1 Scope of the law2 Implied terms3 Title 4 Description5 Quality and fitness in business sales6 Sample7 Remedies in non-consumer cases8 Exclusion of implied terms

11.1 Scope of the law

1979 Act Contract for sale of goods

1973 Act + Hire purchase

1982 Act Contracts for supply of work and materials, contracts for barter, hire, rent or leasing

1994 Act + non-consumer contract

Meaning of “sale”:Pays money in return for ownership of goods.╳ Gift, barter, hire or lease

Meaning of “goods”:√ All personal chattels: you xing cai chan ╳ Things in action wu xing cai chan

11.4 Implied terms 1979 Act    5 terms, Sections 12 to 151973 Act    4 terms, Sections 8 to 111982 Act 4 terms for contracts for work and materials, barter,

rent and leasing, Sections 2-54 terms for contract of hire, Sections 7 to 103 terms for contracts for services, Sections 13 to 15

1994 Act    Satisfactory quality

(1) Such terms are conditions, except in non-consumer contracts as per 1994 Act.

(2) Such terms can’t be excluded, except in non-consumer contract as per 1994 Act.

3 Title (ownership)(1) This is a condition and can’t be excluded.(2) In the chain transaction of stolen car, the loser is generally the one buying from the thief.

Money

Car (Police)

C DOwner Thief A B

Illustration:

Case: Rowland v Divall (1923)A thief stole a car from its owner and sold it to defendant, The plaintiff, motor dealer bought it for $334. The plaintiff did it up and resold it for $400. On discovering the car was stolen, the police took it from the customer and returned it to the owner. The customer went back to plaintiff who returned his $400. Then the plaintiff asked the defendant for return of the $334. The defendant refused.

Court of appeal: The defendant must return $334 to plaintiff.

(3) No conflict with “innocent acquisition” in civil law countries:

The innocent possession only applies to unregistered movable property, excluding immovable and registered property like car.

It requires the primary possession chain separating from the real owner be voluntary and legal, e.g. leasing, lending, storage, invalid sale etc. Stolen and lost articles don’t apply.

(4) Ways to protect innocent purchasers of stolen and lost articles: Time limit for real owner to request for the return of property after which he can’t do so, e.g. 3 years in France.

If purchased at auction or other public market, real owner can’t request the return unless pay the innocent purchase the price of the goods.

As tomoney or unregistered securities, the real owner isn’t entitled to request the return.

4 Description(1) Description can be made in many ways, in contract or advertisement.(2) The law isn’t concerned with trifles (trivial).

Case 1: Acros v Ronaasen & Son (1933)The seller contracted to sell a quantity of wooden staves for making cent barrels. The staves were described as “ half an inch thick”. 90% of them were between half an inch and 5/8 of an inch, but 10% were over 5/8 of an inch. The buyer rejected all staves though they were perfectly fit for making barrels.House of Lords:

Buyer could reject.

Case 2: Beal v taylor (1967)Taylor advertised a car, as Triumph Herald 1200, believing it was correct. Beale examined and bough it. The real of the car was indeed Triumph Herald 1200, but it had been welded to the front of a Triumph Herald 948. Beale had seen a “1200” badge (symbol) on the rear of the car when inspecting it.

Court of appeal:

Beale returned the car and got money back.

Case 3: Re Moore v Landauer (1921)A consignment of 3100 tins of peaches was sent shipped from Australia to buyer in UK. It arrived late. The buyer rejected because the peaches had been described as packed 30 tins to a case, about 1/2 were packed 24 to a case rather than of 30. The total number was correct.

Court of appeal:

the buyer could reject.

5 Satisfactory quality and fitness

for supplied purpose

5.1 Such terms only apply to business deals.

(1) The sale is made as an integral part of business, or

(2) The sale of such goods is fairly regular.

5.2 Satisfactory quality

(1) Merchantable quality (1979), satisfactory quality (1994)

(2) 5 tests (new):

   Fitness for all of their usual purposes

   Appearance and finish

   Freedom from minor defects

   Safety

   Durability

Case 1: Kendall v Lillico (1969)

A game farm owner bought groundnut extract used for making food for birds. The extract is normally used as cattle food, and he didn’t tell the seller of his intention to feed it to birds. It contained a mould poisonous to birds, but not harmful to

cattle. He sued for damages.

House of Lords: It was of merchantable quality.

Case 2: Shine v general Ltd (1988)

A motorist bought a second-hand sports car giving him problems. After he found the car had been involved in car crash and totally submerged in water, he sought to reject it.

Court of appeal: Not of merchantable quality.

Case 3: Rogers v Parish Ltd (1987)

A motorist bought a new Range Rover for $16000. It had minor problems, but was drivable and defects could have been put right. He rejected it.

Court of appeal: Not merchantable due to high price for very high expectations.

(3) It doesn’t apply to:

Defects specially pointed out to the buyer

Defects the buyer ought to have spotted if he examined the goods

5.3 Fitness for purpose(1) The seller’s goods should fit for particular purpose made know to seller.

(2) It doesn’t apply to:

 The buyer doesn’t rely on seller’s skill and judgment

 It is unreasonable for buyer to rely on this.

Case 1: Griffiths v Peter Ltd (1939)

Griffiths with abnormally sensitive skin contracted dematitis (skin disease) from a tweed coat bought from a shop. Such coat wouldn’t have affected most people.

Court: Fitness, seller was not liable.

Case 2: Grant v Knitting Ltd (1936)

Grant buying a pair of underpants from a shop contracted dermatitis due to chemical used in its manufacture not rinsed properly. He sued under sections 14(2) & (3).

Privy Council: Not fitness, seller was liable.

6 Sample

Three implied conditions:

  The bulk must correspond with the sample.

 The buyer must have a reasonable opportunity of comparing the bulk with the sample.

The bulk must be free from hidden defects rendering it un-merchantable, if they wouldn’t be discovered on reasonable examination of the sample.

Case: Godley v Perry (1960)A child bought a catapult snapping in use and causing the boy to lose an eye. He sued the retailer and won. The retailer sued the wholesaler under section 15 because before buying them, he had tested sample by pulling back the elastic and it hadn’t snapped.Court:

Wholesaler was liable.

7 Remedies in non-consumer cases (1994 Act)7.1 Minor breach(1) It will be warranties rather than conditions.(2) Then the courts may choose to award damages for it.8 Exclusion of implied terms (1994 Act)8.1 Only in non-consumer contracts(1) Distinction is defined by Unfair Contract Terms Act 1977

(2) A consumer is: C---B

A person making contract not in the course of business and not holding out to be so

With a person does make the contract in the course of business.

(3) Non-consumer cases:

B---B

C---C

8.2 Reasonableness of the exclusion

(1) Depends on 5 factors

Strength of their bargaining position

Inducement to customer to agree to the term

Whether customer knew or ought to have known the exclusion

Whether it was reasonable to comply with the designated conditions.

Whether the goods were made at customer’s request.

(2) It can’t exclude term as to title(ownership).

Case: Mitchell v Finney seeds Ltd (1983)Mitchell bought his yearly supply of cabbage seeds for $192. Due to seeds defects the cabbages didn’t grow properly and were not saleable. His loss was $61000, but an exclusion term in the back of the seller’s catalogue and on the invoice limited the seller’s liability to the cost of the seed. He sued for total loss of $61000.

Court of appeal:

This was non-consumer case, but the exclusion wasn’t reasonable, and farmer won his damages.