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Summary Sale of Goods - Commercial Law and Intellectual Property
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Condenses all the reading, lectures and SGS activities to about 30% the original volume. Clear, Concise and Organised.
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8. SALE OF GOODS Contract of sale governed by:
o Sale of Goods Act 1979 (SGA)
s.62(2) – provides that rules of common law apply to contracts for sale of
goods (except where inconsistent with SGA)
o Unfair Contract Terms Act 1977 (UCTA)
Business to Business sales only – i.e. seller in the course of a business to a non-consumer
s.2(1) SGA = Definition = ‘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’.
o Specific terms which govern the contract can be negotiated between the parties and
will vary from contract to contract
TERMS OF A CONTRACT
EXPRESS TERMS
Terms expressly agreed by the parties – can be:
o Written – contained in standard terms of business
o Oral – expressly agreed but not reduced to writing – statements made
IMPLIED TERMS
In the absence of express terms agreed, certain terms may be implied into the contract
o Custom or practice in a particular profession or trade
o Conduct of the parties or the imputed intention of the parties
e.g. if necessary to make the contract workable/give it business efficacy
o Previous course of dealing between the parties
o Statute - i.e. SGA 1979
Presumptions/default provisions that apply irrespective of the intention of the
parties unless contracted out/modified by express agreement
Courts may imply a term if it is necessary – NOT merely desirable or convenient to do so
Condition
A term fundamental to the performance of the contract – goes to the root of the contract
Breach = classed as a repudiatory breach giving innocent party the right to accept the
breach and treat the contract as at an end / reject the goods
Contracts generally expressly indicate whether a particular failure to perform is to be
treated as a breach
o Stipulate that a term is a ‘fundamental term’
o Or in relation to which ‘time is of the essence’
o Or stating breach will ‘entitle the other party to terminate the contract’
, Warranty
Contractual promise that goods provided will meet a certain specification
Less important term that does not go to the root of the contract
Breach will not change or fundamentally affect the principle purpose of the contract
o Usually only gives innocent party right to claim damages – s.11(3) SGA
Innominate Terms
Neither condition nor warranty – an intermediate term / ‘wait and see’ approach
Honk Kong Fir Shipping v Kawasaki [1962] – to decide whether an innocent party could
terminate, ask whether the event that occurred had deprived them of the whole benefit of
the contract
o i.e. look at the effect of the breach to decide remedies
minor consequence = treat as warranty
major consequence = breach of condition + termination
KEY PROVISIONS OF CONTRACT
Detail of the goods which are being transferred from S to B
When and how delivery will be effected (i.e. when possession of goods passes to B).
When title and risk in the goods pass to B.
The contractual price.
When and how payment of the contractual price is to be made.
What condition/quality is appropriate to the goods.
For sake of certainty – parties should set out express written terms dealing with each point
and the consequences of a breach
o Rather than rely on oral express terms or implied terms = uncertainty
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