Section 2 - What the Duties are
Between the Parties Engaged
in the Contract of Sale
Outcome
• Students must be able to categorise the
duties imposed on the seller and the buyer
by the Sale of Goods Act 1979.
Introduction
• These duties are found in ss 27 and 28
SOGA 1979.
• DUTY OF THE SELLER: TO DELIVER
THE GOODS
• DUTY OF THE BUYER: TO ACCEPT AND
PAY FOR THE GOODS AS PER (IN
ACCORDANCE TO) THE TERMS OF
CONTRACT
• These are concurrent conditions
Duties of the Seller
• Delivery
• Under s 27 delivery requires the voluntary transfer of
possession from one person to another in accordance
with the terms of the contract.
• In Four Points Garage v Carter (1985) 3 All ER 12 the
court held that the transfer of possession may be
satisfied symbolically through the delivery of
documents of title or to an agent. (In this case S sold
agreed to sell a car to B and at B’s request, delivered the
car directly to X, to whom B has sold the car. Held:
delivery to X constituted a state of affairs whereby S was
acting as B agent and that B was in constructive
possession of the car even though he never had physical
possession of it).
Duties of the Seller (continued)
• Place
• The SoGa 1979 s 29(2) requires the place
of delivery to be determined by the
contract or if not, it will be the seller's
place of business (default rule). The
exception to this would be if the goods are
specific goods, then the place of delivery
will be where the goods are situated.
Duties of the Seller (continued)
• Time
• The SoGa 1979 s 29(5) & 29(3) requires the goods to be
delivered at the time stipulated by the contract of sale,
or, if not, within a reasonable time. What is a reasonable
time will be determined as a question of fact. These
sections must be read in accordance with SoGa 1979 s
10(2) which requires a determination as to whether time
is of the essence or not. See the cases of British &
Common Holdings v Quandrex Holdings (1989) 3 All ER
492, and, Bunge Corporation v Tradax SA (1981) 2 All
ER 513 for a discussion of instances where the time of
delivery may or may not be of the essence.
Duties of the Seller (continued)
• In British & Common Holdings v Quandrex
Holdings (1989) , it was held that initially in a
contract where delivery should be made within
reasonable time, time cannot be initially of the
essence but buyer can subsequently make it
of the essence by serving a reasonable
notice fixing a delivery date and making time of
the essence.
• In Bunge Corporation v Tradax SA (1981), the
buyer was required to give the seller notice of
readiness:
Duties of the Seller (continued)
• ‘It is clearly essential that both buyer and
seller (who may change roles in the next
series of contracts, or even in the same
series of contracts) should know precisely
what their obligations are, most especially
because the ability of the seller to fulfil his
obligations may well be totally dependent
on punctual performance by the buyer’.
(per Lord Wilberforce)
Duties of the Seller (continued)
• In other words time is of the essence for largescale commercial contracts (contracts for
commodities). Lord Wilberforce referred to
‘mercantile contracts’. Probability in commercial
contracts. Possibility in consumer contracts.
• If on seller’s terms delivery ‘on or about’ a
certain date: this will somehow stop the buyer to
simply withdraw from his contractual obligations
Duties of the Seller (continued)
• Amount
• The contract of sale will fix the amount of goods to be
delivered and failure to comply with that term will result
in an unenforceable contract.
• SOGA s 30, lays down a detailed set of rules defining the
buyers rights where the seller delivers more or less than
the agreed quantity of goods.
• If the incorrect amount is delivered the buyer may
reject the whole contract amount subject to the
applicable limitations under SoGa s 30(2A), & s
30(2B). These sections prohibit a buyer dealing as a non
consumer from rejecting goods where the shortfall is so
slight that it would be unreasonable to do so.
Condition of the Goods
• The seller is under a duty to supply
goods in accordance with the implied
terms as to the condition of the goods
under the SoGa 1979. The implied terms
are contained in SoGa ss 12-15. The
implied terms are the most important
source of redress for the buyer if the
goods are defective in any way.
Goods must correspond with
their description
• SoGa s 13 implies a condition that
where the goods are sold by description
they will correspond with that
description once they are in the
possession of the buyer.
I. Goods must correspond with
their description
a. Was the sale by description?
b. What was the description by which the
goods were sold?
c. Did the description influence the buyer?
d. Did the description identify the commercial
characteristics of the goods sold?
e. Did the description identify the goods to be
supplied rather than an item or location of
the goods?
f. Did the goods correspond to all aspects of
the detail by which they were described?
Was the sale by description?
• See Varley v Whipp (1900) 1 QB 513, Grant v
Australian Knitting Mills (1936) AC 85 for seen or
unseen goods.
• In Varley v Whipp it was held that where S sold
specific goods which B had not seen, the sale
was one by description.
• In Grant v Australian Knitting Mills it was held
that ‘There is sale by description even though
the buyer is buying something displayed before
him on the counter…’
What was the description by
which the goods were sold?
• Can include the slightest characteristic.
• See Beale v Taylor (1967) 3 All ER 253:
‘1200’ badge on a secondhand car was
held to be part of the description of the car
Did the description influence the
buyer?
• See Harlington & Leinster v Christopher Hull
(1991) 1 QB 564: Bought a supposedly
Gabriele Munter (German expressionist painter).
S declared he was not an expert on German
expressionist painting to B, who actually was an
expert. £6,000. Fake: £50-100. Court of
Appeal said this was not sale by description
basing its decision on the fact that the
attribution of artistic arts is not an exact
science, and that anyone dealing in fine art is
taking a calculated risk. Good decision but
sellers cannot get away simply by stating that
they are not experts.
Did the description identify the
commercial characteristics of
the goods sold?
• See Ashington Piggeries v Christopher Hill
(1973) AC 441: Goods are only ‘sold by
description’ where the description in
question identifies the commercial
characteristics of the goods to be sold.
Did the description identify the
goods to be supplied rather than
an item or location of the goods?
• See Reardon Smith v Hansen-Tagen
(1976) 3 All ER 570 [1976] 1 WLR 989:
‘Description has to be a substantial
ingredient in the identity of the thing sold.’
Did the goods correspond to all
aspects of the detail by which
they were described?
• See Arcos v Ronaasen (1933) AC 470 HL:
B ordered 0,5 inch thick timber staves
for making barrels; most of the staves
delivered varied from 0,5 inch to 9/16s of
an inch. The buyer was entitled to reject,
despite the fact that he took advantage of
a falling market for timber. ‘Due for fresh
examination’ said the Lord Wilberforce in
Reardon Smith.
II. Goods must be of satisfactory
quality
a. Fitness for all purposes for which the
goods are commonly supplied.
b. Appearance and finish, freedom from
minor defects.
c. Durability and safety.
II. Goods must be of satisfactory
quality (continued)
• SoGa s 14(2) implies a condition that where
goods are sold in the course of a business, the
goods supplied will be of satisfactory quality (not
merchantable quality as before 1995).
• See Stevenson v Rogers (1999) QB 1028: The
court rejected the meaning given to that phrase
in the context of the Trade Descriptions Act 1968
and the Unfair Contract Terms Act 1977 and took
a broader approach. Fisherman selling his
trawler was taken to be ‘in the course of
business’.
II. Goods must be of satisfactory
quality (continued)
• SoGa s 14(2A) creates an objective standard of
satisfactory quality taking into account the
description of the goods, the price and any other
relevant factors.
• See Thain v Annieland Trade Centre (1997) SLT
102: Secondhand Renault 80,000 miles - £2,995
(reasonable price) – realised the car was of
unsatisfactory quality as she had problems with
the gear box; her claim failed, because the car’s
lack of durability did not make it of unsatisfactory
quality.
S 14(2A) ‘checklist’ - Fitness for
all purposes for which the goods
are commonly supplied.
• See Kendall v Lillico (1969) 2 AC 31: B bought
ground nut extract to make food which in turn
sold to the owner of a farm, who fed to his stock.
The groundnuts used in the extract had been
affected by a mould which produced a toxin
poisonous to the birds, which died. In addition
groundnuts were also used for cattle food and
the extract supplied to B could also been used
for cattle food. HoL held that the subject matter
of groundnuts was merchantable (=if fit for at
least one purpose, then merchantable).
S 14(2A) ‘checklist’ - Fitness for all
purposes for which the goods are
commonly supplied (continued)
 Aswan Engineering v Lupdine Ltd (1987) 1 All
ER 135: Here a contract to supply plastic pails
which were used to contain damp-proofing
compound exported to Kuwait. Goods reach
Kuwait and then they were stored. 70 degrees
high temperature inside the storage. Pails
collapsed under their own weight and buyers
claimed that they were unmerchantable. The
CoA rejected the argument that the units were
unmerchantable simply because they collapsed
under their own weight.
S 14(2A) ‘checklist’ - Appearance
and finish, freedom from minor
defects
• A balance between defects that render the
goods unusable and defects that are only minor
and do not affect the usability of the goods.
• See Rogers v Parish Ltd (1987) 2 All ER 232: B
bought a new Range Rover for £16,000.
Suffered from minor defects e.g. scratches to the
paintwork. CoA held: unmerchantable because
it was conceived that cars do not simply get
drivers and passengers from one place to the
other but of doing so one can also claim that
they give pride to their driver by the outward and
interior appearance.
S 14(2A) ‘checklist’ - Appearance
and finish, freedom from minor
defects (continued)
• Shine v General Guarantee Corp (1988) 2 All ER 911:
Unmerchantable even if ‘usable’ – Fiat X-19. Totally
immersed in the water so that anti-corrosion warranty
was avoided. Unmerchantable.
• Bernstein v Pamson Motors (1987) 2 All ER 220: But an
easily repairable defect in a car does not make it
unmerchantable.
• Millars of Falkirk v Turpie (1976) SLT 66: New car
delivered with a leak in the power steering system; would
cost £25 to fix and seller offered to fix it. B (a laywer)
sought to immediately reject. Merchantable.
S 14(2A) ‘checklist’ – durability
and safety
• Durability requires that at the time risk is
transferred, the goods should not
deteriorate more rapidly than can
reasonably be expected. Safety requires
goods of satisfactory quality to be safe for
use. See Thain v Anniesland Trade
Centre (1990) SLT 102 (Renault case).
III. Goods must be fit for purpose
• SoGa s 14(3), where the buyer makes
known to the seller any purpose for which
the goods are to be used, then the goods
supplied under the contract must be
reasonably fit for that purpose (e.g. buying
a washing machine, it should wash
clothes…). Again, the meaning of "in the
course of a business" has been given a
broad interpretation, see Stevenson v
Rogers (1999) QB 1028.
III. Goods must be fit for purpose
Two (2) requirements must be satisfied:
a. The particular purpose must be made
known to the seller and, if it is a
special purpose, that purpose must
be specifically stated.
b. The buyer must rely on the seller in
circumstances where it would be
reasonable for the buyer to rely on the
judgement of the seller.
Fit for purpose - The particular
purpose must be made known to the
seller
• See Kendall & Sons v Lillico & Sons Ltd (1969) 2
AC 31: (Groundnut case).
• Ashington Piggeries Ltd v Christopher Hill
(1972) AC 441: (M)anufacturer a claim against
(S)upplier under s 14 (3) SOGA who had
supplied contaminated herring meal. The
manufacturer had indicated that this would be
for animal feed rather than fertiliser but not that
feed was for mink. Fatal to mink. Held: M
sufficiently indicated that the purpose in the
manufacture was animal feed.
Fit for purpose - The particular purpose
must be made known to the seller
(continued)
• Slater v Finning (1997) AC 473: S supplied a
camshaft for B’s fishing vessel. Not only had the
first camshaft failed but so did two additional
replacements causing significant losses to B’s
business. But the camshaft was fit for purpose.
The boat’s idiosyncrasy caused problems to it
and it worked perfectly in another vessel. The
HoL rejected B’s claim because he did not
make it clear from the outset that the usage
of the camshaft was for a special purpose, a
purpose which was never provided by B.
Fit for purpose - The buyer must
rely on the seller
• See Wren v Holt (1903) 1 KB 610 CA: B
bought Holden’s beer from a public house.
The beer was contaminated by arsenic. B
gave evidence that he knew that the public
house sold only Holden’s beer and that he
drank there because he liked Holden’s
beer. A claim on the unfitness of beer
under s 14(3) failed on the basis that B
had not relied on S.
Pass good title (nemo dat quod
non habet)
• SoGa 1979 s 12(1) imposes a duty on
the seller in a contract for the sale of
goods to transfer to the buyer an
absolute legal interest in the goods.
• Failure to transfer an absolute legal
interest will allow the buyer to reject the
goods and terminate the contract.
Pass good title (nemo dat quod non
habet) (continued)
• See Niblett v Confectioners Materials Co Ltd
(1921) 3 KB 387: Condensed milk ‘Nissly’
instead of Nestle. Trademark breach preventing
B to sell cans of milk of ‘Nissly’.
• Rowland v Divall (1932) 2 KB 500, Barber v
NSW Bank Ltd (1996) 1 All ER 906: B bought
goods but was sued for infringement of patent by
X. The patent however was granted to X after
the property in the goods passed to B; in
contrast to Niblett no breach of s 12(1): S had
the right to sell at the time he did to B.
Pass good title (nemo dat quod non
habet) (continued)
•
In addition under SoGa s 12(2), there
are two implied warranties:
a) Where the defects are specifically drawn
to the attention of the buyer.
b) The buyer must be allowed quiet
possession of the goods.
Sale by sample
• SoGa s 15 requires goods sold by sample to
be free of any defects and also for the sample
to correspond with the bulk of the goods.
• See Drummond (James) & Sons v EH Van
Ingen & CO LTD (1887) 12 APP CAS 284: a sale
by sample ‘where the sample is present to the
eye the real meaning and intention of the parties
with regard to the subject matter of the contract
which, owing to the imperfections of language, it
may be difficult or impossible to express in
words. The sample speaks for itself’
Duties of the Buyer
• Acceptance of the goods
• Payment for the goods
Duties of the Buyer (continued)
• Acceptance of the goods
• SoGa 1979 s 27 requires the buyer to
accept the goods and not wrongfully
reject the goods. This must be read in
conjunction with SoGa 1979 s 37 that
apportions liability on the buyer for
refusing or, being negligent in not
taking delivery of the goods after the
seller has requested him to do so.
Duties of the Buyer (continued)
• The duty to pay the price is fundamental to the
contract of sale and under SoGa s 8(2) the
price may be fixed by the contract, or, by a
manner to be agreed in accordance with the
contract or, by a prior course of dealings.
• Failing this a reasonable price will be implied
dependant on the circumstances of the case.
In connection with the buyer's duty to pay for the
goods under SoGa s 27 reference must be
made to the Late Payment of Commercial
Debts (Interest) Act 1998.
Duties of the Buyer (continued)
• The ability to limit or restrict liability in a sale of
goods contract is regulated primarily by the
Unfair Contracts Terms Act 1977, ss 6 & 7.
This Act states that the duty to pass good title
under s 12 cannot be limited or excluded
under any circumstances.
• In relation to ss 13, 14 & 15, these terms
cannot be excluded or limited where the
buyer deals as a consumer. In instances
where the buyer is not dealing as a
consumer these terms can only be excluded
if they satisfy the test of reasonableness.
Recap
• Duties of the buyer and the seller in a
given sale of goods contract under the
SOGA 1979 and the corresponding case
law.
• In the case of the Seller we have dealt
with the Condition of the Goods and
Delivery, whereas in the case of the
Buyer with Acceptance of the Goods
and Payment for the goods.
Thank you.