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CUFS16 (January 2012)

SALE OF GOODS LAW

Businesses as well as consumers are usually free to enter into contracts on whatever terms they see fit to agree. However, contracts involving sales of goods can be subject to a range of statutory provisions. Consumers have greater protection than buyers who are ‘dealing in the course of a business’. ‘Let the buyer beware’ or ‘caveat emptor’ does not apply to all transactions and anyone selling goods in the course of a business to consumers should be aware that the law will imply certain terms into all such transactions.

Consumers are defined as people who are buying for purposes not related to their trade, business or profession.

1. Legislation

The Sale and Supply of Goods Act 1994 introduced significant changes to areas formerly covered by the Sale of Goods Act 1979, the Supply of Goods (Implied Terms) Act 1973, and the Supply of Goods and Services Act 1982. However, the 1979 Act, as amended, remains the bedrock of our sale of goods law. General sale of goods law is discussed in this fact sheet.

Our fact sheet on Sale of Goods Law (Consumer Protection) deals with legislation that is specifically designed to protect buyers who are consumers. This includes the Unfair Terms in Consumer Contracts Regulations 1999, the Consumer Protection (Distance Selling) Regulations 2000, the Sale and Supply of Goods to Consumers Regulations 2002 and the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987.

2. Implied Terms

The terms implied into most sales of goods contracts are found in sections 12–15 of the 1979 Act. Broadly speaking, they are:

Section 12: Title – The general rule is that a seller must have good title, that is to say, ownership and the right to sell the goods they are selling. If the goods are stolen, the seller will not have the right to sell them and the buyer will not obtain ‘good title’. In such a situation the buyer might well find they have to return the stolen goods to the rightful owner and seek compensation from the seller, assuming they can be found.

Similarly, a person who has possession of goods that are subject to a hire purchase (HP) contract will not usually be entitled to sell them while finance is still outstanding because it is the finance company that actually owns the goods.

Section 12 applies to people selling goods privately as well as to those selling goods in the course of their business and is one of strict liability. So, the fact that the seller did not know the goods were stolen is no defence to a claim for a full refund from the buyer.

Section 13: Description – If you are selling something by description it must correspond with the description given to it. So, a car advertised as being a 1994 model must be a 1994 model, rather than the front end of a 1994 model welded to the rear end of a 1990 model. Goods bought over the counter may be a sale by description so, if the buyer relies, at least in part, on any description given by the seller, those goods must correspond with that description. As with section 12, this section applies to both private sellers and those selling goods in the course of a business and is again one of strict liability. That means if a seller advertises a car for sale saying it is a 1994 model when in fact it is something else, the car will not correspond with the description. It is no defence to rely on information provided in the registration documents.

Section 14(2): Quality – The Sale and Supply of Goods Act 1994 introduced the requirement that goods be of a satisfactory quality. This section of the Act applies only to sellers who are acting in the course of a business. The Act sets out a list of criteria to be met for goods to be of a satisfactory quality. In order to satisfy that test, regard must be had to the following:

• Fitness for all the purposes for which goods of the kind in question are commonly...
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