Introduction
In contracts for the sale of goods, not all terms are expressly agreed upon by the buyer and seller. The law implies certain terms into these contracts to provide a level of protection for the buyer and to ensure fairness in commercial transactions. The primary legislation governing these implied terms in business-to-business contracts in England and Wales is the Sale of Goods Act 1979 (SGA 1979). This Act codified principles developed by the common law to regulate sales. This essay will explain the key terms implied by the SGA 1979, focusing on those relating to title, description, satisfactory quality, fitness for purpose, and sale by sample. It is important to note that for consumer contracts, the Consumer Rights Act 2015 now applies, but the SGA 1979 remains crucial for commercial sales.
Section 12: Implied Term as to Title
Section 12(1) of the SGA 1979 implies a condition into the contract that the seller has the right to sell the goods. This is a fundamental term, as the main purpose of a sale contract is to transfer ownership of the goods to the buyer. If the seller does not have the right to sell, for example, because the goods are stolen, they will be in breach of this condition. The case of Rowland v Divall [1923] 2 KB 500 illustrates this principle clearly. In that case, the claimant bought a car from the defendant but later discovered it was stolen and had to return it to the true owner. The court held that the seller had breached the implied condition as to title, and the buyer was entitled to a full refund of the purchase price, as there had been a "total failure of consideration".
Additionally, section 12(2) implies warranties that the goods are free from any undisclosed charge or encumbrance and that the buyer will enjoy quiet possession of the goods. These terms provide further security to the buyer after the sale has been completed.
Section 13: Sale by Description
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 the description. This term applies to all sales by description, not just those made by a business seller. A sale can be by description even if the buyer has seen the goods, as established in Beale v Taylor [1967] 1 WLR 1193. In this case, a car was advertised as a "Herald, convertible, white, 1961". The buyer saw the car before purchasing it. He later discovered that the rear part of the car was from a 1961 model, but the front part was from an older model. The Court of Appeal held that this was a sale by description, and the seller was in breach of the implied term under section 13 because the car did not match its description.
Section 14: Satisfactory Quality and Fitness for Purpose
The terms implied by section 14 only apply where the seller sells goods in the course of a business.
Section 14(2) implies a term that the goods supplied under the contract are of satisfactory quality. The Act defines satisfactory quality as the standard that a reasonable person would regard as satisfactory, taking into account the description of the goods, the price, and all other relevant circumstances (s 14(2A)). To assist the courts, section 14(2B) provides a list of aspects of quality, including fitness for all common purposes, appearance and finish, freedom from minor defects, safety, and durability. This creates a general standard that business sellers must meet.
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. For this term to be breached, the buyer must have made the specific purpose known and relied on the seller's skill or judgement. For example, 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 informed the seller of her sensitive skin, so the coat was fit for the purpose of a normal person.
Section 15: Sale by Sample
Where goods are sold by reference to a sample, section 15 of the SGA 1979 implies three conditions into the contract. Firstly, the bulk of the goods must correspond with the sample in quality. Secondly, the buyer must have a reasonable opportunity of comparing the bulk with the sample. Thirdly, the goods must be free from any defect which makes their quality unsatisfactory and which would not be apparent on a reasonable examination of the sample. This section ensures that using a sample provides a true and accurate representation of the goods the buyer will ultimately receive.
Conclusion
The implied terms under the Sale of Goods Act 1979 provide a fundamental framework of buyer protection in business-to-business transactions. They ensure that a buyer receives goods to which the seller has title, that match their description, are of satisfactory quality and fit for their intended purpose, and correspond to any sample provided. While not expressly stated by the parties, these terms are automatically included by law, establishing a baseline of quality and entitlement that supports commercial confidence and provides legal recourse when a seller fails to meet these standards.
References
Atiyah, P.S., Adams, J.N. and MacQueen, H. (2010) The Sale of Goods. 12th edn. Pearson.
Beale v Taylor [1967] 1 WLR 1193.
Griffiths v Peter Conway Ltd [1939] 1 All ER 685.
Rowland v Divall [1923] 2 KB 500.
Sale of Goods Act 1979.
