- •Commercial Law
- •Contents
- •Preface
- •Abbreviations
- •Table of Statutory Provisions
- •Table of Cases
- •1 Introduction
- •1 Introduction
- •2 What is agency?
- •3 Nature and characteristics of agency
- •4 The different types of agency
- •5 Conclusion
- •6 Recommended reading
- •1 Introduction
- •2 The authority of an agent
- •3 Agency by ratification
- •4 Agency of necessity
- •5 Conclusion
- •6 Recommended reading
- •1 Introduction
- •2 Duties of an agent
- •3 Rights of an agent
- •4 Commercial agents and principals
- •5 Disclosed agency
- •6 Undisclosed agency
- •7 Termination of agency
- •8 Recommended reading
- •Introduction
- •1 Introduction
- •2 Background
- •3 Development of the sale of goods
- •4 Equality of bargaining power: non-consumers and consumers
- •5 Impact of the European Union
- •6 Contract of sale
- •7 Contracts for non-monetary consideration
- •8 Contracts for the transfer of property or possession
- •9 Recommended reading
- •1 Introduction
- •2 Background
- •3 Sale of Goods Act 1979, section 12: the right to sell
- •4 Sale of Goods Act 1979, section 13: compliance with description
- •5 Sale of Goods Act 1979, section 14(2): satisfactory quality
- •6 Sale of Goods Act 1979, section 14(3): fitness for purpose
- •7 Sale of Goods Act 1979, section 15: sale by sample
- •8 Exclusion and limitation of liability
- •9 Acceptance
- •10 Remedies
- •11 Recommended reading
- •1 Introduction
- •2 Background to the passage of property and risk
- •3 Rules governing the passage of property
- •4 Passage of risk
- •5 The nemo dat exceptions
- •6 Delivery and payment
- •7 Remedies
- •8 Recommended reading
- •1 Introduction
- •2 Background
- •3 Provision of Services Regulations 2009
- •4 Supply of Goods and Services Act 1982
- •5 Recommended reading
- •1 Introduction
- •2 Background
- •3 Electronic Commerce (EC Directive) Regulations 2002
- •4 Distance selling
- •5 Recommended reading
- •Introduction
- •1 Introduction
- •2 CIF contracts
- •3 FOB contracts
- •4 Ex Works
- •5 FAS contracts
- •6 Conclusion
- •7 Recommended reading
- •1 Introduction and background
- •2 Structure and scope
- •3 UNIDROIT Principles of International Commercial Contracts
- •4 Conclusion
- •5 Recommended reading
- •1 Introduction and background
- •2 Open account
- •3 Bills of exchange
- •4 Documentary collections
- •5 Introduction to letters of credit
- •6 Factoring
- •7 Forfaiting
- •8 Conclusion
- •9 Recommended reading
- •1 Introduction
- •2 Hague and Hague-Visby Rules
- •3 Charterparties
- •4 Time charterparty
- •5 Common law obligations of the shipper
- •6 Common law obligations of the carrier
- •7 Bills of lading
- •8 Electronic bills of lading
- •9 Conclusion
- •10 Recommended reading
- •Introduction
- •1 Introduction
- •2 Background
- •3 Development of negligence
- •4 The move to strict liability
- •5 Types of defect
- •6 Developments in strict liability
- •7 Recommended reading
- •1 Introduction
- •2 Personnel
- •3 Meaning of ‘product’
- •4 Defectiveness
- •5 Defences
- •6 Contributory negligence
- •7 Recoverable damage
- •8 Limitations on liability
- •9 Recommended reading
- •Introduction
- •1 Introduction
- •2 Background
- •3 Enforcement strategy
- •4 Criminal law controls
- •5 Civil law enforcement
- •6 Recommended reading
- •1 Introduction
- •2 Scope of the 2008 Regulations
- •3 Prohibition against unfair commercial practices
- •4 Codes of practice
- •5 Misleading actions
- •6 Misleading omissions
- •7 Aggressive commercial practices
- •8 Commercial practices which are automatically unfair
- •9 Offences
- •10 Recommended reading
- •1 Introduction
- •2 Background
- •3 Controls over misleading advertising
- •4 Comparative advertising
- •5 Promotion of misleading or comparative advertising
- •6 Recommended reading
- •1 Introduction
- •1 Introduction
- •2 History of banking regulation: early policy initiatives
- •3 New Labour and a new policy
- •4 The Financial Services Authority
- •5 The Coalition government
- •6 Conclusion
- •7 Recommended reading
- •1 Introduction
- •2 What is a bank?
- •3 What is a customer?
- •4 Bank accounts
- •5 Cheques
- •6 Payment cards
- •7 Banker’s duty of confidentiality
- •8 Banking Conduct Regime
- •9 Payment Services Regulations 2009
- •10 Conclusion
- •11 Recommended reading
- •1 Introduction
- •2 European banking regulation
- •3 The Financial Services Authority
- •4 Financial Services Compensation Scheme
- •5 Financial Ombudsman Scheme
- •6 Financial Services and Markets Tribunal
- •7 The Bank of England
- •8 Bank insolvency
- •9 Illicit finance
- •10 Conclusion
- •11 Recommended reading
- •1 Introduction
- •1 Introduction
- •2 Evolution of the consumer credit market
- •3 Consumer debt, financial exclusion and over-indebtedness
- •4 Irresponsible lending
- •5 Regulation of irresponsible lending
- •6 Irresponsible borrowing
- •7 Ineffective legislative protection for consumers
- •8 A change of policy
- •9 Lessons from the United States
- •10 Conclusion
- •11 Recommended reading
- •1 Introduction
- •2 Crowther Committee on Consumer Credit
- •3 Consumer Credit Act 1974
- •4 Formalities
- •5 Cancellation of agreements
- •7 Documentation of credit and hire agreements
- •8 Matters arising during the currency of credit or hire agreements
- •9 Credit advertising
- •10 Credit licensing
- •11 Unfairness test
- •12 Other powers of the court
- •13 Financial Ombudsman Service
- •14 Enforcement
- •15 Consumer Credit Directive
- •16 Conclusion
- •17 Recommended reading
- •Bibliography
- •Index
62 |
Sale of goods policy |
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contracts for the sale of goods. These include contracts of hire, hire-purchase |
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contracts, leaseback, contracts for the provision of goods and services and the |
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supply of computer programs. |
2â Background
The sale and supply of goods and services lies at the very heart of commercial law. The buying and selling, or related supply and acquisition, of goods and services is the fundamental transaction at the centre of commerce both between traders and between traders and consumers. Other aspects of commercial law, such as the insurance of and the financing of goods or services, are dependent upon the main supply contract and would not exist without it. Equally, agency contracts are often created for the express purpose of bringing about the main contract of sale or supply.
Of immediate note is the breadth of transactions that the law governing the sale and supply of goods seeks to control. It is applicable to multimillion-pound international contracts between traders that lie at the centre of international commerce1 yet is equally applicable to a contract by which a consumer buys a packet of sweets in a local shop. This diversity necessarily presents a challenge to both the law and legislators to ensure that the law remains relevant to the market and encompasses changes to that market, such as the phenomenal growth in distance selling during the last twenty years brought about by the development of the Internet and the ease with which purchasers, both commercial and consumer, can now transact across borders for a wide variety of goods and services. This has necessarily brought about a pan-European review of aspects of the law governing the sale of goods and the ways in which those contracts can be enforced.
Q1 Consider the developments in the market for the supply of goods in the last thirty years and analyse the impact of those changes.
3â Development of the sale of goods
The Sale of Goods Act 1979 (as amended), which came into force in January 1980, provides the current framework for contracts for the sale of goods, the statutory genesis of which lies in the Sale of Goods Act 1893, which itself codified the pre-existing common law as well as seeking to assimilate Scottish law on the subject. Sir Mackenzie Chalmers, who drafted the 1893 Act, stated that, acting on Lord Herschell’s advice, the Bill ‘endeavoured to reproduce as exactly as possible the existing law, leaving any amendments that might seem desirable
1This would naturally depend on whether the contracting parties had chosen to have their contract governed by the laws of England.
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3â Development of the sale of goods |
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to be introduced in Committee on the authority of the legislature’.2 The status of |
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pre-1893 case law would be that those ‘decisions which formed the basis of the |
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various sections and which were intended to be reproduced in the Act’.3 would |
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remain relevant where the law was unchanged. |
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In the period between 1893 and 1979, the 1893 Act was both statutor- |
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ily amended and the subject of a plethora of case law. Statutory amendments |
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included the passage of the Law Reform (Enforcement of Contracts) Act 1954, |
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section 2 of which abolished the need for sale of goods contracts with a value |
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of £10 or more to be evidenced by ‘a note or memorandum in writing’ as pre- |
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viously required by section 4(1) of the 1893 Act. This rendered contractual |
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arrangements less formal, a move now encapsulated in secton 4(1) of the 1979 |
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Act, which provides that contracts of sale can be made in writing (with or with- |
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out seal), by word of mouth, by a combination of the two, or may be implied |
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from the conduct of the parties. A further significant reform came with the pas- |
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sage of the Supply of Goods (Implied Terms) Act 1973 which changed sale of |
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goods legislation by altering the validity and applicability of clauses seeking to |
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exclude the liability of a seller under sections 12–15 of the Sale of Goods Act |
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1893. The 1973 Act inserted a new section 55 into the 1893 Act forbidding any |
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exclusion of liability under section 12 and rendering void any clause that pur- |
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ported to exclude liability under the implied conditions of sections 13–15 of the |
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1893 Act ‘in the case of a consumer sale’.4 Exclusion clauses in other contracts |
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would be unenforceable to the extent that it would not be fair or reasonable |
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to allow reliance on them. This amendment threw into sharp relief the poten- |
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tial for differing regimes for consumer buyers and non-consumer buyers, the |
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development of which has continued since5 and has given rise to debate as to |
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whether we have now reached the point where two distinct, yet overlapping, |
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regimes of commercial law and consumer law exist.6 |
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The 1979 Act is but the latest stage of the development of this area of law and |
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has itself been subject to amendment in 1994, 1995 and 2002. After consider- |
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ation of the topic by the Law Commission,7 the Sale and Supply of Goods Act |
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1994 replaced the familiar implied condition of ‘merchantable quality’ with the |
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more modern and relevant term ‘satisfactory quality’; while the Sale of Goods |
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(Amendment) Act 1994 abolished the historical market overt rule from the |
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2 |
To be found in the ‘Introduction’ to the 1st edn of Chalmers Sale of Goods (1894) and reproduced |
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in subsequent editions, see M. Mark, Chalmers Sale of Goods (18th edn, Butterworths, London, |
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1981). |
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3 |
Ibid. |
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This amendment was itself amended so that the current s.55(1) permits exclusion clauses but |
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only to the extent allowed under the Unfair Contract Terms Act 1977. |
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5 |
For example, the Unfair Contract Terms Act 1977, the Unfair Terms in Consumer Contract |
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Regulations 1999 (SI 1999/2083) and the Sale and Supply of Goods to Consumers Regulations |
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2002 (SI 2002/3045), all of which will be discussed later. |
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6 |
For an interesting discussion of this relationship see R. Bradgate, Commercial Law (3rd edn, |
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Butterworths, London, 2000) |
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7 |
Law Commission, Sale and Supply of Goods (Report No. 160, 1987). |
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Sale of goods policy |
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nemo dat exceptions.8 The following year, the Sale of Goods (Amendment) Act 1995 addressed the issue of the passage of title in an undivided bulk of unascertained goods by allowing prepaying purchasers to acquire an undivided interest in those goods.9
While the Sale of Goods Act 1979 provides the framework for contracts of sale, some of its provisions can be amended by the express agreement of the contracting parties.10 Chalmers made clear that the Act does not prevent contracting parties agreeing their own contractual terms, thus making whatever bargain they feel is appropriate to their needs. The object of the Act is to ‘lay down clear rules for the case where the parties have either formed no intention, or failed to express it’.11 Thus, while being prescriptive in some areas of the contract, it allows for flexibility in others.
At root, a contract for the sale of goods is simply a specialised form of contract, with certain of the common law rules relating to such contracts being brought together in a statute. It follows that, as the provisions of the statute are not all encompassing, other sources of law may be called upon to fill in the gaps. Indeed, section 62(2) of the 1979 Act itself makes clear that other sources of law are both pertinent and expressly applicable.
The rules of the common law, including the law merchant, except in so far as they are inconsistent with the provisions of this Act, and in particular the rules relating to the law of principal and agent and the effect of fraud, misrepresentation, duress or coercion, mistake or other invalidating cause, apply to contracts for the sale of goods.
This section underpins the fact that the Act is a flexible framework as opposed to a rigid set of rules and can be inclusive in approach. The express inclusion of mercantile law facilitates the incorporation of the trade usages and practices into the law governing the sale of goods, reflecting the origins of the Act which was introduced during the reign of Queen Victoria to help facilitate trade. The usage of the term ‘merchantable quality’ in section 14, when codifying the implied condition relating to the quality of goods, spoke to the fact that the Act originally governed relations between merchants, the term ‘consumer’ still being several decades away from common usage and from the overt recognition that the Act would also be a cornerstone of consumer protection. It is noteworthy that there was no attempt to define ‘merchantable quality’ statutorily until 1979 when the notion of consumerism was developing steadily.
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Sale of Goods (Amendment) Act 1994, s.1. |
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Sale of Goods (Amendment) Act 1995, s.1(3). |
10Some provisions of the Sale of Goods Act 1979 can be varied by agreement between the seller and the buyer, e.g., s.20 on the passage of risk, s.28 governing the concurrent nature of the terms on delivery and payment, s.31 on instalment deliveries and s.36 stipulating that the buyer is not normally bound to return rejected goods. For a fuller discussion of these provisions see Part 2 Chapter 3.
11See the ‘Introduction’ to the 1st edn of Chalmers Sale of Goods (1894) reproduced in subsequent editions, see Mark, above n. 2.