Sale of Goods Contracts 2 Flashcards
What is the starting point for sale of goods contracts?
S14(1) SGA 1979 - ‘caveat emptor’ - there is no general implied term about the quality or fitness for purpose of the goods supplied under a contract of sale.
Caveat Emptor explained in Smith v Hughes.
What does S14 SGA 1979 say about quality and fitness?
S14(2) - where the seller sells goods in the course of a business, there is an implied term that the goods supplied are of satisfactory quality.
S14(2A) - Goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, considering any description, the price and other relevant circumstances.
S14(3) - goods supplied in the course of business must be reasonably fit for any particular purpose of the buyer when this is expressly or impliedly made known to them and the buyer relies on the seller’s skill or judgment.
S14(6) - S14(2) & (3) are conditions.
What advice is given as to the quality of the goods?
S14(2B) SGA 1979 - the state or condition, and,
Fitness for all purposes for which the goods are commonly supplied.
Appearance and finish.
Freedom from minor defects.
Safety.
Durability.
What is the difference between satisfactory quality and fitness for purpose?
Satisfactory quality speaks to the condition of goods at the date of delivery.
Fitness for purpose invites an inquiry into the subsequent history of the goods as they are applied for the buyer’s purpose.
What is the ‘purpose’ important to S14(2)? What was the previous position?
Aswan Engineering - ‘all common purposes’ - S14(2B)(a)
The previous position from Kendall v Lillico was that the goods had to be fit for at least one purpose in the range of ordinary purposes.
What was the issue in Brown v Craiks?
The buyers did not disclose that they wished to use the material to make dresses. The cloth was very low quality for dresses but high for industrial fabrics.
No breach as this intention was not made known to the sellers.
Which case is important for the sale in the course of business criteria?
Stevenson v Rogers - a fisherman selling his boat did so in the course of business. It would be peculiar if he did not.
What is the examination exception for S14? What is strange about this?
S14(2C) - if the buyer has examined the goods and the defect is one which such examination ought to reveal, then the seller will not be liable.
The negligent buyer who doesn’t make an examination is exempt where a buyer who checks but fails to find the defect isn’t.
What is the default rule for damages for breach of warranty?
Hadley v Baxendale and S53 SGA 1979 - the estimated loss directly flowing from the breach.
What was the approach to damages in Slater v Hoyle? What was the issue it raised?
The court applied the presumptive test for a case of subsequent resale.
This meant putting liability on the seller for goods which had already been passed down the chain.
