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a supplier invoices you for "packing costs" which have not previously been agreed specifically or provided for in his/her "conditions of sale" or otherwise, then strike them out. He/she has no right to charge!

Method of Delivery

Goods can be delivered in any way the parties agree. It may be direct from seller to buyer, or they may be delivered to a third party nominated by the buyer (Bull v. Stibbs (1799)). Alternatively, delivery may be constructive; for example, handing the buyer the keys of a room in which the goods are stored, or the keys of a car that he/she has bought. The delivery of shipping documents, such as a bill of lading, is also constructive delivery of the goods.

If no such agreement is reached as to actual or constructive delivery, the seller's duty is discharged if he/she makes the goods available to the buyer, at the place and time envisaged by the contract, and in a deliverable state, so as to enable the buyer to take possession of them (Smith v. Chance (1819)).

There are, of course, other parameters:

If the goods are in the possession of a third party, S.29(4) provides that: "there is no delivery by seller to buyer unless and until the third party acknowledges to the buyer that he holds the goods on his behalf ". The act of acknowledgment is called "attornment".

The transfer of documents of title to goods has the effect of delivery of the goods, and of giving constructive possession to the recipient.

Delivery of goods to a carrier is provided for by S.32(1):

"Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier (whether named by the buyer or not) for the purpose of transmission to the buyer is prima facie deemed to be a delivery of the goods to the buyer".

Points to note about this sub-section are firstly that delivery to the carrier is only prima facie evidence of delivery to the buyer. The presumption can be upset by the terms of the contract, or surrounding circumstances pointing to another intention. Secondly, if the carrier is the seller himself, or a servant or agent of his, then the sub-section is not applicable (Dunlop v. Lambert (1839)).

Notwithstanding that delivery is normally effected by delivery to a carrier, the seller is still able to exercise his/her right of "stoppage in transit" in the event of non-payment. We shall be dealing with this right in a later study unit.

S.32(2) deals with the contract of carriage of goods from seller to buyer:

"Unless otherwise authorised by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case; and if the seller omits to do so, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as delivery to himself, or may hold the seller responsible in damages".

So if the seller is authorised by the contract to transmit the goods to the buyer, in making the contract with the carrier he/she is acting as agent for the buyer.

Young (T) & Sons v. Hobson & Partner (1949)

Electric engines were despatched under a "free on rail" (f.o.r.) contract. The seller arranged the contract of carriage which provided that the engines were carried at

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"owner's risk". They could, however, have been carried at "carrier's risk" for the same cost. The engines were damaged in transit.

HELD: The contract made by the seller was not a reasonable one in the circumstances, and the buyers were entitled to resist an action for the price.

The duty of the seller to make a reasonable contract of carriage does not extend to a duty for him/her to insure, unless otherwise agreed.

Place of Delivery

The Sale of Goods Act 1979 does not provide any rule as to whether or not the seller is bound to send or carry the goods to the buyer. It depends upon the terms of the contract, but at common law the seller is prima facie not bound to send or carry the goods. His duty is only to make them available for the buyer to collect (Smith v. Chance (1819)).

S.29(2) of the Act does, however, provide that, subject to contrary agreement, the place of delivery is the seller's place of business. If he/she does not have one, it is his/her residence. This, of course, ties in with S.32(1) that delivery to a carrier – naturally normally at the seller's place of business – constitutes delivery to the buyer.

S.29(2) goes on to specify that if the contract is for the sale of specific goods which to the knowledge of both buyer and seller at the time the contract was made are at some other place than the seller's place of business, then that place where they actually are is the place of delivery.

Time of Delivery

If a time is stated in the contract for the delivery of goods, it may be a condition of the contract, breach of which entitles the buyer to rescind the contract and refuse to take delivery; or it may be a warranty, which entitles the buyer only to seek damages for any loss entailed by reason of late delivery.

S.10(2) of the 1979 Act leaves the question open:

"Whether any stipulation as to time is or is not of the essence of the contract depends on the terms of the contract".

Time being "of the essence" means that it is a condition.

If, therefore, the contract does not expressly state that time shall be of the essence, or make any other statement to the same effect, the common law looks to the nature of the contract and the character of the goods dealt with to resolve the question (Hartley v. Hyams (1920)).

In commercial contracts there is a rebuttable presumption that terms as to the time of delivery are conditions of the contract (Wimshurst v. Deeley (1845)).

Of course, even if the contract specifically states that time is of the essence, the buyer is not bound to reject goods if delivery is delayed. He/she may elect to treat the condition as a warranty, and seek only damages.

However, time of payment is not of the essence, unless a different intention appears from the terms of the contract (S.10(1)).

Quality of Goods Delivered

The Act makes provision for the buyer's rights should the seller deliver the wrong quality of goods. The seller has a strict duty to deliver the precise quantity stipulated in the contract, and if he/she fails to do so the buyer is entitled to reject them. S.30 sets out the buyer's options:

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Where the seller delivers less than the correct quantity, the buyer may reject them all. But if he does accept what has been delivered, he must pay pro rata at the contract rate (e.g. if the contract was for ten articles at £1 each, and eight are delivered, then if the buyer accepts them he must pay £8).

Where the seller delivers more than the contract quantity, the buyer has three options

– she can reject them all; or she can accept the correct quantity and reject the rest; or she can accept the whole lot, and pay at the contract rate for all.

Where the seller delivers the correct type of quality of goods mixed with others of a different description not included in the contract, the buyer can reject the whole, or he can accept the correct goods and reject the incorrect ones. Although the Act does not in this instance specify, it must be implied that if the buyer adopts the latter option, he must pay at the contract rate for the goods he accepts.

Finally there is a let-out, in that the section is "subject to any usage of trade, special agreement, or course of dealing between the parties".

In spite of the seller's duty to supply the correct quantity being strict, the "de minimis" rule applies. This means that if the difference in quantity is minute, and such as not to have any effect on the contract as a commercial reality, the buyer will not be permitted to take advantage of a trivial variation in order to escape from his/her liability to accept and pay.

Shipton Anderson & Co. v. Weil Brothers & Co. (1912)

The seller delivered 55 lbs of wheat over and above a contractual quantity of 4,950 tons.

HELD: The buyer could not reject.

Delivery by Instalments

S.31(1) states that: "unless otherwise agreed, the buyer of goods is not bound to accept delivery of them by instalments".

That is quite straightforward. The buyer can reject the goods if the seller sends other than the full quantity. However, if the contract does provide for delivery by instalments, various things can go wrong, and S.31(2) caters for some of them, as follows:

"Where there is a contract for the sale of goods to be delivered by stated instalments, which are to be separately paid for, and the seller makes defective deliveries in respect of one or more instalments, or the buyer neglects or refuses to take delivery of or pay for one or more instalments, it is a question in each case depending on the terms of the contract and the circumstances of the case whether the breach of contract is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for compensation but not to a right to treat the whole contract as repudiated."

So in the event of a breach of contract by either one or more instalments not being delivered, or being incorrectly delivered, or the buyer failing or refusing to accept one or more instalments, then the court must look at the whole circumstances. If the contract can properly be "severed" so as to treat each individual instalment as if it were a separate contract, then the innocent party will be bound in respect of the correct instalments. He/she will, of course, be able to seek damages for any loss, but will not be allowed to rescind the whole contract. If, on the other hand, the contract cannot be severed, and is in reality one entire entity, albeit being performed at different times, then the innocent party will be entitled to rescind the whole.

In Jackson v. Rotax Motor and Cycle Co. Ltd (1910) there was a contract for the sale of 600 motor horns, "delivery as required". They were delivered in 19 cases over two months.

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S.35A:

"If the buyer:

(a)has the right to reject the goods by reason of a breach on the part of the seller that affects some or all of them, but

(b)accepts some of the goods including, where there are any goods unaffected by the breach, all such goods, he does not by accepting them lose his right to reject the rest."

There are therefore three ways in which a buyer can be deemed to have accepted goods.

If she intimates to the seller that she has accepted them. This is straightforward – either words or conduct suffice to intimate acceptance.

If he does any act in relation to the goods inconsistent with the ownership of the seller.

Such acts usually, but not necessarily, involve the buyer reselling or otherwise treating the goods as if they were his own. Look at the following two cases.

Hardy & Co. Ltd v. Hillems & Fowler (1923)

Wheat from South America was contracted to be sold. The carrying vessel arrived at Hull on 18 March. On 21 March, the buyer sold part of the wheat, and despatched it to the sub-buyers. But the buyer did not have any opportunity to examine the wheat until 23 March; it then turned out to be defective.

HELD: By reselling it on 21 March, the buyer had done an act inconsistent with the seller's ownership. He had therefore accepted the wheat in accordance with S.35.

E & S Ruben Ltd v. Faire Bros & Co. Ltd (1949)

HELD: The delivery of goods by the seller to a carrier for despatch to a third party constituted the sellers acting as agents for the buyers. The goods were therefore deemed to have been notionally delivered to the buyers, hence the delivery to the carriers constituted an act inconsistent with the seller's ownership.

If after lapse of a reasonable time the buyer retains the goods without intimating that she has rejected them.

If the buyer intends to reject the goods, he must therefore inform the seller promptly. If he fails to do so, he will be deemed to have accepted them. What constitutes a "reasonable time" depends on the circumstances.

Payment

It is the buyer's duty to pay for the goods in accordance with the contract of sale. By S.28 of the 1979 Act, delivery of the goods and payment of the price are concurrent conditions, unless agreed otherwise. Now a term as to payment should include not only the amount, but also the method, the time, and the place of payment.

Method

Unless otherwise agreed, the buyer should pay or tender the price in cash, and the seller cannot be compelled to accept other than legal money. Nowadays in commercial transactions, an agreement to pay by cheque or by credit transfer will be readily implied. If payment is sent by post, it is at the buyer's risk (Luttges v. Sherwood (1895)).

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Place of Payment

This again depends on the terms of the agreement, express or implied. However, if there is no such intention to be inferred, the general rule is that the place of payment is the seller's place of business.

Time of Payment

The time of payment is by agreement, and does not necessarily bear any relation to possession or transfer of property or risk.

If goods are sold on "credit", payment is not due until the period of credit has expired (Price v. Nixon (1814)). In the event that payment is delayed, there is no obligation on the buyer to pay interest, unless it has been so agreed in the contract (Gordon v. Swann (1810)).

D. STATEMENTS RELATING TO GOODS

Before dealing with the terms covering the general subject of defects in goods, and the terms which the Sale of Goods Act 1979 implies into contracts regarding the goods, it is necessary to be clear as to the classification of statements which may be made about goods. These broadly fall into two types:

Statements about goods which do not involve the maker in legal liability;

Statements which do involve legal liability.

Statements not Involving Legal Liability

(a)“Mere Puffs”

These are statements describing or extolling the goods, which are not intended to be taken seriously or literally. They are frequently made in advertising.

Walker v. Milner (1866)

A safe was described as "strong, holdfast, thiefproof". A burglar broke into it in half an hour using ordinary tools.

HELD: A “mere puff”, involving no liability for the statement.

But on the other hand, a car dealer describing one of his stock as "a good little bus; I would stake my life on it; you will have no trouble with it", was held to have been giving a warranty giving rise to contractual liability (Andrews v. Hopkinson (1957)).

(b)Statements of Opinion

In order to constitute an actionable misrepresentation, a statement must be one of fact, not of opinion, provided, that is, that the opinion is genuine, and not made with the intention of deceiving.

(c)Statements of Intention

Again, a statement of intention is not normally one of fact. If, however, it can be shown that such a statement was not genuinely made, then it can constitute the tort of deceit.

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Statements Involving Legal Liability

(a)Misrepresentations

We have dealt with the subject of misrepresentation in an earlier study unit on the law of contract. It, of course, applies to contracts for the sale of goods exactly as to any other contract.

(b)Warranties

As we saw in another study unit, a "warranty" is a term of a contract, breach of which entitles the injured party to damages, but not to rescind the contract. S.61(1) of the 1979 Act defines it thus:

"Warranty means an agreement with reference to goods which are the subject of a contract of sale, but collateral to the main purpose of such contract, the breach of which gives rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated."

It is therefore used in precisely the same sense in a contract for the sale of goods as in other types of contract.

But whether any particular statement made prior to the formation of a contract of sale is in reality a warranty, or whether it is a statement of opinion or a “mere puff”, is more difficult. As long ago as 1688, Chief Justice Holt made this comment:

"An affirmation at the time of a sale is a warranty provided it appears on evidence to have been so intended."

That is still the basis, but in this century the trend has been towards treating statements more objectively, and looking rather at the impression that a statement or an act creates on an impartial observer than to the subjective intention of the maker.

In Dick Bentley Productions Ltd v. Harold Smith (Motors) Ltd (1965), Lord Denning said:

"The question of whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice."

In that case, a car dealer stated the mileage done by a second-hand car, and it was held to be a warranty. On the other hand, in Oscar Chess Ltd v. Williams (1957) a private seller of a car innocently stated it was a 1948 model, when in reality it was a 1939 model.

HELD: The statement was not a warranty.

(c)Condition

Again, as we have seen, a "condition" of a contract is a fundamental term, breach of which entitles the injured party to rescind the contract as well as to seek damages for loss suffered. The 1979 Act does not define "condition", but in several places it uses the word in that sense. For instance, S.11(2) states:

"Where a contract of sale is subject to a condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated."

Whether a term of a contract of sale (either express or implied) is a condition or a warranty depends on two main factors. The Act lays down or implies that certain terms are one or the other. In default of guidance from the Act, it is a question of the proper

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construction of the contract. In Bentsen v. Taylor, Sons & Co. (1893), Lord Justice Bowen said:

"There is no way of deciding that question except by looking at the contract in the light of the surrounding circumstances, and then making up one's mind whether the intention of the parties ... will best be carried out by treating the promise as a warranty ... or as a condition".

(d)Intermediate or Innominate Terms

The strict dichotomy indicated in the Act between "conditions" and "warranties" has of recent years been tempered by the realisation that it can involve an over-simplification of a complex commercial transaction.

There is perhaps something in between, the breach of which term should depend not on an arbitrary distinction between whether it is a condition or a warranty, but on the particular circumstances of the case and the breach in question. In Hong Kong Fir Shipping Co. Ltd v. Kawasaki Kisen Kaisha Ltd (1962), a certain term was held to be neither a condition nor a warranty, and the effect of its breach depended on the "nature and effect of the breach". In The Hansa Nord (1976), Lord Justice Roskill said:

"In principle, contracts are made to be performed and not to be avoided according to the whims of market fluctuation and where there is a free choice between two possible constructions I think the court should tend to prefer the construction which will ensure performance and not encourage avoidance of contractual obligations".

E.STATUTORY IMPLIED TERMS AS TO DESCRIPTION AND QUALITY

Correspondence with Description

The Sale of Goods Act 1979, S.13(1) states:

"Where there is a contract for the sale of goods by description, there is an implied condition that the goods will correspond with the description".

So what is a "sale … by description"? Basically there are two types:

A sale of unascertained or future goods will almost invariably be such. If a seller purports to sell, say, 500 tons of "best Welsh steam coal", that is a sale of unascertained goods, and it is a sale by description. Likewise an agreement to sell "the whole crop of King Edward potatoes to be grown on such and such a field" is a sale of future goods by description.

Where specific goods are sold, and the seller either describes them, or a description can be inferred as having been given from the circumstances, it is a sale by description. In Varley v. Whipp (1900), the seller sold an article which was lying elsewhere as "a second-hand self-binder reaping machine".

HELD: It was a sale by description. It was stated that the term "must apply to all cases where the purchaser has not seen the goods, but is relying on the description alone".

But, as we shall see, the term is not restricted to specific goods which have not been seen by the buyer. If at any time the seller describes the goods, even when they are before the buyer, and the buyer relies on the description, then it constitutes a sale by description.

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This is specifically provided for in S.13(3), which states:

"A sale of goods is not prevented from being a sale by description by reason only that, being exposed for sale or hire, they are selected by the buyer".

So even if the buyer him-/herself selects the particular item he/she wishes to buy which is either displayed alone, or amongst others, this can be a sale by description. There must, of course, be some description of the goods, either written or verbal. A notice stating "Golden Delicious" above a pile of apples on a greengrocer's stall would suffice.

It is an implied condition that goods will correspond with the description. On the face of it, therefore, if they do not correspond, then the buyer is entitled to rescind the contract. However, it is not always as simple as that. Descriptive words can apply to the whole article sold – e.g. "Golden Delicious apples". In this case, it seems clear that the description is a condition. But the words can apply to only a part of the article, or to some characteristic of it

– e.g. a "green 2007 Ford Mondeo". If the car in question was indeed a 2007 Mondeo, but it was not green, is it still a condition entitling the buyer to repudiate the bargain? Or is it merely a warranty, giving rise to damages (the cost of re-spraying the car green, perhaps)? Common sense would indicate the latter alternative.

Although the Act is specific on the point, the courts have tended to apply the common sense approach, and hold that a description must apply to the whole article for breach of it to constitute a condition. Look at the following cases.

Harrison v. Knowles and Foster (1918)

Two ships were sold, and in the stated particulars they were said to have a dead weight capacity of 460 tons each. This fact did not appear in the actual memorandum of sale. It transpired that the capacity of each was only 360 tons.

HELD: The statements of capacity were mere representations.

Reardon Smith Line Ltd v. Yngvar Hansen-Tangen (1976)

A ship not yet built was chartered and sub-chartered. She was described in the sub-charter as "Japanese flag motor vessel called Yard No 354 at Osaka described as per clause 24". As built, she had been sub-contracted to another yard at Oshima, where she was designated No 004.

HELD: The sub-charterers must take the vessel.

However, in a consumer-type sale, the Court of Appeal took a stricter view.

Beale v. Taylor (1967)

A car was advertised for sale as a "Herald Convertible 1961". Actually the car consisted of two parts welded together, only one of which was from a 1961 model.

HELD: The description "1961" was a contractual condition.

In the case of sales by description which entail articles or commodities which have other ingredients added to or deleted from them, or which have deteriorated to such an extent as to make the article sold somewhat different, the test appears to be whether it has lost its commercial identity as a result.

In Ashington Piggeries Ltd v. Christopher Hill Ltd (1972), herring meal became contaminated by a chemical reaction when a preservative was added. It became toxic to mink and other small animals.

HELD: It complied with the description "herring meal".

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Finally in Section13, Sub-section (2) states:

"If the sale is by sample as well as by description it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description".

We shall be coming on to sales by sample later in this study unit, but otherwise the subsection is straightforward.

Satisfactory Quality and Fitness for the Purpose

The quality of goods and whether they are fit for the purpose for which they were sold are the next terms implied by the 1979 Act. These are similar concepts, but different in detail. The Act here differentiates between where the seller is selling in the course of a business, and where he/she is selling privately. The status of the buyer – i.e. whether he/she is in the course of a business or not – is immaterial.

The term "selling in the course of a business" is very wide. It does not merely include dealers in goods of the kind in question. If a person (or a company) sells as part of his business, then he will be considered to be "selling in the course of a business", whatever he may have occasion to sell. For example, if the business of a company is selling ironmongery, and it happens to sell one of the office desks second-hand as surplus to requirements, then that particular sale will still be "in the course of business".

A "business" also includes professions, and government or local authorities. It is probable that non-profit-making organisations such as schools, universities and charities, which have occasion to sell will also be considered to be doing so in the course of a business. It is really only the genuine private individual who will not be so.

S.14(1) of the Act pays lip service to the principle of "caveat emptor" as follows:

"Except as provided by this section and Section 15 below and subject to any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods supplied under a contract of sale".

It is the exceptions which will apply in all cases except private sales.

Satisfactory Quality

A major change made by the Sale and Supply of Goods Act 1994 is the replacement in the Sale of Goods Act 1979 of the implied condition of "merchantable quality" with that of "satisfactory quality".

A new S.14(2) is incorporated into the 1979 Act which states:

"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 a satisfactory quality".

The implied term will not apply (S.14(2C)):

As regards defects specifically drawn to the buyer's attention before the contract is made;

If the buyer examines the goods before the contract is made, as regards defects which the examination ought to reveal; or

In the case of a sale by sample, as regards defects which would have been apparent on a reasonable examination of the sample.

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