The Sale of Goods Act 1979 (SGA 1979) is a fundamental piece of legislation governing commercial transactions in the UK, particularly those between businesses. This essay will examine the essential elements required to form a valid contract for the sale of goods under the Act. It will then discuss the key terms that the Act implies into such contracts to protect the buyer, focusing on title, description, quality, fitness for purpose, and sale by sample. Finally, it will evaluate the remedies available to a buyer when these crucial terms are breached.
The Essential Elements of a Contract of Sale
The SGA 1979, in section 2(1), defines a contract of sale of goods as "a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price." From this definition, several essential elements can be identified. There must be two distinct parties, a seller and a buyer. The subject matter must be 'goods' as defined in section 61(1) of the Act, which includes all personal chattels other than things in action and money. A key element is the transfer of property, meaning the ownership of the goods, from the seller to the buyer. Finally, there must be a 'money consideration' or price. If the consideration is something other than money, such as an exchange of goods, the contract would be one of barter and fall outside the scope of the SGA 1979.
Implied Terms in Contracts of Sale
To provide a level of protection for buyers, the SGA 1979 implies several terms into contracts of sale. These terms apply automatically unless lawfully excluded, which is heavily restricted. The most significant of these are found in sections 12 to 15.
Section 12 implies a term that the seller has the right to sell the goods. This is a fundamental condition of the contract.
Section 13 provides that where there is a sale of goods by description, there is an implied term that the goods will correspond with that description. This applies even where the buyer has seen the goods, as demonstrated in Beale v Taylor (1967), where a car advertised as a 1961 model was in fact two different models welded together. The court held this was a breach of section 13.
Section 14 implies terms relating to the quality and fitness of goods, but only where the sale is made in the course of a business. Section 14(2) implies a term that the goods supplied are of 'satisfactory quality'. The Act defines this by reference to what a reasonable person would regard as satisfactory, considering the description, price, and other relevant circumstances. Section 14(3) implies a term that the goods are reasonably fit for any particular purpose which the buyer, expressly or by implication, makes known to the seller.
Finally, section 15 governs sales by sample, implying a term that the bulk of the goods will correspond with the sample in quality and that the goods will be free from any defect making their quality unsatisfactory which would not be apparent on reasonable examination of the sample.
Remedies for a Buyer
The remedies available to a buyer depend on the nature of the term that has been breached. The terms implied by sections 12, 13, 14, and 15 are generally classified as conditions. A breach of a condition is a serious breach that goes to the root of the contract, giving the innocent party the right to repudiate the contract (i.e., reject the goods and claim a full refund) and to claim damages for any losses suffered. Alternatively, the buyer may choose to accept the goods and treat the breach as a breach of warranty, limiting their claim to damages only.
However, the buyer's right to reject the goods for breach of a condition under sections 13, 14, or 15 is not absolute in a business-to-business context. Section 15A of the SGA 1979 provides that if the breach is so slight that it would be unreasonable for the buyer to reject the goods, the breach is to be treated as a breach of warranty. This gives the seller a defence against rejection for trivial defects, limiting the buyer's remedy to a claim for damages. This provides a degree of commercial fairness, preventing buyers from using a minor fault as an excuse to escape a bad bargain.
In conclusion, the SGA 1979 establishes a clear framework for contracts of sale, defining their essential elements. The Act’s most significant contribution is the set of implied terms that offer substantial protection to buyers regarding the seller’s title and the quality and description of the goods. While the primary remedy for a breach of these terms is the powerful right to reject the goods, this is balanced by provisions like section 15A, which promote reasonableness in commercial dealings by restricting this right in cases of very minor breaches.
References
- Beale v Taylor [1967] 1 WLR 1193.
- Sale of Goods Act 1979.
