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Section 12 SGA 1979
Section 12 implies 3 terms into a contract for the sale of goods
Implied terms are about title
Section 12(1)  ‘There is an implied condition on the part of the seller that in the case of a sale he has the right to sell the goods’
Effect of Breach of s12(1)
 Implied term is a condition
 Breach allows buyer to terminate and claim damages
 Rowland v Divall [1923]
 Held to be a “total failure of consideration”
 Seller does not need to be the owner of the goods; he must have the right to sell
Niblett Ltd. v Confectioners’ Materials Co Ltd [1921]
 Sale of a consignment of 3,000 tins of condensed milk
 Labels infringed another company’s trade mark  Buyer sued sellers for damages for breach of what is now s12(1)
Section 12(2)(a)
 Implied warranty that the goods are free from any charge or encumbrance  When a warranty is breached the injured party can claim for damages but cannot treat the contract as terminated
 Buyer succeeded: Breach of s12(1) SGA
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Section 12(2)(b)
 Implied warranty that the buyer will enjoy quiet possession of the goods
 Microbeads AG v Vinehurst Road Marking Ltd (1975)
Section 12
 These terms cannot be excluded or restricted: s6(1)(a) Unfair Contract Terms Act 1977
 Rubicon Computer Systems Ltd v United Paints (2000) Section 13
Sale by Description
 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
Caveat Emptor v Caveat Venditor
 Is basic principle of law ‘buyer beware’ or ‘seller beware’?
 Buyers now have a substantial degree of protection  If the sale is by sample as well as by description goods must correspond with the sample and description
 Implied condition applies to all sales regardless of the status of buyer or seller
against the risk of goods proving to have defects of quality or not being fit for a known purpose Historical Development of s13
 By 1860s, courts were prepared to imply terms into contracts for the sale of unascertained goods bought by description
 Buyers of specific goods still had to rely on own judgement ‐ caveat emptor  Sale of Goods Act 1893 purported to codify the existing law but important changes were made which eroded the concept of caveat emptor
 Sale of Goods Act 1893 extended regulation of sale by description to contracts for the sale of specific goods as well as unascertained goods
 Until 1973, goods only had to be merchantable where they were sold by description
 To give buyers protection, courts gave ‘sale by description’ an extended meaning
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What is a “sale by description”?
 The description must be a term of the contract  Statements made during negotiations are classified by the courts as either terms of the contract or representations
 A representation is not a term of the contract
Goods must be sold by reference to the description
Sale by Description
 Unascertained goods Varley v Whipp [1990]
 What if buyer can examine goods?
Grant v Australian Knitting Mills Ltd [1936]
 Section 13(3): A sale is not prevented from being by description by reason that, being exposed for sale, the goods are selected by the buyer.
Buyer must rely on the description
 A sale not necessarily a sale by description merely because descriptive words have been used in negotiations or in the contract
 Not every statement about quality and fitness of the goods can be treated as part of the description‐
Ashington Piggeries v Hill
 s13 concerned with words which identify an essential
part of the description of the goods
Description must identify the goods
 There is no liability under s13 if the buyer did not rely on the seller’s description
 Harlingdon and Leinster Enterprises v Christopher Hull Fine Art [1991]
 Nourse L.J. "...the description must be influential in the sale...". Exclusion of section 13
 The words must identify the kind of goods The seller may seek to exclude or limit liability for breach of the s 13 term. However:
 Wallis Son and Wells v Pratt and Haynes  s13 cannot be excluded where the buyer deals to be supplied
[1911]
 Arcos v Ronaasen [1933]
as a consumer (B2C)
s6(2)(a) UCTA 1977
 in other cases (B2B) the exclusion clause must satisfy the reasonableness test in s6(3) UCTA 1977
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IMPORTANT!
Breaches of s.13
 Re Moore & Co and Landauer & Co [1921]
Section 13 applies to all sales,  Arcos Ltd v E A Ronaasen & Son [1933]
whether the seller acts in the course of business or privately
 Beale v Taylor (1976)
Effect of Breach
Next Week‐Lecture 3
 Section 13 implied term is a condition  s15A SGA 1979 means that a business buyer cannot reject goods if breach is slight
Section 14(2) SGA 1979 goods must be of satisfactory quality
 NB Buyer loses the right to reject if he has accepted the goods (s35 SGA)
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