Sales and Supply of goods PDF

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Commercial Law & Intellectual Property Contract Law:    

Sale of goods Supply of goods Supply of services Domestic and International (homework only)

Marketing  Agency  Distribution  Franchising Competition Law:  Domestic  European

Sale & Supply of Goods Contracts Objectives: •

Explain the difference between the implied terms under the Sale of Goods Act 1979 & Supply of Goods and Services Act 1982

•

Explain the key principles within Unfair Contract Terms Act 1979

•

Consider & understand the inter-relationship between the implied terms and exclusion of liability in sale and supply contracts

Classification of Terms:

Terms Express Terms

Condition

Innominate

Implied Terms

Warranties

Statute, fact, Custom, Previous course of dealing.

It is not always possible for parties to state agree every single thing in an agreement and can sometime forget somethings. As a consequence of this some terms may be inserted into the contract to fill in these gaps or to reflect some requirements of the law (mostly based on public policy) – these are known as implied terms. Implied terms are those terms which have not expressly been agreed between the parties but may in some circumstances be read (implied) into the contract. In Shell UK v Lostock Garage Limited [1976] 1 WLR 1187 Lord Denning made it clear that it is not the job of the court to renegotiate a contract, as freedom of contract should prevail. The court will only imply a term into a contract for necessity purposes and not whether it is reasonable to do so.

Statutory Intervention: Implied terms – what are they? •

Sale of Goods Act 1979

•

Supply of Goods & Services Act 1982

•

Unfair Contract Terms Act 1977

•

Consumer Rights Act 2015

•

Consumer Contracts Regulations 2013

Importance of Stat provisions – •

automatic application

•

strict liability

•

limited exclusion

Types of Contracts: In order to determine what statutory provisions may or may not be implied into a contract it is important to deduce what type of contract you are considering initially.

Business 2 Business (B2B) Business 2 Consumer (B2C) Consumer 2 Consumer (C2C)*  In B2B contracts both parties are from within a business and are contracting on behalf of that business.  In B2C contracts one party is a consumer (everyday person) and the other is acting on behalf of a business.  In C2C contracts the buyer has the responsibility of ensure that the goods are of satisfactory quality. This is because of a longstanding principle called Caveat Emptor (meaning “let the buyer beware”).

Client’s Perspective:

BUYER

SELLER

Maximise effect of supplement statutory terms Minimise exclusions

Minimise effect of terms Minimise liability for breach Maximise exclusions

REMEMBER when giving advice in commercial circumstances you need to consider the implications/consequences to all parties to ensure you provide defective and fully advice to your client. What statutes are relevant: Sale of Goods Act 1979 (contract Business 2 for goods) Business Supply of Goods & Services Act (B2B) 1982 (contract for supply of service) Business 2 Consumer Rights Act 2015 Consumer (covers both contracts for (B2C) goods and supply of services) Consumer 2 Consumer (C2C)*

Caveat Emptor

1. Business to Business (B2B)

Sale of goods: S2(1) Sales of Goods Act 1979 Supply of Goods (Work & materials): S1 Supply of Goods & Services 1982

B2B Hire of goods: S6 Supply of Goods &

Supply of services: S12 Supply of Goods & Services 1982

Applies to commercial contracts in B2B contracts: transactions where all parties are acting for the purpose of their trade, business, craft or profession S2 (1) Sales of Goods Act 1979: Section 2 Contract of sale: (1)A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. There are a number of implied terms of relevance that are included in all contracts for the sale of goods. Implied Terms (SGS 1979)

Section 12

Implies that the seller has the right to sell the goods

Section 13

That the goods must be as described

Section 14(2)

That the goods are of satisfactory quality

Section 14(3)

That the goods are fit for purpose

Section 15

In sale by sample the bulk will correspond with sample

S14(2A): 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. S14(2B): Quality of goods include; (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

S14(3): There is an implied term that the goods supplied under the contract are reasonably fit for that purpose S15(2): In the case of a contract for sale by sample there is an implied term that the bulk will correspond with the sample in quality and that the goods will be free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample. Remedies (SGA 1979)

Terms implied under Ss12, 13, 14 & 15 are categoried as conditions

.

S15A states that the buyer has the right to reject the goods, terminate (repudiate) the contract and seek damages for breach.

However, if the breach is so slight that it would be unreasonable for them to reject the goods, the breach is not to be treated as a breach of condition but a breach of warranty.

Supply of Service, Hire of Goods, Supply of Goods Supply of Goods & Services Act 1982

S12(1) a relevant contract for the supply of a service includes a contract under which a person (“the supplier”) agrees to carry out a service S6(1) a relevant contract for the hire of goods means a contract under which one person bails or agrees to bail goods to another by way of hire, other than a hire-purchase agreement S1(1) a relevant contract for the transfer of goods means a contract under which one person transfers or agrees to transfer to another the property in goods

Implied Terms & Remedies

Implied Terms

• Supply of service – S13 care & skill, S14 time for performance, S15 consideration • Supply of goods/ Hire of goods – title(S2/7), description (S3/8), quality & fitness(S4/9) & sample (S5/10)

Business to Consumer (B2C)

Remedies • Any breach of implied terms will be considered a breach of condition unless the breach is so slight that it would be unreasonable to do so. (S5A/S10A/S11F)

Sale of goods: S3(1) Consumer Rights Act 2015

Supply of digital goods: S33 Consumer Rights Act 2015

B2C

Supply of services: S48 Consumer Rights Act 2015

Hire of goods: S6 Consumer Rights Act 2015

S3 (2) Consumer Rights Act 2015 (Sale of Goods) 1- This chapter applies to a contract for a trader to supply goods to a consumer. 2- It applies only if the contract is; (a) sales contract, (b) contract for the hire of goods, (c) hire-purchase agreement & (d) contract for transfer of goods. Business: includes the activities of any government department or local or public authority Trader: Person acting for purposes relating to his or her trade, business, craft or profession, whether acting personally or thorough another person in the traders name or on the traders behalf. Includes a charity Consumer: An individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.

Implied Terms for Sale of Goods (CRA 2015)

Section 9

That the goods are of satisfactory quality

Section 10

That the goods are fit for purpose

Section 11

That the goods must be as described

Section 13

Where a sample has been seen, the goods must correspond with sample seen

Section 14

Where a model has been seen, the goods must correspond the model seen

Remedies: (CRA 2015)

Section 20 & 22: Short term right to reject

Section 23: Right to repair or replacement

Sections 9 to 11 & 13, 14 of CRA Section 24: Right to price reduction

Section 20 & 24: Final right to reject

S48 Consumer Rights Act 2015 (Supply of Service) 1- …a contract for a trader to supply a service to a consumer. 2- This does not include a contract of employment/ apprenticeship.

Implied Terms & Remedies for Supply of Service (CRA 2015)

S51 R easonable price to be paid

S52 Perform ed in reasonable tim e S50 Any statement m ade by/ on behalf of the trader which affects the consumer’s decision to enter the contract is also an im plied term

S54 states that if the service does not correspond w ith the agreed contract, the consum er’s rights are as follow s;

(a) the right to require repeat perform ance (b) the right to a price reduction

S49 Reasonable Care & Skill

Exemption Clause: Generic term used to describe contractual clauses that seek to exempt/limit a party’s liability for a breach of contract.

Limitation Clause

Exclusion Clause

Limitatio n Clause A clause contained within a contract that seeks to limit one party’s liability for certain breaches of contract

Exclusion Clause A clause contained within a contract that seeks to completely exclude (avoid) one party’s liability for certain breaches of contract

Applicability: •

The law does not always allow exemption clauses to be applicable. They may sometimes be considered to be unreasonable/unfair and sever that clause(s) from the contract.

•

What does this mean? – remove it from the contract and read the contract as if it had not been included.

Validity:

(1) Has the exemption clause been incorporated into the contract (i.e. does it form part of the contract?) (2) If so, on its true construction does the exemption clause cover the breach? (ie is it appropriately worded to cover what has occurred)

(3) If so, is the exemption clause’ validity afected by statutory provisions (UCTA 1977 and/or CRA 2015)

NB perform all three steps, and in THIS order

Business 2 Business (B2B) Unfair Contract Terms Act 1977 (UCTA) (contract for goods & contract for supply of service) Business 2 Consumer (B2C) Consumer Rights Act 2015 (CRA) (covers both contracts for goods and supply of services) Step 3: Statutory Provisions...