Contract | Formation
Terms: Implied by Statute
Revision Note | Degree
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Introduction
- contracts have express terms & sometimes implied terms are read into the agreementthrough statute, primarily for consumer protection
- implied terms may be conditions: major terms or warranties: minor terms, distinction important for remedies
The Sale of Goods Act 1979
- Sale of Goods Act 1979 (SGA 1979) provides statutory protection for consumers who purchase goods from private sellers & retailers who buy goods from manufacturers
Section 8: prices
- SGA 1979 implies terms concerning prices
Sale of Goods Act 1979
S8 Ascertainment of price- S8(1): if price is not fixed in the contract or determined by the course of dealing between the parties
- S8(2): then the buyer must pay a reasonable price
- S8(3): reasonable price is a question of fact
Section 14: satisfactory quality and fitness for purpose
- SGA 1979 implies conditions relating to satisfactory quality & fitness for purpose
Sale of Goods Act 1979
S14 Implied terms about quality or fitness- S14(2): where seller sells goods in the course of a business, implied condition goods are of satisfactory quality
- S14(2A): satisfactory quality if meet the standard a reasonable person would regard as satisfactory (taking account of description, price & all the other relevant circumstances
- S14(2B): quality includes their state & condition: (a) fitness for all purposes goods in question are commonly supplied (b) appearance & finish (c) freedom from minor defects (d) safety (e) durability
- S14(2C): matters drawn to buyer's attention before sale are not included
- S14(3): where seller is selling in the course of a business & buyer expressly or impliedly makes known any particular purpose for which the goods are being bought, condition implied that goods supplied are reasonably fit for that purpose (except if it is not reasonable for buyer to rely on the seller's skill or judgement)
- S14(6): S14(2) & S14(3) imply conditions
- strict liability for breach of S14(2) & S14(3) making fault irrelevant
Section 13: sale of goods by description
- SGA 1979 implies conditions relating to sale of goods by description
Sale of Goods Act 1979
S13 Sale by description- S13(1): goods will correspond with the description
- S13(1A): a condition
- S13(2): if sale by sample & by description it is not sufficient for bulk of goods to correspond with sample not also correspond with description
- S13(3): sale not prevented from being sale by description if selected by buyer
- S13 condition may be implied whether seller is a business or private individual & there is strict liability for a breach
- sale by description occurs when buyer reasonably relies on seller's description & can apply even if buyer has examined the goods
- case law shows resonableness is key
Harlingdon & Leinster v Christopher Hull Fine Art [1990] 3 WLR 13
Facts:
- plaintiff (P) bought painting from defendant(D) for £6 000
- painting described in auction catalogue as work of Munter (a German impressionist)
- parties were art dealers: P was expert on German art & D was not & P sent experts to inspect painting before sale
- later P discovered painting was a fake & worth only £100
Issue:
- was the painting sold by description?
Held:
- painting not sold by description & parties could not reasonably have contemplated buyer would rely on seller's description
- no valid claim under S13 SGA 1979
Remedies
- SGA 1979 specifies remedies for breach of terms implied by S13 & S14
- general rule: buyer can terminate contract & reject goods if breach of terms implied by S13 & S14, even if minor
- if buyer returns goods: entitled to recover the money paid & not obliged to perform any further obligations under the contract & may sue for damages if there is any further loss
- alternatively, buyer may affirm the contract: keep goods & simply sue for damages for any loss suffered
- SGA 1979 sets out some exceptions to general rule
Sale of Goods Act 1979
S15A Modification of remedies for breach of condition in non-consumer cases- S15A(1):right to reject goods & recover money not available if buyer not buying as consumer & breach is so slight it would be unreasonable to reject
- under S15A seller must demonstrate breach is so slight that rejection is unreasonable
- buyer would be restricted to suing for damages for loss
- further situation when right to reject goods may also be lost for both consumer & business buyers
Sale of Goods Act 1979
S11 When condition to be treated as warranty- S11(4): if buyer has accepted goods, breach of a condition to be fulfilled by the seller is treated as breach of warranty
- S35(1): buyer deemed to have accepted goods: keeping beyond a reasonable time without intimating rejection
- S11: buyer cannot reject goods if he has accepted them & S35 defines acceptance
- reasonable time is question of fact: time to examine & try out goods, nature & complexity of goods
Sale and Supply of Goods to Consumers Regulations 2002
- Sale and Supply of Goods to Consumers Regulations 2002 amends SGA 1979
Sale and Supply of Goods to Consumers Regulations 2002
- inserts S48A into SGA 1979
- S48A: where goods do not conform to contact within six months of delivery, there is a rebuttable presumption of nonconformity (it will be presumed that the goods did not conform at the date of purchase unless the seller can prove otherwise)
- previously consumer had to prove on balance of probabilities that goods did not conform at time of purchase
- S48A SGA 1979 does not apply if goods are not reasonably expected to last six months
- remedies available for a breach of S48A SGA 1979
Sale of Goods Act 1979
S48B Repair or replacement of the goods- S48B(1): if S48A buyer may require seller to (a) repair or (b)replace goods
- S48B(2): seller must (a) repair or replace within a reasonable time (b) bear costs (labour, materials or postage)
- S48B(3): buyer must not require seller to repair or replace if impossible or disproportionate
- S48C : if repair or replacement is not available or if seller has not repaired or replaced within a reasonable time then buyer may terminate contract (however, seller may reduce reimbursement taking into account use buyer has made of goods)
Supply of Goods and Services Act 1982
Sections 13, 14 and 15: services
- SGSA 1982 implies terms about care & skill, timing & price for provision of a service
Supply of Goods and Services Act 1982
S13 Implied term about care and skill- S13: where the supplier is acting in the course of a business, implied term that supplier will carry out service with reasonable care & skill
- S14(1): if not expressly provided for in the contract, supplier will carry out the service within a reasonable time
- S14(2): reasonable time is a question of fact
- S15(1): if not expressly provided for in the contractconsideration (price) will be a reasonable charge
- S15(2): reasonable charge is a question of fact
- S13 reasonable care & skill same duty of care imposed in negligence, therefore if supplier does not carry out service with reasonable care & skill, he will be in breach of implied term & this will amount to negligent breach of contract
Sections 3 and 4: goods
- SGSA 1982 implies terms when both a service and goods are supplied
Supply of Goods and Services Act 1982
S3 Implied terms where transfer is by description- S3(1): applies to goods by description
- S3(2): implied condition that goods will correspond with the description
- S3(3): if sale by sample & by description it is not sufficient for bulk of goods to correspond with sample not also correspond with description
- S3(4) sale not prevented from being sale by description if selected by buyer selects
- S4(2): for goods supplied in the course of a business, implied condition that goods are of satisfactory quality
- S4(2A): satisfactory quality if meet the standard a reasonable person would regard as satisfactory (taking account of description, price & all the other relevant circumstances)
- S4(5): satisfactory quality for purpose which transferee makes known
- S3 and S4 are similar conditions to terms implied by S13 & S14 of SGA 1979
Remedies
- remedies for breach of S3 & S4 of SGSA 1982 are same as for breach of S13 & S14 of SGA 1979
- a consumer & non-consumer will be able to use traditional remedies of termination and/or damages for breach of a condition additionally, a consumer can use remedies of repair or replacement or if not possible price reduction or termination
- non-consumer may not reject the goods for breach of the terms implied by S3 & S4 SGSA 1982, if breach is so slight it would be unreasonable (S5A SGSA 1982)
Negligence
- if supplier sells defective goods or does not carry out work with reasonable skill & care he breaches S13 SGSA 1982 & buyer may sue under negligence
- however, buyer likely to pursue claim under contract due to strict liability for breach of the implied terms, whereas in negligence it is necessary to prove fault