Company Law - s.14 SGA Quality
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S 14. SGA Quality - Statutory Regulation
Where the seller sells goods in the course of business, there is an implied term that the goods supplied under the contract are of satisfactory quality.
What does "in the course of business" mean?
- R&B Custom Brokers v UDT - company bought car for director which was used for business and private purposes. Was buyer dealing as a consumer? Court held that buyer was dealing as a consumer as buying of the car was incidental to the business of the buyer.
- Stevenson v Rogers - fisherman sold his trawler (which he did not do very often). The trawler was defective. Was sold in the course of business? Court held - yes, it was sold in the course of business (even thought seller did not sell trawlers often).
What are goods? (cases)
Geddling v Marsh - goods include packaging (bottles)
Wormell v RHM - goods include instructions.
S. 14 Common Purpose and particular purpose
- s. 14(2)
- Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.
- Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known—
- (a)to the seller, or
- (b)where the purchase price or part of it is payable by instalments and the goods were previously sold by a credit-broker to the seller, to that credit-broker,
- any particular purpose for which the goods are being bought, there is an implied term that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller or credit-broker.
s. 14(2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.
- this is objective test.
- 2B - quality will include:
- (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
What the reasonable man will expect (quality)?
- Depends on whether the goods are
- - brand new, or
- - second hand - Business Appliances Specialists v Nationwide Credit Corporation - merchantability of the second hand car may not be restricted to its safety
- - sold as shop soiled
- Cehave NV v Bremer Handelsgeshaft mbH - commercial men will make a decision respectively to the description of the particular goods.
- But the test every time will be the same.
- Brown v Craiks - sale of industrial fabric, but the fabric was expected to make dresses. But as soon price paid was lower than for fabric for dresses, the fabric fas considered as of merchantable quality.
- Godley v Perry - cheap toy made harm to child. Court held that minimum standard has to be maintained irrespectively of price.
Fitness for all the purposes goods of that kind are commonly supplies
- Grant v Australian Knitting Mills the good which is only for one purpose should be suitable for using it with this person
- Aswan Engenering Co. v Lupdine - storage container were melted in the heat. Court held that goods still met some of the purposes
- Balmoral Group v Borealis - "all purposes" does not meant all conceivable purposes.
Freedom from minor defects
Rogers v Parish - Range Rover was bought, but had many minor defects. Court held that as soon as car is expensive, expectations are high, so car was of not a satisfactory quality
Clegg v Anderson - when you buy very expensive item the expectation may be perfection (expensive yacht was bought)
Egan v Motor Services Bath - Porsche had minor defect, but it was not enough to reject the car. Reasonable person would not think that this car is not of satisfactory quality.
- Unsafe item will not be of satisfactory quality
- But the safety should be taken in the context.
- Bernstein v Pamson Motors - car broke down on the motorway (engine blown up) court considered
- (a) whether car was capable of being driven in safety
- (b) the ease with which the defect could be remedied
- (c) whether the defect was capable being repaired as new, any other potential damage
- (d) whether there was a succession of minor defects to be taken into consideration,
- (e) in appropriate cases, any cosmetic factors
- Lee v York Coach and Marine - second hand car and buyer found number of defects 4 months buying claimed that he wants to reject the contract.
- There is an implied warranty that goods will be fit for purpose for a reasonable period after delivery
- Crowther v Shannon Motor Co - second hand car with 80K miles on the clock. Broke down after 3 weeks. Engine was faulty. Court held that car was not of satisfactory quality (despite that the car was old)
- Thain v Anniesland Trade Centre - second hand car, 5 yrs old, 80K miles on the clock. Broke down within 2 weeks, but court rejected in rejection, saying that reasonable person may expect that this may happen with a car like that .
The fact that the buyer is entitled to a manufacturer repair is not relevant - Rogers v Parish - warranty which removes rights of the buyer, rather than adds, may not exist.
s. 14 (2C) SGA
- The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory—
- (a)which is specifically drawn to the buyer’s attention before the contract is made,
- (b)where the buyer examines the goods before the contract is made, which that examination ought to reveal, or
- Specifically drawn to the attention of the buyer - Barlett v Sydney Marcus - B bought a car with defective gearbox and had discount because of it. But B claimed for rejection of car, court did not decided for B favor.
If inspection was made cannot complain about defects which should be seen - Bramhill v Edwards
- B purchased motorhome, but did not examined it inside, just outside.
S. 14 (2D) Other relevant circumstances
- If the buyer deals as consumer the relevant circumstances mentioned in subsection (2A) above include 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.
- (a) buyer was unaware about the statement
- (b) the statement was withdrawn/corrected
- (c) the buyer was not influenced by the statement
14 (3) SGA - Specific person
Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller, or credit-broker,any particular purpose for which the goods are being bought, there is an implied term that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely (i.e. buyer has far more expertise than the seller), on the skill or judgment of the seller or credit-broker.
How to prove that buyer did not rely?
- What is a difference between 14(2) and 14(3) - Jewson v Boynham - boiler installed by the builder was of low energy efficiency. Court held - no breach, as boiler is working (14(2) is satisfied) and buyer did not tell builder about his specific purpose (14(3) was satisfied).
Only one purpose goods
- Where goods sold only with one purpose, this purpose will be known to the Seller
- Priest v Last - sale of bottle of hot water.
unless there is abnormal feature - Slater v Finning
Buyer does not rely on seller (case)
The section will not apply where the buyer does not rely on the seller's skill, e.g. asks for a product by brand name - Cammel Laird v Manganese Bronze & Brass -
s 12 -15 SGA Implied Terms Status
Claim for breach of ss. 12-15 gives right to strict liability (liability regardless fault) - Frost v Aylesbury Dairy Co. Ltd - Seller was not able identify that the milk is poisoned, but still was held liable for it.
Remedies & Acceptance
Implied terms are Conditions, however
s. 15A - if the buyer is a company and the breach is slight, sufficient quality will be warranty, but not condition.
But buyer-consumer has additional remedy acc. to 48-AF i.e. require repair or replacement or price reduction or rescission. Also there is presumption that in case anything happened with good during 6 months, than good was faulty at the moment of sale.
Rejection of goods under s 13/14 SGA
- Buyer can reject the goods (subject to 15A for non-consumers) in case there was a breach of condition, however cannot reject accepted the good (s. 11(4) SGA).
- Acceptance means (s. 35(1) SGA):
- - when goods are delivered did any act inconsistent with the ownership rights of the seller
- - informed seller that he accepted the goods
Right of inspection (s. 34 - 35 SGA)
s. 34 - Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound on request to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract
s . 35(2) the buyer is given a reasonable opportunity to examine goods following delivery where he has not previously examine them.
s. 35 (2) In case buyer is a consumer he cannot lose his right in 35(2) by agreement, waiver, or otherwise.
Deemed acceptance after a reasonable time
s. 35(4) (5) - keeping goods after reasonable time (which includes reasonable opportunity to examine) deems acceptance
- How long is reasonable time?
- - Lee v York Coach and Marine - 6 months.
- - Bernstein v Pamson Motors - 3 weeks was too long
- Fiat Auto Services v Connoly - car rejected after 9 months after purchase. Buyer asked to fix, but seller was in fault. After 9 months it was allowed to buyer to reject the car, even though he was driving this car during this time.
Latent defects - should not able to reject after long period of time.
Repair (s. 35 (6)(a) - Repair
- Agreement to repair is not acceptance
- Fiat Auto Services v Connoly - Buyer asked to fix, but seller was in fault. After 9 months it was allowed to buyer to reject the car, even though he was driving this car during this time. Until Seller told Buyer the reason of problem after 9 months, so Buyer did not know whether he wants to reject or not.
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