Satisfactory quality

The SSGA 1994 repealed the implied condition of ‘merchantable quality’ and replaced it with the current s 14             There is an implied term that the goods shall be of satisfactory quality, according to s 14 of the SoGA 1979. While s 14 uses the word ‘term’, it is clear from s 14 that the term is a condition. Unlike s 13, s 14 does not apply to private sales; that is, the goods must...

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Seller’s implied obligations

As well as performing any express undertakings in the contract, the seller must also comply with certain terms implied into the contract by the SoGA 1979, regardless of whether he or she sells to a consumer or a business. These implied terms are of particular interest to the consumer, who rarely negotiates and agrees express terms. In supermarket sales, for example, it is unlikely that there will be any discussion, let alone specific undertakings...

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The price of the goods

Being an essential part of the contract by virtue of s 2  the price of the goods is usually expressly agreed; for example, when buying goods in a shop, the buyer agrees to pay the marked price. Section 8 of the SoGA 1979 confirms that the price may be fixed by the contract and also indicates that the price can be determined by a course of dealing between the parties or in a manner agreed by the contract. Thus, when  re-ordering goods...

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SALE AND SUPPLY OF GOODS

INTRODUCTION One of the most common transactions entered into by businesses is the contract for the sale of goods to other businesses or consumers. However, goods may be supplied under contracts other than sale, as follows, for example: • Contracts of hire Here, the owner of goods transfers possession for a fixed period but retains ownership; common examples are television rental and car hire. • Contracts of hire purchase The owner...

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Quantum meruit

The term quantum meruit means that a party should be awarded as much as he had earned, and such an award can be either contractual or quasi-contractual  below, in nature. If the parties enter into a contractual agreement without determining the reward that is to be provided for performance, then, in the event of any dispute, the court will award a reasonable sum.             Payment...

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Liquidated damages and penalties

It is possible, and common in business contracts, for the parties to an agreement to make provisions for possible breach by stating in advance the amount of damages that will have to be paid in the event of any breach occurring. Damages under such a provision are known as liquidated damages. They will only be recognised by the court if they represent a genuine pre-estimate of loss and are not intended to operate as a penalty against the party...

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Remoteness of damage

What kind of damage can the innocent party claim? This involves a consideration of causation and the remoteness of cause from effect, in order to determine how far down a chain of events a defendant is liable. The rule in Hadley v Baxendale states that damages will only be awarded in respect of losses which arise naturally, that is, in the natural course of things; or which both parties may reasonably be supposed to have contemplated, when the contract...

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Law Reform (Frustrated Contracts) Act 1943

Statute intervened to remedy the potential injustice of the common law with the introduction of Law Reform Act 1943. The position is now as follows: • any money paid is recoverable; • any money due to be paid ceases to be payable; • the parties may be permitted, at the discretion of the court, to retain expenses incurred from any money received; or to recover those expenses from money due to be paid before the frustrating event. If no money was...

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DISCHARGE OF A CONTRACT

INTRODUCTION When a contract is discharged, the parties to the agreement are freed from their contractual obligations. A contract is discharged in one of four ways: • agreement; • performance; • frustration; or • breach.  DISCHARGE BY AGREEMENT Emphasis has been placed on the consensual nature of contract law, and it follows that what has been made by agreement can be ended by agreement. The contract itself may contain provision...

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Illegal contracts

A contract which breaks the law is illegal. The general rule is that no claim can be brought by a party to an illegal contract, though in some circumstances money or property transferred may be recovered. The contract may be either expressly prohibited by statute, or implicitly prohibited by the common law. Illegal contracts include: • contracts prohibited by statute; • contracts to defraud the Inland Revenue; • contracts involving the...

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The statement must actually induce the contract

That the statement must actually induce the contract means that: • the statement must have been made by one party to the contract to the other, and not by a third party; • the statement must have been addressed to the person claiming to have been misled; • the person claiming to have been misled must have been aware of the statement; and • the person claiming to have been misled must have relied on the statement. In Horsfall v Thomas...

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There must be a false statement of fact

False In most cases it can be proved whether a statement is false, but the following situations need consideration: • Where the statement is a half-truth, it may be true but misleading because of facts not given; it will be treated as false. In Dimmock v Hallett when selling property, it was truthfully stated that a farm was rented to a tenant for £290 per annum. The failure to indicate that the tenant was in arrears, had left the farm and...

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