lesson 2 notes sga

overview

• the sale of goods act 1979 remain central to many business to buiness salees

• consumer contracts for goods are generally governed by the consumer rights act 2015 cra

• the law seeks certintyand commercially workable rules but traditional categories can create artificial distinction where economically similar transactions receieve different legal treatment

lex mercatoria the law of the merchant

• a body of merchant custos and practices devloped across medieval europe

• merchants traded across poltiical and geogrpahical boundaries and needed rules that were practical, predictable and capable of resolving disputes quickly

  • commercial praciclity= rules should reflect how trade is actually conducted

  • cross border usability= shared customs could bridge differnt local legal systems

  • speed and informality= delay in resolbing disputes could disrut ongoing trade

  • predictabilty and party autonomy= traders need to asses risk and price transactions

• although these characteristics help eplain the continuing importance of certainty, freedom of contract an commercial expceations in english com law the customary rules can also be uncertain were practices differ or are disputed

common law and commercial expectations

courts devloped sale of goods principles through common law decisions includng by recognising epectations associated with the descrition under which goods were sold

• gardiner v gray 1815= goods sold under a particular denomination should be saleable in the market as goods of that decription

  • illistrates the recognition of commercial expectations and the development of implied obligations before stat codificiation

• judicial devlopment can adapt to commercial pracice but a rule spread across many cases is harder to find and apply consistently

  • codification improves accessibility although it cannot remove every ambiguity

sale of goods act 1893 and 1979

• 1893 act largely codified exitig common law rules

  • codification puts legal principles into stayuatory form; it is not necessarily intended to change their substance

• bank of england v vagliano borthers 1891= interpreting principle= when construing a codifying statute the srtating point should ordinarily be the statuatory language rather than a search throough every earlier case from which the rule was derived

• sga 1979 was principally a consolidating act; it brought the law together and largely retained the structure of the previous sga

  • subsequent legislation has altered parts of the frameowrk including rules on exclusion clauses and consumer protection

statuatory definition

• s2.1 a contract of sale of goods is a contract by which the seller trasnfers or agrees to trasnfer the propoerty in goods to the buyer for a money consideration called price

• 3 requirements

  • goods= the subject matter must fall within the stat meaning of goods

  • trasnfer of roperty= thr seller must transfer or agree to trasnfer ownership in the goods; mere possession is insufficient ie hire purchase agreement

  • money consideration=transaction must involve a monetary price not a pure exchange/barter of goods for goods

• under s 2.4-6

  • a sale occurs where property is trasnferred

  • an agreement to sell exists where trasnfer is to ccur in the future or subject to a condition

  • an agreement to sell becomes a sale when the relevant time arrives/the condition is fulfilled

• propoerty is not possesion; a person may posses goods witjout owning them ie a borrower or hierer

  • propoerty is the general ownership of goods under s 61.1

  • whereas possession means physical cutody/control

goods under s 61.1

• centred on personal chattels and excludes things in action and money

• expressly includes certain categories that are not ordinary already detatched physical objects such as

  • emblements and industrial growing crops

  • things attached to or forming part of land where parties agree they will be severed before or under the contract

  • an undidivided share in goods

    • shows goods are not limited to items already physically dedttached from land; the key is the classification and terms of transaction

• exclusions and borderline subject matter

  • land itself is not goods

  • intangible rights such as shares patents and copyright

  • software

    • st albans city and district council v iternational computers ltd 1996= liscensed software was outside te sga

      • a tangile disk may qualify as goods but the intangible programme supplied under a liscence is not

      • illustrates difficulty of applying a tangible property definition to software

    • watford electronics v sanderson 2001= transaction for software was not a sale of goods so implied quality and fitness terms did not apply

    • the physical medium and intangible content may produce dofferet outcomes for functionally simila software dependat on how it os suppkiied

      • appears formaistic and outdted

      • reflects boundries of sga

      • not a reason to assume al digitial products are un rpotectes as under cra 2015 consumer transactions creates a sperate regie

        • doesn redefine every intangible products as good

existing and future goods s5 and s61.1

• existing goods are oods already owned r possessed by the seller when the contract is made

  • a seller agrees to sell a car already in stock

• future goods are to be manufactured or acquired by the seller after the contract

  • a manu agrees to supply a machine that it will produce next month

  • future goods can be subject of a contract but ownership will nt pass as though the goods already existing and identified if they do not yet exist or havent been aquired

specific ascertained and unascertained

• under s61.1 specific goods are identified and agreed upon when the contract is made

  • the parties agree on the particiular car identified by its reg number

• ascertained goods have been identified as the goods to which the contract relates

  • they were initiialy unascertained when the contract was made but have subsequently identified and set aside/ matche to the contract

    • selecting 50 bags of wheat from a larger warehouse stock and labelling them for a specific buyer

• unascertained goods= not specifically identified at the time the contract is formed

  • sold by description or drawn from a generic stock or bulk

  • unascertained goods by description =100 bags of standards cement where the articular bags have not been selected

  • unascertained goods fron a bulk= 50 litres of oil out of a 500 litre tank before the buyers share has been identified or appropriated

• propoerty

  • s16 unascertained goods do not pass until the goods are ascertained

    • exception owners in common= for certain undivided shares in an identiied bulk for a specifi quanity s 20a

  • for specific and ascertained goods

    • s17 direts attention to the parties intntion

    • s19 provides default rules where not intention appear

• risk under s 20 generally passes with property subject to te parties agreement and stat exceptions

• the identification requirement promotes certainty by esnuing ownership attaches to an identified goods but it can never the less disadvantage a buyer who has paid for a qunaity frona. bukk but cannot establish that specific goods have been allocated to them

  • s20a and 20 b partly adress this problem for bulk transactions

transactions outside the sga

supply under statute=

• goods can be supplied without a contract of ale of goods between the supplier and recipient

• the existence of delivery and payement does not prove a sale contract

• legal relationship may arise out of statute ie the source of the parties rights and duties

  • esso petroleum co v commissioners of customs and excise 1976= poromotional coins supplied with petrol prchases were not trwated as seperately sold= they were aalysed as involving a collateral arrangement not a seperate sale of coins for money

  • pfizer v minister of health 19665= supply of prescribed drugs could arise under a stat scheme rather than a contract between patient and phramacist

  • read v cryodon coproation 1038= relationship in a public utility context may be governed by a state rather than ordinary cntract

transactions outside the sga

land and intangible property= a sal of land and a trasnfer of intagible property such as shares patent copyroght dont land within s2.1

• may be governed by property ip or company law

pure exchange or barter= lacks the money consideration required by s 2.1 so is not a sale of goods although can still be a valid contract

• part exchange= alrdrige v johson 1857= barley and bullocks were exchanged with money paid to make up the difference in exchnage prices so the arrangement was treated as 2 seperately priced sale because the goods were seperately valued and monetary difference formed part of the transaction

• money price requirement prvides a clear lega bondry but can be formalistic as economically similar exchnages may fall on dff sides of the sga depending on how paries stucuture and price them

free issue of materials= customer supples materials they already own to a manu, ownerhsip of these materials is never transfered from supplier to customer

• analyss may differ for any new materials or finished goods suppled by contractor

transactions outside the sga

work and materials= agrreements combiing te supply of a hysical item with skill and labour

• court asks what the substance of the contract is ie obtaining a product or obtaining services in which materials are incidental

• robins v graves a comissioned portrait was treated as a contrct for work and materials ecause the artists skill and experience were central notnmerely on the fact a painting would result

• lee v griffin manufacutirng an suppling dentures was a sga as main purpse was provisin of a finished article ie dentures although it had to be made for the customer

• a bespoke or made to order item is not automaticallua service equally use of materials does not auto make a cof s

• substance approach recognises that transactions have diff purposes however creates undertainty as courts may disagree whether skill or finishe product dominiates

  • older cases should be used as illustrations not as mekcanical tests that resolve modern mixed contracts

hire purchase agreements= trasnfers possession not ownership ie customer hires goods and usually has option to purchase later so no obligation to buy uder the tradition sga sense

• helby v matthews 1895= hirer had not become owner merely by possesing goods or paying instalments and could not transfer better title to a sub buye before auring ownership

  • seperation between possession and titile= legal olbigation and timing of transfer over customers expectation they will eventually buy

  • respects parties chosen structure and protects ownership but csn be difficult for a customet to understand where economic possession resmbles wonership

transactions outside the sga application

classifivation outside the sga does not mean arrnagement are invli or recipient has no rights

• common law contract= trasnaction outside sga my still be a valid contract if ordinary formation requirements are satisfied

  • currie v misa 1857= consideration may consist of a benefit, right or interest to one party or a drtrimentt undertakren by the other \

  • dunlop pneumatic tyre co v slefridges and co 1915= cosnideration is commonly described as the price for which a promoise is bought

  • chappel and co vs nestle 1960 = consideration need not be economicallyadequate provided it is kegally suffcient

• supply of goods and srvices act 1982= supplies implied terms for non sale transactions ie contracts including work and materials and services

  • not a universal fall back

• cosumer rights act 2015= framework fo contracts between traders and consumers for goods servies and digitl content

  • for consumer dgi content the cra creates a seciifc regime rather than extending the sga

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themes

certainty vs com relatiy

• n a defined stat categoryallows parties to predict which rules apply and allocate risk when drafting contracts

• however rigid dsintctions between physical goods, dgiital content, services andlicensinf may produce different outcomes for arrangwmnts srving similar com functiosn

freedom of contract vs minimum protection

• com parties may value ability tp chooose between sale hireliscence servce structure

• classification can determine whethe implied terms and remedies are vaiable

• in consumer ts mandtory cra protections limti extent towhch traderd vn contract out of core right

codification vs flex=

• makes law easieet o locate and apply but wording can lag behind new bsiness modes

• courts can intepret provisions in context while parlaiemnt can create new categories scuh asa the cra did for digitsl content

disitncio reains important because diff regimes have dff scopes implid ter ad remedies

• prcatical context is redice by the cra 2015in consumer contexts but distinction remains centrsl in many b2b trasnacios