ON 18 AUGUST 1933, the High Court of Australia delivered Australian Knitting Mills Ltd v Grant [1933] HCA 35; (1933) 50 CLR 387 (18 August 1933).

http://www.austlii.edu.au/au/cases/cth/HCA/1933/35.html

Per Dixon J at 418:

“The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, therefore, knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonably sound order and condition and without special terms.”

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