The Sale of Goods Act 1979 (SGA) - Book Report/Review Example

Section 14(2) of the Sale of Goods Act 1979 requires that where a seller sells goods in the of a business the goods supplied under the contract are of satisfactory quality, however in Bramhill and another v Edwards the court held that notwithstanding the fact that the goods were illegal, there was no breach of section 14(2). Critically evaluate the requirements of satisfactory quality in light of this judgment The Sale of Goods Act 1979 (SGA) implemented strengthened rights for consumer into sales of goods contracts by implying terms that cannot be contracted out of by the seller1. Of particular importance to the consumer are the terms implied under ss.13-15, which address description and the quality of goods supplied. These in turn directly correlate to the buyer’s right to reject goods and seek remedies against the seller. Most importantly, the SGA implied terms are applicable irrespective of whether the seller has expressly incorporated such terms in the contract. Moreover, any attempt by the seller to exclude the SGA implied terms against a consumer will be void2. With regard to the statutory protection of consumers Atiyah comments that “In England, the implied terms as to quality and fitness in ss.13-15 of the 1893 Act represented an important step in the abandonment of the original common law rule of caveat emptor”3. This is mirrored in the current SGA provisions, which has gradually been “extended to other contracts for the supply of goods as well as contracts of sale”4. The strengthened position of consumers is further highlighted by the fact that the SGA definition of “business” is wide and does not require evidence of registration5. Therefore if the buyer satisfies the “consumer test” and the “sale is the course of a business!” as asserted by section 14(2) of the SGA, the implied terms regarding quality, title and fitness for purpose will be applicable. Firstly, the “consumer” test is imperative as a pre-requisite to remedies for breach of implied terms under the SGA. For example, section 15A provides that if there is a breach of the implied terms under the SGA, then “if the buyer does not deal as a consumer, the breach is not to be treated as a breach of condition but may be treated as a breach of warranty”. It is submitted that section 13 of the SGA is vital to determining a buyer’s position in enforcing rights against the seller and in turn correlates to the effect of section 14(2) of the SGA, which provides that “where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality6”. Indeed, the buyer’s right to reject goods under section 15A of the SGA is conditional on breach of the terms implied under section 13 and 14 respectively. Firstly, Section 13 of the SGA asserts that “where there is a contract for the sale of goods by description, there is an implied term that the goods will correspond with that description”7. Furthermore, section 13(3) expressly states that “a sale of goods is not prevented from being a sale by description by reason only that, being exposed for sale or hire, they are selected by the buyer”8. In order constitute a sale of description as stated under section 13 of the SGA; MacLeod posits that it is sufficient if the description is an “identifying description”9. For example, in Beale v Taylor10, an advertisement offering a car for sale described the product as a “Herald, convertible white 1961”. However, this proved to be a misrepresentation in light of the fact that bits of two cars had been put together. The two parts comprising the car did include parts of the 1961 model, however the other parts belonged to an older model. Whilst this decision was prior to the SGA, the Court of Appeal held that the description of the car did not correspond to the description in the advertisement, which therefore breached the commensurate s.13 implied term in the sale contract. It is further important to note the impact of the Sale and Supply of Goods to Consumer Regulations 2002 (the Regulations), which bolster the position of consumers vis-à-vis buyers under the SGA. With regard to a seller breach of sections 13 and 14 of the SGA; Regulation 5 of the Regulations inserts the following provisions into Part 5 of the SGA “The Buyer may require the seller – (a) to repair the goods, or (b) to replace the goods11. Additionally, The Regulations provide that “if the buyer requires the seller to repair or replace the goods, the seller must – a) repair or as the case may be, replace the goods within a reasonable time but without causing significant inconvenience to the buyer; b) bear any necessary costs incurred in doing so (including in particular the cost of any labour, materials or postage”12. Buyer’s rights under section 13 of the SGA are additionally buttressed by section 14 of the SGA, which provides that “where the seller sells goods in the course of a business, there is an implied term that the goods supplied under contract are of satisfactory quality”13. In considering what constitutes “satisfactory quality” section 14(2A) implements an objective test that “for the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances”14. From a seller’s perspective section 14(2) and 14(3) give buyers heightened safeguards against the supply of defective goods. Indeed, the section 14 implied term extends the satisfactory quality test to goods that are “fit for purpose”15. Section 14(2B) provides that “for the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods – (a) fitness for all the purposes for which goods of the kind in question are commonly supplied16.” To this end, Atiyah comments that “indeed it is now unrealistic to treat the basic principle of law as caveat emptor rather than caveat venditor”17. In particular, the implied terms under section 14 pertaining to satisfactory quality clearly grants consumers with bolstered armour from the inherent imbalance in the seller/consumer paradigm. Whilst goods may not be defective and comply with their description and representations given about them; they may nevertheless be incompatible with the buyer’s purpose and “hence in more limited circumstances, the buyer may be able to rely on the third implied term, namely that the goods must be fit for the purpose for which they were sold”18. To this end, Bridge comments that section 14 requirements “encourage some degree of metaphysical discussion. When does a single ordinary purpose split to become two ordinary purposes?19” However, the judicial approach to the section 14 requirement has been ad hoc and inconsistent, thereby widening the ambit of buyer protection. For example, in the case of Bramhill and another v Edwards20, it was held that the section 14 implied term pertaining to satisfactory quality was applicable irrespective of whether the actual goods could legally be consumed in the UK. However, whilst in the Bramhill case the illegality of the goods negated a buyer claim for damages the fact that the section 14(2) claim regarding the implied condition was upheld has further fuelled debate as to the definition of “satisfactory quality” in business to consumer sales contracts. Moreover, Atiyah comments that “the difficulties of this part of the law have unfortunately not been greatly reduced by the legislation of 1973-94 though there has been some gain in simplification21”. This intrinsic problem is further magnified by the fact that there are distinct overlaps in practice with “regard to the duty to supply goods of satisfactory quality as evidenced by the “EC Directive on certain aspects of the sale of consumer goods and associated guarantees under the Sale and Supply of Goods to Consumers Regulations”22. The focus of this analysis is to critically evaluate the requirements of the “satisfactory quality” requirement under section 14(2) in practice. To this end, it is submitted at the outset that section 14 has become of extreme importance in sale of goods contracts to the buyer’s rights even when other SGA implied terms have been complied with such as section 13. Firstly, as asserted by section 14(2) of the SGA, this term will only be implied into consumer contracts and therefore the initial hurdle for a buyer will be to establish this, particularly in second hand sales contracts. With regard to the “satisfactory quality” requirement, section 14(2C) of the SGA expressly provides that the implied term regarding quality does not extend “any matter making the quality of the goods unsatisfactory – a) which is specifically drawn to the buyer’s attention before the contract is made; b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or c) in the case of a contract by sample, which would have been apparent on a reasonable examination of the sample”23. With regard to the applied impact of section 14(2C), Regulation 3 of the 2002 Regulations inserts the following provisions into the SGA with regard to any public statements made about the goods: “If a buyer deals as a consumer….. the relevant circumstances in subsection (2A) above include any public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling”24. However, the provisions regarding “public statements” are slightly ambiguous as section 14(2E) provides some equivocal guidance on what is not a public statement for the purposes of the SGA implied term. To this end, Kelly et al argue “that it could be argued that the seller may now be able to invoke this exception not by actually specifying the defect but by simply mentioning “a matter” which could affect quality. Case law on this point is awaited with interest”25. Nevertheless the judicial approach has been distinctly pro-consumer in considering the definition of “satisfactory quality”. For example, in Beal v Taylor26, the claimant had undertaken an inspection of the car prior to concluding the purchase and the misrepresentation regarding the model claims in the advertisement were discovered after delivery. Nevertheless, the Court of Appeal found for the claimant and supported the plaintiff’s right to claim damages from the seller as a result of demonstrating reliance on the misleading model description as a significant motivation for purchasing the car. The rationale of the Court of Appeal indicates that their pro-plaintiff attitude in the Beal case was motivated by the fact that the plaintiff purchased the car as a consumer relying on the description in the advertisement and was not a car specialist. As such, from an objective viewpoint the customer could not have been expected to have discovered that the car was not the advertised model upon inspection. Another issue relevant to the enforceability of the section 14 implied term is the appropriate length of time post purchase that the satisfactory quality requirement is meant to endure as no guidance is provided in relation to this under the SGA. For example, in the case of Bernstein v Pamson Motors27 the plaintiff was Mr Bernstein who had purchased a brand new Nissan car, making payment to the seller in cash. Mr Bernstein used the car for an initial period of three weeks, accumulating 140 miles with no problem until the car’s engine seized while the plaintiff was on the motorway. It transpired that the engine seizure was caused by a sealant drop penetrating the lubrication system of the car during the manufacturing process. It was determined that in light of the fact that the car was new, the consumer could under an objective test reasonable expect that the car’s engine would not seize after merely three weeks. On this basis, the plaintiff’s claim succeeded and the car was held to breach the pre-SGA “merchantable quality” test. However, the judicial approach to how long the quality requirement is to endure post purchase has been discordant and somewhat contradictory. On the other hand it is arguable that the wide range of consumer contracts covered by the SGA provisions necessarily requires a case by case approach, which thereby creates an intrinsic conflict with legal certainty. For example, in considering the appearance of products sold in consumer contracts, in the case of Rogers v Parish28 the plaintiff purchased a car under a conditional sale agreement. Upon delivery, the plaintiff discovered numerous defects in the product, particularly in the engine and gearbox. Regardless of this knowledge of the defects upon delivery, the plaintiff continued to use the car for a period of six months however he lodged regular complaints with the seller. . The defects in the car remained after the six month period and the buyer brought a claim for breach of the implied terms. The Court of Appeal at the outset determined that the correlation between appearance of defects and satisfactory quality was dependent on the nature of the product and the facts of the case. In this case, the Court of Appeal acknowledged that the visible defects in a new car upon delivery could clearly constitute breach of section 14 of the SGA regardless of whether the plaintiff had continued to drive the car for a period of six months. The fact that the Court of Appeal held in favour of the plaintiff further supports their propensity towards a pro-consumer approach although in this case, the plaintiff had continued to complain about the defects in the car, thereby negating any suggestions of affirmation of seller breach. Second hand goods contracts are still covered by the SGA implied terms and again will ultimately require a case by case approach depending on the age of the product and representations given29. For example, in Bartlett v Sidney Marcus30 the plaintiff purchased a second hand Jaguar for the sum of £950. At the time of purchase, it was disclosed that the clutch was in need of repair. However, after delivery and upon driving only 300 miles, the entire clutch required replacement as opposed to repair and the plaintiff sought the cost of repair on grounds of breach of the pre-SGA merchantable quality requirement. However, the plaintiff’s claim was reject on grounds that the defects in the clutch had been disclosed and the age of the car meant that replacement was entirely likely and therefore the merchantable quality test was satisfied. Conversely, in the case of Crowther v Shannon Motor Co31, the plaintiff had purchased a second hand Jaguar with a pre-existing mileage of 82,000 miles. Post purchase, the plaintiff accumulated another 2,500 miles after which the car’s engine seized. In light of the age of the Jaguar actually purchased, the Court of Appeal held that the car should not have seized up so quickly and therefore the plaintiff’s claim succeeded. Directly related to the time for compliance issue is the concept of risk passing in the property. Section 12(1) of the SGA provides that there is an “implied term on the part of the seller that in the case of a sale he has a right to sell the goods, and in the case of an agreement to sell he will have such right at the time when the property is to pass32”. However, if the risk has passed on purchase this would mean that on a strict application of the law, the buyer would bear the risk. Conversely, the judicial approach to “satisfactory quality” has enabled buyers to reject goods even when legally the risk in the goods has passed. To this end, Atiyah argues that the judicial approach to the section 14 requirement effectively reverses this traditional common law position33. Moreover, in considering the relationship between description and fitness for purpose of the goods, the result of the section 14 requirement is that even if the goods are not defective but become inappropriate for the buyer’s intention, it will still fall foul of the satisfactory quality provisions. In evaluating the definition of “satisfactory quality” the wide range of consumer contracts covered by the SGA has necessarily required a case by case approach. For example, in the case of Aswan Engineering Establishment Co v Lupine Limited34 the Court of Appeal analysed cases at length before proceeding on the statutory definition and asserted that in respect of cars in this case “it was doubtful of any all embracing definition of a car of merchantable quality could ever be made35”. The Court of Appeal further added that the statutory definition of satisfactory quality was probably deliberately left in the widest possible terms “in order to cater for the greater variety of situations in which may occur36”. It was further commented that as regards the section 14 implied term: “any attempt to forge some exhaustive, positive and specific definition of such a term, applicable in all cases, would soon be put to mockery by some new undreamt of set of circumstances37”. Indeed, the decision in Bramhill appears to be a prime example of this. The satisfactory quality requirement in section 14(2C) applies to goods as they appear to buyers at the time of purchase. Furthermore, Kelly et al post comment that “the relationship of section 14(2C) to goods “sold as seen” was considered in Brahmhill”.38 In the Bramhill decision, the fact that the good were illegal for use was irrelevant, the buyer had taken the goods “sold as seen” and therefore the section 14 requirement had been breached as there is no obligation on a buyer to examine goods or ascertain usability prior to purchase39. Interestingly, when considering satisfactory quality, there appears to be no requirement to demonstrate buyer reliance on the seller, which is arguably the rationale for the decision in Bramhill. The relevant issue is the representations as to quality and therefore does not depend on reliance on the seller. For example, even if the goods are illegal Atiyah comments that “if a buyer ordered goods from the seller which were only made by one manufacturer so that the goods could only be obtained from that manufacturer so that the goods could only be obtained from that manufacturer or from someone who had bought from him, the seller would still be treated as warranting the merchantable quality of the goods40”. As such, the Bramhill decision mirrors the objectives of the 2002 Regulations, which bolster the section 14 requirements. The impact of the 2002 Regulations additions to section 14 is that “in determining whether goods are of “satisfactory quality”, the section 14(2B) factors that the court should consider will also include any “public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling”41. This is further relevant to the nature of “goods” to which the section 14 requirement extends. For example, in Geddling v Marsh42 it was held that the seller’s obligations applied notwithstanding the property remaining with the seller, thereby enabling the plaintiff to recover damages. Similarly, in the case of Wilson v Rickett Cockerell & Co Limited43 the plaintiff purchased a load of the product Coalite from the defendants. Unbeknown to the defendants and the plaintiffs, the particular consignment of Coalite contained an explosive substance which exploded on the plaintiff’s premises, causing significant damage. Nevertheless, the plaintiff’s claim was upheld on grounds of the equivalent provision of section 14(2) on grounds of the products not being of satisfactory quality. In addressing quality, Lord Denning commented that “in my opinion, that means the goods delivered in purported pursuance of the contract. The section applies to all goods so delivered whether they conform to the contract or not; that is, in this case, to the whole consignment, including the offending price, and not merely the Coalite alone”44. In addressing the seller’s arguments, Lord Denning commented that “Coal is not bought by the lump. It is bought by the sack or by the hundredweight or by the ton. The consignment is delivered as a whole and must be considered as a whole, not in bits45”. On this basis, the quality requirement applied to the whole consignment regardless of the seller’s knowledge. Whilst these decisions apply to the “merchantability” under the previous provisions, the current section 14 test goes much further as regards the “satisfactory quality” test. However, in Rogers v Parish46 it was suggested that the previous merchantable quality test could be applied to most cases. Atiyah however denounces this and comments that “it must be suggested that the reasoning in this case was fallacious. The court assumed here that the application of the statutory definition in the old section 14(6) was a question of fact but the introduction of reasonableness into the definition meant that questions of evaluation were necessarily involved47”. Furthermore, Bridge supports Atiyah’s rationale and comments that “it remains true however that merchantable quality is too difficult and protean for its various applications to be encompassed with ease by a statutory definition48”. Additionally, the section 14 satisfactory quality requirement applies to both natural commodities and manufactured goods, along with goods purchased for resale as well as to goods purchased for private consumption. Indeed, in the case of Bristol Tramways Carriage Co Limited v Fiat Motors Limited49 Farewell LJ commented that “the phrase merchantable quality” seems more appropriate to a retail purchaser buying from a wholesale firm than to private buyers, and to natural products, such as grain, wool, or flour than to a complicate machine, but it is clear that it extends to both”50. Therefore the judicial discomfort with “merchantability” clearly undermines the veracity of the arguments in Rogers v Parish with regard to the appropriate interpretation of satisfactory quality. Accordingly, the relevant test under section 14 is much wider than “merchantability” in that goods will be “satisfactory” if they meet standard that reasonable person would regard as satisfactory. Another relevant factor will be the relationship between ordinary purpose and price, which was discussed in the case of B.S. Brown & Son Limited v Craiks Limited51 where a quantity of Fibro Plain Cloth was sold accounting to detailed technical specifications, which did not disclose the precise purpose of the buyer. The House of Lords did accept that price, even in the absence of helpful description language might define the range of ordinary purposes for the application of merchantable quality standard. The above analysis demonstrates that in considering the satisfactory quality requirement, there are no hard and fast rules. Nevertheless, the section 14 requirement goes much further than the previous “merchantability” test, which arguably struck more of a balance between the seller and the buyer’s position. Accordingly, the objective test for determining satisfactory quality inherently requires a case by case approach, which in turn has perpetuated legal uncertainty. In any event, the Bramhill decision highlights the pro-consumer approach to the section 14 requirement, particularly with regard to the “sold as seen requirement”. BIBLIOGRAPHY P. S Atiyah (2005). Sale of Goods.11th Edition Longman. Michael Bridge (2007). The International Sale of Goods: Law and Practice. 2nd Edition Oxford University Press. Indira Carr., & Peter Stone (2005). International Trade Law. Routledge Cavendish Chitty on Contracts (2007). 29th Edition Sweet & Maxwell. Jason Chuah (2005). Law of International Trade. 3rd Edition Sweet & Maxwell. A G Guest. (2006). Benjamin’s Sale of Goods. 7th Edition. Sweet & Maxwell. D. Kelly, A. Holmes & R. Hayward (2005) Business Law. Routledge-Cavendish Ewan McKendrick, “Contract Law”, 5th Edition (2003), Palgrave Macmillan John Macleod (2006). Consumer Sales Law. 2nd Edition Routledge Cavendish. Linda Mulcahy & John Tillotson (2004). Contract Law in Perspective. Routledge Cavendish. Jill Poole (2006). Contract law. 8th Edition Oxford University Press. L.S Sealy, Hooley., (2003) “Commercial Law Text, Cases and Materials, 1st edition Sweet and Maxwell. P Todd., (2003) “Cases and Materials on International Trade Law”, 1st edition Sweet and Maxwell. G H. Treitel., (2007). The Law of Contract. 12th Revised Edition Sweet & Maxwell. Legislation Sale of Goods Act 1979 Supply of Goods and Services Act 1989 Sale and Supply of Goods to Consumers Regulations 2002 Read More