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Sale of goods law

General


The law relating to the sale of goods has developed in English law over hundreds of years. Since the original Sale of Goods Act 1893, sale of goods law has been increasingly affected by legislation.

The law relating to the supply of goods to consumers has been radically reformed by the Consumer Rights Act 2015; see Sale of goods and services to consumers.

There is a legal distinction between contracts for the sale of goods and other types of contracts involving goods, such as a contract for the supply of materials and services. This distinction used to be important because sale of goods law applied to the former but not the latter. However, this distinction is less important due to changes in the law:


* Between 1677 and 1954 contracts of sale for a value over £10 were required to be evidenced in writing but contracts for work and materials were not. (the Statute of Frauds 1677 largely repealed in England and Wales by the Law Reform (Enforcement of Contracts) Act 1954)


* Further, before 1983 sale of goods contracts were governed by the Sale of Goods Acts but not other contracts involving the transfer of goods or contracts for the supply of services. However, since 1982 (Supply of Goods and Services Act 1982) the same terms as are implied in sale of goods contracts as are implied into other contracts involving the transfer of goods.

Goods v services: another distinction which has to be made is between goods and services. This can be important because the law implies different terms into contracts for the supply of services’ compared with contracts for the sale of goods. The law in the UK is not efficient in making this distinction. The question of whether software is to be classified as goods or services is a good example of this. It seems that computer software supplied in a physical medium comes within the definition of "goods" in the SGA but not if the software is delivered electronically.

The above points are illustrated by examples 1 & 2.


For a case about software, see St. Albans City Council.

Sale of goods law works by inserting into the sale contract a set of terms which are automatically implied into the contract. In principle, specific terms in the sale contract will override any implied terms, subject to the general law discussed below (e.g. misrepresentation, exclusion clauses etc.).

In the cases of sales using standard terms of business and sales to consumers, any exclusion or limitation of terms implied by the Sale of Goods Act (see below) is only valid if it meets certain reasonableness tests.

Sale of Goods Act 1979 (SGA):


The SGA implies into a contract for the sale of goods the following terms:


* Price: where the price is not specified, the buyer must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case (SGA s.8).


* Title: the seller has the right to sell the goods. There is an exception if it appears from the contract or is to be inferred from its circumstances an intention that the seller should transfer only such title as he may have (SGA s.12).


* Implied terms about quality or fitness where the seller sells goods in the course of a business (SGA s.14):
- the goods are of “satisfactory quality
- the goods are reasonably fit for a particular purpose which the buyer makes known (expressly or by implication)  to the seller.


* Sale by description: the goods will correspond with the description (SGA s.13).


* Sale by sample: the bulk will correspond with the sample in quality and the goods will be free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample (SGA s.15).

Satisfactory quality


Under the SGA, goods are of “satisfactory quality” if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.

Meaning of quality


The quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods:


* fitness for all the purposes for which goods of that kind are commonly supplied
* appearance and finish;


* freedom from minor defects;


* safety;


* durability.

Exceptions to the implied term of satisfactory quality


The implied term relating to satisfactory quality does not apply to any matter making the quality of goods unsatisfactory:


* which is specifically drawn to the buyer’s attention before the contract is made
* where the buyer examines the goods before the contract is made, which that      examination ought to reveal, or


* in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample.

Fitness for a particular purpose


The implied term that the goods are reasonably fit for a particular purpose which the buyer makes known (expressly or by implication) to the seller applies whether or not that is a purpose for which such goods are commonly supplied. There is an exception where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller.

Delivery time


The SGA [perhaps surprisingly] does not imply into a sale of goods contract an obligation to deliver within any particular time, though  probably in the absence of a specific term, the courts would imply an obligation to deliver within a reasonable time.

Rights of the buyer in case of breach of contract (EW, NI)

In the event that the seller is in breach of any of the SGA implied terms described above, the buyer’s remedy is not only to claim for damages but also to repudiate (i.e. cancel) the contract. This is because the implied terms are stated by the SGA to be “conditions” i.e. important terms of the contract which if breached go to the heart of the contract.

In the case of a sale to a business customer, the buyer will not have the right to repudiate the contract and reject the goods because of a breach of a condition, if the breach is so slight that it would be unreasonable for him to reject the goods.

Further, if the buyer has accepted the goods or part of them, the buyer will lose the right of rejection of the goods. A buyer is not treated as having accepted the goods until he has had a reasonable opportunity of examining them after delivery (if he has not previously examined them).

What is a reasonable time is not laid down and is a question to be decided in the particular circumstances.


Case: Clegg and another v Olle Andersson: read more

What's new

19/01/2017: Travel company liable for contaminated food and drink on all-inclusive holiday

Wood and another v TUI Travel plc (trading as First Choice)

Number: [2017] EWCA Civ 11

The claimants (Mr and Mrs Wood) purchased an all-inclusive holiday in the Dominican Republic including hotel accommodation from the defendant travel company. They suffered acute gastroenteritis on the holiday and brought a claim for damages under an implied condition in s 4(2) of the Supply of Goods and Services Act 1982 (the 1982 Act) that where property in goods was transferred pursuant to a contract in the course of business, the goods had to be of 'satisfactory quality'. The consequences of the illness were serious and not transitory.

Scotland


In Scotland, the position is slightly different. There is no distinction between “conditions” and other terms. However, if the breach is “material”, the buyer has the right to reject any goods delivered under the contract and treat it as repudiated.

In the case of a sale to a consumer, any breach by the seller of any term (express or implied):


* as to the quality of the goods or their fitness for a purpose;


* if the goods are, or are to be, sold by description, that the goods will correspond with the description;


* if the goods are, or are to be, sold by reference to a sample, that the bulk will correspond with the sample in quality is treated automatically as a “material” breach.

Hire purchase and hire contracts


In hire purchase agreements, there are implied terms equivalent to those described above (title, quality etc.) for sale of goods (Supply of Goods (Implied Terms) Act 1973.

There are also similar terms implied into contracts for the hire of goods (Supply of Goods and Services Act 1982)

Sales to consumers


Since the later part of the 20th century, consumers dealing with persons contracting in the course of business have acquired special legal protection. Initially introduced by domestic UK law, increasingly EU law has influenced this area.

The law relating to the supply of goods to consumers has been radically reformed by the Consumer Rights Act 2015; see Sale of goods and services to consumers.

[Page updated: 23/01/2017]

 

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