STEPH SHAW February 2010

10 credits

Unit co-ordinator: Steph Shaw

Lecturer: Steph Shaw

Aims: develop an understanding of the legal liabilities of business organisations towards consumers and other businesses

100% Coursework

Problem question - 3000 words

Distributed w/c 09 March

This unit aims to build upon the knowledge of contract law developed in Level 1

Sale of Goods

Exclusion Clauses

Consumer Credit

The law relating to commercial activity, especially transactions concerned with the sale and supply of goods and services and the financing thereof.

Most of the legal principles applicable to contracts of sale were developed at common law, particularly during the eighteenth and nineteenth centuries.

By the late nineteenth century an extensive body of rules concerned with the rights and duties of buyers and sellers had developed and the law of sale was therefore included in the partial codification of commercial law.

Sale of Goods Act 1893

Industrial revolution – between 1860 and 1900 estimated that the real wages of urban workers increased by 60%

Mass production of consumer durables led to a massive increase in commercial activity

Growth in provision of credit Existing contractual basis for analysis of

commercial activity with its assumption of equality of bargaining power was inadequate to deal with the problems created by the increase in consumption and the increasing complexity of goods and sales techniques

Courts developed principles of negligence law to deal with problems caused by defective goods

Parliament legislated to regulate the supply of credit – Moneylenders Act 1927 and Hire Purchase Act 1938

Licensing Criminal law self regulation introduced

Consumer protection Issued directives on: consumer credit, unfair

contract terms, distance sale, unfair commercial practices contracts

Introduced new concepts into UK law: ‘good faith’ ‘average consumer’

New Directive on Consumer Rights proposed in 2008

A contract is a legally binding agreement which is essentially commercial in its nature and involves the sale or hire of commodities such as goods, services or land.

Only a minority of contracts must be written in order to be valid. These include contracts to sell land and contracts to obtain credit.

Terms define the obligations which the parties to the contract have undertaken

Different types of terms, can be express or implied

If any terms are breached the injured party will have a remedy for breach of contract. The nature of the remedy will depend upon what type of term as breached

Express terms are agreed by the parties Implied terms are implied by the court or by

a statute

Importance of statement-Bannerman v White

Special skill and knowledge-Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd-if statement made by someone with special skill/knowledge more likely to be a term

Timing-Routledge v McKay-the more time that elapses between the statement being made and the contract being concluded, the less likely it will be a term

A misrepresentation is an untrue statement of fact by one party which has induced the other to enter into the contract

There must be: An untrue statement It must be a statement of fact and It must have induced the innocent party to

enter the contract

Conditions-important terms of the contract, breach of which allows the innocent party to terminate the contract and sue for damages.

Warranties-less important terms, breach of which allows the innocent party to claim damages but does not allow them to treat the contract as terminated

Terms are implied into contracts by 3 statutes:

Sale of Goods Act 1979 Supply of Goods (Implied Terms) Act 1973

(contracts of hire-purchase) Supply of Goods and Services Act 1982. The terms which these statutes imply are

inserted into certain types of contracts without the parties needing to agree to them.

Sale of Goods Act 1893 was the first statute to imply terms into contracts.

1893 Act replaced by the Sale of Goods Act 1979

Contain 5 major implied terms, all of which are conditions

s12(1) implies a condition that the seller has the right to sell the goods

s13(1) implies a condition that the goods will correspond with any description by which they were sold

s14(2) implies a condition that the goods are of satisfactory quality

s14(3) implies a condition that the goods are fit for the buyer’s purpose

s15(2) implies a condition that where goods are sold by sample that the bulk will correspond with the sample

The terms implied by ss. 14(2) and 14(3) are implied only into contracts for the sale of goods which are made in the ‘course of a business’.

The other terms are implied into all contracts for the sale of goods

The swing of the pendulum from:

Caveat emptor – ‘buyer beware’

to

Caveat venditor – ‘seller beware’

A necessary change rendered necessary by the conditions of modern commerce and trade

Only applies to contracts for the sale of goods

s2(1) ‘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’

Property in goods means ownership or title, therefore contracts of hire are not covered by the SGA as ownership is not transferred.

s8 clarifies the term ‘price’. Consideration must be money, therefore a free gift cannot be a sale

s 61 SGA-defines goods as ‘all personal chattels other than things in action’

A personal chattel is a physical thing which can be touched or moved (land and houses cannot be moved)

A thing in action is a right which can be enforced only by suing (guarantees, debts, intellectual rights like a trademark or copyright)

ss 12 and 13 Sale of Goods Act