European Court of Justice Gives Preliminary Ruling in James Elliott Construction V Irish Asphalt

We reported here that a reference had been made to the European Court of Justice by the Supreme Court, seeking a preliminary ruling on the question of whether a section of the Irish Sale of Goods and Supply of Services Act 1980 is consistent with European law.

The defendant quarry owner had appealed the judgment of the High Court in 2011 in which it was held liable for loss resulting from the supply of construction materials contaminated with pyrite. Before the Supreme Court, the defendant argued that the relevant section of the 1980 Act, by which a term of merchantable quality was implied into the contract for supply of the materials, was in fact inconsistent with European law on the basis that the section should have been notified to the European Commission pursuant to the Technical Standards Directive.

In October 2016, the European Court of Justice delivered the preliminary ruling on the questions referred by the Irish Supreme Court. The court noted that the Technical Standards Directive establishes a presumption of conformity of construction products manufactured in accordance with a harmonised standard. However, this does not require a national court to disregard a national law of a general nature, such as the Sale of Goods and Supply of Services Act, which requires that a construction product should be of merchantable quality. The court did not regard the requirements under Irish law of merchantable quality construction materials to be a technical specification that required notification pursuant to the Technical Standards Directive.

The Irish Supreme Court will now be required to deal with the appeal in light of the preliminary ruling of the European Court of Justice. The Supreme Court has already indicated that it regards the defendant quarry liable for the quality of the construction materials as a matter of Irish law, which leaves the way clear for the court to confirm that finding of liability in due course.

It is striking that the basis for the quarry's liability in this case is not the express terms of the contract, but rather the term of merchantable quality implied by law. The case highlights the importance for parties and their advisers to take account, in negotiations, not only of the express terms of their contracts, but also of those terms that may be implied by law if not expressly excluded.

For further information contact Peter Kearney on

Keywords: Publication, Deirdre Ní­ Fhloinn, Construction, Commercial Litigation

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