Statutory implied terms and breach remedies Flashcards
What are party obligations
• Principal obligations of the seller and buyer are set out in Part IV of the SGA (ss. 27-37) and include:
- Sellers duty to deliver
- Buyers duty to accept the goods
- Buyers duty to make payment
• Note that parties can expressly provide for further obligations to fall on the seller within the contract.
What are seller obligations
ss.12-15 Sale of Goods Act 1979
• Implied condition as to title (s.12)
• Implied condition that the goods will correspond with their description (s.13)
• Implied terms as to quality and fitness (s.14)
• Implied terms in sales of goods by sample (s.15)
Note: these provisions are exceptions to the general rule of ‘caveat emptor’
How can implied terms be excluded
Exclusion of the implied terms
s.55(1) SGA
‘Where a right duty or liability would arise under a contract of sale of goods by implication of law, it may (subject to the Unfair Contract Terms Act 1977) be negatived or varied by express agreement, or by the course of dealing between the parties, or by such usage as binds both parties to the contract’.
S.14(2) and (3) can be excluded in B2B contracts but only in so far the exclusion satisfies the requirements of reasonableness uner the UCTA 19
What does s63 Unfair Contract terms act 1977 say about excluding implied terms
Terms implied by ss. 13-15 SGA 1979 can be excluded or restricted by reference to a contractual term but only if that term satisfies the requirement of reasonableness.
s.13(1) The implied condition that the goods will match their description
What are the 2 questions around claiming breach of an implied term s 13 SGA
- Was the sale a sale by description? and if so,
2. Do the goods correspond with the description?
What is sale by description
Sale by description?
• Unascertained goods and future goods, e.g. generic goods/commodities
• Specific goods (identified and agreed at the time of contract) – Varley v Whipp [1900] 1 QB 513 – a second hand reaping machine that the buyer had not seen.
• Good which the buyer has inspected – Grant v Australian Knitting Mills Ltd [1936] AC 85
there is a sale by description even though the buyer is buying something displayed before him on the counter: a thing is sold by description, though it is specific, so long as it is sold not merely as the specific thing but as a thing corresponding to a description, e.g. woollen under-garments, a hot water bottle…”
Grant v Australian Knitting Mills Ltd
What is classed as description
Description?
• Not all descriptive words relating to the goods will be regarded as part of their description but only those relating to their identity
Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441
Lord Diplock: ‘(…) the key to s. 13 is identification’
• The description must be influential on the sale and relied upon by the buyer, Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1991] 1 QB 564.
‘the description must have a sufficient influence in the sale to become an essential term of the contract and the correlative of influence is reliance’
Nourse LJ.
‘For all practical purposes, I would say that there cannot be a contract for the sale of goods by description where it is not within the reasonable contemplation of the parties that the buyer is relying on the description’, Nourse LJ
Why is it important parties attach weight to certain words in contracts
Parties must attach sufficient weight to the particular
words as to warrant their being treated as part of the contractual description.
Reardon Smith Line Ltd v Yngvar Hansen
Tangen [1996] 1 WLR 989, (HL).
‘whether a particular item in a description constitutes a
substantial ingredient of the ‘identity’ of the thing sold,
and only if it does to treat it as a condition’
• Even minor deviations from the description can result in breach of the term.
Arcos Ltd v E A Ronaasen & Son [1933] AC 470
- Sale of Russian timber cut into staves of ½ inch thickness
- Arcos claimed they were entitled to reject this because most of the staves were thicker than this
- timber was fit for the intended purpose and of suitable quality under the specifications of the contract
- nevertheless, the court recognised right to reject for breach of s. 13
“If the written contract specifies conditions of weight, measure and the like, those conditions must be complied with. A ton does not mean about a ton, or a yard about a yard. Still less when you descend to minute measurements does ½ inch mean about ½ inch. If the seller wants a margin he must and in my experience does stipulate for it”.
Lord Atkin
What does s14 say about implied terms to quality and fitness SGA
s.14 Implied terms as to quality and fitness
(1) Except as provided by this section and section 15 below and subject to any other enactment, there is no implied term about the quality or fitness for any particular purpose of goods supplied under a contract of sale.
• Restates the common law principle of caveat emptor
s.14 (2) Implied condition that the goods of satisfactory quality.
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.
• “sells goods in the course of a business”? .
14(2)(C) - The condition will not be applied in the case of;
(1) Defects specifically brought to the buyer’s attention before the contract is made, or;
(2) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal, or;
(3) In the case of a sale by sample, in regard to any matter which would have been apparent on a reasonable examination of the sample.
Explain Stevenson v Rogers 1999
Stevenson v Rogers [1999] QB 1028:
- Stevenson, who had been in business as a fisherman for 20 years, sold his fishing boat, and bought another as a replacement.
- Even though this was a one-off sale and was merely incidental to the business which Stevenson carried out, it was held that the sale was made ‘in the course of’ that business so as to bring the transaction within the scope of s.14.
- CA gave the phrase ‘in the course of a business’ a wide interpretation-any sale by a business is a sale ‘in the course of a business’
What is classed as satisfactory quality when incomes to goods SGA
s.14(2A) The goods must 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 other relevant circumstances
(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 (Mash & Murrell Ltd v Joseph I Emanuel Ltd [1996] 1 WLR 862)
What does s 14 3 SGA say about implied condition for fit for purpose
s.14(3) Implied condition as to fitness for purpose
Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known —
(a) to the seller any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, EXCEPT where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller.
What is particular purpose regarding SGA
• Particular Purpose?
- Requires that the purpose for which the goods have been purchased has been specified, not that the goods necessarily have any extraordinary purpose, e.g. a buyer who buys paint for use in a unusually harsh environment.
- It will apply equally where the goods only have one or an obvious use, e.g. food is intended to be eaten.
- In the case of common or obvious purposes, the seller will be taken to have such knowledge and B will not need to make the purpose expressly known to him
• Difficulty where the purpose is known or is the obvious purpose, but there is some peculiarity or idiosyncratic feature about the buyer and their intended use which is unknown to the seller
Explain reliance
• Reliance?
Requires something to be said or done to bring home to the seller the fact that he was being relied upon to supply goods for a particular purpose
It is then for the seller to show that the buyer did not rely on his skill and judgement, or that it was unreasonable for them to do so
• Partial reliance may be sufficient
Cammell Laird & Co Ltd v Manganses Bronze and Brass Co Ltd [1934] AC 402
Facts: The sellers constructed two propellers for two ships for the buyers. They were made according to the specification laid down by the buyers but certain matters were left to the sellers.
Held: ‘there was a substantial area outside the specification which was not covered by its directions and was therefore necessarily left to the skill and judgement of the seller’.
What remedies are there for the SGA
Remedies
• Article 11(3)
Whether a stipulation in a contract of sale is a condition, the breach of which may give rise to a right to treat the contract as repudiated, or a warranty, the breach of which may give rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract
