contract law Acts

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Sale of Goods Act 1979 - Summary

Introduction

This summary examines the Sale of Goods Act 1979 (“the Act”) within its context: why it was drafted, what are its important provisions, and how it has changed since it came into force. It is submitted that the Sale of Goods Act 1979 has been part of a change in consumer dealings, with its most significant contributions being to the rights consumers have where they buy products that turn out to be faulty. Indeed, its use has been so central to implied terms in particular, that one author has been criticised for failing to see the contribution of the Act to the law of implied terms.[1] At the same time, the Act’s importance has to an extent been diminished by the introduction of very recent legislation.[2]

Rationale for Drafting

The Act codified various provisions, such as the formation of contract, which was already prevalent and well-established in common law.[3] However, its contribution was to enhance consumer confidence. It has been argued that without the Act, and its successors, there would be little protection for consumers.[4] This imbalance of consumer rights would lead to significant caution, and even “defensive consumerism.”[5] If consumers believe they have few rights when purchasing goods, then they are slow to trust newer and less-familiar brands, and will continue to buy goods from established brands, even where those goods actually lack in quality. Therefore, if the legislature does not guarantee certain minimums for consumer confidence, competition would suffer.[6] In summary, the Act was brought about due to a concern for protecting consumer rights, and thereby promoting consumer confidence and increase competition amongst producers.

Provisions of Note

The Act is recognised for its contribution to the law of implied terms. Sections 12-15 provide guidance on the existence and scope of implied terms relating to title, quality, sale by description, and sale by sample. It has been submitted these sections are central to any considerations about implied terms.[7]

Section 14 is important because of its use of several concepts. First, it implies several terms into all contracts, those terms being that the goods are of satisfactory quality, which is evaluated by reference to the “state and condition” of the goods.[8] Second, the section contains an important proviso: the terms are only implied when the sale is conducted “in the course of a business.”[9] The “valuable decision”[10] of MacDonald v Pollock[11] – a Scottish case which nevertheless provides important guidance for applying the Act across the UK[12] – has recognised this section to have far-reaching consequences for business-to-consumer and business-to-business transactions, because the definition of a business is now a material issue.[13]

Section 15A refers to remedies for breach of conditions in non-consumer cases. This section says a buyer may claim for breach of warranty, but not repudiate a contract, where “the breach is so slight it would be unreasonable for [the buyer] to reject [the goods].”[14] This section has been argued as “central to elements of commercial practice” – as in one case[15] – to concepts of description, condition, and rejection.[16]

The Act makes other specific additions to contract law designed to protect specific consumers. Section 3 of the Act gives detail about “necessaries” purchased by a minor. According to that section, necessaries – defined as “goods suitable to the condition in life of the minor and to his actual requirements at the time of sale and delivery” – must be sold/purchased at a “reasonable” price.[17] That section also requires a reasonable price must be paid by a person who “by reason of drunkenness is incompetent to contract.”[18]

In conclusion, it is submitted the Act has codified the law, provided guidance on various miscellaneous issues, and has been most significant for its contributions to consumer protection and commercial practice through the use of implied terms.

Redefined and Repealed

First, the Act and its place in consumer dealings has been further expanded on by subsequent legislation, in particular the Unfair Terms in Consumer Contracts Regulations 1999.[19] These Regulations have added “to the consternation of UK lawyers”,[20] the requirement by businesses to show good faith. This is a form of dealing which is often seen in Continental European jurisdictions, but much less often in English law, which has “freedom of contract” as its object.[21] Due to it not being part of English jurisprudence, the concept of good faith “remains primitive.”[22] Nevertheless, these legislative developments have been accommodated, if only to some extent, because of the detail given by the Act to implied terms.[23]

The Act has also been recently subjected to a reduction in its scope. The Consumer Rights Act 2015 (“the 2015 Act”), which came into force in October 2015, repealed a significant portion of the Act.[24] The Act formerly had provisions relating to unfair terms of contract in dealings vis-à-vis consumers and businesses.[25] All of those provisions have now been repealed and replaced by the 2015 Act.[26] Importantly, the 2015 Act has enshrined consumer protections relating to digital content. On the one hand, these changes are significant: the 2015 Act has introduced these protections because issues relating to digital content, such as methods of delivery to smartphones and the purchase of apps, were not envisaged at the time of the Sale of Goods Act.[27] To a degree therefore, the 1979 Act has been superseded. However, the Act still provides important concepts: the 2015 Act has principles of quality and fitness for purpose that are very similar to the 1979 Act.[28] Therefore, the Act continues to be relevant.

Conclusion

It is submitted the Act has been part of, and has helped to develop, consumer protection. It has been part of an effort to boost competition by giving consumers certain assurances about their rights when purchasing from businesses (hence why the definition of a “business” is such an important issue). To an extent, subsequent developments have introduced concepts to consumer-to-business dealings that were not envisaged in the Act. Nevertheless, it is submitted these developments were only possible, at least in part, due to the foundations of the Act and its provisions relating to implied terms.

BIBLIOGRAPHY

Cases

Arcos Ltd v EA Ronaasen and Son [1933] A.C. 470

MacDonald v Pollock [2012] CSIH 12 (IH (Ex Div)

Statutes

Consumer Rights Act 2015

Sale of Goods Act 1979

Unfair Terms in Consumer Contracts Regulations 1999

Journal articles

Oliver Bray, Ben Kerry, ‘Digital Content under the Consumer Rights Act 2015’ (2015) Ent. L. R. 271

David Campbell, ‘Contract Law and Contract Practice: Bridging the Gap Between Legal Reasoning and Commercial Expectation’ (2014) L.Q.R. 526

Cowan Ervine, ‘Clarifying the Sale of Goods Act’ (2012) S.L.T. 187

Cowan Ervine, ‘Implied Terms in English Contract Law’ (2012) J.B.L. 163

Paula Giliker, ‘The influence of EU and European human rights law on English private law’ (2015) I.C.L.Q. 237

Reshma Korde, ‘Good Faith and Freedom of Contract’ (2000) UCL Juris. Rev. 142

Andre Naidoo, ‘Consumer remedies following the sale of faulty goods’ (2011) J.B.L. 805

Eimear O’Brien, ‘The UK Consumer Rights Act 2015: unfair contract terms considered’ (2015) Comp. & Risk 12

Website

Daniel Greenberg, ‘Contracts: Implied Terms’ accessed at http://login.westlaw.co.uk/maf/wluk/app/document?docguid=I947D3FF03E2311E298C9E4E30120A4B4&context=13&crumb-action=replace&crumb-label=Contracts: implied terms at 18th February 2016


[1] Cowan Ervine, ‘Implied Terms in English Contract Law’ (2012) J.B.L. 163, p 163

[2] Consumer Rights Act 2015

[3] Andre Naidoo, ‘Consumer remedies following the sale of faulty goods’ (2011) J.B.L. 805, p 806

[4] Ibid, p 806

[5] Ibid, p 806

[6] Ibid, p 807

[7] Daniel Greenberg, ‘Contracts: Implied Terms’ accessed at http://login.westlaw.co.uk/maf/wluk/app/document?docguid=I947D3FF03E2311E298C9E4E30120A4B4&context=13&crumb-action=replace&crumb-label=Contracts: implied terms at 18th February 2016

[8] Sale of Goods Act 1979, s.14

[9] Ibid, s.14(2)

[10] Cowan Ervine, ‘Clarifying the Sale of Goods Act’ (2012) S.L.T. 187, p 191

[11] [2012] CSIH 12 (IH (Ex Div)

[12] n 10, p 187

[13] n 11

[14] Sale of Goods Act 1979, s.15A(1)(b)

[15] Arcos Ltd v EA Ronaasen and Son [1933] A.C. 470

[16] David Campbell, ‘Contract Law and Contract Practice: Bridging the Gap Between Legal Reasoning and Commercial Expectation’ (2014) L.Q.R. 526, p 527

[17] Ibid, s.3

[18] Ibid, s.3

[19] Paula Giliker, ‘The influence of EU and European human rights law on English private law’ (2015) I.C.L.Q. 237, p 44

[20] Ibid, p 44

[21] Ibid, p 44

[22] Reshma Korde, ‘Good Faith and Freedom of Contract’ (2000) UCL Juris. Rev. 142, p 151

[23] Ibid, p 151

[24] Eimear O’Brien, ‘The UK Consumer Rights Act 2015: unfair contract terms considered’ (2015) Comp. & Risk 12, p 14

[25] Sale of Goods Act 1979, ss. 48A-F

[26] Schedule 1, para 27

[27] Oliver Bray, Ben Kerry, ‘Digital Content under the Consumer Rights Act 2015’ (2015) Ent. L. R. 271, p 271

[28] Ibid, p 271