Traders and the sales of Goods Act

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Traders and the sales of Goods Act

The Sale and Supply of Goods Act 1994 applies to contracts made on or after January 3, 1995. It has made changes to commercial law by amending the Sale of Goods Act 1979. The 1994 Act implements the recommendations made by the Law Commission in its 1987 Report on 'Sale and Supply of Goods' (1) The three main effects of the new act relate to the implied term as to merchantable quality, the buyer's right to reject goods for trivial breaches of condition and the effect of a rejection of part of the goods supplied.

        The first Sale of Goods Act of 1893 made no distinction between private and business buyers. Since 1973, when exclusion clauses were made to differ in their effect depending on precisely this distinction, there has been a trend for the law to separate out consumers and businesses. The trend was emphasised in the Unfair Contract Terms Act 1977 and is accentuated in the Directive on Unfair Contract Terms, which is applicable only to consumers.

        Satisfactory quality

The requirements of the Sale of Goods Act 1979, the Supply of Goods (Implied Terms) Act 1973 and the Supply of Goods and Services Act 1982, that goods supplied in the course of a business be of 'merchantable quality' is replaced by the phrase 'satisfactory quality' in preference over the Law Commission's recommendation of acceptable quality.

        The term implied by s14(2) of the Sale of Goods Act 1979 is now such that the goods are of satisfactory quality and the definition of that expression is to be found in the new subsection 14(2A) as amplified by subsection 14(2B) and (2C).

        Goods are defined as of satisfactory quality if they 'meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.' The change in definition probably means little in practice.

        It continues to be the case that second-hand goods are not expected to be perfect and minor defects are expected to materialise, for example, in a second hand car; see Bartlett v Sydney Marcus.(2) Although, price is still relevant, the merest blemish on a Rolls Royce (especially if new) may render it to be of an unsatisfactory standard, whereas it may not be on a humbler motor car.

        The old law did not define the matters which were to be considered in deciding on issues of merchantability. The 1994 Act lists the following 'amongst others', as matters which are to be taken into account in appropriate cases: the fitness for all the purposes for which goods of the kind in question are commonly supplied; appearance and finish; freedom from minor defects; safety and durability.

        The exceptions in ss14(2)(a) and (b) remain, although they are now ss14(2C)(a) and (b). Therefore, a buyer still can not complain about defects if, before the contract was made the defects were specifically drawn to his attention, or he examined the goods and ought by that examination to have discovered the defects. By virtue of s14(2C)(c) a buyer under a contract by sale by sample cannot claim in respect of a defect which would have been apparent from a reasonable examination of the sample. This provision clarifies s15(2)(c) of the 1979 Act.

        The question prompted by the old expression was whether for the goods to be of merchantable quality they had to be fit for all purposes for which goods of that kind were commonly bought, or whether it was sufficient that they suit just one purpose. The latter view was adopted by the House of Lords in Henry Kendall and Sons v William Lillico and Sons Ltd.(3)

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        In the 1987 Report, the Law Commission was of the view that the old definition of merchantable quality had not changed the view taken in Kendal v Lillico (4) that goods need only be fit for one of their common purposes. (5) Nevertheless, the Law Commission recommended a change in the law so that goods supplied should be fit for all common purposes, whether or not individually disclosed to the seller under section 14(3).

        The Commission took the view that a seller concerned to supply goods only for one common purpose should carefully narrow the description of the goods so ...

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