Sale of Goods

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  • Created by: Nikki
  • Created on: 16-04-16 19:32

Contractual terms (1)

Assumption in SGA that terms are either conditions or warranties 

Only warranty is defined by the Act --> binary pairs --> condition covers what warranty doesnt --> 

Since a warranty is defined by the Act so as never to give rise to damages, teh SGA would appear to prevent the application of the geenral contractual ruel that, apart from all breaches of condition, a contract may be terminated if the conseuqneces of a breach are sufficiently serious --> no ref to intermediate stipulations -->

Despite SGA's lack of any ref to intermediate stipulations they have been recognised by courts in case of express (but not implied) terms --> 

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Contractual terms (2)

Concerns about abuse of termination rights/strategic termination

  • s15A --> buyer may not terminate the contract even if the breach is of a condition if the breach is so 'slight' that it would be unreasonable for the buyer to reject the goods (as a concommitant of termiantion)
    • confined only to certain breaches of condition --> s13-15 but only in commercial sales --> not to s12, no express terms, no implied terms realting to time and shipping documents
    • brought in as an alternative to allowing sellers to cure defective deliveries by repair or replacement
  • case law showing concern --> CA conclusion in Cehave that seriously damaged goods are yet of merchantable quality under s14
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Seller's duties regarding description

  • SGA s13 --> implied term of correspondence to contractual description
  • Description has a very technical meaning --> words that go to the essence of the identity of the goods 
  • Occurence of sale by description --> s13(2) 
  • corresponds with the sample if the goods do not also correspond with the description.
  • Range of descriptive words: unascertained words -->
  • Range of descriptive words: specific goods -->
  • Introduction of reliance --> buyer must rely on seller 
  • Mere opinions cannot be factored into s13

13.— Sale by description.

(1) Where there is a contract for the sale of goods by description, there is an implied [ term ] 1 that

the goods will correspond with the description.

[ (1A) As regards England and Wales and Northern Ireland, the term implied by subsection (1)

above is a condition. ] 2

(2) If the sale is by sample as well as by description it is not sufficient that the bulk of the goods

corresponds with the sample if the goods do not also correspond with the description.

(3) A sale of goods is not prevented from being a sale by description by reason only that, being exposed for sale or hire, they are selected by the buyer.

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Conditions and rejection (1)

In what circumstances are termination rights lost?

THE PROVISIONS - 11(2); 11(4); 34; 35; 35A

11.— When condition to be treated as warranty.

(2) - buyer may waive a condition or elect to treat it as a warranty 

(4) [ Subject to section 35A below w ] 2 here a contract of sale is not severable and the buyer has

accepted the goods or part of them, the breach of a condition to be fulfilled by the seller can only

be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is an express or implied term of the contract to that effect.

34.— Buyer's right of examining the goods.

35 -- Acceptance

35A - Right of partial rejection

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Conditions and rejection (2)

ELECTION, WAIVER, ESTOPPEL AND ACCEPTANCE

  • elect = to choose
  • waiver/estoppel =  either temporary or permanent surrender of a right to do something
  • acceptance = buyer indicates that he will be keeping the good therefore losing his right to reject them
  • SOGA doesn't use usual test of affirmation and doesn't say buyer loses right to terminate only if sufficiently informed --> can lose right to terminate even if buyer doesn't even know that breach has occurred 
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Conditions and rejection (3)

BUYER'S RIGHT TO INSPECT THE GOODS

s29 - rules about delivery

s34 - buyer's right to inspect goods -->

  • essential point is that a seller cannot insist upon payment and receipt of goods by buyer without giving buyer a chance to look at the goods or see if they conform to the contract --> 
  • s34 prevails over s35 in a conflict --> actions under s35 cannot function if buyer hasn't had a chance to examine the goods 

BUYER'S ACCEPTANCE OF THE GOODS

s35 - acceptance

s35A - right of partial rejection 

3 clear cases in which buyer loses his right to reject (s35) --> 
- buyer intimates to seller that the goods are acceptalbe
- buyer commits an act in relation to goods that is inconsistent with ownership of seller
- buyer retains the goods beyond a reasonable time before purporting to reject them

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Conditions and rejection (4)

INTIMATING GOOD ACCEPTANCE

- indicating to seller that you will keep the goods despite their faults

INCONSISTENT ACT

- act that is inconsistent with seller's reversionary ownership --> more serious than beneficial enjoyment by buyer --> disposal in favour of TP; destruction etc

LAPSE OF REASONABLE TIME

- elastic expression --> depends on circ of case
- not such time as is reasonably needed to discover the defect 
- conventional period of just a ew weeks --> can be longer or shorter depending on facts
- unsatisfactory definition
- Clegg --> period can be extended if seller is taking time to repair the goods in question 

Effect of s35 is not to eradicate breach --> breach is still there but buyer is relegated to a damages action
s36 --> if you reject the goods you are under no oblgiation to return them to seller, seller can come and collect them themselves

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Fitness for purpose and satisfactory quality (1)

EXTENT OF APPLICATION

s14(1) - no other implied terms of quality/fitness --> court won't add to s14 protection (now hardly means anything because scope of 14(2) and 14(3) are so wide)

s14(2) - note 'course of business'

s14(5) - sales by agents 

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Fitness for purpose and satisfactory quality (2)

SATISFACTORY QUALITY

14(2) - where the seller sells goods in teh course of business there is an implied term that the goods supplied under the contract are of satisfactory quality 

14(2A) - satisfactory quality if they met the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price and all other relevant circ

14(2B) - quality of goods includes their state and condition and the following are in appropriate cases aspects of the quality of goods --> fitness for all purposes for hwich goods of the kind in question are commonly supplied; appearance and finish; freedom from minor defects; safety; durability

Notes
- application of same conditions doesn't mean that the same standard is expected from products of greatly different quality when this is justified --> e.g. Ferrari v Corsa
- examination - s14(2C)(e) - term in 14(2) doesn't extend to any matter making the quality of goods unsatisfactory in the case of a contract for sale by sample, which owuld have been apparent on reasonable examination of the sample 

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Fitness for purpose and satisfactory quality (3)

FITNESS FOR PURPOSE - s14(3)

  • sale in the course of business
  • if using goods for most obvious/common purpose it doesn't have to be declared
  • but for a particular or unusual purpose it should be declared
  • if seller aware of this purpose then it doesn't matter if it is uncommon
  • applies except where circ show that buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgement of the seller
  • strict liability
  • tendency to try to push liability up the chain to manufacturer
  • in case of pruchasing goods from a seller who is selling on sealed good from a reputable manufacturer --> court would now conclude that liability should arise even in these circ
  • goods? --> Wormall - defective instructions are just as much part of good as goods themselves; software would be regarded as goods for purpose of liability
  • contributory neg --> no means of apportioning liability between sellers strict oblgiation and buyers contributory negligence
  • s14 can only be excluded under UCTA if satsifies reasonableness test
  • second hand goods??
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Fitness for purpose and satisfactory quality (4)

CONSEQUENCES

Under both s14(2) and s14(3), consequences of breach of the implied term are:

(a) the buyer may terminate the contract

(b) the buyer may, subject to remoteness rules, recover substantial consequential damages on a no-fault basis (strict liability)

DAMAGES

S53 - remedy for breach of warranty 

s53(2) - measure of damages is estimated loss directly and naturally resulting, in the ordinary course of events, from teh breach of warranty

s53(3) - in case of breach of warranty of quality such loss is prima facie the difference betwen the value of goods at the time of delivery to the buyer and the value they would have had if they had fulfilled the warranty 

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Passing of property

SIGNFICANCE

General law

(1) major importance in insolvency
(2) major role in defining parties' rights and oblgiations

SOGA
- internal structure --> 
(1) presumptive event that determines the trasnfer of risk
(2) importance for defining parties' rights and obligations

Essentially this equates to the transfer of ownership 

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Passing of property (2)

RULE STRUCTURE

s5 - provisions on future goods --> property cannot pass in future goods - goods must be existing goods

s16 - goods must be ascertained - no property can pass in goods until they are ascertained

s17 - property is passed at such time as intended by parties; intention is to be derived from all circ of the case

s18 - in absence of intention dervied from s17 there are a number of presumptive rules that will apply in absence of contrary intention --> 1-4 (specific goods); 5 (unascertained/future goods)

s19 - reservation of right of disposal

s20A - undivided shares in goods forming part of a bulk
- if (a) goods form part of a bulk which is identified in contract or subsequent agreement and (b) the buyer has paid the price for some or all of the goods which are subject of the contract and which form part of the bulk, then unless parties agree otherwise as soon as conditions (a) and (b) are met or at such later time as parties agree, property in undivided share in bulk is transferred to buyer and buyer becomes owner in common in respect of their share in the bulk

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Passing of property (3)

SPECIFIC GOODS: MAIN RULE 
- s18, rule 1 - where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery be postponed

UNASCERTAINED AND FUTURE GOODS: ASCERTAINMENT AND EXISTENCE

  • principle of contractual freedom in determining when property passes doesn't apply in thse cases, so long as the goods remain in future or unascertained state
  • property canont pass, even if the parties say that it does, while the goods remain future or unascertained because the very subject matter of the contract cannot be identified
  • difficulties when fungible goods are stored or transported in bulk
  • in reforms in 1990s it is now possible in defined circ to obtain co-ownership rights in goods that are part of an identified bulk, even if the precise goods that will later be delivered to buyer cannot yet be determined 
  • 5(3); 17; 20A
  • 18 rule 5(3) and (4); 20A; 61(1) ('bulk', 'specific goods')
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Passing of property (4)

UNCONDITIONAL APPROPRIATION

  • last act doctrine --> occurs where seller puts it out of his ability to change it mind 
  • justified because easy to police 

RESERVING THE RIGHT OF DISPOSAL

s19
- property doesn't pass to buyer until certain conditions are fulfilled, regardless of delivery

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Transfer of risk (1)

If risk has transferred to buyer then he is bound to pay notwithstanding damage to or the destruction of the goods

s7 - mentioned here - goods perishing before sale but after agreement to sell 

s20 -passing of risk

(1) Unless otherwise agreed, the goods remain at the seller's risk until the property in them is

transferred to the buyer, but when the property in them is transferred to the buyer the goods are at

the buyer's risk whether delivery has been made or not.

(2) But where delivery has been delayed through the fault of either buyer or seller the goods are at

the risk of the party at fault as regards any loss which might not have occurred but for such fault.

(3) Nothing in this section affects the duties or liabilities of either seller or buyer as a bailee or

custodier of the goods of the other party.

s32(2) - provision for reasonable carriage

s32(3) - reasonable carriage by sea

s33 - delivery to distant place 

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