Bernstein v Pamson Motors: Losing the Right to Reject in Time

Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220 decided that a buyer whose new car seized on a motorway after 142 miles, three weeks after delivery, had lost the right to reject it.

The goods were not of merchantable quality. The buyer nonetheless could not return them, because he had accepted them through lapse of a reasonable time, and was left with damages instead.

The case is taught for the harshness of that result and for what it provoked. It is one of the clearest examples in commercial law of a decision whose main effect was to demonstrate that the rule needed changing.

The facts

The claimant bought a new Nissan Laurel. He used it very little — the mileage at the point of failure was 142 — and three weeks after delivery the engine seized while he was driving, because sealant had entered the lubrication system during manufacture.

He sought to reject the car and recover the price. The manufacturer offered to repair it at no cost, and the repair would have restored the car completely.

The decision

Rogers J held that the car was not of merchantable quality, and that the claimant had lost the right to reject.

Under section 35 of the Sale of Goods Act, a buyer accepts goods when they intimate acceptance, when they do an act inconsistent with the seller's ownership, or when they retain the goods beyond a reasonable time without intimating rejection. Acceptance extinguishes the right to reject and leaves damages.

The critical holding was on what the reasonable time is measured against. Rogers J held it runs from delivery and is a period in which the buyer might reasonably be expected to examine the goods and try them out generally — not a period long enough to discover a particular latent defect.

Three weeks was, on that reading, more than sufficient for a car, whatever the mileage. The claimant recovered damages for the repair period and the inconvenience, and kept the car.

Why the reasoning caused difficulty

The rule as stated produces an outcome that is hard to defend in ordinary terms.

A latent defect is by definition not discoverable on examination. If the reasonable time is fixed without reference to when the defect could have been found, then a buyer of goods with a latent defect may lose the right to reject before the defect exists as far as they are aware.

The judge accepted this and regarded it as what the statute required. The commercial justification offered was certainty: a seller needs to know at what point a transaction is closed, and a rule under which the rejection window opens whenever a defect surfaces would leave sales open indefinitely.

The counter-argument, made repeatedly afterwards, is that certainty for the seller was being purchased with the buyer's only effective remedy, and that damages for a car the buyer no longer trusted were not equivalent to a refund.

What happened to the rule

The 1994 amendment. The Sale and Supply of Goods Act 1994 amended section 35 to provide that in deciding whether a reasonable time has elapsed, a material question is whether the buyer has had a reasonable opportunity to examine the goods for the purpose of ascertaining whether they conform. This softened the Bernstein reading, without fixing any period.

It also provided that a buyer who agrees to a repair does not thereby accept the goods, which removed a trap: before the amendment, allowing the seller to attempt a repair could itself be an act inconsistent with the seller's ownership.

Later authority. Subsequent cases treated the reasonable time as longer than Bernstein suggested, particularly for complex goods, and distinguished it on its facts. It has not been formally overruled and is generally regarded as no longer representing the position even for business buyers.

The Consumer Rights Act 2015. For consumer contracts the problem was resolved by replacing the standard with a number: a short-term right to reject exercisable within thirty days of ownership, delivery and installation being complete, with the period paused while a repair is attempted.

The Act then supplies the remaining structure — one repair or replacement, then price reduction or a final right to reject — so a consumer who loses the thirty-day window is not left with damages alone, which was the specific harshness of Bernstein.

The three routes to acceptance

Section 35 lists them and problem questions turn on which applies, so they are worth separating.

Intimation. The buyer tells the seller they accept the goods. Straightforward, and rarer than the other two, because buyers seldom say so expressly. Signing a delivery note is generally not intimation of acceptance of quality, since it records receipt, not satisfaction.

An act inconsistent with the seller's ownership. Reselling, modifying, consuming or installing goods in a way that cannot be undone. This is the route that catches commercial buyers, because incorporating a component into a finished product is frequently irreversible and happens before any defect appears.

Lapse of a reasonable time. The Bernstein route. It runs without the buyer doing anything at all, which is what makes it dangerous, and section 35(5) now requires the court to consider whether a reasonable opportunity to examine has been had.

Two protections were added in 1994 and both matter. A buyer who asks for or agrees to a repair does not accept by doing so. And a buyer who has not previously examined the goods is not deemed to have accepted them until they have had a reasonable opportunity to do so, which protects a buyer who takes delivery without inspecting.

Why rejection matters more than damages

The case is sometimes read as a dispute about form, since the claimant was made whole for the repair. That understates what was lost.

Rejection returns the price. Damages compensate for the defect and its consequences, which on these facts was the cost of repair and the inconvenience. Rejection would have returned the purchase price and released the buyer from the transaction entirely.

Rejection transfers the residual risk. A buyer who keeps a repaired vehicle keeps the risk that the repair was incomplete, keeps the effect on resale value, and keeps whatever loss of confidence follows from a catastrophic failure in a new car. None of that is readily compensated.

Rejection is the only remedy with leverage. A seller facing a credible rejection has an incentive to resolve the matter; one facing a damages claim for the cost of a repair it has already offered free has very little.

This is why the thirty-day rule was the reform that mattered. It did not change what counts as a defect; it restored a remedy that the reasonable-time standard had made unreliable.

What survives

For business-to-business sales the old framework still applies. There is no thirty-day rule, the reasonable time is a question of fact, and section 35(5) requires the court to consider whether the buyer had a reasonable opportunity to examine.

Two practical consequences follow for commercial buyers.

Inspect promptly and record it. The reasonable time runs whether or not the buyer does anything, so an inspection regime is the only protection.

Do not incorporate before inspecting. Fitting a component into an assembly is an act inconsistent with the seller's ownership, and it forecloses rejection whatever the reasonable time would otherwise have allowed. Where goods go straight into production, the inspection has to happen at goods-in or not at all.

Reject clearly and in writing. Rejection must be intimated. Continuing to use the goods while negotiating is capable of being an act inconsistent with the seller's ownership, and the 1994 amendment protects an agreed repair and not continued use.

Section 15A also sits over the whole area for non-consumers: where the breach is so slight that rejection would be unreasonable, the breach is treated as a breach of warranty and rejection is unavailable regardless of timing.

The deeper question the case raises

Behind the timing rule sits a choice about what a contract of sale is for, and it is worth drawing out because it explains why reasonable people disagreed.

On one view a sale transfers goods, and once the buyer has them the transaction is complete. Defects are then a matter of compensation, because the thing the buyer contracted for has been delivered and the seller's remaining obligation is to make good any shortfall in its quality. Damages are the natural remedy and rejection is exceptional.

On the other view a sale is a promise that the goods will be of a certain standard, and a buyer who receives goods below that standard has not received what was promised at all. Rejection is then the natural remedy, and damages are the fallback where return is impractical.

English law has moved from the first position towards the second for consumers and has stayed closer to the first for commercial parties. That is a defensible division: a business buyer can inspect, insure and price the risk, and values certainty in its own supply chain; a consumer can do none of those things.

Bernstein is the case where the first view was applied to a consumer, and the legislative response was to say that it should not have been.

How it is examined

The case appears wherever a buyer wants a refund and not a repair.

Establish the breach first, because rejection is a remedy and needs one. Then fix the date: a consumer contract after 1 October 2015 runs on the thirty-day rule and the case is relevant only as history. A business contract runs on section 35 as amended, and the argument is about what a reasonable opportunity to examine required in the circumstances.

Where the facts are pre-2015 or business-to-business, set out the Bernstein reading, the 1994 amendment that qualified it, and the reasons later courts have treated the period as longer. An answer that applies Bernstein as though it were the current law on a modern consumer purchase has made a dating error that the question was almost certainly designed to test.