Introduction
The law of contract in England and Wales is founded on the principle of freedom of contract, which allows parties to agree to their own terms. However, to ensure fairness and to protect the expectations of buyers, the law implies certain terms into specific types of contracts. For contracts involving the sale of goods, the Sale of Goods Act 1979 (SGA 1979) is the principal piece of legislation that outlines these implied terms for business-to-business transactions (Twigg-Flesner and Canavan, 2022). These terms are read into the contract by statute and operate automatically, regardless of whether they were expressly mentioned by the parties involved.
The purpose of these implied terms is to provide a statutory baseline of protection for the buyer, ensuring they receive what they bargained for. The SGA 1979 implies terms relating to the seller’s right to sell the goods (title), the correspondence of goods with their description, their quality and fitness for purpose, and their correspondence with a sample in a sale by sample (Bridge, 2023). A breach of these terms provides the buyer with a legal remedy, which is typically the right to claim damages or, in more serious cases, to reject the goods and terminate the contract.
This essay will explain the five main implied terms under the SGA 1979. It will discuss the provisions relating to title under section 12, description under section 13, satisfactory quality and fitness for purpose under section 14, and sale by sample under section 15. The explanation will be supported by relevant case law to illustrate how these statutory provisions are interpreted and applied by the courts (Atiyah et al., 2016). Understanding these terms is fundamental for any business involved in the buying or selling of goods.
Section 12: Implied Term as to Title
The most fundamental obligation of a seller is to be able to pass good title to the buyer. Section 12 of the SGA 1979 implies a term into the contract that addresses this. Specifically, section 12(1) implies a condition that the seller has the right to sell the goods at the time when property is to pass (Sale of Goods Act 1979, s 12). This means the seller must be the legal owner or have the legal authority to sell the goods on behalf of the owner.
The importance of this term is highlighted by the fact that it is classified as a condition. A breach of a condition is a serious breach of contract, which entitles the innocent party to repudiate the contract, reject the goods, and claim damages (Bradgate, 2010). The case of Rowland v Divall [1923] 2 KB 500 provides a clear example. The claimant bought a car from the defendant and later discovered it was stolen. The claimant had to return the car to the true owner. The court held that the defendant did not have the right to sell the car, which was a breach of section 12(1). The claimant was entitled to recover the full purchase price, even though he had used the car for several months, because there had been a "total failure of consideration" as he had never legally owned the car (Rowland v Divall, 1923).
In addition to the right to sell, section 12(2) implies two further, lesser terms known as warranties. These are that the goods are free from any undisclosed charge or encumbrance, and that the buyer will enjoy quiet possession of the goods (Sale of Goods Act 1979, s 12(2)). A breach of a warranty only entitles the buyer to claim damages, not to reject the goods. This distinction reflects the fundamental importance of the seller’s right to pass title, which underpins the entire transaction (Furmston, 2017).
Section 13: Sale by Description
Many sales involve a description of the goods, whether in an advertisement, on packaging, or in the contract itself. Section 13(1) of the SGA 1979 implies a condition that where there is a contract for the sale of goods by description, the goods will correspond with that description (Sale of Goods Act 1979, s 13). This applies even if the buyer has seen and selected the goods, as established in Beale v Taylor [1967] 1 WLR 1193. In this case, a car advertised as a "1961" model was in fact the rear half of a 1961 car welded to the front of an older model. The court held this was a breach of section 13, as the car did not correspond to its description.
The term ‘description’ can cover a wide range of statements about the goods, including their identity, quality, or even how they are packaged (Atiyah et al., 2016). The courts have historically taken a very strict approach to this term. In Arcos Ltd v E A Ronaasen & Son [1933] AC 470, a contract for wooden staves described them as being half an inch thick. The staves delivered were slightly thicker but were still perfectly usable for the buyer's purpose of making barrels. The House of Lords held that the buyers were entitled to reject the goods because they did not match the description. This shows that the motive for rejection is irrelevant; a technical breach is still a breach (Bridge, 2023).
However, the potential for this strict rule to be used unfairly in commercial contracts led to a statutory modification. Section 15A of the SGA 1979 was introduced to prevent a business buyer from rejecting goods for a very minor breach of sections 13, 14, or 15 where it would be unreasonable to do so (Sale of Goods Act 1979, s 15A). In such cases, the breach is treated as a breach of warranty, limiting the buyer’s remedy to damages only. This adds a degree of commercial reasonableness to the otherwise strict application of the term (Twigg-Flesner and Canavan, 2022).
Section 14: Quality and Fitness for Purpose
Section 14 of the SGA 1979 implies two key terms relating to the quality of the goods, but it only applies where the seller sells goods "in the course of a business" (Sale of Goods Act 1979, s 14(2)). This means that private sales between individuals are not covered by these particular implied terms. The two conditions are that the goods are of satisfactory quality (s.14(2)) and that they are reasonably fit for any particular purpose made known by the buyer (s.14(3)).
The term of satisfactory quality, found in section 14(2), provides that goods must meet the standard that a reasonable person would regard as satisfactory, considering the description, price, and other relevant circumstances. To assist the court, section 14(2B) lists several factors to be considered, including fitness for common purposes, appearance and finish, freedom from minor defects, safety, and durability (Sale of Goods Act 1979, s 14(2B)). In Rogers v Parish (Scarborough) Ltd [1987] QB 933, a new Range Rover had several minor defects in its engine, gearbox, and bodywork. The Court of Appeal held that, for a prestigious new vehicle, a buyer is entitled to more than just a car that is roadworthy; it must also be of a quality in terms of appearance and finish that is free from minor blemishes. This demonstrates that the standard of "satisfactory" is a broad and flexible one, dependent on the context of the sale (Bradgate, 2010).
The fitness for purpose term is contained in section 14(3). This section implies a condition that if the buyer makes known to the seller a particular purpose for which they require the goods, the goods must be reasonably fit for that purpose (Sale of Goods Act 1979, s 14(3)). This applies whether or not that is a purpose for which such goods are commonly supplied. For this term to apply, the buyer must have relied on the seller’s skill and judgement, and it must have been reasonable for them to do so. In Griffiths v Peter Conway Ltd [1939] 1 All ER 685, a woman with abnormally sensitive skin bought a tweed coat and developed dermatitis. She failed in her claim for breach of fitness for purpose because she had not made her specific sensitivity known to the seller. The coat was fit for use by a normal person, and the seller was unaware of the particular purpose (use by a person with sensitive skin) (Furmston, 2017).
Section 15: Sale by Sample
The final main implied term relates to sales conducted by sample. A sale by sample occurs where a small quantity of the goods is provided for the buyer's inspection on the understanding that the rest of the goods (the bulk) will be of the same quality (Bridge, 2023). Section 15 of the SGA 1979 implies conditions into such a contract to protect the buyer's expectations.
Section 15(2) contains two main implied conditions. The first is that the bulk of the goods will correspond with the sample in quality (Sale of Goods Act 1979, s 15(2)(a)). The second, and equally important, is that the goods will be free from any defect making their quality unsatisfactory, which would not be apparent on a reasonable examination of the sample (Sale of Goods Act 1979, s 15(2)(c)). This second part is crucial because a sample could appear perfect, yet contain a hidden defect that is also present in the bulk.
The case of Godley v Perry [1960] 1 WLR 9 illustrates this principle. A boy bought a plastic catapult from a retailer. The catapult broke in use, and a piece flew into his eye, causing him to lose it. The retailer had bought the catapults from a wholesaler after testing a sample by pulling back the elastic. The wholesaler was found liable for breaching section 15(2)(c). The defect in the plastic was not discoverable on a reasonable examination of the sample (stretching the elastic), but it made the goods' quality unsatisfactory. Therefore, the retailer was entitled to be indemnified by the wholesaler (Atiyah et al., 2016). This case shows that the buyer is protected not only against obvious differences between the sample and the bulk, but also against latent defects common to both.
Conclusion
In summary, the Sale of Goods Act 1979 provides a crucial framework of protection for buyers in business-to-business transactions by implying terms into the contract of sale. These terms ensure that the buyer receives what they bargained for in several key respects. Section 12 guarantees the seller’s right to sell the goods, a fundamental prerequisite for any valid sale. Section 13 ensures that goods match their description, which is often a key factor in the buyer’s decision to purchase.
Furthermore, section 14 provides essential protections regarding the quality and fitness of goods sold in the course of a business, holding sellers to a standard of "satisfactory quality" and ensuring goods are fit for any purpose made known by the buyer. Finally, section 15 protects buyers in sales by sample, ensuring the bulk corresponds to the sample and is free from hidden defects. While the Consumer Rights Act 2015 now provides a separate, enhanced regime for consumers, the SGA 1979 continues to be the bedrock of commercial sales law in England and Wales, balancing the principle of freedom of contract with the need for a fair and predictable marketplace (Twigg-Flesner and Canavan, 2022). These implied terms are a vital part of that balance, providing remedies where a seller fails to meet their basic obligations.
References
Atiyah, P.S., Adams, J.N. and MacQueen, H. (2016) Atiyah and Adams' Sale of Goods. 13th edn. Pearson.
Bradgate, R. (2010) Commercial Law. 4th edn. Oxford University Press.
Bridge, M.G. (2023) The Sale of Goods. 5th edn. Oxford University Press.
Furmston, M. (2017) Cheshire, Fifoot & Furmston's Law of Contract. 17th edn. Oxford University Press.
Twigg-Flesner, C. and Canavan, R. (2022) Atiyah and Adams' Sale of Goods. 14th edn. Pearson.
Legislation
Sale of Goods Act 1979
Cases
Arcos Ltd v E A Ronaasen & Son [1933] AC 470
Beale v Taylor [1967] 1 WLR 1193
Bramhill v Edwards [2004] EWCA Civ 403
Godley v Perry [1960] 1 WLR 9
Griffiths v Peter Conway Ltd [1939] 1 All ER 685
Rogers v Parish (Scarborough) Ltd [1987] QB 933
Rowland v Divall [1923] 2 KB 500
