Introduction
The contract of sale is a fundamental commercial transaction, central to the functioning of modern economies. In England and Wales, the rights and obligations that arise from such contracts are primarily governed by a statutory framework. This framework aims to create a balance between the interests of the seller, who expects to be paid, and the buyer, who expects to receive goods that conform to the contract. The two key pieces of legislation are the Sale of Goods Act 1979 (SGA 1979), which primarily applies to business-to-business (B2B) transactions, and the Consumer Rights Act 2015 (CRA 2015), which provides enhanced protection for consumers in business-to-consumer (B2C) contracts. This essay will discuss the principal rights of both the seller and the buyer under these legislative regimes, outlining the remedies available to each party when their rights are infringed.
The Rights of the Seller
The primary right of the seller in a contract of sale is to receive payment of the agreed price for the goods. The SGA 1979 provides the seller with a number of remedies to enforce this right if the buyer breaches the contract. These remedies are typically divided into 'personal' remedies against the buyer and 'real' remedies against the goods themselves.
The main personal remedy for the seller is an action for the price under section 49 of the SGA 1979. This allows the seller to sue the buyer for the full contract price. This right arises in two main situations: firstly, where the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay; and secondly, where the price is payable on a specific date, regardless of whether property has passed or the goods have been delivered.
If the buyer wrongfully refuses to accept the goods, preventing the property from passing, the seller’s primary remedy is not an action for the price but an action for damages for non-acceptance under section 50 of the SGA 1979. The purpose of damages is to compensate the seller for the loss resulting from the buyer’s breach. The measure of damages is typically calculated as the difference between the contract price and the market price of the goods at the time they ought to have been accepted. If there is no available market, the seller may be able to claim for their lost profit on the sale.
In addition to these personal remedies, the law grants an ‘unpaid seller’ certain real remedies against the goods. An unpaid seller is defined in section 38 of the SGA 1979 as a seller who has not been paid the whole of the price. The first of these remedies is the right of lien, provided by section 41. This is the right to retain possession of the goods until the price is paid. This right can be exercised when the goods have been sold without any stipulation as to credit, or where the term of credit has expired. The lien is lost, however, once the seller delivers the goods to a carrier for the purpose of transmission to the buyer without reserving the right of disposal (s.43).
A further powerful remedy is the right of stoppage in transit under section 44 of the SGA 1979. This allows an unpaid seller who has already parted with possession of the goods to stop them while they are in the course of transit and resume possession if the buyer becomes insolvent. Finally, the unpaid seller may have a right of resale under section 48. This right arises in specific circumstances, such as where the goods are perishable, or where the seller has given notice to the buyer of their intention to resell and the buyer has not paid the price within a reasonable time.
The Rights of the Buyer
While the seller’s rights are focused on securing payment, the buyer’s rights are concerned with ensuring they receive goods that conform to the contract. The law implies certain terms into contracts of sale to protect the buyer, with the CRA 2015 offering a more protective regime for consumers than the SGA 1979 does for business buyers.
Under the SGA 1979, several key terms are implied into B2B contracts. Section 12(1) implies a condition that the seller has the right to sell the goods. If this is breached, the buyer is entitled to a full refund, as there has been a 'total failure of consideration'. The classic case of Rowland v Divall (1923) illustrates this, where a buyer of a stolen car was able to recover the full price from the seller, even after using the car for several months, because the seller never had title to pass.
Sections 13 and 14 imply terms relating to the quality and description of the goods. Section 13 provides that where there is a sale of goods by description, there is an implied condition that the goods will correspond with that description. This applies even where the buyer has seen the goods, as shown in Beale v Taylor (1967). Section 14(2) implies a condition that goods sold in the course of a business must be of ‘satisfactory quality’. The Act defines this by reference to what a reasonable person would regard as satisfactory, considering the price and any description, and sets out a list of relevant aspects in section 14(2B), including fitness for common purposes, appearance and finish, freedom from minor defects, safety, and durability. Furthermore, section 14(3) implies a condition that if the buyer makes known any particular purpose for which they are buying the goods, the goods must be reasonably fit for that purpose. This was seen in Griffiths v Peter Conway Ltd (1939), where a claim failed because the buyer had not disclosed her abnormally sensitive skin when buying a tweed coat.
The CRA 2015 restates these rights for consumers in a clearer format, referring to them as 'statutory rights' rather than implied terms. Section 9 provides that goods must be of satisfactory quality, section 10 that they must be fit for a particular purpose made known by the consumer, and section 11 that they must be as described. Crucially, under section 31 of the CRA 2015, a trader cannot exclude or restrict liability for breach of these statutory rights. This gives consumers a non-excludable baseline of quality for all goods they purchase.
Remedies Available to the Buyer
The remedies available to a buyer for a seller’s breach also differ significantly between the SGA 1979 and the CRA 2015. For non-consumer buyers under the SGA 1979, the traditional remedy for breach of a condition (such as those in sections 12-15) is the right to reject the goods, terminate the contract, and claim damages. However, this right can be lost if the buyer is deemed to have 'accepted' the goods under section 35. Furthermore, section 15A of the SGA 1979 limits the right to reject for breaches of sections 13, 14, or 15 where the breach is so slight that it would be unreasonable for the buyer to reject the goods. In such cases, the breach is treated as a breach of warranty, entitling the buyer only to a claim in damages.
The CRA 2015 introduced a more structured, tiered system of remedies for consumers. This provides greater clarity and certainty for consumers when goods are faulty. The first tier is the 'short-term right to reject' under section 22. A consumer has 30 days from the date of delivery to reject faulty goods and receive a full refund.
If the 30-day period has passed, or if the consumer prefers not to reject the goods, they move to the second tier of remedies: the right to a repair or replacement under section 23. The consumer can choose which of these they prefer, and the trader must provide the remedy within a reasonable time and without causing significant inconvenience to the consumer. The trader can refuse one of these options if it is impossible or disproportionately costly compared to the other.
If a repair or replacement is not successful, or is not provided within a reasonable time, the consumer can then exercise their 'final right to reject' or a right to a price reduction under section 24. If the consumer chooses the final right to reject, they are entitled to a refund. However, if this right is exercised after six months from delivery, the trader may make a deduction from the refund to account for the use the consumer has had of the goods.
Conclusion
In conclusion, the law of sale of goods in England and Wales establishes a detailed and distinct set of rights for both sellers and buyers. The seller’s rights, principally governed by the SGA 1979, are designed to ensure they receive the agreed price for their goods, providing them with actions for the price and damages, as well as powerful remedies against the goods themselves. The buyer’s rights are focused on ensuring the quality, fitness, and title of the goods they purchase. The statutory framework has evolved to draw a clear distinction between commercial and consumer transactions. While the SGA 1979 provides a robust set of protections for business buyers, the CRA 2015 provides a more extensive, non-excludable, and clearly structured remedial regime for consumers, reflecting a modern legislative policy aimed at redressing the imbalance of power often present in B2C relationships.
References
Cases
- Beale v Taylor [1967] 1 WLR 1193
- Griffiths v Peter Conway Ltd [1939] 1 All ER 685
- Rowland v Divall [1923] 2 KB 500
Legislation
- Consumer Rights Act 2015
- Sale of Goods Act 1979
Books
- McKendrick, E. (2020) Contract Law: Text, Cases, and Materials. 9th edn. Oxford University Press.
- Sealy, L. and Hooley, R. (2020) Commercial Law: Text, Cases, and Materials. 6th edn. Oxford University Press.
