Chapter Four: The
Sale of Goods
1
The Sale of Goods Act 1979 in
Britain:




The Sale of Goods Act 1979  regulates contracts in
which goods are sold and bought.
The Act performs several functions:
1. The Act lays down a small number of compulsory
legal rules  (restrictions) are minimal.
2. The bulk of the Act is concerned with
presumptions and implied terms  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 and legal certainty have led many
jurisdictions to adopt the Act or versions of it in almost all
Commonwealth countries.

The Act applies to all contracts where property in 'goods' is
transferred or agreed to be transferred for a monetary
consideration.
2
Terms Implied into the
Contract of Sale:





Terms are implied into contracts by the Sale of
Goods Act 1979.
Breaches of these terms by the seller may give
rise to an action for damages
Condition: If the terms are conditions, any
breach of them means termination of the
contract.
Warranty: where the breach renders it
unreasonable for a 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.
3
Implied Term as to Title:



Section 12 incorporates into the contract a term
that the seller either has legal title to the
property
 At the time to be sold or
 at the time when property is passed.
Two warranties are implied:
 The buyer enjoys quiet possession of the goods
 The goods will be free from any encumbrances
(i.e., a third party having lien over the goods).
These terms can be harsh:
 e.g., rejection of goods found to be in breach of Section12  will
allow the buyer to recover the full price paid, with no allowance for
the buyer's use of the goods.
4
Implied Term as to
Description:


Where the buyer buys goods by description 
the goods must correspond with this
description.
Harlingdon v Christopher Hull (legal precedent)
 provides  this implied term may only be
breached if the buyer relied upon the
description.
 Therefore if the buyer is an expert, reliance
may not be established.
5
Implied Term as to Quality
or Fitness:

These terms are implied by Section 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.

First: Fitness for purpose:

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 is
reasonable for the buyer to rely on the seller's
expertise.

6
Second: Satisfactory Quality:



The quality of the goods sold must be
satisfactory
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:
 Second hand goods will attract a lower
expectation.
 Goods of a reputable brand may attract a
higher expectation.
7
Sale by Sample:

Where goods are bought by bulk and the
buyer has tested 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.
8
Excluding Implied Terms:


These terms will not be incorporated
into the contract where they have been
expressly excluded, or express terms
conflict with them.
These exclusions may be invalid under
the unfair terms in consumer contracts

If the term excluding these implied terms is
struck out, the implied term will be effective.
9
In Consumer Cases:



These provisions apply where the buyer is a
consumer.
Within six months, after deliverey, the “buyer”
can require the seller to repair the goods,
reduce the price, or rescind 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:
 It is established that the goods did so
conform at the time of delivery, or
 The measure is incompatible with the nature
of the goods or the nature of the lack of
conformity.
10

Consumer requires repair or
replacement:

The seller must repair or replace the goods
within a reasonable amount of time.
 This cannot be required if it is impossible or
disproportionate in consideration of other
available remedies.

Consumer requires reduction or
rescission:

Only available where repair or replacement is
impossible or
the seller is taking an unreasonable amount of
time to perform these requirements.

11
Legal Title and Property:







Passing of property: Property (i.e. ownership) cannot
pass unless the goods are ascertained (the actual goods
to be sold are identified).
Rule 1: unconditional contract: property passes
immediately on contract formation.
Rule 2: conditional contract: property passes when the
condition is performed.
Rule 3: when it is bound to measure or weigh the
goods to ascertain the price, property passes when this
is done
Rule 4: when goods are delivered on sale or on
approval, property passes when the buyer adopts the
transaction.
Rule 5: in a sale of unascertained goods, the property
will pass following an unconditional appropriation of
goods
These 'rules' can be excluded by contrary implication
or express agreement.
12

Seller does not have title:

If the seller does not own the goods, the
buyer generally cannot gain title,
although he can sue for breach of the
implied term as to title.

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 cannot pass.
13
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 (suitable to the persons'
condition of life and actual requirements
at the time of contracting).
14
Miscellaneous:

Price: the price is “a money consideration given in

exchange for property in goods.”
If the price is not agreed, the buyer will be required to
pay a reasonable price.

Specific Goods that perish: the contract is

Place of transfer: where location is not
void where they perish before and avoided where they
perish after contract formation.
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.
15