Sale of Goods Act 1979

PART IIFormation of the Contract

Contract of sale

2Contract of sale

(1)A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.

(2)There may be a contract of sale between one part owner and another.

(3)A contract of sale may be absolute or conditional.

(4)Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale.

(5)Where under a contract of sale the transfer of the property in the goods is to take place at a future time or subject to some condition later to be fulfilled the contract is called an agreement to sell.

(6)An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.

3Capacity to buy and sell

(1)Capacity to buy and sell is regulated by the general law concerning capacity to contract and to transfer and acquire property.

(2)Where necessaries are sold and delivered to a minor or to a person who by reason of mental incapacity or drunkenness is incompetent to contract, he must pay a reasonable price for them.

(3)In subsection (2) above " necessaries " means goods suitable to the condition in life of the minor or other person concerned and to his actual requirements at the time of the sale and delivery.

Formalities of contract

4How contract of sale is made

(1)Subject to this and any other Act, a contract of sale may be made in writing (either with or without seal), or by word of mouth, or partly in writing and partly by word of mouth, or may be implied from the conduct of the parties.

(2)Nothing in this section affects the law relating to corporations.

Subject matter of contract

5Existing or future goods

(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.

(2)There may be a contract for the sale of goods the acquisition of which by the seller depends on a contingency which may or may not happen.

(3)Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods.

6Goods which have perished

Where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract is made, the contract is void.

7Goods perishing before sale but after agreement to sell

Where there is an agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided.

The price

8Ascertainment of price

(1)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.

(2)Where the price is not determined as mentioned in subsection (1) above the buyer must pay a reasonable price.

(3)What is a reasonable price is a question of fact dependent on the circumstances of each particular case.

9Agreement to sell at valuation

(1)Where there is an agreement to sell goods on the terms that the price is to be fixed by the valuation of a third party, and he cannot or does not make the valuation, the agreement is avoided; but if the goods or any part of them have been delivered to and appropriated by the buyer he must pay a reasonable price for them.

(2)Where the third party is prevented from making the valuation by the fault of the seller or buyer, the party not at fault may maintain an action for damages against the party at fault.

Conditions and warranties

10Stipulations about time

(1)Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not of the essence of a contract of sale.

(2)Whether any other stipulation as to time is or is not of the essence of the contract depends on the terms of the contract.

(3)In a contract of sale " month " prima facie means calendar month.

11When condition to be treated as warranty

(1)Subsections (2) to (4) and (7) below do not apply to Scotland and subsection (5) below applies only to Scotland.

(2)Where a contract of sale is subject to a condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated.

(3)Whether a stipulation in a contract of sale is a condition, the breach of which may give rise to a right to treat the contract as repudiated, or a warranty, the breach of which may give rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract; and a stipulation may be a condition, though called a warranty in the contract.

(4)Where a contract of sale is not severable and the buyer has accepted the goods or part of them, the breach of a condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is an express or implied term of the contract to that effect.

(5)In Scotland, failure by the seller to perform any material part of a contract of sale is a breach of contract, which entitles the buyer either within a reasonable time after delivery to reject the goods and treat the contract as repudiated, or to retain the goods and treat the failure to perform such material part as a breach which may give rise to a claim for compensation or damages.

(6)Nothing in this section affects a condition or warranty whose fulfilment is excused by law by reason of impossibility or otherwise.

(7)Paragraph 2 of Schedule 1 below applies in relation to a contract made before 22 April 1967 or (in the application of this Act to Northern Ireland) 28 July 1967.

12Implied terms about title, etc.

(1)In a contract of sale, other than one to which subsection (3) below applies, there is an implied condition on the part of the seller that in the case of a sale he has a right to sell the goods, and in the case of an agreement to sell he will have such a right at the time when the property is to pass.

(2)In a contract of sale, other than one to which subsection (3) below applies, there is also an implied warranty that—

(a)the goods are free, and will remain free until the time when the property is to pass, from any charge or encumbrance not disclosed or known to the buyer before the contract is made, and

(b)the buyer will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed or known.

(3)This subsection applies to a contract of sale in the case of which there appears from the contract or is to be inferred from its circumstances an intention that the seller should transfer only such title as he or a third person may have.

(4)In a contract to which subsection (3) above applies there is an implied warranty that all charges or encumbrances known to the seller and not known to the buyer have been disclosed to the buyer before the contract is made.

(5)In a contract to which subsection (3) above applies there is also an implied warranty 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 such title as a 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.

(6)Paragraph 3 of Schedule 1 below applies in relation to a contract made before 18 May 1973.

13Sale by description

(1)Where there is a contract for the sale of goods by description, there is an implied condition that the goods will correspond with the description.

(2)If the sale is by sample as well as by description it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

(3)A sale of goods is not prevented from being a sale by description by reason only that, being exposed for sale or hire, they are selected by the buyer.

(4)Paragraph 4 of Schedule 1 below applies in relation to a contract made before 18 May 1973.

14Implied terms about quality or fitness

(1)Except as provided by this section and section 15 below and subject to any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods supplied under a contract of sale.

(2)Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition—

(a)as regards defects specifically drawn to the buyer's attention before the contract is made; or

(b)if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal.

(3)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 condition 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.

(4)An implied condition or warranty about quality or fitness for a particular purpose may be annexed to a contract of sale by usage.

(5)The preceding provisions of this section apply to a sale by a person who in ihe course of a business is acting as agent for another as they apply to a sale by a principal in the course of a business, except where that other is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made.

(6)Goods of any kind are of merchantable quality within the meaning of subsection (2) above if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances.

(7)Paragraph 5 of Schedule 1 below applies in relation to a contract made on or after 18 May 1973 and before the appointed day, and paragraph 6 in relation to one made before 18 May 1973.

(8)In subsection (7) above and paragraph 5 of Schedule 1 below references to the appointed day are to the day appointed for the purposes of those provisions by an order of the Secretary of State made by statutory instrument.

Sale by sample

15Sale by sample

(1)A contract of sale is a contract for sale by sample where there is an express or implied term to that effect in the contract.

(2)In the case of a contract for sale by sample there is an implied condition—

(a)that the bulk will correspond with the sample in quality;

(b)that the buyer will have a reasonable opportunity of comparing the bulk with the sample ;

(c)that the goods will be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.

(3)In subsection (2)(c) above "unmerchantable" is to be construed in accordance with section 14(6) above.

(4)Paragraph 7 of Schedule 1 below applies in relation to a contract made before 18 May 1973.