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Atiyah and Adams’ Sale of Goods Atiyah and Adams’ Sale of Goods Thirteenth Edition Christian Twigg-Flesner LLB, PCHE, PHD Professor of Commercial Law School, University of Hull, Hull Rick Canavan Nottingham Law School, Nottingham Trent University, Burton Street, Nottingham With sections on Scots law by Hector MacQueen llb, phd, fba, frse Scottish Law Commissioner Professor of Private Law University of Edinburgh Pearson Education Limited Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Web: www.pearson.com/uk First published under the Pitman imprint in Great Britain in 1957 (print) Second edition published in 1963 (print) Third edition published in 1968 (print) Fourth edition published in 1971 (print) Fifth edition published in 1975 (print) Sixth edition published in 1980 (print) Seventh edition published in 1985 (print) Eighth edition published in 1990 (print) Ninth edition published in 1995 (print) Tenth edition published in 2001 (print) Eleventh edition published in 2005 (print) Twelfth edition published in 2010 (print and electronic) Thirteenth edition published 2016 (print and electronic) © P S Atiyah 1957, 1963, 1968, 1971, 1975, 1980, 1985, 1990 (print) © P S Atiyah and J N Adams 1995 (print) © P S Atiyah, J N Adams and H MacQueen 2001, 2005 (print) © P S Atiyah, J N Adams and H MacQueen 2010 (print and electronic) © P S Atiyah, J N Adams, C Twigg-Flesner, R Canavan and H MacQueen 2016 (print and electronic) The rights of P S Atiyah, J N Adams, Christian Twigg-Flesner, Rick Canavan and Hector MacQueen to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988 The print publication is protected by copyright Prior to any prohibited reproduction, storage in a retrieval system, distribution or transmission in any form or by any means, electronic, mechanical, recording or otherwise, permission should be obtained from the publisher or, where applicable, a licence permitting restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency Ltd, Barnard’s Inn, 86 Fetter Lane, London EC4A 1EN The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased, or as strictly permitted by applicable copyright law Any unauthorised distribution or use of this text may be a direct infringement of the authors’ and the publisher’s rights and those responsible may be liable in law accordingly All trademarks used herein are the property of their respective owners The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners Contains public sector information licensed under the Open Government Licence (OGL) v3.0 http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/ Contains Parliamentary information licensed under the Open Parliament Licence (OPL) v3.0 http://www.parliament.uk/site-information/copyright/open-parliament-licence/ Pearson Education is not responsible for the content of third-party internet sites ISBN: 978-1-292-00933-9 (print) 978-1-292-00961-2 (PDF) 978-1-292-13871-8 (ePub) British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Twigg-Flesner, Christian, 1975- author | Canavan, Rick, author | MacQueen, Hector L, author | Atiyah, P S Atiyah’s sale of goods Title: Atiyah and Adams’ sale of goods / Christian Twigg-Flesner, Law School, Wilberforce Building, University of Hull, Hull; Rick Canavan, Nottingham Law School,Nottingham Trent University, Burton Street, Nottingham; with sections on Scots law by Hector MacQueen LLB, PHD, FBA, FRSE, Scottish law commissioner, professor of private law, University of Edinburgh Other titles: Sale of goods Description: Thirteenth edition | Harlow, England; New York: Pearson Education Limited, 2016 | “First published under the Pitman imprint in Great Britain in 1957.” | Previous edition: Atiyah, P S Atiyah’s sale of goods 12th ed Harlow, England : Longman/Pearson, 2010 (DLC) 2009046200 (OCoLC) 9781405859530 | Includes index | Includes bibliographical references and index Identifiers: LCCN 2016001719 (print) | LCCN 2016001995 (ebook) | ISBN 9781292009339 | ISBN 9781292138718 (ePub) | ISBN 9781292009612 (PDF) Subjects: LCSH: Sales—England | Sales—Scotland | Sales—European Union countries Classification: LCC KD1650 A96 2016 (print) | LCC KD1650 (ebook) | DDC 346.4207/2—dc23 LC record available at http://lccn.loc.gov/2016001719 10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 Print edition typeset in 10/12.5pt Sabon MT Pro by 30 Printed in Malaysia NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION Dedication All the editors dedicate this edition to the memory of Professor John Adams and Professor Robert Bradgate Contents in brief Dedicationv Preface to the Thirteenth Edition xiii Acknowledgements xv Table of statutes xvi Table of cases xxviii Table of statutory instruments lv Part I Nature and formation of the contract of sale Sources of the law of sale of goods The contract of sale Subject-matter of the contract The types of obligation created 52 62 Part II The duties of the seller The existence of the goods and the duty to pass a good title The duty to deliver the goods The duty to supply the goods at the right time The duty to supply goods in the right quantity The duty to supply goods of the right quality 10 Exclusion of seller’s liability 77 97 106 113 119 198 Part III The duties of the buyer 11 The duty to pay the price 1 2 The duty to take delivery 231 236 Part IV The effects of the contract 13 The transfer of property 14 Risk and frustration 15 Transfer of title by a non-owner 241 279 297 Part V Export sales 16 Export sales 17 International Convention on Sales of Goods (‘CISG’) 345 371 Part VI The remedies of the seller 18 Real remedies 19 Personal remedies 385 417 www.downloadslide.com Contents in brief Part VII The remedies of the buyer 20 Rejection of the goods, rescission and specific performance 21 Action for damages 435 468 Part VIII Consumer sales 22 Consumer sales contracts 23 Product liability 24 Manufacturers’ guarantees 497 531 555 Index560 vii www.downloadslide.com Contents Preface to the Thirteenth Edition xiii Acknowledgementsxv Table of statutes xvi Table of cases xxviii Table of statutory instruments lv Part I Nature and formation of the contract of sale Sources of the law of sale of goods The Sale of Goods Act 1979 The contract of sale 3 Definition 8 Sale distinguished from other contracts Number of parties 30 The price 31 Conveyancing effect of the contract 35 Formation of the contract 36 Mistake in the offer of acceptance 39 Doorstep selling 48 Formalities 48 Subject-matter of the contract Meaning of ‘goods’ Different types of goods The types of obligation created 52 52 59 62 Fundamental terms 62 Innominate terms 66 Warranties 72 Representations 72 Scots law 74 www.downloadslide.com Contents ix Part II The duties of the seller The existence of the goods and the duty to pass a good title No implied condition that the goods exist The seller’s right to sell the goods Warranty of freedom from encumbrances and of quiet possession The duty to deliver the goods 77 77 85 93 97 The duty to deliver Payment and delivery concurrent conditions The meaning of delivery 97 99 103 The duty to supply the goods at the right time 106 The time of delivery Waiver of conditions as to delivery time The duty to supply goods in the right quantity Delivery of the right quantity The duty to supply goods of the right quality From caveat emptor to caveat venditor 1 Express terms 2 Implied terms that the goods must correspond with their description 3 Implied terms that the goods are of satisfactory quality 4 Implied terms that the goods are fit for a particular purpose 5 Implied terms in sales by sample 6 Implied terms annexed by trade usage 7 Other implied terms 8 Mistake as to quality 9 Reform of the English privity doctrine 10 Exclusion of seller’s liability Exemption clauses Construction of exemption clauses Fundamental breach The Unfair Contract Terms Act 1977 106 108 113 113 119 119 122 123 136 173 187 189 190 190 195 198 198 202 207 208 www.downloadslide.com Manufacturers’ guarantees should additionally be liable, since the manufacturer’s guarantee is often specifically mentioned by the retailer as a selling point for the goods in question However, nothing has been done about this, though, as noted above, many reputable retailers offer their own guarantees, which may extend for a longer time than the manufacturer’s Obviously, there is a cost in this, and probably the answer is best left to consumer choice If goods are bought at a low price from the warehouse type establishments sometimes referred to as ‘box shifters’, no doubt the price will be lower than from a reputable department store, but by buying from the latter type of establishment, the consumer does often acquire additional security in the form of the store’s guarantee This is particularly useful where, as is often the case, it is more convenient to return defective goods to the store than to the manufacturer The situation under manufacturers’ guarantees so far as the consumer buyer is concerned changed after the Sale of Consumer Goods and Associated Guarantees Directive.11 Initially implemented through the Sale and Supply of Goods to Consumers Regulations,12 the relevant provision now is s 30 of the Consumer Rights Act 2015 The Consumer Rights Act 2015 and Guarantees The Directive did not make it obligatory that a manufacturer’s guarantee be given, but, if it is, the provisions implementing Art.6 of the Directive are applicable The definition of ‘guarantee’ is as follows: . an undertaking to the consumer given without extra charge by a person acting in the course of the person’s business (the “guarantor”) that, if the goods not meet the specifications set out in the guarantee statement or in any associated advertising— (a) the consumer will be reimbursed for the price paid for the goods, or (b) the goods will be repaired, replaced or handled in any way.13 Section 30 of the Consumer Rights Act 2015 contains the relevant provisions on guarantees Section 30(3) lays to rest the doubts (mentioned above) that existed at common law about the effectiveness of manufacturers’ guarantees as legal documents.14 Guarantees now take effect at the time the goods are delivered as a contractual obligation owed by the guarantor under the conditions set out in the guarantee statement and the associated advertising Because a guarantee is treated as a unilateral promise, rather than as a contract, in Scots law,15 s 30(3) does not state that the guarantee forms a contract between the manufacturer and the buyer Perhaps so far as the law in England and Wales is concerned, the use of the term ‘contractual obligation’ is also intended to signal that these documents are unilateral contracts, a possibility suggested above for analysing guarantees in non-consumer cases.16 As was pointed out above, manufacturers are under no legal obligation to provide guarantees, but, if they do, they are legally binding and must comply with the terms of s 30 In particular, the guarantee must set 11 12 13 14 15 16 Directive 99/44/EC on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees, OJ 1999 L177/12 SI 2002/3045 Section 30(2) Consumer Rights Act 2015 See p 556 above See Hogg (2001) ERPL 337; Ervine 2003 SLT (News) 67, 70 See p 556 557 www.downloadslide.com 558 Consumer sales out in plain and intelligible language the contents of the guarantee and the essential particulars necessary for making claims under the guarantee; notably the duration and territorial scope of the guarantee as well as the name and address of the guarantor 17 If the consumer requests, the guarantee must be made available in writing or other durable medium available and accessible to him within a reasonable time.18 Enforcement is by injunction, or in Scotland specific implement, applied for by an enforcement authority19 Extended warranties or guarantees20 As noted above, these are usually offered with more expensive types of domestic electrical appliance such as fridges, washing machines and dishwashers These are known in the trade as ‘white goods’ Such warranties or guarantees are also offered with a range of ‘brown goods’ such as television sets and television recorders.21 These contracts cover three types of risk: (1) the risk of product breakdown;22 (2) the financial risk if an expensive part needs replacing and (3) the risk that a suitable repairer may be difficult to find (the warrantor should offer a network of repairers who can carry out the repair quickly and efficiently) These contracts add to the remedies provided to the consumer under the Consumer Rights Act 2015, but how much they add is problematic because obviously at the outset the reliability of goods is unknowable, and many manufacturers’ guarantees will cover most breakdowns that are likely to occur, and the retailers are liable for defects existing at the time of sale under the Consumer Rights Act As noted previously, reputable retailers often themselves offer guarantees equivalent to manufacturers’ warranties for a period that may even be longer than the manufacturer’s guarantee Where goods are heavily used by different persons, as will be the case with goods present in furnished lettings, they may well prove to need more repair and maintenance than those in homes under single-family occupation In this case, these extended warranty contracts can offer a good way of making outgoings predictable, which will usually be what the owners in such cases want It may also be that those on a tight budget will find that the predictability that these contracts offer is of value In practice, however, it would appear that these contracts are offered by retailers whose margins on their sale can be very high, as a way of inflating their profits.23 In fact, the claims made seem to be lower than for insurance generally.24 In short, for most consumers they offer poor value 17 18 19 20 21 22 23 24 S 30(4)/(5) S 30(6) The Competition and Markets Authority, a local weights and measures authority in Great Britain, or the Department of Enterprise, Trade and Investment in Northern Ireland: s 30(10) For a useful discussion of this sparsely covered topic, see Twigg-Flesner, Consumer Product Guarantees (2002, Ashgate), Ch 2.5, and [2002] Web JCLI by the same author Leaving aside the situation under extended warranties, an important practical difference between the two categories of goods is that in the case of white goods, the manufacturer will usually have its own repair network, and the consumer will deal with that directly In the case of brown goods, traditionally the dealer maintained its own repair facilities Today, not all retailers maintain these facilities, and, where they not, the manufacturer will provide a list of approved repairers This could be due to inherent lack of reliability, accidental damage, or simply wear and tear Competition Commission Report, ‘Extended warranties on domestic electrical goods: a report on the supply of extended warranties on domestic electrical goods within the UK – Volumes 1, and 3’ accessible at website http://webarchive.nationalarchives.gov.uk/+/http:/www.competition-commission.org.uk/rep_pub/ reports/2003/485xwars.htm Office of Fair Trading, ‘Extended Warranties on Domestic Electrical Goods’ 2002b, para 4.31 www.downloadslide.com Manufacturers’ guarantees A further cause of concern is that whereas the real nature of these contracts is that of insurance, many are not made with insurance companies Where, as has happened, the warranty providers become insolvent and unable to provide the contracted services, the consumer has been left without recourse, and the premiums paid are unrecoverable By contrast, if an insurance company were involved and became insolvent, the Financial Services Compensation Scheme would cover the case.25 In consequence of these concerns, in July 2002, the Competition Commission was asked to investigate and report on the existence or possible existence of a monopoly situation in relation to the supply of extended warranties for domestic electrical goods in the UK Its report appeared in 2003.26 Four overlapping characteristics of market behaviour suggested that, given the point of sale advantage that the offer of such contracts possesses, practices that might otherwise be unexceptionable could act to restrict or distort competition: (a) Almost all extended warranties are purchased at point of sale; few consumers seek information on extended warranties prior to their purchase;27 and consumers have little opportunity to consider alternatives to the extended warranty on offer at point of sale (b) Extended warranties on offer at point of sale are nearly always all from one provider, usually the retailer (or a third party which is the sole supplier to the retailer) (c) There is generally no information available at point of sale on prices, or terms and conditions, of extended warranties available from alternative providers (such as manufacturers, insurers, credit card companies or others) (d) There is generally no information available on domestic electrical goods’ reliability, likely repair costs, or the probability of theft or accidental damage Based on their consultation on remedies and further consideration, the Competition Commission developed two packages of possible remedies In the event, it is the first of these packages which is given effect to by the Supply of Extended Warranties on Domestic Electrical Goods Order,28 which came into force on April 2005 Retailers now have to the following: • show the price of the extended warranty alongside electrical goods, in store and in their printed advertising material; • provide consumers with information about their statutory rights, cancellation rights and details of the warranty, including whether or not the warranty provides financial protection in the event of insolvency and terminates if a claim is made; • give the consumer 45 days to cancel the extended warranty, including giving the consumer a written reminder of this right and the right to cancel at any time and receive a refund; • offer any consumers, who not wish to purchase a warranty immediately, quotations stating that the extended warranty remains available on the same terms for 30 days if the consumer chooses not to buy it at that time Any discounts tied to the purchase of the extended warranty should also be available for 30 days 25 26 27 28 Ibid., para 4.59 See Competition Commission Report, n 43 above Or indeed intend to purchase an extended warranty before they go out to buy electrical goods It is the element of surprise that tends to reinforce the retailer’s point of sale advantage SI 2005/37 559 www.downloadslide.com Index acceptance see offer and acceptance agency contract, distinguished from contract of sale 8, 28–30 agent delivery to 104 mercantile 312–15 sale by 305, 309–10 seller shipping goods as 349 attornment 103 auction sales bidding agreements 38 formation of contract 36 mock auction 39 reserve price 37–8 Unfair Contract Terms Act inapplicable 209 bailment contract of sale distinguished 8, 13–14 delivery to carrier 392–3 hire purchase agreement, under 338 reservation of title clause and 412 banker’s commercial credits dealings with documents, fundamental principle 367 documents required 366–7 fraud 368 fulfilment of obligations before drawing 366 performance bonds 370 price, payment of by 364–70 procedure, normal 364 time limits 368–9 Uniform Customs and Practice for Documentary Credits 365 variation in forms of 365 bidding agreements bill of lading 104 dating 354–5, 478–9 transfer termination of transit right 399–400 where sub-dealing 399 bills of sale 49–51 buyer in possession consent of the seller 328 contract of sale, existence of 326 delivery or transfer of the goods 331–2 documents of title 330 effect of s.9 FA 334–6 good faith and notice 333–4 goods on sale or return 328 hire-purchase and similar agreements 326 person having bought or agreed to buy the goods 325–8 possession of the goods 329 reservation of title clause 325 sale, pledge or other disposition 332 seller’s lien 333 transactions excluded from s.9 328 transfer by 325 buyer’s loss of right to reject goods see under rejection of goods, rescission, and specific performance buyer’s remedy, rescission of contract 461–5 charges, registrable under Companies Act 413–16 c.i.f (cost, insurance, freight) contracts 352–9 bill of lading, dating, 354–5 buyer’s duties 359 carriage, contract of 355 delivery to carrier 355–6 features of 345, 353–4 non-conforming documents 354 property, passing of 355–9 risk, passing of 355–6 seller’s duties 353–4 variants on 359 collateral contracts 535–6, 551 computer software 52–8 warranties 57 conditions breach, consequences and 66, 106–8 damages for breach see damages, buyer’s remedy for breach of condition or warranty existence of goods, no implied condition 77–85 fundamental terms, distinguished 62–6 www.downloadslide.com Index 561 implied, by construction, as to existence of goods 77–80 nature of 65–6 time, stipulations 105–12, 476–80 warranties, distinguished from 62, 65–6 consideration money, payment under sale of goods legislation 31–2 partial failure of 292–4 total failure of 88, 291–2, 294, 359–60, 493 see also price Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCR) 520 consumer credit agreement, definition 529–30 consumer protection under s 75 of the Consumer Credit Act 1974 528–30 from unfair trading 526–8 private redress 527–8 regulating commercial practices 527 Consumer Protection from Unfair Trading Regulations 2008 (CPUTR) 526 Consumer Rights Act 2015 and guarantees 557–8 Sale of Goods Act to 497–9 special provisions in relation to nonconsumer sales 285 consumer sales contracts 497–530 consumer protection from unfair trading 526–8 delivery of goods 512–13 digital content 514–16 contracts for 514 damage to device 516 definition 514 remedies in respect of 516 requirements in respect of 515 exclusion of liability 516–19 key definitions and scope 499–500 passing of risk 513–14 pre-contractual information for distance/ off-premises contracts 521–3 pre-contractual information in on-premises contracts 521 protection under s 75 of the Consumer Credit Act 1974 528–30 remedies 506–12 price reduction and final right to reject 511–12 repair and replacement 510–11 right to reject 508–10 type of breach 506 right of cancellation in off-premises/distance contracts 524–6 rules applicable to 519–20 Sale of Goods Act to Consumer Rights Act 497–9 for supply of goods 500–12 definition of 500 requirements in respect of goods 501–6 digital content and goods 505–6 fitness for particular purpose 503 freedom from encumbrances 506 goods to match description 504 goods to match sample/model 504–5 installation of goods 505 matter of custom 503 right to quiet possession 506 right to supply goods 506 satisfactory quality 501–2 types of 500 contract of sale agency and 8, 28–30 bailment and 8, 13–14 conveyancing, effect of contract 35–6 definition distinguished from other contracts 8–30 doorstep selling 48 exchange and 8, 11–12 formalities 48–51 bills of sale 49–51 repeal of formal requirements 48–9 formation of contract auction sales 36–8 bidding agreements 38–9 mock auctions 39 offer and acceptance 36 gift and 8, 12–13 hire-purchase and 8, 14–19 loan on security and 8, 20–2 mistake in offer of acceptance 39–48 English law 39–44 Scots law 44–8 nature, essential 10 number of parties 30–1 price and 31–5 professional services and 24–5 seller’s/supplier’s duties 24–5 services, supply of and 8, 22–8 distinguish, when necessary to 22–8 statutory provisions 23–8 conveyancing, effect of contract on 35–6 www.downloadslide.com 562 Index court, sale by order of 318 credit card companies, and e-commerce 529 Crowther Committee on Consumer Reform 18, 341 damages, buyer’s remedy for breach of condition or warranty 475–88 acceptance of goods, method of assessing damage 477 buyer’s failure to take precautions 486 consequential loss 484–8 consumer cases 486–7 goods bought for use 482–4 goods bought for use of family 484 Hadley v Baxendale rule 484–7 late delivery 476–80 profit-earning chattels 483 replacement plant or machinery 484 resale, sub-buyer claiming 487–8 shipping documents, antedated 482 statutory provision 476 time of the essence 476 trader buying for resale 477 warranty of quality, breach of 480–2 basic rule 480–1 sub-sale by buyer 481 damages, buyer’s remedy for breach of contract 378 damages, buyer’s remedy for misrepresentation 489–90 damages, buyer’s remedy for non-delivery 468–75 disposal in market 475 expressed time for delivery 470, 476–80 main rules 468 market price at what date 469–71 at what place 471 market price rule 468–9 cases where rule inapplicable 471–5 seller’s repudiation, buyer’s position 470 sub-sales 471–5 damages, seller’s action for general rule, appropriate where property has not passed 417 market, where no 432 mitigate loss, duty to 445 non-acceptance see damages, seller’s action for non-acceptance non-performance, profits elsewhere 432 repudiation, seller declines 430 special damages, action for price 422 damages, seller’s action for non-acceptance 420, 423–32 assessment, general rule of 424 available market, meaning of 424–6 award in foreign currency 432 delivery time 429–31 liability least onerous where possible alternatives 423 market, which? 431 market price 425, 427, 429–31 mitigate loss, duty to 423 resale, immediate or later 426–8 resale by seller, effect on available market 426–8 damages, seller’s remedies under CIGS 378–9 damages in tort, buyer’s remedy 488–9 debtor-creditor-supplier agreements 529 delivery buyer in possession, transfer of goods 331–2 damages, seller’s and relevant market price 430 different goods than intended 117 duty of 97–105 duty to take 236–7 estoppel 101 excess of goods 115 expressed time for, damages and 470, 476–80 forms of 103–5 of goods, consumer sales contracts 512–13 goods or documents of title 322–3 by instalments 114, 237 late delivery, damages 476–80 meaning of 98, 103–5 one load, general rule 113–14 payment, seller’s right to on delivery 103 payment and delivery, concurrent conditions 99–103 place of 98–9 quantity see supply goods of right quantity, duty to repudiation by buyer 99–103 signature of acceptance note, Unfair Contract Terms Act 446–7 statutory duty 98–9 time of, statutory provisions 106–8 to carrier, c.i.f contracts 355 waiver of 101–2, 108–12 www.downloadslide.com Index 563 deposits, whether repayable 490–4 description, implied term where goods sold by 121, 123 express terms 122–3 description, implied terms that goods correspond with application of s.13 128–9, 132 compliance with 135–6 de minimis rule 135 description corresponds but not fitness 133 general terms and 133 knowledge of buyer and contractingout 136 quality of a kind, implication of 134 quality as part of description 133–4 relationship between description and quality or fitness 132–4 relationship with representations and contractual terms 124–36 sale by description, meaning 130–2 statutory provisions s.13(1)–(2) 123 summary of relationship with s.13 128–30 terms used 135–6 Unfair Contract Terms Act, effect of 130 words of description and s.13 126–9 digital content, consumer sales contracts 514–16 contracts for 514 damage to device 516 definition 514 and goods 505–6 remedies in respect of 516 requirements in respect of 515 Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees 120 Directive on Unfair Terms in Consumer Contracts 198, 208–27 England and Wales, 208–9 exemption clauses affect, 212–13 limited contracting-out, 209–12 requirement of reasonableness, 214–23 Scots law, 223–7 distance contract definition 520 pre-contractual information for 521–3 right of cancellation in 524–6 see also e-commerce documents of title 330 delivery or transfer 322–3, 331–2 document sales, buyer’s loss of right to reject goods 452 possession of 313 Draft Common Frame of Reference (DCFR) e-commerce cases 47–8 identity errors, Scots law 46–7 error 44–8 estoppel 300–9 by conduct 301, 303–5 allowing another possession 303 cases on 303–5 representation that seller is owner compared with agent 304–5 delivery and 101 effect of 311–12 by negligence 301, 305–8 cases on 306–8 duty to take care essential 306–8 rejection of goods, loss of right 443 relationship between estoppel and other principles 309 by representation 301 requirements for all estoppels 301 by words 301–2 ex-ship contracts 359–60 ex-store contracts 346 ex-works contracts 346 exchange, contract of sale distinguished from 8, 11–12 exclusion of liability, consumer sales contracts 516–19 exclusion of seller’s liability Directive on Unfair Terms in Consumer Contracts 198–9 exemption clauses see exemption clauses (exclusion of seller’s liability) fundamental breach 207–8 see also Unfair Contract Terms Act 1977 exemption clauses (exclusion of seller’s liability) 198–201 common law position 199 construction of 202–6 course of dealing between parties 206 implied terms, statutory 205 incorporation in contract and notice 199 limitation clause, distinction between 203 shrink wrap licences 200 standard forms (battle of the forms) 201 strict interpretation 204 www.downloadslide.com 564 Index exemption clauses (exclusion of seller’s liability) (Continued) UN Convention on Contracts for International Sales of Goods 201 Unfair Contract Terms Act 209, 210–13 exemption clauses in general terms, negligence 205 export and import licences 360 absolute duty to obtain, whether 362–3 best endeavours to obtain 363 obtaining, whose duty? 360–2 export sales 345–70 bankers’ commercial credits 364–70 best endeavours to obtain 362–4 c.i.f (cost, insurance, freight) contracts 352–9 duty absolute to obtain 362–4 ex-ship contracts 359–60 ex-works or ex-store contracts 346 export and import licences 360 f.o.b (free on board) contracts 407, 346–52 obtaining, whose duty? 360–2 Factors Act 1889 s.2 exceptions to nemo dat rule 311–17 consent of owner 313–15 good faith and notice 317 mercantile agent 312–17 pledge for antecedent debt 317 possession of goods or documents of title 313 sale, ordinary course of business 315–16 sale, pledge or other disposition 317 fitness for the purpose, implied term 121, 173–87 case law, earlier 150 circumstances where condition implied 174–80 comparison between implied conditions 186–7 durability 185 express terms 122–3 extent of seller’s obligations 180–7 goods, extended to 147–8 goods sold under patent or trade name – former proviso to s.14 180 immediately usable goods 152–3 knowledge, warnings, instructions 184 latent defects not discoverable 181 minor defects, non-functional defects 185 onus of proof 180 particular purpose 177–9 reliance on seller’s skill or judgment 174–7 selling in course of a business 179–80 status of seller irrelevant 179 statutory definitions 153 statutory provisions 173–4 strictness of seller’s liability 181–3 test of 149–53 triviality 181 Unfair Contract Terms Act and contracting out 209–12 unreasonable reliance 175 unusual consequences 183 variety of purposes, problems of 150 f.o.b (free on board) contracts 345–52 buyer’s duty 346–7 property, passing of 349–51 risk, passing of 349–51 seller’s duties 346–9 contract of carriage 348–9 documents 352 insurance 351–2 formation of contract auction sales 36–9 doorstep selling 48 formalities 48–51 mistake in offer of acceptance 39–48 offer and acceptance 36 fraud 42, 44–7 identity 46 frustrated contracts assessment of Act 295–6 cases where Act applies 290–6 cases where Act does not apply 290–3 changes effected by Act 293–6 frustration 285–90 application of s.7 rule 286–7 at common law 287–93 effects of 290–6 entire contracts rule 292–3 force majeure clauses and 289–90 goods perishing before property passes to buyer, rule 286 Scots law 296 unascertained goods, frustration other than perishing of goods 287–9 unascertained goods, perishing of goods 259 see also risk fundamental breach see under exclusion of seller’s liability fundamental terms condition distinguished where nonperformance 64 doctrine of, development and 62–3 legislation, effect of 63 www.downloadslide.com Index 565 gift, contract of sale distinguished 8, 12 good title, duty to pass Rowland v Divall, rule in 88, 90–2 seller’s right to sell the goods see seller’s right to sell goods warranty, freedom from encumbrances and quiet possession 93–6 implied statutory term 93 scope, uncertain 94 goods a spes 60–1 existing 59 future 59 meaning of 52–8 sources of law, covering 3–7 specific goods, meaning 82 types of, 59–61 unascertained 60 meaning of 259 goods, existence of construction of the contract and 77–8 implied condition precedent and 78 no implied condition as to 77–85 perish, meaning of 83–5, 286 perishing of goods 82–3, 286 risk, of buyer 78 specific goods, meaning of 82 warranty by seller 78 guarantees extended 558–9 Competition Commission report and recommendations 559 risks covered 558 manufacturers’ guarantee 555–9 definition 555 ownership of goods 556–7 persons liable under 556 retailers’ 556 Sale and Supply of Goods to Consumers Regulations 557–8 Sale of Consumer Goods and Associated Guarantees Directive 557–8 use of term 555 see also Directive on Certain Aspects of the Sale of Goods and Associated Guarantees hire purchase agreements 16, 17–19, 198, 338–9 buyer in possession and transfer by nonowner 325 Consumer Credit Act and 18–19 historical development of 16–19 motor vehicles, transfer by non-owner 336–9 sale, contract of sale distinguished from 8, 14–19 implied conditions 24–5 contracting out of 24 import licences see export and import licences innominate terms see under obligation, types created insolvency reservation of title clause and 413–16 unpaid seller’s lien 390–1 instalments buyer’s right to reject goods 437–8 delivery of goods by 114 rejection of defective 439–42 unpaid seller’s lien on contract for 389 jus quaesitum tertio doctrine 200, 537 Law Reform Committee, transfer of title by non-owner, recommendations for reform 340–1 lien 388–95 buyer obtaining possession 392–3 of carrier 401 credit, goods sold on 389–90 delivery of goods to carrier or other bailee 392–3 insolvency of buyer 390 instalment contracts 389 loss of 392–5 possession of goods, essential 391, 393–4 price paid or tendered 392 of seller, problems of 333–4 storage charges 391–2 waiver of 392, 394 loan on security contract of sale distinguished 8, 20–2 substance considered not form of 20 lock-out agreement 33–4 manufacturer’s guarantee, ownership of goods 556 market overt, sale in 318–19 mercantile agent 312 merchantable quality meaning, case law development 137–8 replacement by satisfactory quality 148–9 www.downloadslide.com 566 Index merchantable quality (Continued) statutory definition 138 statutory meaning 144, 148–9 misrepresentation buyer’s damages for 489–90 liability for, Unfair Contract Terms Act 213 rescission for actionable 461–5 mistake as to quality 190–5 mistake in offer of acceptance 39–48 English law 39–44 Scots law 44–8 mock auction 39 motor vehicles, transfer by non-owner 336–9 bailment under a hire-purchase agreement 338 trade or finance purchaser 336–9 negligence exemption clauses and 205 Nemo dat quod non habet rule see under transfer of title by non-owner, nemo dat quod non habet rule, exceptions product liability at common law 531–9 Unfair Contract Terms Act and 92, 207, 214 obligation, types created conditions 65–6 fundamental terms 62–6 innominate terms 66– development of 67–8 Sale and Supply of Goods Act 1994 and 68, 71–2 time stipulations 69–71 representations 72–4 Scots law 74 warranties 65–6, 72 off-premise contract 520 pre-contractual information for 521–3 right of cancellation in 524–6 offer and acceptance 36 cases on 39–44 mistake, awareness of other party’s real intentions 39 objectivity test and offeror’s intentions 39–40 on-premises contracts, pre-contractual information in 521 passing of property see under transfer of property, passing of property payment delivery and concurrent conditions 99–103 for perishable goods 234 seller’s right to 103 see also price; price, action for; price, payment of perishing of goods meaning of 83–5, 286 part, as to 82–3 payment for perishable goods 234 perishable goods, duty to take delivery 236 before property passes to buyer 285 unascertained goods, frustration and 287 personal remedies see remedies, personal (seller’s) pledges 317, 324, 332 price agreement to fix at future date 31–3 contract for sale and 31–5 duty to pay 231–5 lock-out agreement and 33–4 paid or tendered, unpaid seller’s lien and 391–2 relevance to quality and fitness 164–7 sale of goods, requirements for 31 valuation by third party 34–5 price, action for 417–23 critique of present law 420–2 day certain, difficulty in interpreting 418–20 Hyundai Heavy Industries v Papadopoulos decision and effect 419 price payable on day certain 418–20 price payable in foreign currency 422–3 special damages, claims for 422 Uniform Commercial Code, provisions 421–2 price, payment of 431–5 by bankers’ commercial credits 364–70 in foreign currency 422–3 methods for 231–3 for perishable goods 235 time for 231, 233–4 privity of contract, doctrine of basic questions for application of 196 liability confined to seller 531–7 reform of 195–7 remedy confined to buyer, product liability 537–9 product liability assignment and novation 539 at common law 531–9 collateral contracts 535–6, 551 limitations of 532–5 negligence 532–5 privity of contract www.downloadslide.com Index 567 liability confined to seller 531–7 remedy confined to buyer 537–9 proximity, sufficient degree of 533 third party liability 536–7 product liability, non-contractual claims (tort) 551–4 difficulties in bringing action 551 examples (hypothetical) 552–4 product liability under the Consumer Protection Act 539–51 damage caused by defective product 540–9 claimant or pursuer must show 540–2 meaning 540 defect, meanings and scope of 544–7 design defects 545 development risks defence 547–9 limitations, property for private use occupation or consumption 542 manufacturing defects 545 producers and other parties liable 549–50 relation of liability to other forms 550–1 state of the art defence 547–9 quality and fitness, implied term 119–21, 136–87 circumstances where applicable 140–7 commissioning goods 143, 172 defects drawn to buyer’s attention 144–7 durability 162–3 examination 144–7 express terms 122–3 extent of seller’s obligation 147–73 fitness for the purpose, test of, quality and fitness 149–53 goods, to which s.14(3) extends 180–1 grades of differing quality 169–71 hidden defects 153–6 information on goods, need for 153–4 knowledge, warnings and instructions 156–7 maintenance of spare parts 172 merchantable quality 137–8, 144, 148–9 non-functional aspects of quality 159–61 part of goods unsatisfactory 171 post-1973 statutory definition 159 price, relevance of 164–7 quality, meaning case law on standard of 138–9 problems relating to 138, 139 satisfactory quality 140, 148–9, 169–71 statutory definition 139 quality includes state or condition 171 reasonably satisfactory 161–2 reliance on seller need not be shown 142–4 goods made to own specification 143, 172 Unfair Contract Terms Act and 143 safety 153 sample and examination of goods 144–7 second-hand goods 142, 167–9 seller selling in course of a business 140–2 servicing facilities 172 standard of fitness for use 157–9 see also fitness for the purpose, implied term quality and quantity, seller’s duty as to supply see supply goods of right quality, duty to; supply goods of right quantity, duty to rejection of goods, rescission, and specific performance buyer’s right to reject 435–42 instalment sales 437 loss of right 443–61 acceptance due to 444–61 by act inconsistent with ownership of seller 447–54 express contractual provisions 445 by express intimation 446–7 meaning 451 statutory definition 445–6 through lapse of reasonable time 446, 449, 454–7 acceptance of part of the goods 457–61 right to accept or reject part 459–61 severable contracts, meaning 458 affirmation 444 common law doctrines and 444 documentary sales 452–3 estoppel 444 goods bought for resale 453–4, 457 goods bought for use 453–7 mitigation and 445 passing of property, due to 443 place of delivery for examination 450–1 seller without right to sell 445 sub-buyer’s rejection without returning goods 449 waiver 444 non-severable contracts 438 rejection, consequences of 441–2 relationship with rescission of contract for actionable misrepresentation 461–5 www.downloadslide.com 568 Index rejection of goods, rescission, and specific performance (Continued) Sale and Supply of Goods Act excludable provisions 436 new provisions of 435–7 severable contracts 438–1 contrasting cases on 438–9 instalments, rejection of defective 439–1 single contract, distinguished from number of distinct and separate contracts 440 specific performance or implement 465–7 remedies (consumer’s rights to enforce terms about goods) 506–12 price reduction and final right to reject 511–12 repair and replacement 510–11 right to reject 508–10 type of breach 506 remedies, personal (seller’s) action for damages 423–32 action for price 417–23 remedies, real (seller’s) 385–416 reservation of title clause 406–16 seller’s rights and powers against goods 385–8 stoppage in transit 395–401 conditions to be satisfied 395–6 unpaid seller’s lien 388–95 unpaid seller’s right of resale 401–6 remedies available to buyer in breach 490–4 deposits and part payments 490–3 English law 490–3 equitable relief 492 forfeitable deposit 492 Sales of Goods, International Convention on 376–8 Scots law 493–4 unpaid deposit 491–2 representations 72–4 repudiation by buyer 99–103 seller’s acceptance of, damages and 430–1 seller’s buyer’s position upon 470 seller’s non-acceptance, damages and 430–1 seller’s right to sell goods 87–90 resale, unpaid seller’s right of 401–6 circumstances enabling exercise 402 compared with power of sale 401 payments due before rescission 405–6 proceeds of, claims to 409–11 profit on resale, entitlement 404–5 resale, rescission of original contract 403–4 rescission, statutory and modern usage differences 404 rescission of the contract 461–5 misrepresentation, statutory and equitable principles, divergence of 464 Misrepresentation Act and 463–4 original contract of, where resale 403–4 statutory and modern usage 404 reservation of title clauses 19, 242, 406–16 buyer in possession and 325 cases holding clause registrable 414–16 charges registrable under Companies Act 413–16 claims to the goods themselves 408–9 clause as non-registrable 413–15 proceeds of resale, claims to 409–11 bailment 409–11 redelivery omission in bailment 411 restrictions on 409–10 protection against buyer’s insolvency 413 real remedies and 406 resale of goods by buyer 406–8 transferred claims to other goods 411–12 retailers’ guarantee 556 retention of title clauses 14 risk accidental destruction, risk of 283–4 frustration distinguished 279 general rule: risk passes with property 349 risk passing after property 282 risk passing before property 280–2 special provisions in relation to nonconsumer sales 285 transfer of 279–85 deterioration of goods 283 express agreement 280, 282 general rule: risk passes with property 280–1 risk passing after property 282 see also frustration Romalpa clause see reservation of title clauses sale of goods, contract for Sales of Goods, International Convention on (‘CISG’) 371–82 battle of the forms 373 carriage of goods 380, 382 execution of sales contracts 380–1 field of application 371–3 interpretation 374–5 notice of breach 379–80 parol evidence rule 373–4 www.downloadslide.com Index 569 remedies 376–9 right of inspection 381 risk 381–2 Sale of Goods Act 1979 to Consumer Rights Act 497–9 primary source 3–7 sale or return 30 samples, implied terms in sale by 187–9 bulk to correspond with sample 188–9 comparison of bulk and sample reasonable opportunity for 188–9 examination of goods exclusion from implied term that goods satisfactory 144–7 reasonable 146–7 Unfair Contract Terms Act and contracting out 211 second-hand goods extent of seller’s obligation 167–9 quality and fitness, implied term as to 142 seller in possession 320–4 application of s.8 Factors Act 1889 324 definition 320 delivery or transfer of goods or documents of title 322–3 good faith and notice 324 sale, pledge or other disposition 324 seller’s right to sell goods 85–93, 385–8 breach of implied term, effect 87–93 implied statutory terms as to 85 indemnity, buyer’s right to seek 90 limited title, sale with 92 meaning, problems with 86 power and right 86–7 remedies generally 87–8 repudiation and damages, cases on 87–90 statutory rights of unpaid seller 386–7 unpaid seller, who is 388 services, supply of contract for sale distinguished 8, 22–8 professional services, cases on 25–6 sale of goods legislation 25 standard of care 27–8 and Supply of Goods and Services Act 1982 24–5 specific performance or implement 465–7 buyer’s right 465 cases on 466–7 specific and unascertained goods 465–6 standard of care, supply of services 27–8 stoppage in transit, unpaid seller’s right of 395–401 carrier’s lien 401 conditions to be satisfied 395 methods of exercise, statutory 400–1 transfer of bill of lading 399–400 sufficient to terminate transit right 399 vendor and carrier 400–1 when does transit end? 395–9 subject matter of the contract computer software goods 52–8 goods, meaning of 52–8 goods, type of 59–61 existing and future 59 spes, a 60–1 land and 58 suppliers and liability 56–7 supply goods at right time, duty to failure as breach of conditions 107–8 statutory provisions 106–7 time of delivery 106–8 waiver and estoppel 108–10 waiver as to delivery acting to detriment of any party in breach 110–11 extension of time 111–12 knowledge, where lack of 109 principles applied 109–10 reservation of rights 110 supply goods of right quality, duty to buyer’s claim that contract void 190–5 caveat emptor to caveat venditor, developments 119–22 description, implied term see description, implied terms that goods correspond with Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees 120 durability 162–3, 185 express terms 122–3 fitness for the purpose see fitness for the purpose, implied term implied terms as to quality and fitness 119–21, 136–87 implied terms that goods are satisfactory 136–73 statutory provisions 136–40 knowledge, warnings, instructions 156–7, 184 mistake as to quality English law 190–5 Scots law 195 seller’s claim that contract void 194–5 www.downloadslide.com 570 Index supply goods of right quality, duty to (Continued) non-functional aspects of quality 159–61, 185 other implied terms 190 quality and fitness, implied term see quality and fitness, implied term quality and quantity, relationship 117–18 sample see samples, implied terms in sale by satisfactory, implied term that goods are 144–7 standard of fitness for use 157–9 time for compliance 121–2 trade usage, implied terms annexed by 189–90 supply goods of right quantity, duty to 113–18 de minimis principle 115–17 different goods to those intended 117 excess, delivery of 114–15 one load, general rule 113–14 quantity and quality relationship 117–18 separate instalments 114 statutory provisions 113 supply of goods, contracts for 500–12 definition of 500 requirements in respect of goods 501–6 digital content and goods 505–6 fitness for particular purpose 503 freedom from encumbrances 506 goods to match description 504 goods to match sample or model 504–5 installation of goods 505 matter of custom 503 right to quiet possession 506 right to supply goods 506 satisfactory quality 501–2 types of 500 time, stipulations as to compliance time for 121–2 as conditions 69–71 delivery time 106–8, 476–80 general rules 107–8 mitigation rule 70 tort, damages in 551–4 trade marks 52, 549 trade usage, implied term annexed by 189–90 transfer of property, passing of property property in the goods, meaning 241–6 property, meaning 241 transfer of property, specific goods, contract, seller to put in deliverable state (s 18 SGA rule 2), goods delivered on approval or sale or return (s 18 SGA rule 4) 255–9 transfer of property, specific goods contract, goods in deliverable state, seller to act to ascertain price (s 18 SGA rule 3) 254–5, 267 contract, seller to put in deliverable state (s 18 SGA rule 2) 254 deliverable state 250–1 goods delivered on approval or sale or return (s 18 SGA rule 4) 255–9 buyer’s approval or acceptance 255–8 buyer’s retention without approval or acceptance notification 258–9 passing of property 247–78 rules for ascertaining intention on 247, 259 specific goods, time of passing 247 unconditional contract, goods in deliverable state (s 18 SGA rule 1) 248 contrary intention, factors 251–4 deliverable state 250–1 specific goods 249–50 unconditional contract, meaning 248–9 transfer of property, unascertained goods 259–78 conditional appropriation 266–8 types of conditional contracts 266 contract, goods in deliverable state unconditionally appropriation upon assent (s 18 SGA rule 5) 260–5 assent required 268–9 contract, no property in goods transferred until ascertained 259 deliverable state 250–1 passing of property, relationship of rules on 259–60 passing of property, rules 259 transfer without unconditional appropriation 269–70 delivery for transmission without reservation of disposal meaning 260–1 situations where 260–5 Sale of Goods (Amendment) Act 1995, provisions 272–8 sale of unidentified part of identified bulk 270–2 ascertainment by exhaustion 273 bulk, definition 273 carrier and 270 www.downloadslide.com Index 571 deemed consent by co-owner 275–6 effect of provisions 276–7 equity, position before 1995 277–8 part payment, undivided shares in part of bulk 275–6 undivided shares in goods forming part of bulk 273–5 transfer of title by non-owner 297–342 nemo dat quod non habet rule 297–300 consent of owner 298–300 exceptions 300–39 agent, sale by 304–5, 309–10 buyer in possession 325–39 estoppel 300–9 Factors Act 1889 311–17 market overt, sale in 318–19 motor vehicles under Part III Hire Purchase Act 1964 336–9 seller in possession 320–4 special powers of sale 317–18 common law powers 318 court order, sale by 318 statutory powers 318 voidable title, sale under 319–20 writs of execution 339 reform proposals 340–2 Unconditional contract, meaning under s.18 SGA rule 248–9 Unfair Contract Terms Act 1977 198–9, 207–27 business liability 144 contracting out, limited 209–12 contracting out, prohibited general rule 209 EC Directive on Unfair Terms in Consumer Contracts 198 exemption clauses 199, 202, 212–13 implied terms and contracting out 24–5, 210 liability for misrepresentations 212–13 non-consumer sales 220 potential problems 212–13 reasonable reliance and contracting out 211 reasonableness 208–9, 214–23 cases on 218–23 construction, questions of 216 guidelines 217–18 Sale of Goods Act, comparison 208–9, 220 test of 218–19 sample sale and contracting out 211–12 satisfactory quality concept and contracting out 211–12 Scots law 223–7 sellers outside UK 529 signature of acceptance notes on delivery 446–7 Unfair Contract Terms Act 1977 Part II, Scotland 223–7 exemption clauses 223 covered 224–5 liability for death or personal injury 225 reasonableness test 226–7 sale of goods and hire purchase 224 waiver delivery time 108–12 and payment and delivery 102–3 rejection of goods, loss of right 444 unpaid seller’s lien 392, 394 warranties computer software 57 damages for breach of see damages, buyer’s remedy for breach of condition or warranty definition 72 distinguished from conditions 62, 65–6 existence of goods, as to 78 express 222, 376 freedom from encumbrances and quiet possession 93–6 implied 11, 25–6, 93–4, 222, 536 see also guarantees ... Acknowledgementsxv Table of statutes xvi Table of cases xxviii Table of statutory instruments lv Part I Nature and formation of the contract of sale Sources of the law of sale of goods The Sale of Goods Act... Table of statutes xvi Table of cases xxviii Table of statutory instruments lv Part I Nature and formation of the contract of sale Sources of the law of sale of goods The contract of sale ... and Adams’ Sale of Goods Atiyah and Adams’ Sale of Goods Thirteenth Edition Christian Twigg-Flesner LLB, PCHE, PHD Professor of Commercial Law School, University of Hull, Hull Rick Canavan Nottingham