Knowledge of mere rumours about possible product contamination, falling short of actual knowledge of the defect or deliberate blindness, is insufficient to break the chain of causation between a supplier's breach of the implied warranty of merchantable quality under s 19(2) of the Sale of Goods Act 1923 (NSW) and the buyer's loss. Mere carelessness by the buyer cannot suffice. An appellate court is in as good a position as the trial judge to draw inferences from circumstantial evidence, even where credit findings have been made, where the critical findings depend on inference rather than direct observation of demeanour.
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