Sale of Goods Law PDF

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Notes on the Sale of Goods Act 1893...

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CONSUMER LAW – SALE OF GOODS AND SUPPLY OF SERVICES ACT 1980 1. The Sale of Goods and Supply of Services Act 1980 (SGSSA 1980) introduced certain terms that could be implied into all contracts for the sale of goods and supply of services. WHO DOES THE SGSSA 1980 APPLY TO? 2. The Sale of Goods and Supply of Services Act, 1980 only applies to transactions between consumers and sellers. 3. The Acts were passed to protect consumers’ rights when dealing with sellers. 4. This means that every consumer has ‘statutory rights’ whenever they buy anything, so even if a shop says that it will not exchange anything, the shop is still bound by the terms of Sale of Goods and Supply of Services Act 1980. 5. The Act consists of two pieces of legislation, the Sale of Goods and Supply of Services Act 1980 and the Supply of Services Act 1980. DEFINITIONS 6. Section 1(1) of the SGA 1893 says that a contract for the sale of goods is when a seller transfers or agrees to transfer ownership of goods to a buyer “for a money consideration called the price” 7. The goods to be sold must be given a price tag or price. IMPLIED TERMS OF THE SALE OF GOODS AND SUPPLY OF SERVICES ACT 1980

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8. Sections 12-15 of the SGSSA,1980 implies TERMS into every consumer contract.

SECTION 12 - SELLER’S GOOD TITLE and NEMO DAT QUOD NON HEET 9. An implied condition under section 12 is that the seller has the right to sell the goods, (i.e. that he/she honestly has possession of the goods); Rowland v Divall (1923). 10.

Divall sold a car which had unknown to him been stolen and

sold it to Rowland. Rowland went on to sell it to a third party. The true owner of it later recovered it from the third party. Rowland refunded the money to the third party. Rowland then sued Divall for the full price that he had originally paid for the car. Held: Rowland was entitled to recover the whole purchase price of the car. 11.

This rule in section 12 that the seller must have good title to

the goods that they are selling comes from the rule known as Nemo Dat Quod Non Habet. 12.

The nemo dat rule is that the transferor of goods cannot pass

a better title than he himself possesses. The rule represents the common law’s traditional favour of the preservation of property rights. 13.

There are some circumstances in which a seller may sell

goods which he does not have any right to sell. In these circumstances the law has to decide which of two innocent parties to favour: the buyer or the original owner.

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14.

It is at this stage that the nemo dat quod non habet rule

comes into play. 15.

The rule can be demonstrated by the case of Greenwood v

Bennett (1973).1 16.

In this case the original owner of a Jaguar car (Bennett)

entrusted it to a man named Searle for repairs to be carried out. Searle then used the car for his own purposes, crashed it and caused extensive damage. Searle then sold the car to Harper, who owned a garage, for £75. Harper did not realise that Searle was not the owner of the car. Harper then spent £226 repairing the car and sold it on to a finance company. It was held by the court that the car belonged to Bennett as Searle did not have title and could therefore not transfer that title to Harper. For the same reason, Harper could not transfer title to the finance company. Bennett was therefore able to recover the car but had to compensate Harper for the work done to it.2 17.

Free from encumbrances – an implied warranty that the

goods are free from any debts owed to third parties. 18.

Quiet possession – an implied warranty that the buyer will

have no one interfering with their right to use the goods.

SECTION 13 – SALE BY DESCRIPTION 19.

Where goods are sold based on a written description, there is

an implied condition that they will be exactly like the description in real life. This is very important in relation to labels and packaging of goods. T.O’Regan & Sons Ltd v Micro-Bio (Ireland) Ltd (1980) 1

This case is an example of Restitution of Unjust Enrichment. Where Contract law overlaps with Consumer Law in the Sale of Goods and Supply of Services Act 1980. 2

https://www.lawteacher.net/free-law-essays/commercial-law/the-nemo-dat-quod-non-habet-rulecommercial-law-essay.php

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20.

O’Regan informed Micro-Bio that they required a product in

order to vaccinate baby chickens against bronchitis. 21.

Micro-Bio recommended a vaccine which O’Regan used,

however a large number of the chickens treated with the vaccine died. 22.

Tests later showed that the vaccine supplied by Micro-Bio was

a much stronger vaccine used to vaccinate adult chickens. 23.

Held: there had been a breach of the condition of the contract

as to the description, since the vaccine (which turned out to be for adult chickens) sold did not correspond with the description (which said the vaccine was for baby chickens). SECTION 14 – QUALITY OF GOODS 24.

Goods must be of merchantable quality – goods must

have all the parts they are meant to have, e.g. a car should have an engine McCullough Sales Ltd v Chetham Timber Co (Ire) Ltd (1983) 25.

McCullough sold a man-made building material, called

Celuform to Chetham. The plastic substance designed as an alternative to timber was supplied with special nails but the nails proved to be unsuitable for concrete walls in Ireland. Chetham refused to pay for the Celuform. McCullough sued for the money he was owed. 26.

Held: the materials supplied were not of merchantable quality

and not fit for purpose for which they were required. Egan v McSweeney (1956) 27.

Egan purchased coal from McSweeney. When it was lit, some

of the coal exploded and Egan was struck by flying particles,

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which led to the loss of her right eye. She sued McSweeney for damages. 28.

Held: the goods did not meet the implied condition of

merchantable quality in that the coal was not fit for its ordinary use, i.e. to burn in a domestic fire. McSweeney was liable to compensate Egan for personal injuries suffered by her. 29.

Goods must be fit for purpose – goods must be able to

perform the function they are bought for, e.g. the car should be able to be driven. Godley v Perry (1960) 30.

Godley purchased a catapult from Perry. It broke whilst being

used by Godley and resulted in him losing an eye. 31.

Held: the catapult was not fit for purpose as it was not an

effective catapult, therefore it was in breach of section 14 of the Act. 32.

Fitness of goods for a disclosed purpose – section 14(3).

33.

If a buyer makes it known to the seller the purpose for which

the goods are being bought, then, the goods supplied under the contract shall be reasonably fit for that purpose. SECTION 15 – SALE BY SAMPLE 34.

There is an implied condition that where goods are sold by

sample, the goods will be as good a quality as those in the sample. The buyer has an implied right to examine the sample to check it for quality. Nichol v Godts (1854) 35.

Nichol entered into a contract to purchase from Godts some

foreign rape seed oil. The sample turned out not to be foreign

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rape seed oil, but the bulk of the sample was foreign rape seed oil. Nichol sued Godts for breach of condition. 36.

Held: Godts was in breach of sections 13 to 15 of the Act and

the sample did not correspond with the description of the sample, therefore Nichol did not have to pay Godts for the rape seed oil.

EXCLUSION CLAUSES 37.

Exclusion clauses in law are used in contracts where the seller

usually wants to avoid liability for if something goes wrong between the parties to the contract. 38.

Under the Sale of Goods and Supply of Services Act 1980, the

seller might try to exclude sections 13-15 of the Act when dealing with a consumer. 39.

A consumer is defined under the 1893 Act as “a party who

does not make the contract in the course of business, while the other party does (the seller), and the goods sold are ordinarily sold for private use or consumption.” 40.

The seller of the goods cannot exclude sections 13-15 of the

Sale of Goods and Supply of Services Act 1980 when doing business with the consumer. O’Callaghan v Hamilton Leasing (Ire) Ltd (1983) 41.

O’Callaghan was the owner of a take-away restaurant, leased

a drink-dispensing machine from Hamilton Leasing. The machine produced drinks which were dispensed by the plaintiff to the customer. After two payments, the machine proved defective and the plaintiff sued for breach of condition.

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42.

Held: the plaintiff had not dealt as a consumer within the

meaning of the Sale of Goods and Supply of Services Act 1980. Hamilton Leasing could not be held liable for a breach of condition, because O’Callaghan was a trader himself, not a consumer within the meaning of the Sale of Goods and Supply of Services Act 1980.

REMEDIES FOR BREACH OF SALE OF GOODS AND SUPPLY OF SERVICES ACT 1980

Consumer / Buyer’s Remedies



43.

The Consumer has a number of options:

44.

Return the item to the shop

45.

Ask for the item to be repaired

46.

Ask for a refund.

47.

The consumer should remember:

Do not attempt to repair the item yourself or give it to anyone else to repair it



Make sure that you have a proof of purchase (a receipt, cheque stub, credit card statement or invoice)

You have no grounds for redress if 

You were told about the defect before you bought the item (for example, if the goods were marked 'shopsoiled')



You examined the item before you bought it and should have seen the defect



You bought the item knowing that it wasn’t fit for what you wanted it to do



You broke or damaged the product

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

You made a mistake when buying the item (for example, if you bought an item of clothing thinking it was black when it is actually navy)



You change your mind

Retailers are not obliged to give refunds or credit notes under the above circumstances even if you show proof of purchase.3 48.

If the consumer is unhappy with the way that the shop has

handled the situation then the consumer can take a case to the Small Claims Court. 49.

The Small Claims Court handles cases for consumers up to the

value of €2000.

Seller’s Remedies 50.

A seller may sue if ownership of the goods has passed to the

buyer and the buyer wrongfully refuses to pay according to the terms of the contract. 51.

A seller can sue if the contract price is payable on a certain

day and the buyer wrongfully neglects or refuses to pay it regardless of delivery of the goods.

THE SUPPLY OF SERVICES ACT 1980 52.

Terms in a contract for the supply of services are also implied

into contracts. 53.

Section 39 of the 1980 Act implies a number of terms into

contracts where the supplier is acting in the course of his/her business. 54.

These terms include:

3

http://www.citizensinformation.ie/en/consumer_affairs/consumer_protection/consumer_rights/consumers_a nd_the_law_in_ireland.html, viewed 6 November 2014.

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ii. That the supplier has the required skill to supply the service iii. That the supplier has the due skill, diligence and care in the supply of the service iv. That the materials used are sound and fit for purpose. v. That any goods supplied under contract are of merchantable quality. 1. It is possible to exclude some of these terms from a supply contract if the parties in the contract agree by one of three methods: i. By express agreement of the parties ii. If a course of dealing indicates that such terms are normally excluded iii. If it is common to the trade to exclude such terms and this fact is known or should be known to both parties.

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