IMPLIED TERMS - STATUTORY INTERVENTION IN CONTRACT
Sale of Goods Act 1979 & Supply of Goods & Services Act 1982
INTRODUCTION TO THE UNIT 1.
WHY HAS IT BEEN NECESSARY FOR PARLIAMENT TO INTERVENE IN CONSUMER CONTRACTS REGARDING THE BUYING AND SELLING OF GOODS AND SERVICES AND THE PROVISION OF CREDIT FACILITIES ?
1.
TRADERS OFTEN IN SUPERIOR BARGAINING POSITION SO CAN TAKE UNFAIR ADVANTAGE OF A CONSUMER
2.
CONSUMERS OFTEN LACK RELEVANT KNOWLEDGE ABOUT A PRODUCT
3.
CONSUMER OFTEN LACK KNOWLEDGE REGARDING CONTRACTUAL DEALS
4.
NEED “PROTECTION” FROM UNSCRUPULOUS TRADERS
INTRODUCTION TO THE UNIT contd 2.
WHAT ARE SOME OF THE STATUTES PASSED GOVERNING THE PROVISION OF GOODS OR GOOD & SERVICES e.g. BUILDING A HOUSE
1.
SALE OF GOODS ACT 1979
2.
SUPPLY OF GOODS & SERVICES ACT 1982
3.
CONSUMER PROTECTION ACT 1987 [DEFECTIVE PRODUCTS]
4.
UNFAIR CONTRACT TERMS ACT 1977
5.
UNFAIR TERMS IN CONSUMER CONTRACTS REGULATIONS 1999
3.
WHAT IS A “CONSUMER” ?
A “ORDINARY” PERSON I.e. WHO IS NOT DEALING AS NOT A BUSINESS OR COMPANY, AND WHO “BUYS” ITEMS NORMALLY USED FOR PRIVATE USE OR CONSUMPTION OR ENTERS INTO A CONTRACT FOR SERVICES WITH A PERSON WHO IS RUNNING A BUSINESS
THE SALE OF GOODS ACT 1979 [SOGA 79]
CONTRACTS WHICH ARE NOT COVERED BY SOGA 79 1.
CONTRACTS PROVIDING BOTH GOODS AND SERVICES e.g. BUILDING A HOUSE
2.
HIRE PURCHASE CONTRACTS – REGULATED BY THE CONSUMER CREDIT ACT 1974
3.
HIRE CONTRACTS – SUPPLY OF GOODS & SERVICES ACT 1982 – NOTE THE “OWNERSHIP” OF THE GOODS NEVER PASSES TO THE HIRER
4.
BARTERING e.g. EXCHANGING GOODS OR SERVICES
5.
FREE GIFTS LINKED TO A CONTRACT FOR SALE e.g. FREE CUSHIONS GIVEN AWAY WHEN YOU PURCHASE A SETTEE
6.
GOODS SUPPLIED IN RETURN FOR TRADING STAMPS – TRADING STAMPS ACT 1964
GENERAL TERMINOLOGY IN SOGA 79 1.
WHAT IS A CONTRACT FOR THE SALE OF GOODS ?
s2[1] SOGA DEFINITION A CONTRACT WHERE SELLER TRANSFERS OR AGREES TO TRANSFER THE “PROPERTY” IN THE GOODS TO THE BUYER FOR A MONEY CONSIDERATION CALLED “THE PRICE”
NOTE : CONTRACTS TO “SELL” IMMEDIATELY TO THE BUYER AND OWNERSHIP OF THE GOODS PASSES IMMEDIATELY e.g. BUYING A NEWSPAPER OR AGREES TO SELL IN THE FUTURE WHEN THE OWNERSHIP IN THE GOODS WILL PASS TO THE BUYER IN THE FUTURE e.g. GOODS NOT MANUFACTURED YET OR HAVE NOT BEEN SEPARATED FROM A BULK OF ITEMS ESPECIALLY FOR YOU
GENERAL TERMINOLOGY contd 2.
WHAT IS MEANT BY “PROPERTY” ?
ALTHOUGH THE BUYER MAY HAVE THE GOODS TRANSFERRED TO HIM WHAT HE ACTUALLY ACQUIRES IS THE “PROPERTY” – THE OWNERSHIP IN THE GOODS, NOT THE GOODS THEMSELVES
3.
WHAT CONSTITUTES “GOODS”
TANGIBLE [YOU CAN TOUCH AND SEE THEM] OR “MOVEABLE” ITEMS BUT NOT INTANGIBLE ITEMS [INVISIBLE THINGS LIKE GAS, ELECTRICITY] NOR LAND
GENERAL TERMINOLOGY contd 4.
“PRICE”
GOODS MUST BE EXCHANGED FOR MONEY OR AT LEAST PART MONEY E.G. PART EXCHANGE
BARTERING I.E. GIVING “GOODS FOR GOODS” IS NOT COVERED
IMPLIED TERMS OF SOGA 79 CONDITION OR WARRANTY ? CONDITION
VERY IMPORTANT TERM GOES TO THE “HEART OF THE CONTRACT” e.g. SELLER SAYS THE CAR IS A SPECIFIC MODEL MADE IN A SPECIFIC YEAR BUT BOTH STATEMENT ARE UNTRUE. IF BREACHED CLAIM THE “DOUBLE WHAMMY” – “RESCIND’” THE CONTRACT I.e. TREAT CONTRACT AS AT AND END AND CLAIM DAMAGES
WARRANTY
LESSER BUT STILL IMPORTANT TERM e.g. SELLER SAYS CAR WAS SERVICED IN LAST 3 MONTHS BUT WAS SERVICED 5 MONTHS AGO IF BREACHED CLAIM DAMAGES ONLY
IMPLIED TERMS OF SOGA 79 contd SECTIONS 12 – 15 SOGA 79 ARE “CONDITIONS”
SECTION 12
TITLE
SECTION 13
DESCRIPTION
SECTION 14
SATISFACTORY QUALITY AND FITNESS FOR PURPOSE
SECTION 15
SAMPLE
CAN A SELLER EXCLUDE LIABILITY FOR THE IMPLIED TERMS OF SOGA 79 ? WHERE THE BUYER IS A “CONSUMER” THE ANSWER IS NO !!! CANNOT EITHER EXPRESSLY OR IMPLIEDLY EXCLUDE LIABILITY
S6 UNFAIR CONTRACT TERMS ACT 1977 CONSUMER TRANSACTIONS [RESTRICTIONS ON STATEMENTS] ORDER 1976
WHAT IS “SPECIAL” ABOUT THE CONSUMER TRANSACTIONS [RESTRICTIONS ON STATEMENTS] ORDER 1976 ?
IT IS NOW A CRIMINAL OFFENCE TO PUT A CLAUSE EXCLUDING LIABILITY FOR BREACHING ANY OF THE IMPLIED TERMS IN A CONSUMER CONTRACT, NOTICE OR ADVERTISEMENT OR ANY OTHER WRITTEN FORM.
CAN A SELLER EXCLUDE LIABILITY FOR THE IMPLIED TERMS OF SOGA 79 WHERE THE BUYER IS NOT A CONSUMER ?
WHERE THE BUYER IS NOT A “CONSUMER” I.e. IS A “BUSINESS” BUYING FROM A BUSINESS THE ANSWER IS “YES” BUT ONLY IF EXCLUDING THEM IS REASONABLE.
NOTE : SECTION 12 – RELATING TO “TITLE” CAN NEVER BE EXCLUDED EITHER FROM CONSUMER OR BUSINESS CONTRACTS
“YOUR STATUTORY RIGHTS ARE NOT AFFECTED” EVER SEEN THIS SIGN IN A SHOP AND NOT KNOWN WHAT IT MEANS? NOW YOU DO !!!! THE SHOP IS TELLING YOU THAT YOUR “STATUTORY RIGHTS UNDER S.O.G.A. 79 ARE NOT EXCLUDED BUT THEY DON’T ACTUALLY TELL YOU WHAT YOUR RIGHTS ARE !!!
SO…………………..LET’S LOOK AT SOME OF THESE “STATUTORY RIGHTS”
SECTION 12 [1] - SOGA 79 – TITLE [OWNERSHIP]
THIS IS MINE !!!!!!!!
SECTION 12 [1] - SOGA 79 – TITLE S12 [1] SOGA 1979 IMPLIED CONDITION THAT SELLER HAS THE LEGAL “RIGHT” TO SELL THE GOODS I.e. HE HAS THE “LEGAL TITLE”
WHERE AN IMMEDIATE SALE, THE SELLER HAS A RIGHT TO SELL THE GOODS OR WHERE AN AGREEMENT TO SELL, SELLER HE WILL HAVE SUCH A RIGHT AT THE TIME WHEN THE PROPERTY IS TO PASS. NO RIGHT TO SELL GOODS IF AGREEMENT
STOLEN OR SUBJECT OF A HIRE PURCHASE
BREACH OF CONDITION IF THE RIGHTFUL OWNER RECOVERED THE GOODS FROM THE BUYER - THE BUYER SUES THE SELLER. ROWLAND v DIVALL (1923) [STOLEN CAR HAD TO BE RETURNED TO RIGHTFUL OWNER]
SECTION 13 - SOGA 79 – DESCRIPTION
CUTE PANDA BEAR
SECTION 13 - SOGA 79 – DESCRIPTION S13(1) SOGA 1979 – IMPLIED CONDITION GOODS SOLD BY DESCRIPTION e.g. “SILK” ?? GOODS MUST CORRESPOND TO THAT DESCRIPTION S13(1) “WHERE THERE IS A CONTRACT FOR THE SALE OF GOODS BY DESCRIPTION, THERE IS AN IMPLIED CONDITION THAT THE GOODS SHALL CORRESPOND WITH THAT DESCRIPTION.” INCLUDES : •
PRE-CONTRACTUAL DESCRIPTIONS USED BY PROSPECTIVE SELLERS
•
GOODS ORDERED FROM CATALOGUES/BROCHURES
•
DESCRIPTION ON PACKAGING OF ARTICLES
WHEN A PURCHASER CANNOT RELY ON SECTION 13 – DESCRIPTION
NOTE : SECTION WILL NOT APPLY IF PURCHASER HAS HAD AN OPPORTUNITY TO EXAMINE AND SELECT GOODS AND THEN CHECK THAT THE DESCRIPTION WAS ACCURATE E.g. BUYING A JUMPER LABELLED “WOOL” BUT WAS IN FACT ACRYLIC – EVEN IF YOU HAD TRIED IT ON. IMPORTANT FACTOR THAT THE BUYER RELIES ON THE SELLER’S DESCRIPTION HARLINGDON & LEINSTER ENTERPRISES LTD v CHRISTOPHER HULL FINE ART LTD (1990)
SECTION 13 - SOGA 79 – WHAT CONSTITUTES “DESCRIPTION” ? DESCRIPTION” APPLIES TO : • • • •
INGREDIENTS AGE DATE OF SHIPMENT PACKAGING AND QUALITY
BEALE v TAYLOR (1967) [TRIUMPH HERALD CAR]
S13 IMPOSES A STRICT DUTY AND ANY SLIGHT DEVIATION WILL AMOUNT TO A BREACH OF CONDITION ENTITLING THE BUYER TO REJECT THE GOODS. RE MOORE & CO LTD and LANDAUER AND & (1921) [PEACHES] S13 APPLIES EVEN IF THE BUYER DOES NOT SUFFER A DETRIMENT : ARCOS v RONAASEN (1933) [TIMBER]
SECTION 14 - SOGA 79 – SECTION 14[2] - SATISFACTORY QUALITY SECTION 14[3] - FIT FOR PURPOSE
SECTION 14 - SOGA 79 – SECTION 14[2] - SATISFACTORY QUALITY SECTION 14[3] - FIT FOR PURPOSE THIS SECTION IMPLIES TWO CONDITIONS THAT A SELLER OF GOODS PROMISES THAT THE GOODS HE SELLS ARE : 1.
OF SATISFACTORY QUALITY
AND ALSO THAT THE GOODS ARE 2.
“FIT FOR PURPOSE”
NOTE : THIS SECTION DOES NOT APPLY TO PRIVATE SALES - APPLIES ONLY WHERE SALES ARE MADE “IN THE COURSE OF BUSINESS” IF SOMEONE TRIES TO HIDE THE FACT THAT THEY ARE A BUSINESS AND TRIES TO SELL AS A PRIVATE PERSON IT IS A CRIMINAL OFFENCE – BUSINESS ADVERTISEMENTS (DISCLOSURE) ORDER 1977.
WHAT IS “SATISFACTORY QUALITY” ? S14(2A) DEFINES SATISFACTORY QUALITY AS BEING OF A STANDARD THAT THE REASONABLE PERSON WOULD REGARD AS SATISFACTORY HAVING REGARD TO THE DESCRIPTION, PRICE AND ALL OTHER RELEVANT CIRCUMSTANCES THIS INCLUDES NOT ONLY THE STATE AND CONDITION OF THE GOODS BUT ALSO: : · · · · ·
FITNESS FOR ALL THE PURPOSES FOR WHICH THE GOODS OF THAT KIND ARE COMMONLY SUPPLIED APPEARANCE AND FINISH FREEDOM FROM MINOR DEFECTS SAFETY DURABILITY
NOTE A NEW SS14(2D) AND 2E INSERTED BY THE SALE & SUPPLY OF GOODS TO CONSUMERS REGULATIONS 2002 WHICH STATES THAT A STATEMENT BY A SELLER, PRODUCER OR HIS REPRESENTATIVE IS ALSO A RELEVANT CIRCUMSTANCE UNDER S142(A) UNLESS HE WAS NOT AND COULD NOT HAVE BEEN AWARE OF THE STATEMENT WHEN THE CONTRACT WAS MADE.
“MERCHANTABLE” QUALITY
PREVIOUS STATUTES REFERRED TO “MERCHANTABLE QUALITY” AND “FITNESS FOR PURPOSE”BUT SALE & SUPPLY OF GOODS ACT 1994 AMENDED SOGA 1979 “MERCHANTABLE” TO “SATISFACTORY” QUALITY - EASIER TO UNDERSTAND. ALSO ADDED REQUIREMENT THAT GOODS SHOULD BE FIT FOR ALL THE PURPOSES FOR WHICH IT IS COMMONLY SUPPLIED
WHY WERE THE GOODS OF “UNSATISFACTORY” QUALITY? GODLEY v PERRY CHAPRONIER v MASON WILSON v RICKETT COCKERELL LTD – GEDDLING v MARSH ASWAN ENGINEERING ESTABLISHMENT CO v LUPINE LTD GRANT v AUSTRALIAN KNITTING MILLS HEIL v HEDGES
WHEN CAN A BUYER NOT CLAIM GOODS ARE NOT OF A “SATISFACTORY QUALITY” ? S14(2C ) A BUYER CANNOT CLAIM GOODS ARE NOT OF SATISFACTORY QUALITY WHERE ANYTHING MAKING THE GOODS UNSATISFACTORY WAS SPECIFICALLY DRAWN TO THE BUYER’S ATTENTION BEFORE PURCHASE e.g. A NOTICE SAYING “SECONDS” OR IF THE BUYER EXAMINED THE GOODS BEFOREHAND AND THE EXAMINATION REVEALED OR OUGHT TO HAVE REVEALED THE DEFECT.
SO – DON’T EXAMINE THE GOODS !!!!!
SECTION 14[3] – SOGA 79 - FITNESS FOR PURPOSE IMPLIED CONDITION IF A BUYER TELLS THE SELLER THAT HE WISHES THE GOODS FOR A PARTICULAR OR SPECIFIC PURPOSE THEN THE GOODS WHICH ARE SUPPLIED BY THE SELLER MUST BE FIT FOR THAT PURPOSE WHETHER OT NOT THAT IS A PURPOSE FOR WHICH SUCH GOODS ARE COMMONLY SUPPLIED AND THE BUYER MUST RELY ON THE SELLER’S SKILL & JUDGEMENT THIS SECTION APPLIES UNLESS CIRCUMSTANCES SHOW THAT THE BUYER DOES NOT RELY, OR THAT IT IS UNREASONABLE FOR HIM TO RELY, ON THE SKILL OR JUDGMENT OF THE SELLER [B & Q VARNISH] SO IF A BUYER PERSONALLY SELECTS GOODS WHICH ARE UNSUITABLE FOR A SPECIFIC JOB HE CANNOT CLAIM UNDER S14[3] NOTE: WHERE GOODS ONLY HAVE ONE PARTICULAR PURPOSE THEN THE SELLER IS LIABLE IF THE GOODS ARE NOT FIT FOR THAT PURPOSE. PRIEST v LAST 1903 – DEFECTIVE HOT WATER
SECTION 14[3] – FITNESS FOR PURPOSE GRIFFITHS v PETER CONWAY LTD WOMAN BUYS A TWEED COAT BUT DID NOT MENTION SHE SUFFERED FROM AN ALLERGIC REACTION TO WOOL. MISS GRIFFITHS DID NOT STIPULATE SHE HAD SENSITIVE SKIN AND THEREFORE HAD NOT STATED THE COAT HAD TO BE “FIT FOR A SPECIFIC PURPOSE” AND IT WAS SUITABLE AS A COAT FOR ANYONE ELSE APART FROM HER
SECTION 15 – SOGA 79 – SALE BY SAMPLE
SECTION 15 – SOGA 79 – SALE BY SAMPLE WHERE GOODS ARE SOLD BY SAMPLE THERE ARE THREE IMPLIED CONDITIONS : (i) THE BULK OF THE GOODS WILL CORRESPOND WITH THE SAMPLE IN QUALITY (ii) THE BUYER WILL HAVE A REASONABLE OPPORTUNITY OF COMPARING THE BULK WITH THE SAMPLE (iii) THE GOODS WILL BE FREE FROM ANY DEFECT RENDERING THEM UNSATISFACTORY WHICH WOULD NOT BE APPARENT ON A REASONABLE EXAMINATION OF THE SAMPLE APPLIES TO THINGS LIKE WALLPAPER, CARPETS, CURTAIN MATERIAL OR A SUIT ORDERED AFTER LOOKING AT A RETAILER’S PATTERN BOOK. GODLEY v PERRY (1960) - CATAPULT
IMPOSITION OF STRICT LIABILITY FOR SECTIONS 12 – 15 SOGA 79 WHAT DOES “STRICT LIABILITY” MEAN ? IN WHAT WAY WHERE THE SELLERS “STRICTLY LIABLE” IN THE CASE OF : GODLEY v PERRY [1960] FROST v AYLESBURY DAIRY CO [1905]
LIABLE WITHOUT PROOF OF FAULT GODLEY v PERRY [1960] DEF LIABLE EVEN THOUGH SHE DID NOT KNOW THE CATAPULT WAS FAULTY FROST v AYLESBURY DAIRY CO [1905] DEF LIABLE FOR DEATH OF CLAIMANT’S WIFE DUE TO CONTAMINATED MILK DESPITE FACT HE DID NOT KNOW COULD HAVE KNOW ABOUT THE CONTAMINATION WITH TYPHOID
TIMING – WHEN CAN A CLAIM FOR A BREACH OF THE IMPOSED TERMS BE MADE ? AT THE TIME OF DELIVERY FROM THE SELLER TO THE BUYER IMPORTANT NOTE : SALE & SUPPLY OF GOODS TO CONSUMERS REGULATIONS 2002 IF GOODS ARE FAULTY WITHIN SIX MONTHS OF DELIVERY THEN THE DEFECT IS PRESUMED TO HAVE BEEN THEN WHEN THE BUYER TOOK DELIVERY OF THE GOODS
THE EFFECT OF A BREACH OF THE IMPLIED TERMS – WHAT CAN YOU DO ? WHERE THE BUYER IS A CONSUMER A BREACH OF CONDITION MEANS : 1.
THE CONTRACT CAN BE RESCINDED i.e. TREATED AS AT AN END AND THE PARTIES ARE RETURNED TO THEIR ORIGINAL PRE CONTRACTUAL POSITION.
2.
BUYER ON RETURNING THE GOODS CAN CLAIM A REFUND
3.
BUYER CAN CLAIM DAMAGES
4.
BUYER CAN CLAIM FOR ADDITIONAL COSTS.
NOTE – FOR A BREACH OF SS 12 – 15 YOU DO NOT HAVE TO ACCEPT A CREDIT NOTE OR ACCEPT A REPLACEMENT.
THE EFFECT OF A BREACH OF THE IMPLIED TERMS – BUYER IS NOT A CONSUMER - WHAT CAN YOU DO ?
S15A SOGA 79 WHERE THE BUYER IS NOT A CONSUMER A BREACH OF CONDITION AS IN s13, 15, OR 15 OCCURS BUT THE BREACH IS SO SLIGHT THAT IT WOULD BE UNREASONABLE FOR HIM TO REJECT, THEN HE IS STUCK WITH THE CONTRACT AND CAN ONLY CLAIM DAMAGES – HE CANNOT REJECT THE GOODS ARCOS v RONAASEN OR IF THE SELLER DELIVERS QUANTITY VERY SLIGHTLY IN EXCESS OR LESS THAN THAT ORDERED - AND THE BUYER IS NOT A CONSUMER – CANNOT REJECT IF UNREASONABLE TO DO SO BUT CAN STILL CLAIM DAMAGES
HOW CAN A CONSUMER LOST THE RIGHT TO REJECT GOODS ? S11[4] SOGA 79 A BUYER CAN LOSE HIS RIGHT TO REJECT THE GOODS ONCE THE GOODS HAVE BEEN ACCEPTED. HE CAN STILL CLAIM DAMAGES BUT LOSES THE RIGHT TO A COMPLETE REFUND.
SUPPLY OF GOODS AND SERVICES ACT 1982
TERMS IN THE SGSA 1982 IN CERTAIN INSTANCES YOU MAY BE “SUPPLYING” GOODS E.G. BRICKS AND MORTAR etc AND ALSO “CARRYING OUT A SERVICE” THE IMPLIED TERMS IN SUCH CONTRACTS ARISE FROM THE SUPPLY OF GOODS AND SERVICES ACT 1982 THERE ARE SIMILAR TERMS TO THE SALE OF GOODS ACT S2 S3 S4 S5
TITLE DESCRIPTION QUALITY SAMPLE
BUT THERE ARE THREE OTHER ADDITIONAL TERMS WHICH REALLY RELATE TO THE “SERVICE” PART OF THE CONTRACT : S13 S14 S15
WORK WILL BE CARRIED OUT WITH REASONABLE CARE AND SKILL WORK WILL BE CARRIED OUT WITHIN A REASONABLE TIME PRICE CHARGED WILL BE REASONABLE
S13 – WORK WILL BE CARRIED OUT WITH REASONABLE CARE AND SKILL A TERM IS IMPLIED WHICH MEANS THAT WHERE A SUPPLIER IS ACTING IN THE COURSE OF BUSINESS HE WILL CARRY OUT THE SERVICE WITH REASONABLE CARE AND SKILL e.g. TAKING YOUR CLOTHES TO THE DRY CLEANERS YOU WOULD EXPECT THEM TO BE RETURNED IN GOOD CONDITION NOT COVERED IN OIL OR TAR OR TORN.
NOTE : THIS IS ESPECIALLY RELEVANT IN THE RECENT TRAGEDY IN A CYPRUS HOTEL WHERE AN AIR CONDITIONING ENGINEER DID NOT CARRY OUT HIS WORK WITH REASONABLE CARE AND SKILL AND TWO CHILDREN IN A FAMILY DIED AS A RESULT OF CARBON MONOXIDE POISONING FROM FAULTY INSTALLED PIPEWORK
S14 – WORK WILL BE CARRIED OUT WITHIN A REASONABLE TIME WHERE THE TIME FOR PERFORMANCE OF THE CONTRACT HAS NOT BEEN AGREED, A TERM IS IMPLIED WHICH MEANS THAT WHERE A SUPPLIER IS ACTING IN THE COURSE OF BUSINESS HE WILL CARRY OUT THE SERVICE WITHIN A REASONABLE TIME – WHAT’S REASONABLE ?
DEPENDS ON THE CIRCUMSTANCES e.g. MINOR CAR REPAIRS – A FEW DAYS IF SPARE PARTS ARE NEEDED BUT NOT SIX MONTHS !
S15 – THE PRICE CHARGED WILL BE REASONABLE
WHERE A FIXED PRICE HAS NOT BEEN AGREED EITHER EXPRESSLY OR PREDETERMINED FROM A PREVIOUS COURSE OF DEALINGS, A TERM IS IMPLIED WHICH MEANS THAT WHERE A SUPPLIER IS ACTING IN THE COURSE OF BUSINESS T PRICE CHARGED WILL BE REASONABLE - WHAT’S REASONABLE ?
PLUMBER CALLED IN TO MEND A BURST PIPE – NO REFERENCE MADE TO HIS CHARGES – HE IS ENTITLED TO A REASONABLE AMOUNT FOR HIS SERVICES ON COMPLETING THE JOB