The Sale of Goods Act - Case Study Example

SALE OF GOODS ACT, 1978 “It is not possible to create an all embracing test of satisfactory quality, nor, when considering fitness for purpose, is itpossible to define exactly what amounts to a reasonable reliance on the seller’s skill and judgment.” With reference to the above statement, critically evaluate the meaning of “satisfactory quality” and “fitness for purpose” in the Sale of Goods Act, 1979. Over many years the common law has evolved implied terms which gives the customer certain rights against those who supply him with goods or services. These terms are said to be implied because they apply as part of the contract which comes into existence whenever goods or services are supplied, regardless of whether they are mentioned by the customer or the trader. Satisfactory Quality as envisaged by the Sale of Goods Act, 1979 is a relative term, as the quotient is the satisfactory needs being met of a “reasonable person”, and more often than not is governed by variables like price and description, wherein aspects of durability, safety, appearance and freedom from minor defects are to be considered as an integral part of evaluation. 1 Further thereto, where goods are sold by a trader, the same ought to be reasonably fit for the buyer’s particular purpose, provided the buyer had made his purpose known, and relied on the expertise of the seller.2 The dealer was sound only by implied condition as envisaged under Section 14(2) of the Sale of Goods Act, 1979 (hereinafter referred to as the 1979 Act for brevity), where “merchantable quality”3 was given emphasis minor defects would not necessarily mean a downgrade of the marketable quality, it was only a yardstick that the standard to be achieved depended on the market it was aimed at. For example if a buyer on the one hand specified his requirements and relied on his skill and/or judgment, he would be bound by implied conditions in Section 14(3) of the 1979 Act. If on the other hand, a buyer on specifying his requirements, decided on the representation, skill and judgment of the seller, the seller was duty bound to give the buyer what he wanted, and failing which the buyer was provided in that event of failure, with a remedy in damages. 4 This view was further endorsed by the Law commission’s Report of 1987 (Law Com. No. 160) that implied that the goods should be of marketable quality,5 meaning “acceptable quality”.6 In the event the buyers exercised his option of acceptances, he necessarily would bar rejection, which is both a precursor to the buyer’s right to treat the contract as repudiated and the basis for any right to request repair or replacement under English Law. Exclusion clauses are governed by judicial rules, by the Unfair Contract Terms Act 1977 and by the Unfair Terms in Consumer Contract Regulations 1999. The judicial approach will be to ask first whether the statement is incorporated into the contract at all. Secondly, the meaning of the clause itself will be interpreted contra proferentem, that is, against the party that drew it up in cases where there is any doubt in the matter. A term of a contract must have been inserted at the time when the contract was made. Once it is concluded, the statement will have no legal value as no consideration will have been given for it and, in any event, it would be a variation of the contract already agreed. A person cannot by reference to any contract term or to a notice, exclude or restrict his liability for death or personal injury resulting from negligence. In the case of other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness. However the doctrine of “caveat emptor” or buyer’s beware, stood glaringly creating anomalies with the provisions of the Act of 1979, whence the doctrine arose from judicial reluctance to intervene in contractual disputes and emerged in its replaced version of caveat venditor,7 and the concept of strict liability were to be applied. The intent and object with which Lord Casswell has expressed his view is to make clear that the protection of consumers is to be given importance and should be kept in mind by the legislature wherein they do not interfere with the terms of trade between the dealers and their customers.8 The fitness for purpose duty in the Sale of Goods Act 1979, s 14(3) is in essence quite simple, despite the convoluted language in which it is expressed. The goods must be reasonably fit for the purpose for which the buyer requires them - not perfectly and absolutely fit, but reasonably fit - provided three requirements are satisfied. First, the seller must sell in the course of a business. Secondly, the buyer must have told the seller the purpose (expressly or by implication) before the sale takes place. Thirdly, the seller will escape liability if it can be shown that the buyer did not rely on the seller’s skill and judgement, or that it was unreasonable for the buyer so to rely. Where the buyer is relying on the skill and judgement of the seller, that reliance will not be taken to extend to the avoidance of peculiarities which no reasonable seller could anticipate - so long as they are plainly peculiarities in the buyer or the buyers property, rather than in the seller or the sellers property. So stated, the rule is a reasonable one on the facts of Slater, though it is not what the statutory wording most obviously suggests; and perhaps it needs to be emphasised that part of what the buyer is paying for is a knowledge of at least the more usual peculiarities. As the lords were in reality sneaking in a defence of due diligence, it would have been well to emphasise that it should be a demanding one.9 The normal and the accepted view under the English Law is that the buyer has the right to reject the goods and demand a refund, whenever his specifications are not met with the amendments, as they stand it has been found that a buyer does not immediately look for a refund, instead exhaust his options of repair and replacement. Refund is used as the last resort to rectification or cancellation of the contract so entered into, though this is the only clear legal right. It has become a recognized practice that the question of quality cannot be separated from the other aspects of conformity, questions of delivery, wherein the entire contractual matrix needs to be examined within the operative framework of law of sale of goods. Problems of risk are not fully dealt with as relativity is given emphasis, leaving or creating a glaring gap in the scope of harmonization. The other escape route was that of authority, and their Lordships placed particular stress on Griffiths v Peter Conway [1939] 1 All ER 685, which does indeed seem on all fours with the present case. The plaintiff bought a Harris tweed coat, which had been made up to her specific instructions. It rapidly emerged that the coat gave her dermatitis, due to her having abnormally sensitive skin. Branson J and the Court of Appeal refused liability. Again, the case for liability is simple enough - the plaintiff bought the coat to wear, but it turned out not to be suitable for that purpose - and the eventual denial of liability takes some fancy footwork indeed. Sir Wilfred Greene MR went so far as to deny that the buyer had revealed the purpose for which she wanted the coat, namely to be worn by someone with an abnormally sensitive skin. This seems to me to be sophistry. She made it perfectly clear that it was to wear, and that it was she who would be doing the wearing, and that she was relying on the seller’s skill and judgement. It might have been different if she had held back knowledge of her sensitivity, but it was accepted that it was as much a surprise to her as it was to the seller. It is a fair point that the seller was not in a position to use the skill and judgement on which the buyer was relying: "[H]ow can he decide and exercise skill or judgement in relation to the suitability of the goods that he is selling for the use of the particular individual who is buying from him unless he knows the essential characteristics of that individual?" ([1939] 1 All ER 691, per Sir Wilfred Greene MR).”10 If goods do not correspond with the description or are not of satisfactory quality or are not fit for the purpose there is a breach of an implied condition and the customer can reject the goods (unless he has lost the right). Generally this will mean that the customer is entitled to his money back. (He need not accept a credit note.) He may also be entitled to compensation for any losses or expenses which he has incurred. ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­It is interesting to contrast the decision in Beta vs. Adobe11, where the Scottish Principle of jus quaestium tertio was used, depriving the decision of professing a wider significance, and made a limiting clause reasonable, through they fail to distinguish between “conditions and warranties”. We have all become familiar and believe that where goods are sold, the seller assumes the legal responsibility for them. Thus statutory implications harbour and create a regime of strict liability with the easily identifiable target the supplier, who is liable for the goods sold without the need to prove fault, where the essence of the “implied” terms has been established over a period of 200 years. If goods do not correspond with the description or are not of satisfactory quality or are not fit for the purpose there is a breach of an implied condition and the customer can reject the goods (unless he has lost the right). Generally this will mean that the customer is entitled to his money back. (He need not accept a credit note.) He may also be entitled to compensation for any losses or expenses which he has incurred. The result, then, is just, but can only be reconciled with the Act by the most convoluted reasoning. The drafting of the Act reflects a distinctly Victorian approach, under which reliance is hard to establish, but once established is taken as well-nigh absolute. Is this not, perhaps, one more instance where the Act needs to be dragged into the modern world? Buyers are entitled to a reasonable degree of care of skill from sellers, but no more in the absence of very clear undertakings; and it does not appear that the courts are prepared to give any more. "Outside the field of private sales the shift from caveat emptor to caveat venditor...has been a notable feature of the development of our commercial law. But to uphold the present claim would be to allow caveat venditor to run riot" (per Lord Steyen). Indeed. Now that the claims of buyers are more generously interpreted, let us not strain at the wording of the Act, but admit that a change of values has occurred, and amend the Act to reflect it. BIBLIOGRAPHY : ACTS England, Sale of Goods Act, 1979 ARTICLES 1. Bradgate Robert, M. A. “Consumer Guarantee: the EC’s draft directives, 1997. http://webjcli.ncl.ac.uk/1997/issue1/bradgate1.html 2. Bradgate, JR and white 7 (1995) “Rejection and Termination in contracts for the sale of goods” in Birds, Bradgate and Villiers(eds) Termination of contracts (Chichester : Wiley Chancery) 3. Bradgate Robert MA and Hesner Christian Twigg, LLB “The EC Directive on certain aspect of the sale of consumer goods and Associated Guarantees. All talk and no do?” [2000] 2 Web JCLJ 4. Chissick M (1996), “Software Contracts after St Albans”, (1996) 1 communications Law. 5. Chitty (1993) “Chitty on Contracts”, 27th edition, London, Sweet & Maxwell. 6. Commission of the European Communities (1993) Green Paper on guarantees for Consumer Goods and after Sales Service Com (93) 509 final. 7. McDonald E (1999) “Y2K and contractual exemption clauses” Journal of information and law and technology (JILT) 1999(2) http://elj.warwick.ac.uk/jilt/99-2/macdonald.html 8. Howells G and Weatherill S (1995) Consumer Protection Law (Aldershot : Dartmouth Publishing). 9. Howells G (1999) “The Millennium bug and Product liability”, Journal of Information, Law and Technology (JILT) 1999(2) http://elj.warwick.ac.uk/jilt/99-2/howells.html 10. Law Commission No. 160 (1987) Sale and Supply of Goods (London : HMSO) 11. Steve Hedley,” Fitness for the buyer’s peculiar purpose”, swh10@cam.ac.uk. LIST OF CASES Aswan Engineering Est. Ltd. vs. Lumpdire [1987] IAIIFR 135 Beta vs. Adobe 1996 SLT 604 Heilbut, Symons & Co. vs. Buckleton [1913] AC 30 Rogers vs. Parish Ltd. [1987] QB 933 Slater vs. Finning Ltd. [1996] 3 WLR 190. Stewart vs. Perth and Kinross Council. [2004] UKHL 16. Read More