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1 Scope of the law 2 Implied terms 3 Title 4 Description 5 Quality and fitness in business sales 6 Sample 7 Remedies in non-consumer cases 8 Exclusion.

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Presentation on theme: "1 Scope of the law 2 Implied terms 3 Title 4 Description 5 Quality and fitness in business sales 6 Sample 7 Remedies in non-consumer cases 8 Exclusion."— Presentation transcript:

1 1 Scope of the law 2 Implied terms 3 Title 4 Description 5 Quality and fitness in business sales 6 Sample 7 Remedies in non-consumer cases 8 Exclusion of implied terms

2 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

3 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

4 11.4 Implied terms 1979 Act 5 terms, Sections 12 to Act 4 terms, Sections 8 to Act 4 terms for contracts for work and materials, barter, rent and leasing, Sections terms for contract of hire, Sections 7 to 10 3 terms for contracts for services, Sections 13 to Act Satisfactory quality (1) Such terms are conditions, except in non-consumer contracts as per 1994 Act. (2) Such terms cant be excluded, except in non-consumer contract as per 1994 Act.

5 3 Title (ownership) (1) This is a condition and cant be excluded. (2) In the chain transaction of stolen car, the loser is generally the one buying from the thief. Money Car (Police) CD OwnerThief AB Illustration:

6 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.

7 (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 dont apply.

8 (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 cant do so, e.g. 3 years in France. If purchased at auction or other public market, real owner cant request the return unless pay the innocent purchase the price of the goods. As tomoney or unregistered securities, the real owner isnt entitled to request the return.

9 4 Description (1) Description can be made in many ways, in contract or advertisement. (2) The law isnt concerned with trifles (trivial).

10 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.

11 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.

12 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.

13 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)

14 (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 didnt 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.

15 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 $ 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.

16 (3) It doesnt 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 sellers goods should fit for particular purpose made know to seller. (2) It doesnt apply to: The buyer doesnt rely on sellers skill and judgment It is unreasonable for buyer to rely on this.

17 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 wouldnt 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.

18 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 wouldnt be discovered on reasonable examination of the sample.

19 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 hadnt snapped. Court: Wholesaler was liable.

20 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


22 (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

23 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 customers request. (2) It cant exclude term as to title(ownership).

24 Case: Mitchell v Finney seeds Ltd (1983) Mitchell bought his yearly supply of cabbage seeds for $192. Due to seeds defects the cabbages didnt grow properly and were not saleable. His loss was $61000, but an exclusion term in the back of the sellers catalogue and on the invoice limited the sellers liability to the cost of the seed. He sued for total loss of $ Court of appeal: This was non-consumer case, but the exclusion wasnt reasonable, and farmer won his damages.

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