#20305 - L4 Pt.2 Implied Terms In Non Consumer Contracts Satisfactory Quality & Fitness - Commercial Sales Law Lecture Notes

L4 Pt.2: Implied Terms in Non-consumer Contracts:

Satisfactory Quality & Fitness

1. The Statutory Framework (SGA 1979)

The Sale of Goods Act (SGA) implies specific conditions into contracts for the sale of goods to protect the buyer from defective or non-conforming products.These terms are classified asconditions, meaning a breach allows the buyer to repudiate the contract and claim damages.

A. Satisfactory Quality (Section 14(2))

• Business Requirement: This term only applies when the seller is acting"in the course of a business".UnderStevenson v Rogers, this is interpreted broadly to include even incidental or sporadic sales.

• Strict Liability: The seller's liability is strict; they are liable for defects regardless of whether they were at fault.

• The Objective Test: Quality is measured by what a"reasonable person"would find satisfactory.This is an objective standard that ignores the subjective views of the specific buyer or seller.

• Factors of Quality: Courts consider the description, price (higher prices often imply higher quality expectations), and all other relevant circumstances.

• Specific Aspects (s 14(2B)): Includes fitness for all common purposes, appearance and finish, freedom from minor defects, safety, and durability.

B. Fitness for Particular Purpose (Section 14(3))

• Application: Where a buyer makes known aparticular purposefor the goods (expressly or by implication), there is an implied condition that the goods are reasonably fit for that specific use.

• Reliance: This does not apply if the buyer does not rely on the seller's skill or judgment, or if such reliance would be unreasonable (Jewson v Boyhan).

• Particular vs. Usual Purpose: If the goods are for their "usual" purpose, the buyer need not explicitly state it (e.g., a hot water bottle must be fit for hot water—Priest v Last).

C. Sale by Sample (Section 15)

• Core Requirements: The bulk of the goods must match the sample in quality, and the goods must be free from any defect that would not be apparent upon a "reasonable examination" of the sample.

• Latency: If a defect is hidden (latent) and not discoverable by reasonable inspection, the seller remains liable (Godley v Perry).

2. Supply of Goods and Services Act (SGSA 1982)

For contracts not involving a "sale" (e.g., hire, barter, or services), the SGSA implies nearly identical terms.

• B2B Services (s 13): The supplier must carry out the service withreasonable care and skill.

• Fault-Based: Unlike the strict liability for goods, service...