Statutory implied terms
The Consumer Rights Act 2015, Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982
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In contracts for the sale of goods and supply of services certain basic provisions are implied by statute in order to provide protection to purchasers. In consumer contracts, the provisions derive from the Consumer Rights Act 2015. The Consumer Rights Act 2015 came into force on 1st Oct 2015 and replaced many of the provisions contained in the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982 where there is a consumer sale. The Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982 have not been repealed and still apply to contracts for the sale of goods and the supply of services outside a consumer context (eg private sales and business to business transactions). The main protection offered covers where the seller does not have the right to sell the goods, where the goods are sold by description there is an implied term that the goods will correspond to that description, businesses must ensure that the goods they sell are of satisfactory quality and fit for their purpose, where the goods are sold by sample there is an implied term that the goods will correspond to the sample in quality. In addition there are implied terms that the service must be carried out with reasonable care and skill, that the service will be carried out within a reasonable time and where no price is agreed a reasonable price will be paid. These protections are in the form of statutory implied terms. This means that the Consumer Rights Act or the Sale of Goods Act will put these terms into all contracts for the sale of goods no matter what the parties themselves have agreed in the terms and conditions of sale.
The main provisions
1. - Title
The implied terms as to title are contained in:
S.12 Sale of Goods Act 1979
S.17 Consumer Rights Act 2015S. 12 Sale of Goods Act 1979 implied terms as to title
S. 12 applies to private sales in addition to where goods have been purchased in a business to business context.
S.12(1) implies a term that the seller has the right to sell the goods. This covers situations where the seller is selling stolen goods (whether the actual thief or a subsequent sale in the chain). This term is a condition in all sales.
A buyer who treats the contract as repudiated is entitled to return of the full purchase price even if they have enjoyed use of the goods for some time.
Rowland v Divall [1923] 2 KB 500 (Case summary)
In addition to applying to stolen goods s.12(1) also applies where the seller does not have the right to sell the goods where to do so would be breach of trademark, patent or copyright:
Niblett v Confectioners' Material [1921] 3 KB 387 (Case summary)
s.12(2) (a) implies a term that the goods are free from any undisclosed charge or encumbrance. This applies where for example goods which are still subject to hp terms have been sold without telling the purchaser of the hp agreement or where any other debt has been secured on the goods. This term is only a warranty so whilst the purchaser can claim for any loss caused by the charge or encumbrance they can not end the contract.
S.12 (2)(b) implies a term that the purchaser will enjoy quiet possession of the goods. This acts as an ongoing assurance that no one will interfere with the buyer’s right to possess or use the goods. This term is a warranty.
Microbeads v Vinehurst Road Markings [1975] 1 WLR (Case summary)
Consumer Rights Act 2015
S.17 (1) Implies a term that the trader has the right to transfer the goods.
S. 19(6) If the trader is in breach of the term that section 17(1), the consumer has a right to reject without time limit.
S.17 (2) implies a term that the goods will be free from any undisclosed charge or encumbrance & buyer will enjoy quiet possession of the goods.
2. Description
Sale of Goods Act 1979
s.13(1) Sale of Goods Act 1979 provides that where there is a contract for the sale of goods by description, there is an implied term that the goods will correspond with the description. This applies to private sales and business to business contracts.
This section applies where the sale is solely by description. If the buyer sees the actual goods before the sale then s.13 can not be relied upon:
Harlington & Leinster v Christopher Hull Fine Art [1991] 1 QB 564 (Case summary)
S.13 (1) is simply concerned with description and not quality as was made clear in:
Arcos v Ranaason [1933] AC 470 (Case summary)
Re Moore & Landauer [1921] 2 KB 519 (Case summary)
Consumer Rights Act 2015
Applies only to consumer contracts
S.11 (1) Consumer Rights Act 2015 - Where there is a sale by description, there is an implied term that the goods must match the description
S.11 (2) If the supply is by sample as well as by description, it is not sufficient that the bulk of the goods matches the sample if the goods do not also match the description.
3. Quality & Fitness for purpose
Sale of Goods Act 1979 - s.14
S.14 only applies where the seller sells goods in the course of a business. It therefore does not apply to private sales although there may be an action for breach of an express term or misrepresentation in some circumstances.
The question of whether goods were sold in the course of a business was considered in:
Stevenson v Rogers [1999] 1 All ER 613 (Case summary)
Liability under s.14 is strict and not dependant of proof of fault on the part of the seller.
The relevant parts of s.14 are as follows:
(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.
(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.
(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods—
(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
(e) durability.
Applying this section a judge would thus consider whether a reasonable person would regard the goods as of satisfactory quality looking at the stated aspects in addition to all other relevant circumstances. Looking at fitness for purpose, the judge, will consider whether the goods are fit for the purpose the goods are commonly supplied so for example if you purchase a hairdryer and use it to dry your clothes, the judge is unlikely to conclude there has been a breach as the goods were not used for their common purpose. Conversely if you purchase a pair of shoes which fall apart after a few days wear, the seller cannot simply state they were fashion shoes and not intended for wearing full time.
In addition to the statutory guidance a court applies the usability test to help determine if the goods in question are of satisfactory quality.
The Usability Test – Applies to business to business transactions
The usability test is less generous than the acceptability test. This test requires the court to consider if a reasonable purchaser could have used the goods for purposes for which the goods were commonly supplied:
Aswan Engineering v Lupdine [1987] 1 All ER 135 (Case summary)
S.14 (2C) provides certain limitations to the application of s.14(2) as follows:
(2C) 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:
Bartlett v Sidney Marcus ltd [1965] 1 WLR 1013 (Case summary)
(b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or
(c) in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample.
Consumer Rights Act 2015 - s.9 & s.10
S.9 (1) Consumer Rights Act 2015 implies a term in consumer contracts that the goods are of satisfactory quality
S.9(2) Consumer Rights Act 2015 An objective test is applied to determine if the goods are satisfactory.
S.9(3) Consumer Rights Act 2015 the quality of goods includes their state and condition, including in particular:
a) Fitness for purpose
b) Appearance and finish
c) Freedom from minor defects
d) Safety
e) Durability
S.9(4) Consumer Rights Act 2015 - Can not use S.9 if the defect was bought to the buyers attention at the time the contract was made
s.9(5) Consumer Rights Act 2015 The quality of goods includes any public statement about the characteristics of the goods made by the trader or producer or their representatives.
The Acceptability Test – Applies to consumer transactions
The acceptability test looks at whether a reasonable purchaser would have accepted the goods at the same price had they known of the defect:
Shine v General Guarantee Corp [1988] 1 All ER 911 (Case summary)
S.10 Consumer Rights Act 2015 -Implies a term that the goods will be fit for purpose. If the goods are purchased for a particular purpose which is bought to the sellers attention at the time of sale and the seller assures the goods will be fit for that purpose, there is an implied term that the goods will be fit for that purpose.
—The consumer must rely on the statement
—It must be reasonable to rely on the statement
4. Sample (& Model)
Sale of Goods Act 1979 -s.15
S.15 applies to private sales and business to business sales.
S.15 (2) provides that in a contract for sale by sample there is an implied term-
(a) that the bulk will correspond with the sample in quality;
(b) that the goods will be free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample.
Consumer Rights Act 2015 -S.13 & S.14
Where the goods are sold by reference to a sample that is seen or examined by the consumer before the contract is made. There is an implied term that:
S.13 (2) (a) Consumer Rights Act 2015 the goods will match the sample except to the extent that any differences between the sample and the goods are brought to the consumer’s attention before the contract is made, and
S.13 (2)(b) Consumer Rights Act 2015 the goods will be free from any defect that makes their quality unsatisfactory and that would not be apparent on a reasonable examination of the sample.
S.14 (1) Consumer Rights Act 2015 There is an implied term that the goods will match a model seen or examined
5. Digital content
The Sale of Goods Act contains no provision for digital content. This is a new protection for consumers contained in the Consumer Rights Act 2015.
Implied terms for digital content:
—S.34 the digital content must be of satisfactory quality
—S.35 must be fit for purpose
—S.36 must be as described
Remedies for consumer sales under the Consumer Rights Act 2015
S.19(3) For breaches of sections 9, 10, 11, 13 or 14 the remedies are:
—(a) the short-term right to reject ( see sections 20 and 22);
—(b) the right to repair or replacement (see section 23); and
—(c) the right to a price reduction or the final right to reject (see sections 20 and 24).
S.19 provides that a consumer is not prevented from claiming other remedies provided they do not recover twice for the same loss. Such other remedies include
—(a) claiming damages;
—(b) seeking specific performance;
—(d) relying on the breach against a claim by the trader for the price;
—(e) for breach of an express term, exercising a right to treat the contract as at an end.
The right to reject - s.20 & 22
—The consumer must indicate to the trader that they are rejecting the goods by things done or words said within 30 days
—The trader is obliged to provide a refund
—The consumer is obliged to make the goods available to the trader for collection or to return the goods
—The trader is to pay for the collection but is not obliged to pay expenses incurred in returning the goods in person
The right to repair or replacement- s.23
S.23 (2)If the consumer requires the trader to repair or replace the goods within six months, the trader must—
(a) do so within a reasonable time and without significant inconvenience to the consumer, and
(b) bear any necessary costs incurred in doing so (including in particular the cost of any labour, materials or postage).
S.23 (3) The consumer cannot require the trader to repair or replace the goods if that remedy is:
(a) impossible, or
(b) disproportionate compared to the other of those remedies.
s.24 Right to a price reduction or final right to reject
S.24 (5) - A consumer who has the right to a price reduction and the final right to reject may only exercise one (not both), and may only do so in one of these situations—
(a) If after one repair or one replacement, the goods do not conform to the contract;
(b) because of s. 24(3) the consumer can require neither repair nor replacement of the goods; or
(c) the consumer has required the trader to repair or replace the goods, but the trader is in breach of the requirement of s. 24(2)(a) to do so within a reasonable time and without significant inconvenience to the consumer.
The right to a price reduction is the right—
S.24(1)(a) to require the trader to reduce by an appropriate amount the price the consumer is required to pay under the contract and
S.24 (1)(b) to receive a refund from the trader for anything already paid or otherwise transferred by the consumer above the reduced amount.
S.24 (2) The amount of the reduction may, where appropriate, be the full amount of the price or whatever the consumer is required to transfer
S.42 Remedies for digital content
If the digital content does not conform to the contract, the consumer’s rights are—
—(a) the right to repair or replacement (see section 43);
—(b) the right to a price reduction (see section 44).
Other remedies include:
—a) claiming damages;
—(b) seeking to recover money paid where the consideration for payment of the money has failed;
—(c)seeking specific performance;
—(d)seeking an order for specific implement;
—(e)relying on the breach against a claim by the trader for the price.
Statutory implied terms where services are provided
Supply of Goods and Services Act 1982
Where goods are supplied in addition to services outside a consumer contract, eg the installing of a machinery on a production line, the goods are covered by the Supply of Goods and Services Act 1982) (SGSA) rather than the Sale of goods Act. The SGSA is divided into two parts Part 1 covers the supply of goods and part 2 covers the supply of services. Part 1 covers contracts which transfer property in goods and hire contracts. Where the contract is a consumer contract the Consumer Rights Act 2015 applies.
Part 1 Supply of goods
S.1 Defines contracts which transfer property in goods and excludes the following type of contracts:
(a) contracts for the Sale of goods: (Covered by Sale of Goods Act)
(b) contracts for hire purchase;
(c) contracts involving trading stamps
(d) contracts made by deed where there is no consideration
(e) a contract intended to operate by way of mortgage, pledge or charge
Sections 2-5 replicate the provisions in the Sale of Goods Act sections 12-15 in relation to title, description, satisfactory quality and sample.
S. 5A provides that in non-consumer sales the terms implied by sections 2-5 are innominate terms
S. 6 defines a contract for the hire of goods and excludes contracts of hire purchase and contracts using trading stamps.
Sections 7-10 again replicate sections 12-15 of the Sale of Goods Act in relation to title description, satisfactory quality and sample.
Part 1B
Part 1b S.11 provides additional remedies for consumers which replicate those in s 48 of the Sale of Goods Act in relation to repair or replace, reduction in price and rescission.
Part 2 Supply of services
S.12 SGSA defines contracts for the supply of services. It excludes contracts of apprenticeships, but includes any agreement for the supply of services irrespective of whether goods are also supplied. There is no requirement for money consideration.
S. 13 SGSA implies a term where the supplier acts in the course of a business, that the services will be carried out with reasonable care and skill.
s.14 SGSA implies a term where the service is carried out in the course of a business and no time is specified, that the service will be carried out within a reasonable time. What is considered a reasonable time is a question of fact and will depend on the circumstances.
S.15 SGSA where a service is carried out and no price has been agreed there is an implied term that a reasonable charge is payable. This is not limited to services supplied in the course of a business. What is a reasonable charge is a question of fact to be determined in the circumstances.
Consumer Rights Act 2015
The following provisions are implied into consumer contracts for the provision of services:
S.49 - The service is to be carried out with reasonable care and skill
S.51 - A reasonable price is to be paid if no pricehas been agreed
S.52- A service is to be performed within a reasonable time
Further reading:
Law Commission Consultation Paper 188 Consumer Remedies for Faulty Goods Nov 2008
Office of Fair Trading response to consultation, Consumer Remedies for Faulty Goods, February 2009
Sale of Goods Act 1979, Supply of Goods and Services Act 1982, Consumer Rights Act 2015