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(1) Subject to the provisions of this section, in every hire-purchase or conditional sale agreement there shall be implied a term that the goods will be of merchantable quality at the time of delivery.

(2) Where the hirer or buyer has examined the goods or a sample of them before delivery, the term referred to in subsection (1) shall not be implied in respect of defects which the examination ought to have revealed.

(3) Where the goods are let or sold as second-hand goods, and the agreement contains a statement to that effect and a provision that the term referred to in subsection (1) is excluded in relation to those goods, then subject to subsection (5) of this section that term shall not be implied in relation to those goods.

(4) Where the goods are let or sold as being subject to any defect specified in the agreement (whether referred to in the agreement as a defect or by another description to the like effect), and the agreement contains a provision that the term referred to in subsection (1) is excluded in relation to those goods in respect of that defect, then subject to subsection (5) of this section that term shall not be implied in respect of that defect.

(5) The owner or seller shall not be entitled to rely on any provision in a hire-purchase or conditional sale agreement excluding or modifying the term referred to in subsection (1) unless he proves that before the agreement was made-

(a) he had brought that provision to the notice of the hirer or buyer and made its effect clear to him; and

(b) where the exclusion or modification is in relation to any defect, he had brought that defect to the notice of the hirer or buyer.

(6) A breach of any provision of this section by the owner or seller shall give the hirer or buyer a right to rescind the agreement.