Sale of Goods Act 1979 breach of warranty damages (McAlpine Grant Ilco Ltd v AFR Refrigeration Ltd)

Article summary

Commercial analysis: This analysis considers the court’s approach to the measure of loss for damages claimed under section 53(2) of the Sale of Goods Act 1979 (SGA 1979). McAlpine Grant Ilco Limited (MGI) supplied an industrial refrigeration unit to a third party (AMS) which kept high value pharmaceutical products in the unit. Soon after, the unit failed, and the goods perished. MGI settled a claim brought by AMS, and then sought to recover the settlement sum from its supplier, AFR Refrigeration Limited (AFR). At first instance, the claim failed because the losses were found to be too remote. That decision was reversed on appeal because the court had conflated the test under SGA 1979, s 53(2) with the second limb test under Hadley v Baxendale, which additionally required the court to consider whether the losses would have been in the parties’ contemplation. SGA 1979, s 53(2), however, simply required the court to determine the direct...