Essential Characteristics of Contract of Sale

Generally “a contract of sales of goods is a contract, whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called price.” Section 2(1) Sale of Goods Act 1893 United Kingdom.

Thus contract for sale includes both present sale of goods and a contract to sell the goods at a future time and a sale consists in the passing of title from the seller to the buyer for a price. The essential characteristics of a contract for the sale of goods are:

1.1 Goods:

Section 2(4) defines the contract of sale as “Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contact is called a sale.”Hence the existence of goods is a prerequisite for a contract to be termed as a contract of sale. Under section 5 (1) “the goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured or acquired by him after the making of the contract of sale, in this Act called future goods”.

Therefore the contract of sale included all existing and future goods.

1.2 Transfer of Property:

Section 2 of the Sale of Goods Act 1979 contains the essential elements forming part of a contract of sale. According to subsection (1) of Section 2 the foremost essential element for any contract to be regarded as ‘sale’ is the transfer of property in goods to the buyer for an agreed consideration.

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The agreement to transfer the property will also be regarded as sale. There are many implied and express terms under which the property transfers from the seller to the buyer.

1.3 Price:

The transfer of property in the goods take place for an agreed consideration called ‘price’ Price is another important characteristic feature of a sale of contract. The term ‘price’ is described under Section 8 (1) of the Sale of Goods Act 1979. According to this section “The price in a contract of sale may be fixed by the contract, or may be left to be fixed in a manner agreed by the contract, or may be determined by the course of dealing between the parties”

Contact of Sale and

2.0 Distinction between the Contract of Sale and Other Commercial Contracts:

As against a contract of sale the commercial contract contains the following elements:

“intention – the parties must intend and communicate their intention to enter into contract under the law;
offer and acceptance – there must be an offer and an unqualified acceptance;
consideration – money or money’s worth must be exchanged for goods or services provided;
capacity to contract – the parties must have capacity to enter into the contract;
consent – this must not have been obtained by means of fraud, deceit, duress or misrepresentation, whether deliberate or unintentional;
legality – the contract must not be for an immoral or illegal purpose, and
performance – the obligations under the contract must be capable of performance by the parties.”[1]
While for a commercial contract the above conditions are essential to make the contract valid the contract for the sale of goods implies the existence of certain conditions which are peculiar to the contract of sale of goods only. The implied conditions relate to various aspects like description, quality and conformity to the quality of the samples. The implied condition also ensures that the buyer will have a quite possession and enjoyment of the goods sold under the contract. The contact of sale also assumes that the seller has the right to sell the goods, whereas the contractual capacity is external to the contract in the case of other commercial contracts.

3.0 Implied Terms of Contract for the Sale of Goods:

The following are the implied terms of the contract of sale of goods under the Sale of Goods Act 1979 include:

“the seller has the right to sell the goods;
the goods are free from any security interest;
the buyer will have quiet enjoyment of the goods;
where the goods sold by description, the goods will conform with the description;
where the goods sold by sample, the goods will conform with the sample;
the goods are of satisfactory quality unless defects are brought to the notice of the buyer prior to the contract or a reasonable inspection would reveal the defect;
the goods are reasonably fit for the purpose stated by the intended buyer or implied by the buyer’s statements and conduct;” [2]
The essential implied term in a contract of sale is the capacity of the parties to the contact to buy and sell the goods. Section 3 (1) of the Sale of Goods Act says “Capacity to buy and sell is regulated by the general law concerning capacity to contract and to transfer and acquire property.” Further under section 12 the implied terms applicable to a contract of sale are described in detail. Section 12 (1) stipulates that there is an implied term about the sellers’ right to sell the goods. This section further adds that in the case of an agreement to sell the contract implies that the seller will acquire the right when the property in the goods is to pass.

As regards to the quite enjoyment of the goods subsection (5) of section 12 lays down the provisions. According to this section:

“In a contract to which subsection (3) above applies there is also an implied term that none of the following will disturb the buyer’s quiet possession of the goods, namely—

(a)      The seller;

(b)      In a case where the parties to the contract intend that the seller should transfer only third person may have, that person;

(c)      Anyone claiming through or under the seller or that third person otherwise than under a charge or encumbrance disclosed or known to the buyer before the contract is made”

Section 13 deals with the implied term about the sale of goods by description and sale by sample. In both the cases of sale there is an implied condition that the bulk shall correspond to the description and the sample. Similarly section 14 implies that the goods shall possess a satisfactory quality. Section 14 (2B) specifies

“For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods—

(a)      Fitness for all the purposes for which goods of the kind in question are commonly supplied,

(b)      Appearance and finish,

(c)      Freedom from minor defects,

(d)      Safety, and

(e)      Durability.”

4.0 Purchase of Laptop by Janet:

The purchase of a laptop on the basis of the description as it is new is a case falling under sale of goods with an implied condition under section 14 of the Sale of Goods Act 1979. “Terms of satisfactory quality, fitness for purpose and correspondence with description are implied by implied by statute into contracts for the sale of goods (Sale of Goods Act 1979 ss.13, 14(2), 14(3))” (Robert Bradgate)[3]

As noted earlier, all contracts for the supply of goods include implied terms that the goods supplied should

(a) where sold by description, correspond with that description (Sale of Goods Act 1979 s.13); (b) be of satisfactory quality (Sale of Goods Act 1979 s.14(2)); and

(c) where the buyer makes known the purpose for which the goods are required, be reasonably fit for that purpose (Sale of Goods Act 1979 s.14 (3)).

The terms are implied into all contracts for the supply of goods, and apply to all goods supplied in purported performance of the contract. In Beale v Taylor (1967) it was shown that the plaintiff had relied on the description of the car he purchased as being a 1961 Triumph Herald and when it turned out to have been two different years welded together he was entitled to reject the car and claim his money back.

The firs thing one must see is that whether the laptop forms part of ‘goods’ under the Sale of Goods Act. It is an established fact that the computer hardware should be regarded as goods. In the case of Amstrad plc v Seagate Technology Inc[4] it has been held that the computer hardware is classified as goods and it is further submitted that the supplier will still be liable under the contract even if the defect is due to the computer has failed due to an error in the real time clock or due to the failure of the ‘embedded’ software.

The second aspect to be considered is the description on which the customer depended. The legal requirement under the implied conditions is that the goods must correspond with description applies where the contract of sale is effected by description. In the case of Ashington Piggeries Ltd v Christopher Hill Ltd [5] it has been held that in this context ‘description’ is limited to those words which identify ‘essential commercial attributes’ of the item sold.

For the purpose of deciding on ‘description’ as applied to the implied condition the courts will consider whether the descriptive words form part of the description and such description has influenced the customer to rely on them and purchase the goods in question (Harlingdon & Leinster v Christopher Hull Fine Art Ltd[6]) Normally under sale of goods by description, a statement with regard to the description will be regarded as a term of the contract and the seller is bound by such term. When the goods do not correspond to the description the seller would become liable even if he is unaware of the non-compliance of such goods to the description. This is so if the seller has prescribed the description in the promotional literature or in any other form.

In the instant case Janet purchased the laptop on the basis of an advertisement which claimed that the computer is new and a model of that year which description later proved to be false. Hence the laptop sold by description has not corresponded to the description. In view of the legal positions discussed above the seller is liable to compensate Janet.

Since there is a clear breach of the implied term of the sale Janet is entitled to claim damages and since the breach is material she can reject the laptop supplied under the sale of contract and repudiate the contract itself. “These provisions apply where the buyer is a consumer. Within six months beginning at the time at which the goods were delivered, the buyer can require the seller to repair the goods, reduce the price, or rescind (cancel and return property and money) the [[contract] where buyer claims that the goods were not in accordance with the contract at the time of delivery.”[7]

5.0 Purchase of Carpet Cleaner Set by Janet:

The sale of the carpet cleaner under the television ad falls under the sale of goods by description which falls under section 14 (2B). Under this section the quality of the goods shall cover all the following aspects of the business:

Fitness for the purpose for which the goods are commonly supplied
Appearance and finish
Freedom from minor defects
Safety and
Durability.
“There is no case law on this definition of quality under the legislation. This definition of satisfactory quality was introduced by the Sale and Supply of Goods Act 1994. Prior to this the definition was merchantable quality and all relevant case law is with regard to the old definition of quality.”[8] However with the change of time there are increased quality expectations from the consumers and that is the reason the 1994 Act dealt with “reform of the domestic quality term it is intended to reflect that consumers require more than mere functionality from the goods they buy.” This is the precise reason that section 14(2B) Sale of Goods Act has set the above list of factors which are, “in appropriate cases”, aspects of the quality of goods.

Thus s14 (2B) spells out the consumer’s expectations and insofar as it refers only to the public statements of the seller and producer it might be read as suggesting that the consumer has no general minimum quality expectations but the following conditions also apply:

The seller’s and the manufacturer’s public statement about the goods
The seller is liable for the public promotional claims
The implied condition under section 14 (2B) in essence implies “The goods show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods and taking into account any public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling.i[9]

In accordance with the legal position discussed above Janet would be entitled to claim damages form the supplier of carpet cleaner. She can claim the remedies as outlined in S 48B Sale and supply of Goods to Consumer Regulations 2002