SALE OF GOODS ACT – IMPLIED TERMS
This question involves implied terms under the law on sale of goods.
The Sale of Goods Act (SOGA) imposes certain obligations on the seller which are automatically included in every contract of sale. These implied terms will be part of the contract even though the parties may not have expressly addressed these issues.
One of the implied terms is that there must be satisfactory quality in the goods sold. This is provided in Section 14 of Sale of Goods Act (SOGA).
Section 14 only applies when the seller is selling in the course of business. Otherwise, Section 14 would not be applicable (the general rule would then be “buyer beware”). In this scenario, as David was selling the bracelets from a shop, it is very likely that David was selling in the course of business and Section 14 would therefore, be applicable.
Section 14(2) states that when the seller is selling in the course of business, it is an implied term that goods supplied under the contract will be of satisfactory quality.
Section 14(2A) states that goods would be deemed to be satisfactory if a reasonable person would regard the goods as satisfactory considering the description, price and all other relevant circumstances.
In this scenario, one of the bracelets broke when Mary was wearing it. As bracelets are meant to be worn, it is reasonably likely that a bracelet of satisfactory quality would not break easily while being worn.
Even in the unlikely case that a bracelet that breaks is still of satisfactory quality, it is provided in Section 14(2B) that certain specific factors may make a good unsatisfactory. These include Appearance and Finish, Freedom from minor defects, Safety, and the factor most applicable to this question would be Durability. Therefore, the amount of time that has passed from when the bracelet was bought to when it broke would also have to be considered.
In the case of Mash & Murrell v Joseph Emmanuel (1961), the court held that the potatoes at the very least had to be able to be of merchantable quality upon arrival.
Thus, if the bracelet broke in a short time relative to other bracelets of the same type after it was bought, the bracelet would most likely be deemed as not of satisfactory quality.
Similarly, it must be noted that mere functionality of the goods does not make it satisfactory. In the case of Rogers v Parish (Scarborough) Ltd (1987), the court held that even though the faulty car could still be driven, there was a breach of Section 14(2).
However, there is an exception to Section 14(2). Section 14(2C) states that the buyer cannot sue for implied terms if defects were drawn to the buyer’s attention before the contract was made, or if the buyer examined the goods before the contract and that examination ought to have revealed the defects. The buyer is however, not actually obliged to examine the goods. In this case, it is not stated if Mary had checked the bracelets before her purchase. In the unlikely case where she had checked the bracelets, but did not manage to see the defects that a reasonable person should have spotted, then Mary would not be able to ask for a refund from David.
Even if David uses Section 14(2C) as a defence, Section 14(3) provides that goods sold must be reasonably fit for a purpose that the buyer expressly or by implication makes known.
In the case of Grant v Australian Knitting Mills Ltd (1936), the court held that there was a breach of Section 14(2) and Section 14(3) even though the buyer did not explicitly state the purpose for buying the goods. The purpose was implied that underpants should be safe for wearing.
In this scenario, it is an implied purpose that the bracelet is meant to be worn and hence should be able to withstand the activity.
However, if Mary needs the bracelet for purpose that is not obvious, then she would need to make it known to the David.
In the case of Griffiths v Peter Conway Ltd (1936), the court held that since the buyer did not inform the seller of his special needs and since the coat was otherwise reasonably fit for normal persons, section 14(3) was not breached.
Hence, if Mary were to wear the bracelet for vigorous activity, she has to inform David so that he knows that the bracelets to be sold to her should not be made of materials that are too fragile. Otherwise Section 14(3) might not be breached.
Section 14(3) does not apply if the buyer does not rely or if it is unreasonable for the buyer to rely on the seller’s skill and judgement.
With regard to the exemption clause used, whether the sale is a consumer (home/private use) or non-consumer sale (office use) would have to be examined.
Section 12(1) of the Unfair Contract Terms Act states that, a party to a contract “deals as a consumer” in relation to another party if (a) he does not make the contract in the course of a business; (b) the other party does make the contract in the course of a business; and (c) the goods supplied are of a type ordinarily supplied for private use or consumption.
In this scenario, it is unclear if Mary is dealing as a consumer or a non-consumer. If she had bought the bracelets for consumer’s use, then the exemption clause will be completely void. If she had bought the bracelets for non-consumer use, the exemption clause will be void for a breach in Section 12 and will be valid if reasonable for breaches in Section 13, 14(2), 14(3) and 15.
In the more likely case that Mary is dealing as a consumer, she will be able to return the defective bracelet to David and recover the price she paid.
Effect of breach of Section 14(2) or 14(3): the buyer would have the right to repudiate the contract, reject the goods and sue for damages if any.
(PAGE 123, Packaging Geddling v Marsh, All goods of satisfactory quality Jackson v Rotax Motor and Cycle Co)
1. Specific performance
2. Rejection of goods
3. Actions for damages
4. Recovery of price
1.Specific performance: forcing the seller to sell, only applicable provided that the goods are RARE and UNUSUAL.
2.Rejection of goods: Rejection of the goods to seller and then sue for damages. He can also recover the price paid for the goods.
3.Sue for damages, loss occurring directly and naturally, resulting from the ordinary course of events from the breach. Objective of damages is to put the injured party in so far as money can do it, in the same position as if the contract had been performed. However, the damages must not be too remote. Also, the damages rewarded must not be allow the person rewarded to make a profit as it is only supposed to compensate.
4.Recovery of price: Ask for the refund of money paid to the buyer.
SALE OF GOODS ACT – SALE BY DESCRIPTION
This question involves the sale of goods by description under the Sale of Goods Act.
Section 13 of the SOGA provides that where there is a contract for the sale of goods by description, it is an implied term that the goods will correspond with the description. Section 13 can be applied even if the sale is not in the course of business. Hence in this question, as the transaction between Gary and Dave is not in the course of business, S13 applies.
Examples of sale by description is that if goods were ordered by merely looking at a catalogue or an advertisement, then it will be considered as a contract for the sale of goods by description.
(the following can be used if the buyer checks the goods)
However, if after seeing the advertisement, the goods were inspected and selected by the buyer, would it still be considered as a contract for the sale of good by description?
Yes it is. The case law is Beale v Taylor (1967). The court held that even though the plaintiff had inspected the car, it could nonetheless be a contract for the sale of good by description and so the defendant was held liable for the breach of section 13.S13 further states that a sale of good does not cease to be a sale of good by description just because the goods are exposed for sale and selected by the buyer.
For S13 to be successfully invoked , we must prove that the buyer has relied on the description. In Harlingdon & Leinster Enterprises Ltd v Christopher hull Fine Art Ltd (1991) , the court held that S13 was not breached, as the buyer did not rely on the seller, but relied on his own judgement. In this question, Gary relied on Dave that the motor car was in “showroom condition” before he bought the car. Hence, in this question S13 can be successfully invoked.
Also, till today, it remains unclear if the S13 is applicable to all sorts of descriptions or only descriptions that are vital or important. In Re Moore & Co Ltd and Laudauer & Co Ltd (1921), the court found that there was no difference in value between tins packed 30 to a case and those 24 to a case. Nonetheless, the court held that there was a breach of S13. Some later have questioned the validity of this overly technical approach and suggested that only vital and important descriptions that do not correspond would cause a breach of S13. For instance, in Ashington Piggeries v Christoper Hill Ltd (1972), it was held that the buyer can fairly and reasonably refuse to accept the goods only if their failure to correspond with what was said about them makes the goods of a different kind from what he had agreed to buy.
Nonetheless, in this question, no matter if we were to agree with either case law, it is true that the descriptions which Dave has given to Gary do not correspond to the condition of the car.
In this question, Dave said the motorcar was in “showroom condition” other than the “minor adjustments” to the steering wheel. A reasonable man would regard “showroom condition” as the car being as good as a brand new car (other than the steering wheel requiring adjustments). Hence, when the car engine completely seized up and could not be repaired, it is deemed that Gary has breached S13.
Gary can claim for damages. Restitution of $150, 000 and other damages like inconvenience caused when going to work etc.
Possible defense for Dave
1. Dave does not know that the engine is spoilt. A car technician told him that it is alright
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