of specific goods is capable of falling within s.13(1). However, if it is to do so, it has to be a contract for sale "by description" according to the ordinary meaning of language. The word "by", which was stressed by Lord Diplock in Gill & Duffus S.A. v. Berger & Co. Inc. (No. 2) (1984) AC 382 at p.394 in my judgment makes this much plain: The fact that a description has been attributed to the goods, either during the course of negotiations or even in the contract (if written) itself, does not necessarily and by itself render the contract one for "sale by description". If the court is to hold that a contract is one "for the sale of goods by description", it must be able to impute to the parties (quite apart from s.13(1) of the Sale of Goods Act 1979) a common intention that it shall be a term of the contract that the goods will correspond with the description. If such an intention cannot properly be imputed to the parties, it cannot be said that the contract is one for the sale of goods by description within the ordinary meaning of words. The practical effect of s.13(1), as I understand it, is to make it plain (if it needed to be made plain) that in a case where such a common intention can be imputed, the relevant term of the contract will be a condition as opposed to a mere warranty.

    In Couchman v. Hill (1947) 1 KB 554 (at p.559) Scott L.J. said:

    "..... as a matter of law, I think every item in a description which constitutes a substantial ingredient in the 'identity' of the thing sold is a condition ...."

    With all respect, I find the meaning of this passage (which was quoted by Judge Oddie at p.15 without express acknowledgment) rather obscure. However, I do not think that my analysis in the immediately preceding paragraph is inconsistent with it. It is certainly not inconsistent with the statement of Lord Wright in a case not cited to us, Grant v. Australian Knitting Mills Ltd. (1936) AC 85 (at p.100) where he said: "a thing is sold by description, though it is specific, so long as it is sold not merely as the specific thing, but as a thing corresponding to a description ...." The essential ratio of the learned judge's decision on the s.13(1) point is to be found in three sentences at p.15 of his judgment:

    "However, on the facts of this case I am satisfied that the description by Hull before the agreement was not relied upon by Runkel in making his offer to purchase which was accepted by Hull. I conclude that he bought the painting as it was. In these circumstances there was not in my judgment a sale by description."

    While some judicial dicta seem to support the view that there can be no sale by description unless there is actual reliance on the description by the purchaser, I am not sure that this is strictly correct in principle. If a party to a contract wishes to claim relief in respect of a misrepresentation as to a matter which did not constitute a term of the contract, his claim will fail unless he is able to show that he relied on this representation in entering into the contract; in general, however, if a party wishes to claim relief in respect of a breach of a term of the contract (whether it be a condition or warranty) he need prove no actual reliance.

    Nevertheless, where a question arises as to whether a sale of goods was one by description, the presence or absence of reliance on the description may be very relevant in so far as it throws light on the intentions of the parties at the time of the contract. If there was no such reliance by the purchaser, this may be powerful evidence that the parties did not contemplate that the authenticity of the description should constitute a term of the contract - in other words, that they contemplated that the purchaser would be buying the goods as they were. If, on the other hand, there was such reliance (as in Varley v. Whipp (1900) 1 QB 513, where the purchaser had never seen the goods) this may be equally powerful evidence that it was contemplated by both parties that the correctness of the description would be a term of the contract (so as to bring it within s.13(1)).

    So far as it concerns s.13(1), the issue for the court in the present case was and is, in my judgment, this: On an objective assessment of what the parties said and did at and before the meeting at Motcomb Street, and of all the circumstances of the case, is it right to impute to them the common intention that the authenticity of the attribution to Gabriele Münter should be a term of the contract of sale? The proper inferences to be drawn from the evidence and the findings of primary fact by the judge are matters on which different minds can take different views, as the cogent judgments of Nourse L.J. and Stuart-Smith L.J. have shown. However, I for my part feel no doubt that the answer to the crucial issue is No.

    There has been no challenge to the judge's findings (at p.8) as to what Mr. Hull said at the meeting:

    "Hull did say that he did not know much about the paintings. He said he had never heard of Gabriele Münter and thought little of her paintings. He made it absolutely plain that he was not an expert. By some form of words which no one can now precisely remember Hull 'to a certain extent made it clear that he was relying on' Runkel. (my emphasis).

    I can see no sufficient grounds for disturbing the inference (at p.10) of the judge, who had heard and seen both witnesses give their account of the crucial conversation, that

    "Runkel must have known and accepted that Hull was disclaiming any judgment, knowledge or private information which would or could have grounded the latter's earlier statement to Braasch that he had two paintings by Gabriel Milnter for sale."

    If at the end of that meeting an independent onlooker, who had both heard the initial telephone conversation between Mr. Hull and Mr. Braasch, and had been present throughout the meeting, had been asked whether it appeared that the one dealer (Mr. Hull) was entering into a legal commitment to the other (Mr. Runkel) as to the correctness of the attribution to Gabriele Münter, I think he would have replied, "Of course not. The description in the auction catalogue, which Mr. Runkel has seen, proves nothing and Mr. Hull has made it quite plain that he is not qualified to give any opinion of his own as to its authorship by Gabriele Münter, of whom he has never previously heard. Mr. Runkel must therefore surely realise that in proceeding with the purchase he will have to rely on his own judgment". And the judge found (at p.10) that it was in fact "Runkel's exercise of his own judgment as to the quality of the pictures, including the factor of the identity of their painter, which induced him to enter into the agreement made with Hull.

    The judge was not satisfied by Mr. Joll's evidence that there is any actual usage or custom in the London art market which would exclude the application of the material provisions of the Sale of Goods Act 1979, and his finding on this point has not been challenged. Nevertheless, it is perhaps worth noting that, while s. 6(2)(a) of the Unfair Contract Terms Act 1977 (as amended by the 1979 Act, Schedule 2, paragraph 19) provides that "as against a person dealing as consumer" obligations arising from ss. 13, 14 or 15 of the 1979 Act cannot be excluded or restricted by reference to any contract term, the definition of "dealing as a consumer" in s.12 of the 1977 Act excludes a person who makes the contract "in the course of a business". I do not say that in the present case s.13 has been excluded by any contract term; my analysis of the position is that the contract was not one for the sale of goods by description. Nevertheless, in my judgment, the provisions of the 1977 Act support the view that the very fact that two parties to the negotiations for the sale of a specific chattel are dealers in that class of chattel is a relevant factor in considering whether or not an attribution of origin made by one dealer to the other during the course of negotiation should be treated as rendering the transaction a "sale by description".

    The form of the invoice subsequently made out in favour of the plaintiffs does not, in my judgment, assist the plaintiffs' case. By that time the contract had already been concluded. While the reference to Gabriele Münter in the invoice is quite consistent with the parties' having made the origin of the picture a term of the contract, it can equally well be read as merely a convenient mode of reference to a particular picture which both parties knew to have been attributed to Gabriele Münter (and indeed both still thought to be her work: see p.8 of the judgment).

    For these reasons, I agree with the conclusions of Nourse L.J. and the learned judge that this was not a sale falling within s.l3(l) of the 1979 Act. In my view, one cannot impute to the parties a common intention that it should be a term of the contract that the artist was Gabriele Münter.

    As to the claim based on s.14, I hope that my opinion is not too simplistic, but it is very clear. The complaint, and only complaint as to the quality of the picture, relates to the identity of the artist. There is no other complaint of any kind as to its condition or quality. If the verdict of the experts had been that the artist was in truth Gabriele Münter, the claim would not have arisen. Having concluded that this was not a contract for the sale of goods by description because it was not a term of the contract that she was the artist, I see no room for the application of s.14. If the plaintiffs fail to establish a breach of contract through the front door of s.l3(l), they cannot succeed through the back door of s.14.

    I would dismiss this appeal.

    (Order: Appeal dismissed with costs).


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