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 given, as to the quality and functions of the goods sold. Nevertheless, the implied terms will place a seller under an obligation as to matters such as quality and functions of the goods that he or she sells. It is also important to note that the seller’s obligations under the implied terms apply even though the seller is not actually at fault; he or she undertakes liability by the act of selling the goods. Thus, if a new stereo system does not function properly because of a manufacturing defect, the buyer may still sue the seller for breach of contract. Furthermore, in some cases, the Contracts Act 1999 might give a non-buyer the same rights against the seller.

            Finally, it should be realised that the implied terms of the SoGA 1979 are classified as conditions or warranties which give rise to different remedies for breach

Title

We have already seen that the objective of a contract for the sale of goods is to buy ownership in the goods; accordingly, s 12 implies a condition into the contract that the seller has the ‘right to sell’ the goods. If the seller cannot transfer ownership, he or she does not have the ‘right to sell’. In Rowland v Divall the buyer of a car did not receive ownership, as the garage which sold him the car did not own it. There was a breach of s 12 and he was able to recover the full purchase price paid, even though he had used the car for four months. Where ownership is not transferred, there is a total failure of consideration, as the buyer does not receive what he contracted to buy. Clearly, legal ownership is of paramount importance and transferring use and possession of goods is not sufficient for performance of a sale of goods contract.

            Section 12 also implies into the contract warranties of quiet possession and freedom from encumbrances Effectively, the seller undertakes that the buyer’s title will not be interfered with or be subject to anyone else’s rights, except in so far as such are known by or disclosed to the buyer before the contract is made.

            In Microbeads AC v Vinhurst Road Markings the seller sold some road marking machines to the buyers. Unbeknown to the seller at the time of the sale, another firm was in the process of patenting this type of equipment, although rights to enforce the patent did not commence until after the contract between the seller and buyer was made. A patent action was subsequently brought against the buyer, who then claimed that the seller was in breach of the implied condition, as he had no right to sell and was in breach of the warranty of quiet possession. It was held that, at the time of sale, the seller had every right to sell the goods, but was in breach of the warranty for quiet possession, because that amounted to an undertaking as to the future.