Steph Shaw
February 2010
Section 12 SGA
The essence of a sales contract is
the transfer of property from the
seller to the buyer, therefore:
Section 12 implies 3 terms into a
contract for the sale of goods
S12(1) Title
 ‘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’
 Rowland v Divall [1923]-the defendant had bought in
good faith a car which had been stolen. The thief could
not pass on good title and neither could the D when he
resold it.
 Where there is a chain of innocent sellers the loser will
generally be the person who bought from the thief
 Seller does not need to be the owner of the goods; he
must have the right to sell, i.e. an agent
Effect of Breach of s12(1)
Implied term in s12(1) is a
condition, therefore breach allows
the buyer to reject the goods,
terminate the contract and sue for
damages
Held to be a total failure of
consideration
Niblett Ltd. v Confectioners’
Materials Co Ltd [1921]
 Sellers agreed to sell a consignment of 3,000 tins of
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condensed milk.
The tins bore a wrapping which infringed another
company’s trade mark and that company had the legal
right to stop the sale by an injunction.
The buyer had to remove the labels and sell the tins at a
reduced price.
He sued the sellers for damages for breach of what is now
s12(1).
Although property in the tins had passed to the buyers,
never the less they could have been stopped by injunction
from selling the tins.
Breach of s2(1) SGA
S12(2)(a)
 There is an implied warranty in s12(2)(a)
that the goods are free from any
encumbrance or charges
 When a warranty is breached the injured
party can claim for damages but cannot treat
the contract as terminated
S12(2)(b)
 Implied warranty that the buyer of the
goods will enjoy quiet possession of
them
 Microbeads AG v Vinehurst Road
Marking Ltd (1975)- breach of s12(2)(b)
 Rubicon Computer Systems Ltd v
United Paints (2000) -breach of
s12(2)(b)
S12 (contd)
These terms cannot be
excluded or restricted:
s6(1)(a) Unfair Contract
Terms Act 1977
s13-Sale by Description
 s13 provides that where there is a contract for the
sale of goods by description there is an implied
term that the goods shall correspond to that
description
 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 either buyer or seller
Caveat Emptor v Caveat Venditor
 Is basic principle of law ‘buyer beware’ or ‘seller
beware’?
 Historically parties were free to contract on their own
terms and were also able to exclude their liability
 Little legal protection for the buyers of goods
 Buyers now have a substantial degree of protection
against the risk of goods proving to have defects of
quality or not being fit for a known purpose
Historical Development of s13 SGA
 By the 1860s courts were prepared to imply terms into
contracts for the sale of unascertained goods bought
by description where the buyer had not seen the
goods, requiring the goods to correspond with the
description and be of ‘merchantable’ quality
 If buyer bought specific goods then he was taken to
rely on his own judgment and caveat emptor applied
 Sale of Goods Act 1893 purported to codify the existing
law but important changes were made to the existing
law which further eroded the concept of caveat emptor
 The 1893 Act extended the protection of the implied
term relating to sale by description to contracts for the
sale of specific goods as well as unascertained goods
 Until 1973 the Act only required goods to be
merchantable where they were sold by description
 In order to give buyers protection the courts were
forced to give ‘sale by description’ an extended
meaning
 Caution!! Some cases on sale by description decided
prior to 1973 should be treated with caution
What is a sale by description?
 The description must be a term of the
contract and not a representation
 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
Sale by Description
 Clearly where the seller sells unascertained goods the sale must
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be by description Varley v Whipp [1990]
Examination of the goods by the buyer does not prevent the sale
being a sale by description Grant v Australian Knitting Mills Ltd
[1936]
Section 13(3) SGA 1979
‘A sale is not prevented from being by description merely because
being exposed for sale the goods are selected by the buyer’.
Section 13(3) provides that goods can still be sold by description
even if, being exposed for sale they are selected by the buyer. So
the fact that a buyer chooses goods, perhaps in a supermarket,
for example, will not prevent the goods from having been sold by
description.
 Beale v Taylor [1967]– the goods may describe
themselves
 Use of descriptive words on packaging may be
sufficient to make the sale a sale by description
Were the goods sold by reference
to the description?
 A sale not necessarily a sale by description merely because
descriptive words have been used in negotiations or in the
contract
 Courts now moving away from excessive technicalities-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
 NB s15A SGA a non-consumer buyer cannot reject goods
where the breach is so slight that rejection would be
unreasonable
Reliance
 There is no liability under s13 if the buyer did not rely on
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the seller’s description-Harlingdon and Leinster Enterprises
v Christopher Hull Fine Art [1991]-described as being a
Munter painting
Painting was a fake
Buyer sought to reject the goods (the painting) on the basis
that it did not comply with the description. However:
Seller emphasised that he had no expertise and the
Buyer had obtained an expert’s opinion, therefore court
held:
No reliance
Nourse L.J. "...the description must be influential in the
sale...".
‘The key to s13 is Identification’
 The words must identify the kind of goods to be supplied
 s13 concerned with words which identify ‘an essential part of the
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description of the goods’
Wallis Son and Wells v Pratt and Haynes [1911]
Breach of s13 contract for the sale of English sanfoin seed and instead
the seller delivered giant sanfoin
If goods are described in detail then goods must correspond to every
element
Arcos v Ronaasen [1933]
A quantity of staves, half inch thick ordered by a buyer
Over 95% of the staves delivered were a sixteenth of an inch oversize.
Buyer was able to reject
Outcome would now probably be different as a result of s15A
Ashington Piggeries [1972]
 S13 construed narrowly
 Questions of quality are to be dealt with under s14 SGA
 Contract for the supply of herring meal of ‘fair average
quality’
 Meal contaminated and proved fatal to the buyer’s
mink
 House of Lords held that the statement was not part of
the description for the purposes of s13 and meal was
still ‘herring meal’
 The contamination did not change its nature!
Exclusion of section 13
 The seller may seek to exclude or limit liability for
breach of the s 13 term however:
 s13 cannot be excluded where the buyer deals as a
consumer-s6(2)(a) UCTA 1977 (B2C)but
 in other cases (B2B) the exclusion clause must satisfy
the reasonableness test-s6(3) UCTA
IMPORTANT!
Applies to all sales, whether
the seller acts in the course of
business or privately
Breaches of s13 SGA
Re Moore & Co and Landauer &
Co [1921]
Arcos Ltd v E A Ronaasen & Son
[1933]
Beale v Taylor (1976)
Effect of Breach
 Implied term is a condition therefore breach allows the
buyer to reject the goods, terminate the contract and
sue for damages
 s15A SGA means that a business buyer will not be able
to reject if breach is slight but instead the buyer must
treat the breach of condition as a breach of warranty
and therefore claim for damages
 NB Buyer loses the right to reject if he has accepted
them (s35 SGA)
Next Week-Lecture 3
Section 14(2) SGA-goods must be
of satisfactory quality