The Gazette 1981

GAZETTE

SEPTEMBER 1981

Conditions of Sale and the

Sale of Goods and Supply of

Services Act, 1980

Mark de Blacam, Barrister-at-Law

HE drafting of conditions of sale for use in commercial

contracts has become increasingly complex in recent

years. For instance, the so-called "Romalpa clause" is now

often regarded as an essential element of well-drafted

conditions. But, for a variety of reasons, the wording of this

clause has failed to become standardised. An additional

burden on the draftsman of conditions of sale has been

imposed by the new Sale of Goods and Supply of Services

Act, 1980. This Act has given rise to a number of new

problems which this article attempts to analyse. The article

does not purport to be a comprehensive consideration of

the 1980 Act; it is concerned solely with its effects on

commercial contracts of sale.

Protection by implied terms.

A purchaser of goods continues to be protected by the

implication of certain terms into the contract of sale. To

this end, section 10 of the 1980 Act replaces sections 11,

12, 13, 14 and 15 of the Sale of Goods Act, 1893 with

new provisions which are set out in the Table. These new

provisions, as did the old ones, provide that certain

implied terms are to be incorporated into a contract of

sale. These terms can be summarised as follows. There is,

generally, an implied condition that the seller has a right

to sell the goods and an implied warranty that the goods

are free from any undisclosed charge or encumbrance and

that the buyer will enjoy quiet possession of them.

In the

case of a contract for the sale of goods by description,

there is an implied condition that the goods will

correspond with the description.

The 1980 Act restates

the

caveat emptor

rule by enacting that, subject to the

provisions of the Act and of any statute in that behalf,

there is no implied condition or warranty as to the quality

of fitness for any particular purpose of the goods supplied

under a contract of sale.

But where a seller sells goods in

the course of a business there are, generally, implied

conditions that the goods supplied are of merchantable

quality and, where the buyer makes known to the seller

any particular purpose for which the goods are being

bought, reasonably fit for that purpose.

In the case of a

contract for the sale of goods by sample, there are implied

conditions that the bulk will correspond with the sample

in quality; that the buyer will have a reasonable

opportunity of comparing the bulk with the sample; and

that the goods will be free from any defect, rendering

them unmerchantable, which would not be apparent on

reasonable examination of the sample.

The Act defines

expressly for the first time the phrase "merchantable

quality" and includes in that definition the concept of

durability.

As will be noted, the terms implied by the 1980 Act are

virtually identical to those implied by the Sale of Goods

Act, 1893. The major innovation of the 1980 Act is

contained in section 22, which replaces section 55 of the

1893 Act, which allowed the unrestricted contracting out

of the statutory implied terms. Section 22 substitutes a

new section for section 55. This new section reasserts a

contracting party's right to contract out of the statutory

implied terms,

but it renders void any term of a contract

for the sale of goods which exempts all or any of the

provisions of section 12.

It provides further that any

term of such a contract which exempts all or any of the

provisions of section 13, 14 or 15 is to be void where the

buyer deals as consumer and, in any other case, is to be

unenforceable unless it is shown that it is fair and

reasonable.

This last provision raises a number of

questions for the draftsman of conditions of sale. Among

them: when can a purchaser be said to deal as consumer?

And what is a term which exempts all or any of the

provisions of section 13, 14 or 15?

The two questions considered

The phrase "dealing as consumer" is defined in section 3

of the 1980 Act.

There it is said that a party to a

contract deals as consumer where "(a) he neither makes

the contract in the course of a business nor holds himself

out as doing so, and (b) the other party does make the

contract in the course of a business, and (c) the goods or

services supplied under or in pursuance of the contract

are of a type ordinarily supplied for private use or

consumption." The definition is not without difficulty.

What constitutes, for example, goods "of a type

ordinarily supplied for private use or consumption?" If

somebody buys an item of goods which is to be used both

by the purchaser and others, when does private use

become non-private use? Perhaps even more difficult is

the requirement that the purchaser must not make the

contract in the course of a business nor hold himself out

as doing so. Does the doctor buying a typewriter for his

office make the contract in the course of a business? It

would seem that he does.

Benjamin's Sale of Goods)

considering an equivalent provision in the English Supply

of Goods (Implied Terms) Act, 1973, says that:

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