Sale of Goods Act 1979

Part I (section 1) states that the Act applies to contracts of sale of goods made on or after 1 January 1894. This was the date when the Sale of Goods Act 1893 took effect.

Contract law
Formation
Capacity Offer and acceptance Meeting of the minds2 Abstraction principle4,5 Posting rule1 Mirror image rule Invitation to treat Firm offer Consideration1,4 Implication-in-fact Collateral contract
Defences
Misrepresentation Mistake Threats and unequal bargaining power Illegality and public policy Unconscionability Culpa in contrahendo2 Force majeure Frustration of purpose Impossibility Impracticability Hardship Set-off Illusory promise1 Statute of frauds1 Non est factum1 Unclean hands1 Accord and satisfaction1
Interpretation
Parol evidence3 Contract of adhesion Integration clause Contra proferentem UNIDROIT Principles of International Commercial Contracts
Dispute resolution
Choice of law clause Forum selection clause Hague Choice of Court Convention Arbitration New York Convention UNCITRAL Model Law on International Commercial Arbitration Mediation Singapore Mediation Convention Enforcement of foreign judgments Hague Judgments Convention
Rights of third parties
Privity of contract1 Assignment Delegation Novation Third-party beneficiary
Breach of contract
Anticipatory repudiation Cover Exclusion clause Efficient breach Deviation Fundamental breach
Remedies
Specific performance3 Money damages Liquidated, stipulated, or penal damages3 Rescission
Quasi-contractual obligations
Promissory estoppel1 Quantum meruit1 Unjust enrichment Restitution Negotiorum gestio2
Duties of parties
Duty of honest contractual performance (or doctrine of abuse of rights)6 Duty of good faith (also implied covenant of good faith and fair dealing or duty to negotiate in good faith)7 Contract A and Contract B6
Related areas of law
Conflict of laws Commercial law
By jurisdiction
Australia Canada China (mainland) Irish contract law India United Kingdom England and Wales Scotland
Other law areas
Tort law Property law Wills, trusts, and estates Criminal law Evidence
Notes
1 Specific to common law jurisdictions 2 Specific to civil and mixed law jurisdictions 3 Historically restricted in common law jurisdictions but generally accepted elsewhere; availability varies between contemporary common law jurisdictions 4 Specific to the German Bürgerliches Gesetzbuch and other civil codes based on the pandectist tradition 5 Explicitly rejected by the UNIDROIT Principles of International Commercial Contracts 6 Specific to Canadian contract law both in Québec and in the country's common law provinces 7 Specific to civil law jurisdictions, the American Uniform Commercial Code, and Canadian jurisprudence in both Québec and the common law provinces pertaining to contractual and pre-contractual negotiation

Sections 2 to 15B concern how a contract of sale is formed and, in particular, contain standardised implied terms in all contracts of sale.

Section 2 specifies that a contract of sale involves the transfer, or an agreement to transfer, the property in goods from the seller to the buyer, in exchange for a money consideration, called the price.

Section 3(2) provides that if goods are sold and delivered to minors,[3] or those mentally incapacitated,[4] the minor will be liable to pay a reasonable price if the goods are necessaries. Necessaries are goods suitable to the persons' condition of life and actual requirements at the time of contracting. Under sections 6 and 7, concerning specific goods that perish, a contract is void where they perish before and avoided where they perish after contract formation.[5] (See Mistake (contract law)). Under section 8(2) the price is a money consideration given in exchange for property in goods. If the price, or means to ascertain a price, is not agreed, the buyer will be required to pay a reasonable price.[6]

Breach of these terms by the seller may give rise to an action for damages, and in the case of those terms which are also conditions, termination of the contract. Where the slightness of the breach renders it unreasonable for a non-consumer buyer to reject the goods, for breach of the implied terms as to description, quality or fitness or sample, then the buyer can only claim damages for a breach of warranty.[7] This amendment moderates the traditionally strict approach of English Law to contractual breach in a commercial context.

Section 12 incorporates into the contract a term that the seller either has legal title to the property to be sold or that he will have title at the time when property is to pass.

Section 13(1) provides that where the buyer is sold goods by description, the goods must correspond with this description. Harlingdon v Christopher Hull[8] held that this implied term may only be breached if the buyer relied upon the description. Therefore, if the buyer is an expert, reliance may not be established.

Section 14 states that terms are implicitly about quality and title and are only relevant where the seller is acting in the course of a business. There is no requirement as to the status of the buyer. The phrase "in the course of a business" has received much judicial consideration. Some judges have applied definitions found in other acts, but the case of Stevenson v Rogers[9] gives a wide definition to this requirement. It will encompass activity which is ancillary or loosely related to the business of a company. To use Richards'[10] example, a bank that sells a company car will be acting in the course of a business.

Satisfactory quality, s 14(2)

[11] The quality of the goods sold must be satisfactory (prior to 1994, this provision required 'merchantable' quality; this requirement has been retained in most Commonwealth versions of the Act). The Act provides an objective test to determine satisfactory quality; the standard that a reasonable person would regard as satisfactory, taking into account the price, description and any other relevant factors.[12] The courts have identified certain factors that may raise or lower the expectation of satisfaction. Second hand goods, per Bernstein v. Pamson Motors Ltd.,[13] will attract a lower expectation. On the other hand, goods of a reputable brand may attract a higher expectation, the judge in Bernstien used the example of a small ping on a Rolls-Royce being unsatisfactory. 'Other relevant factors' may include advertising in the case of consumer contracts.[14]

Fitness for purpose, s14(3)

If the buyer expressly or implicitly makes his purpose for the goods known to the seller, the seller is obliged to make sure the goods provided are fit for that purpose, if it is reasonable for the buyer to rely on the seller's expertise. An example of the application of this provision can be found in Godley v Perry.[15]

Under section 15, when goods are bought by bulk and the buyer has tested or examined a small number of those goods, the seller is obliged to make sure that every item in the bulk corresponds with the quality of the sample tested or examined.[16]

Section 15A refers to a buyer's general right to reject goods for failure to match the description or to meet the implied conditions about quality or fitness in sections 13–15.

Sections 16 to 26 concern a contract's effects, and in particular the transfer of property and title. Under section 16, property (ownership) cannot pass unless the goods are ascertained (the actual goods to be sold are identified).[17] Section 18 provides presumptions to determine when property will pass, both for specific goods (ascertained at the time of the contract) and goods unascertained at the time of contracting. These 'rules' can be excluded by contrary implication or express agreement.

Rule 1: in an unconditional contract for sale and delivery of specific goods in a deliverable state, property passes immediately on contract formation.

Rule 2: where the seller is bound to perform some condition before the sale is possible, property passes when this condition is performed.

Rule 3: where the seller is bound to measure or weigh the goods to ascertain the price, property passes when this is done and the buyer is notified.

Rule 4: when goods are delivered on sale or return, or on approval, property passes when the buyer adopts the transaction (or fails to give notice of rejection within a reasonable time).

Rule 5: in a sale of unascertained goods, the property will pass following an unconditional appropriation of goods or, where the sale is from a specified bulk, following ascertainment by exhaustion (i.e. removal of all the goods in the bulk but those destined for the buyer).

Seller does not have title

if the seller does not own the goods, the buyer generally cannot gain title, but he can sue for breach of the implied term as to title.[18] This is subject to numerous exceptions in closely defined circumstances, for example: s.2 Factors Act 1889, ss. 21, 24, 25 SGA 1979.

Seller has voidable title

where the seller holds voidable title, title can pass to a buyer in good faith. If title is voided before the contract of sale is concluded, title cannot pass.[19]

Part IV, sections 27 to 39, concerns "performance of the contract".

Under section 29, concerning the place of transfer, where location is not stipulated, the buyer must collect the goods at the seller's place of business, if there is one.[20] The seller must be prepared to deliver them to the entrance of his place of business. If the contract was concluded by a means of communication at a distance and the buyer is a consumer, this provision is disapplied and the Consumer Protection (Distance Selling) Regulations 2000 apply instead. However, it is changed today and what applies is The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Section 35 concerns the buyer's acceptance (see J & H Ritchie Ltd v Lloyd Ltd [2007] UKHL 9).

Section 35A concerns a buyer's right of partial rejection and partial acceptance.

Within six months, beginning at the time at which the goods were delivered, the buyer can require the seller to repair the goods, reduce the price, or rescind (revesting property and requiring the return of any payment) the contract where the buyer successfully claims that the goods were not in accordance with the contract at the time of delivery.[21] The seller can defeat this claim if (a) "it is established that the goods did so conform" at the time of delivery, or (b) the measure is "incompatible with the nature of the goods or the nature of the lack of conformity.[22]

Consumer requires repair or replacement

The seller must repair or replace the goods within a reasonable amount of time, incurring all costs necessary to perform this task.[23] This cannot be required if it is impossible or disproportionate in consideration of other available remedies.[24]

Consumer requires reduction or rescission

This is only available where repair or replacement is impossible or the seller is taking an unreasonable amount of time to perform these requirements. Any reimbursement must take into account any use that the buyer has had out of the goods.[25]

Sections 49 to 54 concern actions for breach of contract.

Sections 49 and 50 protect sellers' rights.

Sections 51 to 53 (and 53A in Scotland) relate to damages due to a buyer for non-delivery of goods, where the seller "wrongfully neglects or refuses to deliver the goods to the buyer", although consumers' rights in this regard are now covered by the Consumer Rights Act. Damages are generally to be estimated according to the "loss directly and naturally resulting, in the ordinary course of events, from the seller’s breach of contract", but where there is "an available market", damages should be calculated prima facie as the difference between the agreed contract price and the "market or current price" facing the buyer needing to secure an alternative supply. The Court of Appeal dealt with a case in 2016 (Hughes v Pengragon Sabre Ltd.) where Pendragon had failed to supply Hughes with a "limited-edition" Porsche car, for which there was no "available market". The ruling calculated damages based on the cost to purchase "the nearest equivalent" car.[26]

Section 52 directs that the court may order specific performance where appropriate if the buyer has applied for this. Such an order would deny the seller the option to "retain the goods on payment of damages". Section 53 concerns remedies for a breach of warranty.

Section 54 concerns interest payments.

Terms from the Sale of Goods Act will not be incorporated into the contract where they have been expressly excluded, or express terms conflict with them.[27] These exclusions may be invalid under common law, the Unfair Contract Terms Act 1977, or in consumer cases the Unfair Terms in Consumer Contracts Regulations 1999. If the term excluding these implied terms is struck out, the implied term will be effective.

Under the Unfair Contract Terms Act 1977, section 12 may never be excluded, and sections 13 to 15 may never be excluded where the buyer is a consumer.[28]

The 1979 Act was preceded by the UK's original Sale of Goods Act of 1893, a statute drafted by Sir Mackenzie Chalmers. The success of both the 1893 and 1979 statutes was largely down to their conciseness and to Sir Mackenzie's clarity of expression. In the 1990s, a number of short statutes were passed to amend the 1979 Act, and a new updated and consolidated Act is considered to be overdue.

• English contract law
• UK commercial law
• Sale of Goods Act
• Unfair Contract Terms Act 1977
• Unfair Terms in Consumer Contracts Regulations 1999

• PS Atiyah, J Adams and H MacQueen, Atiyah's Sale of Goods (12th edn Longman)
• R Goode and E McKendrick, Goode on Commercial Law (4th edn Penguin)
• L Sealy and RJA Hooley, Commercial Law: Texts, Cases and Materials (

• Text of the Sale of Goods Act 1979 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk.