Everything about The Sale Of Goods Act 1979 totally explained
The
Sale of Goods Act 1979 is a
British Act of Parliament (
1979, ch 54) which regulates
contracts in which goods are sold and bought. The Act consolidates the Sale of Goods Act 1893 and subsequent legislation, which in turn consolidated the previous common law.
The Sale of Goods Act performs several functions. The Act lays down a small number of compulsory legal rules, but these restrictions are minimal: the bulk of the Act is concerned with an array of presumptions and implied terms, which aim to reflect the commercial expectations in the most commonly agreed sales contracts. In the absence of contrary agreement these terms will govern a contract within the Act's remit. The benefits in efficiency (through lower bargaining costs) and legal certainty have led to many jurisdictions adopting the legislation wholesale, and versions of the Sale of Goods Act have been adopted in almost all the former territories of the British Empire and Commonwealth (with the notable exception of Canada, which has adopted hybrid legislation incorporating elements of the US Uniform Commercial Code).
The Act applies to all contracts where property in 'goods' is transferred or agreed to be transferred for a
monetary consideration, in other words: where
property in chattels is sold.
Terms implied into the contract
These
terms are implied into
contracts falling within the Act. Breach of these terms by the seller may give rise to an
action for
damages, and in the case of those terms which are also conditions, termination of the contract.
Where the slightness of the breach renders it unreasonable for a non-consumer buyer to reject the
goods, for breach of the implied terms as to
description,
quality or fitness or
sample, then the buyer can only claim
damages for a
breach of warranty. This amendment moderates the traditionally strict approach of English Law to contractual breach in a commercial context.
Implied term as to title
Section 12 incorporates into the
contract a term that the seller either has legal title to the
property to be sold or that he'll have title at the time when property is to pass. Two warranties are additionally implied that the buyer will enjoy quiet possession of the goods and that the goods will be free from any encumberances (such as sellers'
lien or a third party having
lien over the goods).
These terms can be harsh in their application: controversially, the case of
Rowland v Divall held that rejection of goods found to be in breach of s.12 will allow the buyer to recover the full price paid, with no allowance for the buyer's (potentially extensive) use of the goods.
Implied term as to description
Where the buyer is sold goods by description, the
goods must correspond with this description.
Harlingdon v Christopher Hull provides that this implied term may only be
breached if the buyer relied upon the description. Therefore if the buyer isn't an expert, reliance may not be established.
Implied term as to quality or fitness
These terms are implied by s 14 and are only relevant where the seller is acting
in the course of a business. There is no requirement as to the status of the buyer.
The phrase "in the course of a business" has received much
judicial consideration. Some
judges have applied definitions found in other
acts, but the recent case of
Stevenson v Rogers gives a wide definition to this requirement. It will encompass activity which is ancillary or loosely related to the business of a
company. To use Richards' example, a
bank that sells a company
car will be acting
in the course of a business.
Satisfactory quality, s14(2) : The quality of the goods sold must be satisfactory (prior to 1994, this provision required 'merchantable' quality; this requirement has been retained in most Commonwealth versions of the Act). The Act provides an objective test to determine satisfactory quality, the quality that would be expected by the reasonable man, with regards price, description and any other relevant factors. The courts have identified certain factors that may raise or lower the expectation of satisfaction. Second hand goods, per Bernstien v Pamsons Motors Ltd., will attract a lower expectation. On the other hand goods of a reputable brand may attract a higher expectation, the judge in Bernstien used the example of a small ping on a Rolls-Royce being unsatisfactory. 'Other relevant factors' may include advertising in the case of consumer contracts.
Fitness for purpose, s14(3) : If the buyer expressly or impliedly makes his purpose for the goods known to the seller, the seller is obliged to make sure the goods provided are fit for that purpose, if it's reasonable for the buyer to rely on the seller's expertise. An example of the application of this provision can be found in Godley v Perry
Sale by sample
Where goods are bought by
bulk and the buyer has tested or examined a small number of those
goods, the seller is obliged to make sure that every item in the
bulk corresponds with the quality of the sample tested or examined.
Excluding implied terms
These terms won't be incorporated into the
contract where they've been expressly
excluded, or express terms conflict with them. These
exclusions may be invalid under
common law, the
Unfair Contract Terms Act 1977, or in
consumer cases the
Unfair Terms in Consumer Contracts Regulations 1999. If the term
excluding these implied terms is struck out, the implied term will be effective.
In consumer cases
These provisions apply where the buyer is a
consumer.
Within six
months, beginning at the time at which the
goods were delivered, the buyer can require the seller to repair the
goods, reduce the price, or
rescind (revesting property and requiring the return of any payment) the
contract where the buyer successfully claims that the
goods were not in accordance with the
contract at the time of delivery. The seller can defeat this claim if (a) "it is established that the goods did so conform" at the time of delivery, or (b) the measure is "incompatible with the nature of the goods or the nature of the lack of conformity.
Consumer requires repair or replacement : The seller must repair or replace the goods within a reasonable amount of time, incuring all costs necessary to perform this task. This can't be required if it's impossible or disproportionate in consideration of other available remedies.
Consumer requires reduction or rescission : This is only available where repair or replacement is impossible or the seller is taking an unreasonable amount of time to perform these requirements. Any reimbursement must take into account any use that the buyer has had out of the goods.
Legal title and property
Passing of property : Property (for example ownership) can't pass unless the goods are ascertained (for example the actual goods to be sold are identified). s.18 provides presumptions to determine when property will pass, both for specific goods (ascertained at the time of the contract) and goods unascertained at the time of contracting. These 'rules' can be excluded by contrary implication or express agreement.
» Rule 1: in an unconditional contract for sale and delivery of specific goods in a deliverable state, property passes immediately on contract formation.
Rule 2: where the seller is bound to perform some condition before the sale is possible, property passes when this condition is performed. » Rule 3: where the seller is bound to measure or weigh the goods to ascertain the price, property passes when this is done and the buyer is notified.
Rule 4: when goods are delivered on sale or return, or on approval, property passes when the buyer adopts the transaction (or fails to give notice of rejection within a reasonable time). » Rule 5: in a sale of unascertained goods, the property will pass following an unconditional appropriation of goods or, where the sale is from a specified bulk, following ascertainment by exhaustion (for example removal of all the goods in the bulk but those destined for the buyer).
Seller doesn't have title : If the seller doesn't own the goods, the buyer generally can't gain title, although he can sue for breach of the implied term as to title. This is subject to numerous exceptions in closely defined circumstances, for example: s.2 Factors Act 1889, ss. 21, 24, 25 SGA 1979.
Seller has voidable title : Where the seller holds voidable title, title can pass to a buyer in good faith. If title is voided before the contract of sale is concluded, title can't pass.
Necessities for minors and mentally incapacitated
Section 3(2) provides that if
goods are sold and delivered to minors or those mentally incapacitated the minor will be liable to pay a reasonable price if the goods are
necessaries. Necessaries are goods suitable to the persons' condition of life and actual requirements at the time of
contracting.
Miscellaneous
Price : The price is a money consideration given in exchange for property in goods. If the price, or means to ascertain a price, isn't agreed, the buyer will be required to pay a reasonable price.
Specific Goods that perish: The contract is void where they perish before and avoided where they perish after contract formation. (See Mistake (contract law)).
Place of transfer : Where location isn't stipulated, the buyer must collect the goods at the sellers' place of business. The seller must be prepared to deliver them to the entrance of his place of business. If the contract was concluded by a means of communication at a distance and the buyer is a consumer, this provision is disapplied and the Consumer Protection (Distance Selling) Regulations 2000 apply instead.Further Information
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