The Sale of Goods Act

The Sale of Goods Act (SGA) 1979 regulates the sale of goods within the UK and imposes contractual terms which are provisions forming part of a contract of sale. There are several implied terms codified into the SGA; title, freedom from charges and encumbrances, quiet possession, correspondence with description, quality, fitness for purpose and correspondence with the sample. The implied terms have been put in place to work in the favor of the buyer. The three implied terms that I will be focusing on in this essay are; sale by description (S13(1), satisfactory quality of the goods (S14(2), and fitness for purpose of the goods (S14(3). I will be exploring the correctness of whether these implied terms work to the buyer’s advantage.

Sale by description

Section 13(1) of the SGA 1979, states that sale by description must be adhered to when a contract for sale is made and that "the goods will correspond with the description" given. Under section 13(1A) of the SGA 1979, the term implied is a condition. This term allows the party to terminate the contract, claim damages or uphold the contract. This condition will apply to the seller selling the goods whether they are in the course of a business or not, and in situations whereby the buyer has not seen the goods but is relying on the description alone. "Sale of goods by the description" does not have a statutory definition, and so it is necessary to look at the plain ordinary meaning of the words. The words should correspond to the description given at the time the contract was created by either; the seller describing the good or in any written description such as packaging/display signs. If the goods have not been ascertained, the description will be essential to the buyer to determine whether the seller has fulfilled his obligation by supplying the correct goods.

Descriptive words are terms of the contract which identify the goods concerned. The description must have sufficient influence in the sale to become an essential term of the contract. One way in which sale by description benefits the buyer is that if the goods which are purchased from the seller do not correspond with the description, the buyer may be able to claim for breach section 13(1). If the buyer was dealing as a consumer he will be entitled to request that the seller; repairs/replace the goods, reduces the price of the goods or rescinds the contract. The buyer is also entitled to reject the goods if he has not accepted them. However, if he has accepted the goods, the breach of the condition will be treated as a breach of warranty. Either way, the buyer is protected by the SGA and is benefitted, because if the buyer requires the seller to repair or replace the goods, the seller must do this within a reasonable time. This is so there is no inconvenience caused, thus working to the advantage of the buyer as no time is wasted in the replacement or repair of the goods allowing the buyer to enjoy the full benefit of the good as soon as possible.

A sale will not be by description simply because the descriptive words were used during the negotiations; for it to be by description, the buyer must rely on the words in making the contract. In Beale v Taylor 1967, the buyer realized the car obtained did not correspond to the description after purchasing it. As the buyer had relied upon this, it was held to be a sale of a good by description. The buyer could claim for breach of the condition implied in section 13(1). This case illustrates how the condition implied benefits the buyer. Even though the buyer had relied upon the description, purchased the car and drove it away, he was still able to claim damages as he was protected under the implied terms.

Another example of how the sale by description condition is of benefit to the buyer is Arcos v Ronaason 1933. The wooden staves supplied did not correspond to the description given, although they were still useable. The buyers were entitled to reject the staves as they relied upon the description to which the sellers breached the term implied. Lord Atkin purported, that "a ton does not mean about a ton or yard about a yard". He highlights the strict approach of commercial law whereby if the buyer expects the good to be of the description given, that is what he should receive. If the good does not correspond to the description, the buyer is entitled to claim damages. This protects the rights of the buyer, hence protecting them from sellers who do not fulfill their obligations, whilst demonstrating the strict approach.

In Harlingdon and Leinster 1991, the strict approach of statutory interpretation was illustrated. The seller stated that he was not an expert in paintings, and so the buyer relied on his own judgment and purchased the painting later realizing it was forged. The buyer tried to claim a breach of section 13(1), however as the seller disclaimed his lack of knowledge the buyer could not have relied upon the description given. This sale was not by description. It can be argued that this application of the strict statutory approach reintroduces the notion of caveat emptor (buyers beware) in relation to business buyers. Lord Justice Nourse proposed that "the description must have a sufficient influence in the sale to become an essential term of the contract". When the seller gives an opinion on the goods being sold, it does not amount to a statement of fact. Hence, as the seller expressed he did not know anything about the painting, the buyer was unable to make a claim as he did not rely on the seller’s description. Lord Justice Nourse claimed that section 13 was "superfluous", in that the existence of a sale by description turns on whether that buyer relied on it or not, making it a term of the contract. This illustrates that implied terms do not always work in the favor of buyers. The strict application of section 13(1) can work as a disadvantage to the buyer as the section states the obvious and is interpreted as it plainly stands.

Harrington defines section 13 as a reliance that the buyer puts onto the seller. Therefore, the balance of bargaining power has tipped in favor of the seller, who can now conveniently side-step section 13 by pleading ignorance at the time the contractual agreement was made. The buyer must now be aware of what the seller says and does, bringing caveat emptor into play, undermining the power of the buyer. Lord Justice Stuart-Smith highlighted that "there is a serious defect in law if the effect of a condition implied by statute could be excluded by the vendor’s saying that he was not an expert in what was being sold".

Satisfactory quality

Section 14(2) of the SGA 1979 contains the implied term referring to the quality of the good concerned. This section purports that "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". Until 1994, satisfactory quality was known as merchantable quality, meaning that goods were saleable under the contractual description given. This was the replaced with satisfactory quality by the Sale and Supply of Goods Act, which amended section 14(2) of the SGA 1979. Satisfactory quality includes the following; fitness for purpose, safety, durability, appearance and finish, and freedom from minor defects.

The term satisfactory quality is implied as a condition, thus, if the goods supplied fail to conform to this implied term, a breach will be established. The buyer will have the right to reject the goods, claim damages and will have the right to end the contract. A buyer who does not examine the goods before making a contractual agreement tends to be in a stronger position than one who does inspect the goods. Although this may seem strange, it is merely the effect of section 14(2C)(b).

Consequently, the buyer should either not inspect the goods that he intends to purchase at all, or if he does inspect them he must do so thoroughly. This usually does not work in the buyer’s favor, as those who are willing to purchase a good will want to thoroughly check it. Yet it is possible that they would miss a defect during the inspection. This is especially in situations whereby the buyer would have to examine the good externally, internally or mechanically.

If the goods purchased "meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price and all other relevant circumstances", they will be of satisfactory quality and so there will be no need for a claim under section 14(2) of the SGA. The reasonable person must be in the position of the buyer (with his knowledge) as it would not be appropriate for the objective test to be that of a reasonable third-party who does not have the same knowledge. The goods will be of satisfactory quality if a reasonable person deems it so, bearing in mind the quality against the definition in the SGA. It is the seller’s responsibility to sell goods which are of the condition of satisfactory quality. If the seller does not adhere to this, the buyer will have the legal right to claim. What is regarded as satisfactory will depend upon the purchase price, description and so forth? If the goods purchased are known to be second- hand, the buyer cannot expect the good to be in a perfect condition. Goods only need to be of satisfactory quality. Thus, the buyer cannot do anything in his power to make a claim.

The implied condition regarding satisfactory quality will not work in the buyer’s favor if he has examined the goods before a contractual agreement is made. In the case of Thornett v Beers 1919, the buyer made an examination, and by doing so lost protection from section 14 of the SGA despite his examination being insufficient to have detected a defect. Moreover, if the buyer proves that he is not relying on the seller’s description, he may be relying on the words for purposes of section 14(3). Yet a claim under section 14(2) may be excluded by the wording of the provision as to the examination.

If a seller breaches the implied condition of satisfactory quality, the buyer will be entitled to claim a remedy, such as rejecting the goods if he has not accepted them. If he has accepted the goods, the breach of the condition will be treated as a breach of warranty. The buyer has the advantage of requesting the seller to repair or replace the goods. This will be done within reasonable time and without causing inconvenience to the buyer. This reasonable time prevents sellers from taking their time with replacement and repair which benefits the buyer. Alternatively, he may terminate the contract. This is advantageous to the buyer, as he will be able to claim from a number of remedies as a result of a breach committed by the seller.

Fitness for purpose

Section 14(3) of the SGA 1979 contains the implied term of fitness for purpose. This is "where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought". The implied term here is a condition whereby the goods purchased under the contract are fit for purpose. The case of Stevenson v Rogers 1999, highlights that for the purposes of section 14, a sale conducted by a business is a sale in the course of a business, regardless of whether it is incidental to the business or not. This case resulted in widening the meaning of "course of business" in that it applies to all sales by those in business. This means that liability under section 14(3) is strict, and so the seller need not be at fault. This does not work in favor of the buyer. If it was a private sale the buyer cannot rely on the implied conditions.

In Priest v Last 1903, the buyer purchased a hot-water bottle which burst after a few days use. The buyer claimed under section 14(3), and it was held that the hot-water bottle was good with a single purpose. Hence, the buyer did not need to inform the seller of the purpose as the buyer relied upon the skill and knowledge of the seller. Moreover, it is essential that the buyer informs the seller of a specific use or idiosyncrasy of a good. In Griffiths v Peter Conway 1939, the buyer has contracted dermatitis from a Harris Tweed Coat which she had bought. The buyer claimed under sections 14(2) and (3) of the SGA 1979. It was held that the claim under section 14(2) failed as the coat was of merchantable quality (now satisfactory quality). Regarding section 14(3), the coat was for a special purpose, and so the buyer should have expressly informed the seller of her sensitive skin and the purpose required. Hence the claim under this section failed.

The case of Kendall v Lillico 1969, illustrated a breach of the condition implied. The seller was held liable under section 14(3) of the SGA 1979, as he knew the purpose for which the buyer wanted the goods. Hence, we can presume that the buyer relied on the skill and knowledge of the seller. If there is a breach of fitness for purpose, the buyer (if he was dealing as a consumer) will be entitled to reject the goods unless he has already accepted them. If he has accepted the goods, then a breach of this condition will be treated as a breach of warranty. Additionally, the buyer may ask the seller to repair, replace, or reduce the price of the goods. He may even terminate the contract. Once again these remedies for breach of the implied condition, work to the buyer’s advantage in that it assures that if sellers do not adhere to the legislation, they will have to aid the buyers with the remedy chosen.

From the first step of creating a contract, the buyer is in an advantageous position, as the SGA 1979 protects the buyer’s rights and stipulates that the goods provided by the sellers must; be of satisfactory quality, correspond to the description and be fit for purpose. These implied terms evidently work in favor of the buyer, as they have many remedies if breaches of these terms were to arise. Once a claim has been established, the seller will not have a defense and so will be disadvantaged by the remedies available to the buyers. Sections 13 and 14 both impose strict liability upon the seller, this liability even makes accidental faults irrelevant. As these implied terms have strict liability, it works to ensure that sellers do not undermine the legislation and the buyers. Liability is strict in the sense that it does not matter if the seller took reasonable care. It puts straight the legal position of both buyers and sellers, making sure they adhere to the implied terms at first instance, thus working in the favor of the buyer. However, it has been noted that the implied terms do nothing in the favor of the buyer as they can deem that the seller need not be at fault. As businesses cannot exclude liability for breaching the implied terms listed in the SGA 1979, it is clear to say that the law is in favor of buyers. There is an advantage for buyers as the SGA 1979 was put in place for consumer protection, and as every case is different, it is difficult to deem that the implied terms will always work to the buyer’s advantage.