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Sale of goods

Subject to the overriding doctrine of caveat emptor, contracts for the sale of goods have, like all contracts, always been covered by common law. However, the then state of common law was codified by the Sale of Goods Act 1893 and, from that time, sales were governed by that statute. There were many occasions when the courts were called upon to interpret and decide upon various aspects of the statute, not least with the growth of credit trading and the popularization of hire purchase contracts. As case law accumulated, further statutes came into being, each covering particular aspects of contracts of sale. Acts were also passed for the additional protection of the innocent purchaser, e.g. the Misrepresentation Act 1976, the Trade Descriptions Act 1968, the various Hire Purchase Acts, particularly the Hire Purchase Act 1965, the Fair-Trading Act 1973 and the important Consumer Credit Act 1974. The Supply of Goods (implied terms) Act 1973 was directly intended to tidy up certain parts of the Sale of Goods Act 1893, but, subject to the slight changes this made, the 1893 Act is still the principal legislative instrument governing any contract for the sale or transfer of goods or property, covering not only straight sales for cash or credit but also sales by description or by sample.

Unless specifically, and legally, excluded, there are certain conditions and warranties which by virtue of statute law apply automatically to any sale. Firstly, there is an implied condition that the seller a. of goods has a good title to those goods, or will do so when the sale is to take effect. There is also an implied condition where the sale is by description that the goods shall conform to the description. Specific conditions apply to sales by sample. There are no general conditions or warranties governing the quality of goods sold or their fitness for any special purpose except that:

Where the sale is in the normal course of business, there is an implied condition that the goods are of a merchantable quality, except where faults have been pointed out to the purchaser or the goods have been sufficiently examined prior to purchase for any defect or flaw to be apparent. Where the purchaser has asked for goods for a specific purpose and has, reasonably, relied on the seller’s advice on their fitness for that purpose, then there is an implied condition that the goods are fit for that purpose. This condition only applies to sales in the normal course of business. There are also two principal warranties implied by the Sale of Goods Act. One is that the buyer shall enjoy quiet possession and the other is that the goods shall be free of any charge in favour of a third-party unknown to the purchaser. The position of the purchaser has nowadays been improved by the growth of such independent organizations as the consumers’ association, which examines and compares various goods on offer, publishing its findings in a magazine called Which? Other forms of protection are afforded by the British standards institution, with its kite-mark signal of approval of certain categories of goods.

Reference: The Penguin Business Dictionary , 3rd edt.