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LPC Law Notes International Commercial Law Notes

Intro To Sale Of Goods Contracts Notes

Updated Intro To Sale Of Goods Contracts Notes

International Commercial Law Notes

International Commercial Law

Approximately 179 pages

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SALE OF GOODS CONTRACTS

RELEVANT LEGISLATION
B2B

  • Sale of Goods Act 1979, as amended by:

a) the Sale and Supply of Goods Act 1994

b) the Sale of Goods (Amendment) Act 1994

c) the Sale of Goods (Amendment) Act 1995

  • If goods supplied with services, Supply of Goods and Services Act 1982 (SGSA 1982) applies

  • Unfair Contract Terms Act 1977 (UCTA 1977) deals with exclusion clauses
B2C

  • Consumer Rights Act 2014 (CRA)

  • See Table on p. 43 for rel’p between CRA and old legislation
DEFINITIONS
‘Sale of goods’

  • SGA, s 2(1): “a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price” (can refer to hire agreements)

  • SGA, s. 2(4): “Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale”
“Goods”

  • SGA, s. 61: “all personal chattels other than things in action and money”

  • E.g. not land, cheques, services

  • May be either existing (present) or future goods (SGA, 5(1))

  • Existing goods may be

  • Specific goods, identifiable at time of contract (2007 grey Mercedes, reg. T15 SHR)

  • Unascertained purely generic goods (100 tons of potatoes)

  • Specific quantity of goods from identified bulk (100 tons of potatoes from 200 tons currently stored in warehouse in Chatteris)

  • Future goods do not yet exist (e.g. next year’s crop); never specific

  • Where goods have perished, contract is void (SGA, s. 6)
CORE RIGHT & DUTIES (SGA 1979)
Table
Duties of seller Duties of Buyer

  • To deliver the goods (s. 29)

  • To deliver the correct quantity (s. 30)

  • To pass good title (s. 12)

  • To deliver goods which

  • Correspond w/ description (s. 13)

  • Are of satisfactory quality and fit for purpose (s. 14)

  • Correspond w/ sample (s. 15)

  • To accept delivery (s. 27)

  • To pay for the goods (s. 27)
Rights / Remedies of Seller Rights / Remedies of Buyer

  • To terminate / repudiate contract for breach of condition

  • Action for the price (s. 49)

  • Damages for non-acceptance (s. 50)

  • Rights of the unpaid seller:

  • Lien (s. 41)

  • Stoppage in transit (s. 44, 45)

  • Resale (s. 48)

  • To retain title to the goods until paid (ss. 17, 19)

  • To inspect the goods (s. 34)

  • To reject the goods and refuse payment for breach of condition

  • To damages for non-delivery (s. 51)

  • To damages when the goods are accepted (s. 53)

  • To request specific performance (s. 52)
Performance obligations

  • Three categories of performance obligations:

1) Default provisions (will apply unless agreed otherwise)

2) Implied terms that can be excluded by agreement (s. 55)

3) Implied terms that can never be excluded
OTHER CONTRACTS UNDER WHICH GOODS MAY PASS
Contracts for services

  • Contracts for services only (legal or accountancy advice)

  • Service will be performed with rble skill and care (s. 13)

  • Work will be carried out w/in rble time (if no specific time given) (s. 14)

  • Rble charge will be paid (if no price fixed) (s. 15)

  • Contracts for work & materials (where worker also supplies parts) – governed by SGSA 1982

  • Contracts for finished products (e.g. on-site construction of fitted kitchen)
Hire purchase

  • Regulated by Consumer Credit Act 1974

  • Buyer buys the goods from the finance house, pursuant to the credit agreement
Hire agreement

  • Hirer obtains only possession, not title
Leases of goods

  • Operating leases (short-term, multiple-use hire)

  • Finance leases (equipment supplied to one user for course of its working life (e.g. computers)

IMPLIED TERMS

SGA, SS. 12-15
SGA, ss. 12-15

  • s. 12 – Title

  • s. 13 – Correspondence with description

  • s. 14 – Quality and fitness for purpose

  • s. 15 – Correspondence with sample

  • Terms implied into all commercial contracts but parties may expressly agree to exclude them (w/ exception of s. 12), subject to UCTA 1977
Summary of operation of ss. 12-15
Section Duty of Seller in relation to: Condition / warranty Remedy
s. 12(1) Title Condition (s. 12(5A)) Rejection and / or damages
s. 12(2) Freedom from charges and encumbrances Warranty (s. 12(5A)) Damages only
s. 12(2) Quiet possession Warranty (s. 12(5A)) Damages only
s. 13(1) Description Condition (s. 13(1A)) Rejection and / or damages
s. 14(2) Satisfactory quality Condition (s. 14(6)) Rejection and / or damages
s. 14(3) Fitness for purpose Condition (s. 14(6)) Rejection and / or damages
s. 15(1) Sample Condition (s. 15(3)) Rejection and / or damages
DUTY TO PASS GOOD TITLE
UK

  • s. 12(1): implies that S has right to sell goods

  • s. 12(2): implied warrant that goods are free from charges and encumbrances not already known to B and that B will enjoy quiet possession
International

  • CISG, 41: S must deliver goods free of any claims of TPs

  • USS, 2-312: implied warranty that S will pass good title

  • PICC / PECL: no specific provision on title (but duty of good faith)
SALE BY DESCRIPTION
UK

  • s. 13(1): implies that good sold should comply with their description, e.g. on website, in catalogue, brochures, advertisements

  • CONDITION (s. 13(1A)

  • B must know or, and have relied on, the description

  • Breach of s. 13 may also amount to misrepresentation
International

  • CISG , 35: obligation for goods to comply with description, unless otherwise agreed

  • UCC, 2-314: goods not merchantable unless comply with description

  • PICC: non-compliance w/ description = non-conforming goods remediable under 7.1.4

  • PECL: non-performance remediable under 8.104
SATISFACTORY QUALITY
UK

  • s. 14(2): goods must be, objectively, of satisfactory quality

  • Factors take into account:

  • price and description (14(2A);

  • fitness for purpose, appearance and finish, freedom from minor defects, safety and durability (s. 14(2B)); those relevant to circumstances

  • S not liable if defect specifically drawn to B’s attention before contract made (s. 14(2C))

  • CONDITION (s. 14(6))
International

  • CISG, 35: goods must be ‘of the quality… required by the contract’; good practice include specific...

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