Implied Terms (SGA, SGSA, CRA)

Question 1

what is the difference between a term implied in fact and a term implied in law?

Answer 1

a term implied in fact is implied to give effect to the presumed but unexpressed intentions of the parties

a term implied in law is because court or statute require this regardless of the parties’ intentions

Question 2

what are 3 common terms implied in fact?

Answer 2

(1) term implied on grounds of trade or professional custom - based on the assumption that it was parties’ intention to be bound by well-known customs of a particular trade

(2) term implied based on a course of dealing between parties if there is a consistent and regular pattern of dealing on such term over a period of time

(3) term implied to give business efficacy to a contract - it must be so obvious that it would not be sensible for the parties not to have intended this term

Question 3

what are the 3 statutes that imply terms into contracts and what do they apply to?

Answer 3

(1) Sale of Goods Act 1979 - apply to business to business contracts

(2) Sale of Goods and Services Act 1982 - apply to business to business contracts

(3) Consumer Rights Act 2015 - apply between a trader (person acting for purposes relating to their trade, business or profession) and a consumer (individual acting wholly or mainly outside their trade, business, or profession)

Question 4

SGA: what are 5 implied terms in contracts for goods?

Answer 4

(1) title

(2) correspondence of goods with description

(3) goods are of satisfactory quality

(4) goods are fit for purpose that buyer makes known to seller

(5) sale by sample: bulk corresponds to sample, and goods are free from defect making it different to sample

Question 5

SGA: what is the implied term as to title?

Answer 5

the seller has the right to sell the goods

Question 6

SGA: what is the implied term as to correspondence with description?

Answer 6

where the goods are sold by description, the goods will correspond with the description

where the goods are described as having certain characteristics and specifications, they must correspond with this description

Question 7

SGA: what is the implied term as to satisfactory quality?

and what is the test to assess this?

Answer 7

Goods sold in the course of business must be of satisfactory quality

Goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking into account any description of the goods, the price, and all other relevant circumstances

5 factors are taken into account when assessing this

but there are 2 exceptions to this

Question 8

SGA: what 5 factors are taken into account when assessing whether a reasonable person would regard the goods as satisfactory?

Answer 8

(1) fitness for all the purposes for which the goods of the kind in question are commonly used

(2) appearance and finish

(3) freedom from minor defects

(4) safety

(5) durability

Question 9

SGA: what are the 2 exceptions to the implied term that goods must be of satisfactory quality?

Answer 9

(1) there is no condition regarding defects which are specifically drawn to the buyer’s attention before the contract was made

(2) there is no condition of implied satisfactory quality if the buyer examines the goods before the contract is made regarding defects which that examination ought to have revealed

Question 10

SGA: what is the implied term regarding fitness for a particular purpose?

what is the exception to this?

Answer 10

if the buyer expressly or impliedly makes known to the seller any particular purpose for which the goods are being bought, there is an implied term that the goods are REASONABLY FIT for that purpose (whether or not that is the purpose for which the goods are commonly used)

BUT: there is no such implied condition for fitness for a particular purpose where the buyer does not rely, or it is unreasonable for him to rely, on the skill or judgement of the seller

Question 11

SGA: what is the implied term as to sale by sample? (2 terms)

Answer 11

when there is a sale by sample, there are 2 implied terms:

(1) the bulk will correspond with the sample in quality

(2) the goods will be free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample

Question 12

what are the remedies for the buyer if the seller breached a term implied by SGA? what is the qualification to this?

Answer 12

SGA implied terms are all conditions - so this allows the buyer to repudiate the contract by rejecting the goods and claiming a refund

BUT: for breach of all terms other than title, the court can decide to treat the breach as a breach of warranty and only allow the buyer to claim damages IF:

THE BREACH IS SO SLIGHT THAT IT IS UNREASONABLE FOR THE BUYER TO REPUDIATE THE CONTRACT AND REJECT THE GOODS

Question 13

can terms implied by SGA be contracted out of (excluded/ restricted)?

Answer 13

governed by UCTA 1977:

• implied term as to title cannot be contracted out of
• all other implied terms can be contracted out of subject to the requirement of reasonableness

Question 14

what 3 different contracts does the Sale of Goods and Services Act 1982 apply to?

Answer 14

(1) contracts for the transfer of property in goods

(2) contracts for the hire of goods

(3) contracts for the supply of services

Question 15

SGSA: what are the implied terms in contracts for the transfer of property in goods?

Answer 15

same as for sale of goods:

• title
• correspondence with description
• satisfactory quality and fitness of purposes
• correspondence with sample

Question 16

SGSA: what are the implied terms in contracts for the hire of goods?

Answer 16

same as for sale of goods:

• title
• correspondence with description
• satisfactory quality and fitness of purposes
• correspondence with sample

Question 17

SGSA: what are the implied terms in contracts for the supply of services? (3)

Answer 17

(1) the supplier will carry out the service with reasonable care and skill *

(2) where time of service is not fixed by contract or a course of dealing, the supplier will carry out the service within a reasonable time

(3) where consideration is not fixed by contract or a course of dealing, the party will pay reasonable charge

Question 18

what 3 types of contracts does the Consumer Rights Act 2015 imply terms into?

Answer 18

(1) contracts for goods

(2) contracts for digital content

(3) contracts for services

Question 19

CRA: what 3 terms are implied into contracts for goods?

Answer 19

(1) goods are of satisfactory quality

(2) goods are reasonably fit for any purpose which the consumer makes known to the trader that the consumer intends to use the goods for

(3) goods sold by description match the description

Question 20

CRA: what 4 remedies are available to breach of CRA implied terms in contracts for goods (‘non-conforming’), and how must the innocent party exercise them?

Answer 20

(1) Short term right to reject + refund (available for 30 days)

(2) Right to repair or replacement:

• available unless impossible or at disproportionate cost to T
• must be done in reasonable time and without significant inconvenience to C

(3) Right to price reduction OR final right to reject:

only available after:
a) one repair/replacement and goods still do not conform, or
b) repair/replacement is impossible or disproportionate to T
c) trader failed to repair/replace in a reasonable time and without significant inconvenience to C

also if final right to reject is rightfully exercised within 6 months, C gets full refund without deductions for using the goods

Question 21

can a consumer repudiate a contract if the trader breached any implied term under CRA?

Answer 21

no - C cannot treat the contract as terminated

Question 22

when can the consumer exercise a short term right to reject?

Answer 22

if T breached an implied term in a contract for goods, C can reject the goods and claim a full refund within 30 days

starting from when:
(1) ownership and possession transferred to C
(2) goods delivered to C, and
(3) any other steps required to enable C to use the goods are taken and this is notified to C

Question 23

what remedies are available to a consumer if CRA implied terms in contracts of goods are breached, and the time lapsed for short term right to reject/

Answer 23

(1) right to repair or replacement

then

(2) right to price reduction OR final right to reject - ONLY when:

a) one repair / replacement did not cure defect in goods, or
b) any repair / replacement is impossible or disproportionate to T
c) C required T to repair/replace but T did not do so in a reasonable time and without significant inconvenience to C

note: if final right to reject is exercised within 6 months, C can get full refund without deduction for use

Question 24

CRA: what 3 terms are implied into contracts for digital content?

Answer 24

(1) digital content is of satisfactory quality (meets the standard that a reasonable person would consider satisfactory)

(2) digital content is fit for purpose

(3) digital content matches any description given by T to C

Question 25

CRA: what are the remedies to C if the digital content breaches implied terms? (‘non-conforming’)
(2)

Answer 25

(1) right to repair or replacement within a reasonable time and without significant inconvenience to C unless impossible or disproportionate

then

(2) right to price reduction - only where:

a) one repair / replacement did not cure defect, or
b) any repair / replacement is impossible or disproportionate to T
c) C required T to repair/replace but T did not do so in a reasonable time and without significant inconvenience to C

Question 26

when is digital content ‘non-conforming’?

Answer 26

where implied terms (of quality, fitness for purpose, correspondence with description) are breached at any time within the 6-month period starting from when it was supplied - these are taken to have not conformed when it was supplied

Question 27

CRA: what remedies are available when a trader did not have the right to supply digital content?

Answer 27

right to receive a full refund within 14 days with no added fee

Question 27

CRA: what remedies are available if digital content damages a device or other digital content belonging to the consumer?

Answer 27

(1) repair

or

(2) compensatory payment

Question 28

CRA: what terms are implied in contracts for services? (4)

Answer 28

(1) service is performed with reasonable care and skill

(2) reasonable price is to be paid where this is not agreed

(3) service is to be provided in reasonable time where this is not fixed

(4) anything communicated to C by T about the service which is taken into account by C when deciding to contract is a term of the contract

Question 28

CRA: what 2 remedies are available to a consumer if the trader breached the requirement to perform services with reasonable care and skill?

Answer 28

(1) right to require repeat performance - within a reasonable time and without significant inconvenience to C unless impossible

or

(2) right to price reduction - only when:

a) repeat performance is impossible, or
b) trader failed to provide repeat performance within a reasonable time and without significant inconvenience

Question 29

CRA: what remedy is available to a consumer if the trader breached the requirement to perform the service within reasonable time (if not fixed by contract)?

Answer 29

right to price reduction