Implied Terms - Sales of Goods Act PDF

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IMPLIED TERMS S.13 + S.14 SALE OF GOODS ACT 1989

Scope of Contract Express Terms

Contrac t Implied Terms

Incorporated Terms

Which act? Sale of Goods Act + Consumer Rights Act have the same implied terms as to: 

Right to sell: S.12 SGA = S.17 CRA

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Correspondence with description: S.13 SGA = S.11 CRA

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Satisfactory quality: S.14 SGA = S.s.9&10 CRA

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Match to sample: S.15 SGA = S.s.13&14 CRA

BUT – they have different remedies and legal consequences of breach Types of Contractual Terms  SGA Conditions or Warranties REPRESENTATIONS 

NOT part of the contractual terms. No automatic right to damages.

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Damages are only normally available if the representation is at fault – primary remedy rescission. But even equitable, subject to limits. WARRANTIES

TERMS 

Part of contractual terms. Party effectively promising/ guaranteeing that something is or will be so.

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Therefore automatic rights to damages if not so.

Less importance damages only

INNOMINATE / INTERMEDIATE TERMS

CONDITIONS IMPORTANT TERMS – other party’s performance is conditional on this term being performed. Therefore remedy of termination available in addition to damages- this remedy available even if breach doesn’t have serious consequences.

Terms for which the remedy isn’t prescribed in advance. Repudiation allowed if effects of breach are serious enough to deprive the innocent party of substantially the whole contractual benefit: otherwise only damages.

Correspondence with description- S.13 SGA 

Section.13 (1) - “where there is a contract for sale of goods by there is an implied term that the goods will correspond with the description”.

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Section.13 (3) - “A sale of goods is not prevented from being a sale by description by reason only that, being exposed for sale or hire, they are selected by the buyer”.

SALE BY DESCRIPTION

Words used to describe goods

Unascertained or future goods

Usually s.13 term in contract unless not substantial part of the identify of the goods sold (Reardon v Hanson)

Specific goods

Descriptive words for Identity: not mere attribute

Reliance = presumed in unseen goods

Term in contract

Future goods/unascertained goods Presumption that the sale is by description. Usually S.13 applies unless described are not regarded as substantial part of the identity of the goods but just describe their quality – (Reardon v Hanson) then the sale will not be sale of goods.

Specific Goods Would deem the contract as a sale by description and if described words are goods to describe the goods.

1. IDENTITY NOT ATTRIBUTE (quality or fitness for purpose) Ashington v Christopher (1972) Breach in quality 2. RELIANCE Harlington v Christopher (1991) Sold a painting believed to have been by a German artist but examined by buyer and held not to be a ‘sale by description’, no reliance. Description must have sufficient to come an essential term. Need to prove reliance.

Another test for reliance

Beale v Taylor (1991) relied on description

 sale by description despite it was specific and seen because B

Brewer v Man (2012)

 buyer found out original engine wasn’t in the car.

HELD: original engine wasn’t in the description. Evidence of vintage car custom such car did correspond with its description.

3. TERM IN THE CONTRACT Description must constitute part of the contract and not a mere misrepresentation. Leading test: whether words were reduced into writing or not – T& J Harrison v Knowles (1918)  Said the net weight was 460 tonnes  Was not reduced into writing = representation net weight was actually 360.  Seller not in breach of S.13

General rule of S.13  Strict compliance with description Leading test is to check whether words constituted a ‘substantial part of the identity. Reardon v Hansen (1976)  Under construction  To Charter the tanker under construction in ‘Yard No 354 at Osaka’  It was to large so had to be built at another shipyard in Oshima Held: the shipyard did not form part of description Test “substantial part of the identity of the thing that was sold” despite that goods were future. Arcos v EA Ronasen (1933)  Sale for 1 inch timber staves to be used for making of barrels  Thickness of some of the supplied timer staves were 1.06 inch but they were fit to be used for barrels Held: breach of S.13 = certainty in business for strain contracts Having certainty is essential especially when it comes to ‘string contracts’. If not in compliance with the description then can reject the goods. Strict compliance exception  Subject to de minimis rule = 5% less or more on the quantity in international trade is acceptable

Remedies - section.13 S.13 is a CONDITION  Breach of which is a repudiatory breach gives rise to the right to repudiate (terminate) the contract  Buyer can select to reject goods, not to pay the price (or take the paid price back “refund”) and claim damages OR accept the goods and claim damages

2ND IMPLIED TERM – S.14 SGA - ‘Goods must be of satisfactory quality’ 

S.14 (2) - Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.

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S.14 (2A) - For the purposes of this Act, 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.

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S.14 (2B) - For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods: a) Fitness for all the purposes for which goods of the kind in question are commonly supplied, b) Appearance and finish, c) Freedom from minor defects, d) Safety, and e) Durability

Two Elements 1. IDENTIFICATION – S.14 (2) satisfactory quality- (objective test)

 standard of a

reasonable man. Application of satisfactory quality S.14 (2A) – whether the seller sells goods in the course of business hours – then S is warranting the goods must be of satisfactory quality, if not can sue and reject goods. Stevenson v Rogers (1999) – interpreting course of business hours (broad scope)  S (fisherman)  Sold his first fishing boat Held: in the course of business, although it was a once off sale and selling boats was not substantial part or regular 2. SATISFACTORY QUALITY: when is it not applicable?  When not in the course of business hours (S.14 (2)(c)) but the defect is drawn to the buyer’s attention therefore S.14 will not apply due to being informed and accepting it.  If not sold in the course of business hours then S.14 doesn’t apply as well as if the defect was not brought to the buyer’s attention. Test for S.14 satisfactory quality: meaning  Merchantable equality no longer applies – Kendall v William  New test (objective test) S.14 (2A): “they meet the standards that a reasonable man would regard as satisfactory.”  Reasonable person – judge will look at the description of the goods – Brown v Craiks AND The price of the goods – Rodgers v Parish  AND All relevant circumstances – Bramhill v Edwards 

Examples Browns v Craiks (1970) Purpose not clear Description was ambiguous Purpose not laid down in the contract therefore it was held to be of satisfactory quality Held: satisfactory quality as goods complied with description and was useable for one of their common purpose (industrial use although not to sell to dressmakers). Meaning of satisfactory quality Rodgers v Parish (1987) LJ Mustill: judge will look at the price. For higher priced products you would expect they to be perfect. Clegg v Anderson (2003) Lady Hale: high-priced quality products “the customer is entitled to expect that it is free from even minor defects, in other words perfect or nearly so”. Bramhill v Edwards (2004)  2-inch wider than legally allowed  Buyer inspected but didn’t measure  Buyer then later measured and complained Held: to be of satisfactory quality as a reasonable person would regard it as of satisfactory quality.

Aspects of quality - S.14 (2B) Look at the packaging of the goods. For the purposes of this Act, 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 the kind in question are commonly supplied,  Appearance and finish,  Freedom from minor defects,  Safety, and  Durability. TEST: - all aspects of quality must be measured against the matric of the product e.g. price, age of product and description.

Aspects of quality - S.14 (2B) State and Condition Niblett v Confectioners (1921)  Tinned milk with labels Nissly  Infringing Nestle’ trade mark Held: not of merchantable quality (known now satisfactory quality).

Breach of S. 14 (2) as well as S. 12 (1) right to sell.

Aspects of quality S.14 (2B) Fit the Purpose Britivic v Messer (2002)  Carbone dioxide was supplied for sparkling drinks  It was contaminated with benzene  It did not infringe the relevant British standard and was not posing any threat to health Held: was NOT of satisfactory quality as it was commercially necessary for B to recall all drinks from sale for fear of adverse publicity Contrast with BRAMHILL + EDWARDS A reasonable man would have regarded it as unsatisfactory

Jewson v Boyham (2003)  Supplied electric boilers  Installed in 13 flats  Boilers worked perfectly well  But B then realised that boilers gave the flats low home energy ratings which affected selling the flats to customers Held: were of satisfactory quality because they fitted for their normal (usual) purposes

FREE FROM MINOR DEFECTS Leading case: Clegg v Anderson  New yacht for £236,000  Was delivered with a keel that was 800kg overweight Lady Hale: high-priced quality products “the customer is entitled to expect that it is free from even minor effects, in other words perfect or nearly so”. o

See also Rogers v Parish: new range rover had some problems in gearboxes = not satisfactory quality

Millars v Turpie 1976 SLT 66 If 2nd hand car then it could be expected to have a problem with it, but if brand new then it should be perfect, however if it did have a special discount on it then one could expect there to be a fault or something that’s made it have a reduction cost applied.

Appearance + Finish  Would expect a new car to have no scratches but and old one yes  It is ALL about the circumstances

Safety of Goods Nature and purpose of goods would affect the safety.

Durability Question of facts  nature of goods. How long the goods must remain of satisfactory quality after delivery to the buyer is dependant on the nature of goods you are dealing with. Mash v Joseph (1961) – potatoes

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Implied condition as to the fitness for a particular purpose  S.13 (3) Particular purpose = common (normal) purpose or abnormal purpose If it is common = S.14 (2) anyway applies If it is not common = S.14 (3) and the aspects for satisfactory quality in S.14 (2) also apply Test of fitness = reasonable person test equipped with all relevant circumstances (price, age of goods etc.)

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Two conditions: 1. Knowledge of S 2. Reliance of B

Particular Purpose: Reliance on the skill of Seller  S.14 (3)  Reasonable to rely on the seller – partial reliance will suffice: Aswan v (1987) 

Would be protected if not fit for their purpose....