STEPH SHAW
February 2010
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10 credits
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Unit co-ordinator: Steph Shaw
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Lecturer: Steph Shaw
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Aims: develop an understanding of the legal
liabilities of business organisations towards
consumers and other businesses
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100% Coursework
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Problem question - 3000 words
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Distributed w/c 09 March
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This unit aims to build upon the knowledge
of contract law developed in Level 1
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Sale of Goods
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Exclusion Clauses
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Consumer Credit
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The law relating to commercial activity,
especially transactions concerned with the
sale and supply of goods and services and
the financing thereof.
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Most of the legal principles applicable to
contracts of sale were developed at common law,
particularly during the eighteenth and nineteenth
centuries.
By the late nineteenth century an extensive body
of rules concerned with the rights and duties of
buyers and sellers had developed and the law of
sale was therefore included in the partial
codification of commercial law.
Sale of Goods Act 1893
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Industrial revolution – between 1860 and 1900
estimated that the real wages of urban workers
increased by 60%
Mass production of consumer durables led to a
massive increase in commercial activity
Growth in provision of credit
Existing contractual basis for analysis of
commercial activity with its assumption of
equality of bargaining power was inadequate to
deal with the problems created by the increase in
consumption and the increasing complexity of
goods and sales techniques
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Courts developed principles of negligence law
to deal with problems caused by defective
goods
Parliament legislated to regulate the supply of
credit – Moneylenders Act 1927 and Hire
Purchase Act 1938
Licensing
Criminal law self regulation introduced
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Consumer protection
Issued directives on: consumer credit, unfair
contract terms, distance sale, unfair
commercial practices contracts
Introduced new concepts into UK law: ‘good
faith’ ‘average consumer’
New Directive on Consumer Rights proposed
in 2008
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A contract is a legally binding agreement
which is essentially commercial in its nature
and involves the sale or hire of commodities
such as goods, services or land.
Only a minority of contracts must be written
in order to be valid. These include contracts
to sell land and contracts to obtain credit.
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Terms define the obligations which the
parties to the contract have undertaken
Different types of terms, can be express or
implied
If any terms are breached the injured party
will have a remedy for breach of contract. The
nature of the remedy will depend upon what
type of term as breached
Express terms are agreed by the parties
Implied terms are implied by the court or by a
statute
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Importance of statement-Bannerman v White
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Special skill and knowledge-Dick Bentley
Productions Ltd v Harold Smith (Motors) Ltdif statement made by someone with special
skill/knowledge more likely to be a term
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Timing-Routledge v McKay-the more time
that elapses between the statement being
made and the contract being concluded, the
less likely it will be a term
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A misrepresentation is an untrue statement of
fact by one party which has induced the other
to enter into the contract
There must be:
An untrue statement
It must be a statement of fact and
It must have induced the innocent party to
enter the contract
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Conditions-important terms of the contract,
breach of which allows the innocent party to
terminate the contract and sue for damages.
Warranties-less important terms, breach of
which allows the innocent party to claim
damages but does not allow them to treat the
contract as terminated
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Terms are implied into contracts by 3
statutes:
Sale of Goods Act 1979
Supply of Goods (Implied Terms) Act 1973
(contracts of hire-purchase)
Supply of Goods and Services Act 1982.
The terms which these statutes imply are
inserted into certain types of contracts
without the parties needing to agree to them.
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Sale of Goods Act 1893 was the first statute
to imply terms into contracts.
1893 Act replaced by the Sale of Goods Act
1979
Contain 5 major implied terms, all of which
are conditions
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s12(1) implies a condition that the seller
has the right to sell the goods
s13(1) implies a condition that the goods
will correspond with any description by
which they were sold
s14(2) implies a condition that the goods
are of satisfactory quality
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s14(3) implies a condition that the goods are fit for the
buyer’s purpose
s15(2) implies a condition that where goods are sold by
sample that the bulk will correspond with the sample
The terms implied by ss. 14(2) and 14(3) are implied
only into contracts for the sale of goods which are made
in the ‘course of a business’.
The other terms are implied into all contracts for the
sale of goods
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The swing of the pendulum from:
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Caveat emptor – ‘buyer beware’
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to
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Caveat venditor – ‘seller beware’
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A necessary change rendered necessary by the
conditions of modern commerce and trade
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Only applies to contracts for the sale of goods
s2(1) ‘a contract by which the seller transfers or
agrees to transfer the property in goods to the
buyer for a money consideration called the price’
Property in goods means ownership or title,
therefore contracts of hire are not covered by the
SGA as ownership is not transferred.
s8 clarifies the term ‘price’. Consideration must
be money, therefore a free gift cannot be a sale
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s 61 SGA-defines goods as ‘all personal
chattels other than things in action’
A personal chattel is a physical thing which
can be touched or moved (land and houses
cannot be moved)
A thing in action is a right which can be
enforced only by suing (guarantees, debts,
intellectual rights like a trademark or
copyright)
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ss 12 and 13 Sale of Goods Act