Statutory Implied Terms: s12 s13 Flashcards
Which sections of SGA 1979 imply terms into contracts?
s12
s13
s14
s15
Do all the implied terms apply all the time?
No
Which terms only apply sometimes?
s14(2)
s14(3)
When is it that s14 (2),(3) doesn’t apply?
When the seller is dealing outside of the course of business
The three different classifications of contractual terms?
1) Condition
2) Warranty
3) Innominate terms
(in that order of importance)
What type of terms are those implied by SGA?
Either condition or warranty, but only if s2(1) is satisfied
What does s12 deal with?
Implied terms as to title
How many terms are implied as to title under s12?
3
3 terms implied as to title under s12
12(1) = condition S has the right to sell the goods 12(2)a = warranty that goods are free from charge/encumbrance 12(2)b = warranty that B will enjoy quiet quiet possession
Which is one of the most important terms in the whole SGA
s12(1)
Why is s12(1) so important?
It imposes a legal duty onto S to pass on good title of the goods
s12(1) in relation to a sale?
‘the right to sell the goods’
s12(1) in relation to an agreement to sell?
‘S will have the right to sell at time when property is to pass’
Eastport Navigation Corp 1982
- s12(1) doesn’t require S to acquire title before transferring the goods, only at point to sale
- Also not required to own goods, only have the right to sell them
Case for having title to sell need not be at time of transfer, only time of sale
Eastport Navigation Corp 1982
Most common situation where doubt arises to S’s title to sell?
- > Where the goods have been found
- > S wants to sell them even though they don’t have absolute title over them
What kind of title does S acquire when they have found the goods?
- > Possessory title
- > Strictly subject to owners title, who can reclaim goods at any time
Does S have to disclose they only have possessory title?
Yes, or they are in breach of s12(1)
If S does disclose the only possessory nature of title, how are they protected?
By s12(3) and s12(5)
What do s12(3) and s12(5) do?
- > State that if it appears in contract/implied by circumstance that S only intended to transfer as much title as they have
- > Implied warranty that S won’t disturb B’s quiet possession
- > B will only be disturbed by someone acting on a charge/encumbrance that B was aware of before sale (real owner)
What happens if s12(1) is breached?
- > Is a condition (important)
- > Innocent party may treat contract as finished
Is terminating a contract for breach of 12(1) subject to any other terms?
Yes
s11(4)
What is s11(4)?
If B has accepted the goods, then they cannot terminate contract, only sue for damages
Rowland v Divall 1923
FACTS
- Contract for purchase of a car
- S unaware car was previously stolen = no right to sell
- Entire purpose of contract for sale is to transfer ownership to B, but there could be no consideration
- No consideration because B could never obtain title over something S had no right to sell, no title over
- Can’t be acceptance without consideration
Case for acceptance not always removing B’s right to terminate for breach of s12(1)
Rowland v Divall 1923
Rowland v Divall 1923
JUDGMENT
- B had used the car extensively when breach was discovered
- Extensive use = acceptance
- However, proper acceptance not possible as no consideration given by S
- Still allowed to terminate contract under s11(4) as no acceptance possible
Why has Rowland v Divall been criticised?
- > Allows B to have use/enjoyment of something for free
- > By using something it’s value is lessened
- > Of particular issue when goods are perishable/finite
Example used to highlight problems with Rowland v Divall 1923 decision
WINE
- > A buys case of wine from B and drinks it
- > Later discovered wine was stolen = no consideration = no contract
- > A entitled to repayment of price paid
- > Real owner can sue B for BOTH the value of the wine and the price A paid them
- > A simply got free wine and B suffered = unjust?
Niblett Ltd v Confectioners Materials Co 1921
- S sold quantity of condensed milk, some of them labelled ‘nissly’
- B were later informed by Nestle that it was an infringement of trademark
- B brought action against S for breach of 12(1)
- Even though S owned the goods, by unwittingly infringing on Nestle’s copyright = no right to sell
s12(2) a
Warranty that goods are free from charge/encumbrance
s12(2) b
B will enjoy quiet possession of the goods
Case for s12(2) b
Microbeads AG v Uinhurst Road Markings 1975
Microbeads AG v Uinhurst Road Markings 1975
FACTS
- S sold some roadmarking machinery, shortly after sale unrelated company bought patent relating to the kind of machine sold
- Third party brought claim against B to enforce their patent
- B sued S for breach of s12(1) and s12(2) b
Microbeads AG v Uinhurst Road Markings 1975
JUDGEMENT
- No breach of 12(1) as condition of title is only needed at time of sale
- Breach of 12(2) as ‘will enjoy’ quiet possession is in reference to the future enjoyment of the goods, not just at time of sale
- Only a warranty = damages awarded
s13 relates to?
Sales by description
What is implied by s13(1)?
If contract is for sales off gods by description, implied that goods will correspond to description
What is the definition of a sale by description?
- > Not in statute
- > The ordinary meaning of the words is applied
- > Easy with future/unascertained goods as they can only be sold by description
Are specific goods saleable by description?
Yes, but the description must be very specific
s13(3)
No prevention of goods on display being chosen by B amounting to a sale by description
2 contrasting cases on sales of cars by description?
Beale v Taylor 1991
Brewer v Mann 2012
Beale v Taylor 1991
FACTS
- S advertised his car for sale, in the honest belief it was a 1961 triumph herald
- Advert read: Herald, convertible, white, 1961
- On buying the car B soon realised that the front half was an early model that had been welding onto the back half which was a 1961 Herald
- Badge displayed on car was that of a 1961 model
QUESTION - Even though B had inspected the car before buying it, was he relying on the description in any way that would influence his purchase?
Beale v Taylor 1991
JUDGEMENT
- Can still be a sale by description, even after B’s inspection
- Must be that the chattel was being sold not as the specific thing B inspected, but that it was the same specific thing described and B is relying on the description in some way
- B only bought it due to the description and badge displayed = relied on part in descrpition
- Even though innocently, goods did not correspond = breach of s13(1) = liable for damages
Brewer v Mann 2012
FACTS
- S advertised his ‘1930 Bentley Speed Six’
- B obtained car on hire-purchase agreement. Later argued car did not conform to description
- Engine was not an original, a different Bentley engine that had been modified to meet specs
- Further argued that the body work had also been altered to fit specs
QUESTION
By altering parts to fit specification of description, is the chattel still matching description?
Brewer v Mann 2012
JUDGEMENT
- Advert did not say the car was an original, so any alterations to make it fit specs were not a breach of s13(1)
- Identity of car was to be decided according to normal customs of particular industry
- 2 experts confirmed it met specs for a 1930 Bentley Speed Six
Point made in Beale v Taylor 1991
Even after inspection, if B is relying on description given in any way, the goods must correspond exactly
Point made in Brewer v Mann 2012
- If there is question, identity of goods is decided according to normal trade customs
- If goods aren’t stated to be original, and have been altered to match description = not a breach
When does having a description of the goods amount to it being a sale by description?
It must amount to a term in the contract
When will the courts hold a sale to be a sale by description?
- > Where they can find that parties had a common intention
- > They intended that the goods will correspond with description term of the contract
Case for parties having to intend that it be a sale by description?
Christopher Hill Fine Art 1991
Under previous SGA 1893 was easier or harder to reject goods for breach of s13?
Easier, shown in Re Moore and Landauer 1921
Re Moore and Landauer 1921
- S contracted to sell tinned fruit packaged in cases of 30
- The correct quantity were delivered, but some were packed in cases of 24
- Held that the fact it would be in cases of 30 was part of description = B entitled to reject entire consignment
In Hansen-Tangen 1976, what did Lord Wilberforce say about Re Moore and Landauer 1921?
The decision was ‘excessively techincal’
In order to breach s13(1), how important must the wrong descriptive detail be?
Must be a ‘substantial ingredient of the identity of the thing sold’
Which case stated a breach of s13 must be a ‘substantial ingredient to the identity of the thing sold?
Hansen-Tangen 1976
Hansen-Tangen 1976
- Concerned a ship that the contract stated would be built in shipyard ‘Osaka 354’
- Due to size was actually built in ‘Oshina 004’
- When vessel finally finished, market had collapsed and B sought to escape payment relying on breach of description under s13
- Held that particular of a description must be ‘substantial ingredient to identity of thing sold’
- Shipyard number is not important = no breach
When does B’s reliance on description not amount to breach of s13?
- > When it is unreasonable or inappropriate to rely on it
- > It was not within reasonable contemplation of the parties that B would be relying on it
Case for unreasonable to think B was relying on description = not liable under s13?
Christopher Hull Fine Art 1991
