Case of the week; G.A. Sarpong & Co v. Silver Star Auto Limited

Published August 13, 2025

Supreme Court · Civil Appeal No. J4/43/2013 · 15 January 2014 · Ghana

Introduction

When you buy something brand new in Ghana and it turns out to have a serious hidden fault, the law gives you more protection than you might think.This case examines the seller’s liability under the Ghanaian Sale of Goods Act, 1962 (Act 137) for latent defects in goods, and clarifies the distinction between a breach of a condition and a breach of a warranty in contracts for the sale of goods.

Facts

G.A. Sarpong & Co., a law firm, bought a brand-new Mercedes Benz C180 from Silver Star Auto in February 2007 under a 2-year unlimited warranty. After five months, the head gasket cracked. The parties agreed that the C180 be exchanged for a brand-new Mercedes Benz E-Class upon payment of €15,000, also under a 2-year unlimited warranty.

In May 2008, the E-Class broke down during rainfall at East Legon. Silver Star claimed water had entered the engine and kept the car for three months to import parts for repairs. The insurer covered 90% of the repair cost, and the firm paid the balance before collecting the car.

Two months later, in December 2008, the car broke down again -this time on a clear day- after a loud noise and total oil loss from the engine. Silver Star informed the insurer that the engine was damaged beyond repair.

The firm sued in the High Court for:

a) A brand-new E-Class replacement or refund;
b) Compensation for loss of use;
c) Damages for breach of condition and/or deceit.

The High Court found for the firm, ordering a brand-new replacement but denying other reliefs. The Court of Appeal agreed there was a latent defect but reduced the remedy to replacing only the engine under warranty. The firm appealed to the Supreme Court.

Holding

The Supreme Court allowed the appeal, restoring the High Court’s order for a brand-new replacement vehicle. The Court held that:
i. The engine defect was latent, existing at manufacture and undiscoverable by reasonable inspection.

ii. The defect was fundamental and rendered the vehicle non-propulsive, going to the root of the contract under sections 13(1)(a) and 49 of the Sale of Goods Act.

iii. Ghana’s Sale of Goods Act imposes a heavier seller’s duty (“caveat venditor”) than English law; liability covers all undeclared defects in both new and second-hand goods.

iv. The breach was of a condition, not a warranty – making the buyer entitled to reject the goods and demand a replacement.

v. The Court of Appeal erred in downgrading the breach to a warranty and varying the damages.

Implications of the Decision

This decision reinforces that in Ghana:

1. Latent defects in goods -even after partial repairs- can justify contract repudiation if they go to the root of the contract.
2. Under sections 13 and 49 of the Sale of Goods Act, a seller must deliver goods free from undeclared defects, regardless of whether the goods are new or used.
3. The remedy for a fundamental breach is not limited by warranty terms unless clearly disclosed at the time of contracting.
4. Ghanaian law takes a buyer-protective stance compared to English common law.

Significant Quote

“The general rule under the Ghana Sale of Goods Act 1962, distinguished from the English Sale of Goods Act 1979, is that a seller of goods in Ghana, whether new or second-hand, is liable for all defects in them. This duty is an implied condition of the contract of sale. The seller is, however, not liable for those defects which he declares or makes known to the buyer before or at the time of the contract. Again, where the buyer has examined the goods, the seller is not liable for defects, which should have been revealed by the examination. It would appear then that where the defects complained of were not declared or made known to the buyer before the contract and could not have been revealed by the buyer’s examination, if any, the seller is liable. But even so, where the seller is not a dealer in the kind of goods sold and it is established that he did not know or could not reasonably have been aware of the defects complained of, he escapes liability.”  – Ansah JSC

Commentary and Insights

This case is a strong reminder that you have a legal right to get exactly what you paid for, free from hidden defects. If a machine, delivery van, or office equipment turns out to have a serious fault that wasn’t disclosed and affects its core use, you are not stuck with it just because the seller offers a “repair under warranty.

The Supreme Court is clear: if the defect goes to the heart of the deal, you can reject the item and demand a proper replacement or refund. Sellers cannot hide behind warranty terms unless they were upfront about them from the start.

Practical Takeaway

What this means for buyers:

1.⁠ ⁠You can reject goods and demand a replacement/refund if a hidden defect affects the core function.

2.⁠ ⁠Warranty terms can not override your right to reject in cases of fundamental defects.

3.⁠ ⁠Even second-hand goods are protected under Ghana’s Sale of Goods Act unless defects were disclosed or visible.

What this means for sellers:

1.⁠ ⁠You must deliver goods free from hidden defects unless disclosed before the sale.

2.⁠ ⁠Repairs may not be enough if the defect is fundamental. Buyers can still reject the goods.

3.⁠ ⁠Being upfront about known defects protects you from liability.