CUFS16 (January 2012) SALE OF GOODS LAW Businesses as well as consumers are usually free to enter into contracts

on whatever terms they see fit to agree. However, contracts involving sales of goods can be subject to a range of statutory provisions. Consumers have greater protection than buyers who are dealing in the course of a business. Let the buyer beware or caveat emptor does not apply to all transactions and anyone selling goods in the course of a business to consumers should be aware that the law will imply certain terms into all such transactions. Consumers are defined as people who are buying for purposes not related to their trade, business or profession. 1. Legislati n

The Sale and Supply of Goods Act 1994 introduced significant changes to areas formerly covered by the Sale of Goods Act 1979, the Supply of Goods (Implied Terms) Act 197 ! and the Supply of Goods and Ser!ices Act 19"#$ However, the 1 ! "ct, as amended, remains the bedroc# of our sale of goods law. $eneral sale of goods law is discussed in this fact sheet. %ur fact sheet on &ale of $oods 'aw (Consumer )rotection* deals with legislation that is specifically designed to protect buyers who are consumers. +his includes the %nfair Terms in &onsumer &ontracts 'e(ulations 1999, the &onsumer )rotection (*istance Sellin() 'e(ulations #+++, the Sale and Supply of Goods to &onsumers 'e(ulations #++# and the &onsumer )rotection (&ancellation of &ontracts &oncluded a,ay from -usiness )remises) 'e(ulations 19"7$ 2. "#$lie% &er#s

+he terms implied into most sales of goods contracts are found in sections 1,-1. of the 1 ! "ct. Broadly spea#ing, they are/ Se'ti n 12( &itle - +he general rule is that a seller must have (ood title, that is to say, ownership and the right to sell the goods they are selling. 0f the goods are stolen, the seller will not have the right to sell them and the buyer will not obtain good title. 0n such a situation the buyer might well find they have to return the stolen goods to the rightful owner and see# compensation from the seller, assuming they can be found. &imilarly, a person who has possession of goods that are subject to a hire purchase (H)* contract will not usually be entitled to sell them while finance is still outstanding because it is the finance company that actually owns the goods. &ection 1, applies to people selling goods privately as well as to those selling goods in the course of their business and is one of strict liability. &o, the fact that the seller did not #now the goods were stolen is no defence to a claim for a full refund from the buyer. Se'ti n 1)( Des'ri$ti n - 0f you are selling something by description it must correspond with the description given to it. &o, a car advertised as being a 1 1 model must be a 1 1 model, rather than the front end of a 1 1 model welded to the rear end of a 1 2 model. $oods bought over the counter may be a sale by description so, if the buyer relies, at least in 1

part, on any description given by the seller, those goods must correspond with that description. "s with section 1,, this section applies to both private sellers and those selling goods in the course of a business and is again one of strict liability. +hat means if a seller advertises a car for sale saying it is a 1 1 model when in fact it is something else, the car will not correspond with the description. 0t is no defence to rely on information provided in the registration documents. Se'ti n 1*(2)( +uality - +he &ale and &upply of $oods "ct 1 1 introduced the re3uirement that goods be of a satisfactory .uality. +his section of the "ct applies only to sellers who are acting in the course of a business. +he "ct sets out a list of criteria to be met for goods to be of a satisfactory 3uality. 0n order to satisfy that test, regard must be had to the following/ 4itness for all the purposes for which goods of the #ind in 3uestion are commonly supplied. "ppearance and finish. 4reedom from minor defects. &afety. 5urability.

Buyers cannot e6pect a legal remedy in respect of 4air wear and tear7 8isuse or accidental damage7 or 0f they decide that they no longer want the item

4urther, where defects or special uses have been specifically brought to a buyers attention, or where an inspection is carried out and a reasonable inspection of the goods would have revealed those defects, a buyer will not be able to rely on any of the above implied terms when arguing breach of this section. 0n some cases, therefore, a buyer who has not had the opportunity to carry out a reasonable inspection will be in a better position than one who has. +he section goes on to state that goods will be of a satisfactory 3uality if they meet the standard that a reasonable person would regard as satisfactory ta#ing into account such things as any description given, the price paid and all other relevant considerations. &ale of goods law generally and the re3uirement that goods be of a satisfactory 3uality applies e3ually to used or second9hand goods as well as new goods. +he re3uirement that goods be fit for all the purposes for which goods of that #ind are commonly supplied significantly strengthens the consumers position. 0t may be possible to suggest, for e6ample, that a television and video combination set would not meet the test of satisfactory 3uality where it was not possible to video one television channel whilst watching another. "rguably, one of the common purposes of buying a television and video together is the ability to watch one channel whilst taping another. &o, unless the salesperson had specifically brought those characteristics to the attention of the consumer prior to purchase, it may be possible to argue that the goods were not of a satisfactory 3uality. +he reference to appearance and finish and freedom from minor defects is again subject to the test of reasonableness. " reasonable person would not e6pect used or second hand goods to be of the same appearance and finish as new goods. &imilarly, goods may still ,

satisfy the test of satisfactory 3uality notwithstanding a minor defect where a reasonable person would regard the defect so minor as to be insignificant. +he re3uirement of durability will not necessarily e6tend the reasonable period of time (see below* within which consumers are entitled to reject faulty goods and claim a full refund. +hat would place an unreasonable burden on retailers where a fault did not become apparent until many months after purchase. However, because durability is now a specific re3uirement, the consumer will have a stronger right to claim damages for faulty goods, even though the fault may not have appeared until some months after purchase. :ach case will vary depending on the circumstances but, obviously, all goods will suffer wear and tear over a period of time. +herefore, where a fault develops some months after purchase the consumer will probably have lost the right to reject the goods because more than a reasonable period of time has elapsed. However, they may be entitled to damages if the fault was not due to normal wear and tear but because the goods were not of a satisfactory 3uality at the point of sale. &ince ;1 8arch ,22;, where the buyer is a consumer, they also have additional rights. Se'ti n 1*())( Fitness , r $ur$ se - 0f the buyer, prior to purchase and e6pressly or by implication, ma#es #nown to the seller any specific purpose for which the goods are re3uired, they will have to be reasonably fit for that specific purpose. +hat would be the case regardless of whether it was a purpose for which goods of that type are commonly bought or sold. 0t is worth repeating that all of section 11 nly applies to people who sell goods in the course of their business. &o, anyone selling a car privately by placing an advertisement in the local paper must ensure that they have good title to sell the vehicle (s.1,* and that it corresponds with any description given (s.1;*. However, they will be under no obligation to see that it meets the criteria of satisfactory 3uality as laid down by section 11 provided they are not acting in the course of their business. Se'ti n 1-( Sale .y sa#$le - 0f the contract is for a sale by sample there will be an implied term that the bul# of the goods will correspond with the sample in 3uality and be free from any defect ma#ing the goods not of a satisfactory 3uality which would not be apparent upon a reasonable e6amination of the sample. ). /e#e%ies

Generally " buyers remedy for breach of any of the implied terms will vary depending on whether he is acting in the course of a business or as a consumer. <here any of the implied terms have been bro#en, the buyer may be able to reject the goods and claim a full refund (with or without damages* provided they have not =accepted> the goods (see below* or claim damages based on the cost of a repair or the difference in value. Consumers have additional rights. )artial rejection may be possible where some mi6ed goods, sold in units, are of a satisfactory 3uality and some are not. Buyers may now be able to reject only those goods that are faulty and accept the rest. +his improved right is subject to one 3ualification. )artial rejection will not be allowed where goods are sold as a whole unit and splitting them would impair the value of the goods or the character of the unit. "n e6ample of a whole unit would be reference wor#s such as encyclopaedias made up of several volumes. &plitting them, ;

allowing the buyer to reject one volume because it was not of a satisfactory 3uality, would alter the character and reduce their value. +he buyer would have to reject them all or accept them all. 0uyers 12 are 3' nsu#ers4 $oods will meet the test of satisfactory 3uality if they are of a standard that a reasonable person would regard as satisfactory. "gain, each case will be decided on its own facts. 0f goods are not of a satisfactory 3uality, or do not conform with the contract, that is to say, they are faulty, the consumer has a number of options available. ?ntil recently, the 1 ! "ct gave all buyers of faulty goods just , main remedies. +o reject the goods outright and claim a full refund (plus damages, if appropriate* or bring a claim of damages for the cost of a repair. "s with all claims based on contract in the ?@, these rights are available for A years. &ince ;1 8arch ,22; where the buyer is a consumer, they have additional rights. 5epending upon the circumstances, the consumer who buys faulty goods may now be able to claim either a repair or a replacement. <here that is not possible they could then claim either a partial or full refund of the purchase price. +hese rights are discussed in more detail in the fact sheet on &ale of $oods 'aw (Consumer )rotection*. 0uyers in .usiness sales Bot every breach of contract will be significant enough to allow for rejection when the buyer is also acting in the course of a business. &ection 1.("* of the &ale of $oods "ct 1 ! states that the implied terms as to satisfactory 3uality will not allow the buyer to reject where the breach or damage is so slight that it would be unreasonable to allow the buyer to do so. 0n such circumstances, the buyer will be restricted to a claim in damages, say, for the cost of repairing the goods to the standard of a satisfactory 3uality. *. A''e$tan'e , t2e G %s

Buyers may lose the right to reject goods if they have =accepted> them. "cceptance may be intimated to the seller or by doing an act inconsistent with the rights of the owner or by deemed acceptance if the buyer #eeps the goods for more than a =reasonable period of time>. " buyer will not be deemed to have (legally* accepted the goods until he has had a reasonable opportunity of e6amining them to ascertain whether they conform to the contract or, if the sale is by sample, by comparing the bul# with the sample. &o, a buyer who signs for delivery of goods will not, necessarily, lose the right to reject them as faulty until he has had a reasonable opportunity of e6amining them, regardless of anything that might be written on the delivery note. <here the buyer in this situation is a consumer he can never lose that right to reject by agreement or waiver. <here a commercial buyer ta#es delivery of goods and signs a delivery note stating that the goods have been =accepted> then it will be a 3uestion of fact whether the buyer has had a reasonable opportunity of e6amining those goods and le(ally accepted them. <here a buyer allows the seller to attempt a repair of faulty goods, that will not necessarily be regarded as acceptance of the goods and the buyer would still be able to reject the goods if the fault remained. 4urther, where goods which have been purchased are discovered to be defective, a term could be implied into the contract entitling the buyer to be told what the defect was (even if the seller repairs the defect* because this information may be necessary 1

to enable to buyer to ma#e a properly informed choice between accepting or rejecting the goods. 0f the buyer is not given this information they may be entitled to reject the goods. 0t would be a different matter where the buyer ta#es faulty goods to anyone other than the seller for repair, unless they were able to argue that was necessary due to an emergency. A reas na.le $eri % , ti#e " buyer of faulty goods will lose the right to reject those goods by deemed acceptance if they #eep them for more than a reasonable period of time. :6actly what amounts to a reasonable period of time is not defined in any legislation and it has been left to the courts to decide this on a case by case basis. " reasonable period of time may be as little as three to four wee#s or as much as one or two years depending on the circumstances. +he only thing that can be said for certain is that if the delay is unfairly prejudicial to the seller, the buyer will most li#ely lose the right to reject and only be able to claim damages if the goods are faulty. &ay, for e6ample, that a consumer purchases a washing machine to be installed into a brand new #itchen which is being fitted. +here may be a delay that has nothing to do with the consumer. " prudent consumer might not unpac# the machine until it is ready to be installed for fear of it being damaged. 0f the machine was then found to be faulty there may have been a delay of more than three or four wee#s. But it would still be arguable that the consumer had not had a reasonable opportunity to carry out an inspection until the machine was ready to be fitted and would therefore still be entitled to reject the machine if not of a satisfactory 3uality. Compare the above with a consumer who buys a pair of s#is at a bargain price because it is the end of the season. +hey do not use the s#is until their ne6t s#iing trip some 11 months later when they discover they are not of a satisfactory 3uality. "rguably, they would have a harder time trying to show they had not had a reasonable opportunity to inspect the goods within that period. "lso, the seller would be able to argue it would be unfairly prejudicial to allow the consumer to reject the s#is after such a lengthy delay, so the consumers rights would be limited to damages either for the cost of repair or the difference in value. "lternatively, under regulations introduced from ;1 8arch ,22; the consumer may also re3uest a repair or replacement. +he position would again be different where, for e6ample, a fault was discovered with goods upon delivery. "s long as the buyer notifies the seller immediately of that fault and ma#es repeated and continuous re3uests that the fault be remedied or as#s the seller to provide information about any remedial wor# that might be necessary, so that the buyer can ma#e an informed decision whether to #eep the goods or not then, arguably, the buyer can not be said to have accepted the goods and would still be allowed to reject them even though, due to the sellers prevarication, that rejection may be many months after the original sale and delivery. +he above position in respect of buyers who are consumers will, obviously, have to be read in the light of the consumer regulations which came into force on ;1 8arch ,22; (see the fact sheet on &ale of $oods 'aw (Consumer )rotection**. -. Su$$ly , G %s an% Ser5i'es

The Supply of Goods and Ser!ices Act 19"# deals with contracts which are not strictly sale of goods contracts but are so similar that many of the legal principles are the same. .

+his is usually the case where a service is being provided in addition to the sale of goods. "n e6ample would be the purchase of a #itchen or bathroom where the seller supplies not only the units that are bought but the materials and labour necessary for the fitting. +he "ct contains implied terms similar to the sale of goods. Broadly spea#ing, where the contract is for the supply of goods as well as the provision of services then the goods and materials must meet the criteria for satisfactory 3uality as indicated by the implied terms for sale of goods purposes. "dditionally, the person doing the wor# must meet the standard of a reasonably competent professional e6ercising reasonable care and s#ill. <here no time limit has been agreed in the contract, say, for the delivery of goods or completion of wor#, then the contract must be completed within a reasonable period of time. &imilarly, where no price or charge has been agreed in advance, any charge must be reasonable in all the circumstances. 6. Lin6s

"ll local authorities will have +rading &tandards departments to assist consumers and retailers with any consumer problems. 5etails will be in your local telephone directory or search online at +rading &tandards Central www.tradingstandards.gov.u# 4ree advice and leaflets for consumers are also available from most CitiCens "dvice Bureau6. 5etails are again available from your local telephone directory or contact their main website for online advice and to fine your nearest bureau www.nacab.org.u# +he %ffice of 4air +rading is the main regulatory body and also has free consumer advice for both consumers and retailers on their website. Contact details are/ %ffice of 4air +rading 4leetban# House ,9A &alisbury &3uare 'ondon :C1D EFG $eneral :n3uiries/ 2E1.! ,, 11 www.oft.gov.u# +his fact sheet was prepared by the C ##er'ial Unit of A..ey Legal 7r te'ti n. 0t is intended only as a guide and is not to be regarded as a substitute for consultation with one of our 'egal "dvisors, since every case will ultimately turn on its own particular facts and circumstances. &hould you re3uire legal advice please contact A..ey Legal 7r te'ti n on 020 89)0 6000. If you are dri!in( ,hen usin( the le(al ad!ice ser!ice, please ma/e sure it is safe and le(al to do so$ A..ey Legal 7r te'ti n offers a professional :mployment Consultancy &ervice on a wide range of employment and HH issues including redundancy programmes, termination of senior employees and directors, in-house training and drafting employment documentation compliant with the very latest changes in employment law specifically tailored to your business. <e are successful and popular with our clients because we ta#e a customer9 focussed approach to each :mployment Consultancy assignment.

A..ey Legal 7r te'ti n is happy to provide a 3uote for :mployment Consultancy wor#. %ur aim is to 3uote fees that are fi6ed and transparent. 4or further details contact/ :mail/ consultancyIabbeylegal.com +el/ 2,2 E!;2 A1,. 4a6/ 2,2 E!;2 A22,