Introduction
In the law of contract in England and Wales, terms can be either express or implied. While express terms are those explicitly agreed upon by the parties, implied terms are not. Instead, they are read into the contract by the courts or by statute to give effect to the presumed intentions of the parties or to meet public policy objectives. One of the most significant pieces of legislation in this area is the Sale of Goods Act 1979 (SGA 1979). This Act implies several key terms into contracts for the sale of goods to provide a level of protection for buyers, ensuring they receive what they bargained for. This essay will explain the main terms implied by the SGA 1979, which primarily governs business-to-business contracts today. The essay will examine the provisions relating to title, description, quality, fitness for purpose, and sale by sample.
The Implied Term as to Title (Section 12)
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 that addresses this. Section 12(1) implies a condition that the seller has a right to sell the goods. This means that at the time property is to pass to the buyer, the seller must have the legal ownership and authority to transfer it. If the seller does not have this right, they are in breach of this implied condition.
The case of Rowland v Divall [1923] 2 KB 500 is the leading authority on this point. The claimant, a car dealer, bought a car from the defendant. He then sold it on to a customer. Two months later, the police seized the car as it had been stolen. The claimant had to refund his customer and subsequently sued the defendant to recover the price he had paid. The Court of Appeal held that there had been a total failure of consideration because the seller had no right to sell the car. The buyer had not received what he had contracted for, which was ownership of the car, but merely the use of it for a period. Therefore, he was entitled to recover the full purchase price without any deduction for his use of the car. This demonstrates the strict nature of the s.12(1) condition.
Additionally, section 12(2) implies two further warranties into the contract. Firstly, that the goods are free, and will remain free until the time when the property is to pass, from any charge or encumbrance not disclosed or known to the buyer before the contract is made. Secondly, that the buyer will enjoy quiet possession of the goods. A breach of these warranties would give the buyer a right to claim damages, but not to reject the goods and terminate the contract, as a warranty is a less fundamental term than a condition.
The Implied Term as to Description (Section 13)
Section 13(1) of the SGA 1979 provides 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. This applies even if the buyer has seen the goods, for example in a self-service shop where goods are selected from a shelf with a description on the packaging (Atiyah, Adams, & MacQueen, 2010).
The requirement for correspondence with description is strict. In Arcos Ltd v E A Ronaasen & Son [1933] AC 470, a contract was for the sale of wooden staves described as being half an inch thick. Most of the staves delivered were slightly thicker, although they were still perfectly usable for their intended purpose of making cement barrels. The House of Lords held that the buyers were entitled to reject the goods for breach of s.13 because they did not match their description. The fact that they were commercially equivalent was irrelevant; the description was a term of the contract that had been breached.
However, for s.13 to apply, the buyer must have relied on the description. The case of Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1991] 1 QB 564 illustrates this limitation. The seller of a painting stated that he believed it was by the German artist, Gabriele Münter. The buyers were art dealers who sent their own experts to inspect the painting before purchasing it. The painting later turned out to be a fake. The Court of Appeal held that this was not a sale by description. The buyers had relied on their own expertise, not on the seller's statement, and therefore the seller was not liable for a breach of s.13.
The Implied Terms as to Quality and Fitness (Section 14)
Section 14 of the SGA 1979 implies terms relating to the quality and fitness of goods, but it is important to note that these terms only apply where the seller sells goods in the course of a business. There is no such requirement for private sellers, to whom the principle of caveat emptor (let the buyer beware) more broadly applies.
Section 14(2): Satisfactory Quality
Section 14(2) implies a condition that goods supplied under the contract are of satisfactory quality. The definition of "satisfactory quality" is found in section 14(2A), which states that goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, considering any description of the goods, the price, and all other relevant circumstances.
To assist in applying this test, section 14(2B) provides a non-exhaustive list of aspects of quality. These include: (a) fitness for all the purposes for which goods of the kind in question are commonly supplied; (b) appearance and finish; (c) freedom from minor defects; (d) safety; and (e) durability.
The case of Rogers v Parish (Scarborough) Ltd [1987] QB 933 involved the purchase of a new Range Rover for nearly £16,000. The vehicle had several minor defects in the engine, gearbox and bodywork, although it was still driveable. The Court of Appeal held that the car was not of satisfactory quality. For a new, premium vehicle, buyers are entitled to expect a higher standard of quality, including being free from minor cosmetic defects. The purpose of the car was not just to be driven, but to be driven with the appropriate degree of comfort, pride, and freedom from defects that could be expected of a car of that price and type.
There are exceptions to this implied term. Section 14(2C) states that the term does not apply to any defect which is specifically drawn to the buyer’s attention before the contract is made, or where the buyer examines the goods before the contract is made, any defect which that examination ought to have revealed.
Section 14(3): Fitness for a Particular Purpose
Section 14(3) implies a condition that where the buyer makes known to the seller any particular purpose for which the goods are being bought, the goods supplied are reasonably fit for that purpose. This applies whether or not that is a purpose for which such goods are commonly supplied. For this term to be implied, the buyer must have relied, or it must have been reasonable for them to rely, on the skill or judgement of the seller.
In Griffiths v Peter Conway Ltd [1939] 1 All ER 685, a woman with abnormally sensitive skin bought a tweed coat and subsequently developed dermatitis from wearing it. She had not informed the seller of her sensitive skin. The court held that there was no breach of the implied term of fitness for a particular purpose. The coat was fit for a normal person to wear, and the buyer had failed to disclose her particular sensitivity. The seller could not be expected to know of the buyer's special requirements unless they were made clear.
The Implied Term in Sale by Sample (Section 15)
Finally, section 15 of the SGA 1979 deals with sales by sample. Where a sale is expressly or impliedly a sale by sample, certain conditions are implied into the contract. These are, firstly, that the bulk of the goods will correspond with the sample in quality. Secondly, that the buyer will have a reasonable opportunity of comparing the bulk with the sample. And thirdly, 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.
In Godley v Perry [1960] 1 WLR 9, a young boy bought a plastic catapult. It broke while he was using it, and a piece of plastic entered his eye, blinding him. The shopkeeper had tested the sample from the wholesaler by pulling back the elastic. The court held that the defect (the poor quality of the plastic) was not apparent on a reasonable examination of the sample. Therefore, the wholesaler was in breach of section 15(2)(c) in their contract with the shopkeeper, who was in turn liable to the boy.
Conclusion
The Sale of Goods Act 1979 provides a crucial statutory framework that implies certain fundamental terms into contracts for the sale of goods. These terms ensure that buyers receive what they pay for by guaranteeing the seller’s right to sell (s.12), that goods match their description (s.13), that they are of satisfactory quality and fit for purpose when sold in the course of a business (s.14), and that they correspond with a sample where one is provided (s.15). While these principles were developed to provide a baseline of protection for all buyers, it is worth noting that the legal landscape has since evolved. The SGA 1979 now primarily applies to business-to-business transactions, while consumer contracts are governed by the Consumer Rights Act 2015, which has adapted and expanded these protections for individuals. Nevertheless, the implied terms in the SGA 1979 remain a cornerstone of commercial contract law in the UK, upholding fairness and standards in business dealings.
References
Atiyah, P. S., Adams, J. N., & MacQueen, H. (2010) Atiyah's Sale of Goods. 12th edn. Pearson.
Arcos Ltd v E A Ronaasen & Son [1933] AC 470
Godley v Perry [1960] 1 WLR 9
Griffiths v Peter Conway Ltd [1939] 1 All ER 685
Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1991] 1 QB 564
Rogers v Parish (Scarborough) Ltd [1987] QB 933
Rowland v Divall [1923] 2 KB 500
Sale of Goods Act 1979
