69

5â Impact of the European Union

These 1999 Regulations will be affected by the Consumer Rights Directive,26

which broadly reflects the provisions of the previous Directive and thereby of

the current Regulations. A proposal has been made to introduce a black list

and a grey list of unfair contract terms, those terms which will always be con-

sidered unfair or that will be presumed to be unfair unless the trader can prove

that the individual term is fair in accordance with the general principles laid

out in the Directive.

(c)â Sale of Goods Act 1979 section 15A

The provision of different rules for consumer buyers and non-consumer

buyers reflecting their essential differences are also to be found in the Sale of

Goods Act 1979 itself. Thus, for example, section 15A restricts the remedies

available to a non-consumer buyer for a breach of sections 12–15 of the 1979

Act while preserving the right of the consumer buyer to reject the goods fol-

lowing a breach. A person not dealing as a consumer cannot exercise a right

to reject the goods if the breach is so slight that it would be unreasonable for

him to reject them27 unless there is a contrary provision, either express or

implied, in the contract.28 The breach will be treated as a breach of warranty

instead of being viewed as a breach of condition. As such, the remedy will be

a claim for damages as opposed to a right to reject the goods and claim a full

refund of the contractual price. A further example exists in section 20(4) of

the 1979 Act. Generally, in the absence of an agreement to the contrary, the

risk in goods passes with the property irrespective of whether delivery has

taken place. However, section 20(4) provides that where the buyer is a con-

sumer, the goods remain at the risk of the seller until they are delivered to the

buyer.29

Q3 Consider how legislation has been used to differentiate between business

purchasers and consumer buyers. Is this legislative distinction valid?

5â Impact of the European Union

While the dichotomy between consumer buyers and non-consumer buyers

has increasingly been a feature in the application of rights under the Sale of

Goods Act 1979, the other major change in the market of recent times has been

the growth in distance sales via the Internet. Of significance here is both the

26

In 2008, the European Commission proposed a Consumer Rights Directive 2008/0196 (COD).

In June 2011, the EU Parliament adopted the Directive, with the publication of the new Directive

scheduled for 2011 and the transposition of the new rules into national laws to be completed by

the end of 2013.

27

Sale of Goods Act 1979, s.15A(1)(b).

28 Ibid. s.15A(2).

29

For a full discussion of the passage of property, risk and delivery, see Part 2 Chapter 3.

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Sale of goods policy

potential for the cross-border sales and supply of goods and services and also

the issues that necessarily result in respect of identifying and enforcing the rights

of the buyer in that enlarged market. This brings the regulation of e-commerce

to the fore and the enforceability of the rights of the buyer when the seller is in

breach of his obligations. The European Union has introduced controls over the

workings of e-commerce in the EU with the passage of Directive 2000/31/EC

on Electronic Commerce.30 The provisions of that Directive largely relate to the

information that a buyer must receive about the seller with whom he is going to

do business, which, of course, allows the buyer the opportunity to contact the

seller and ultimately sue him if the latter should be in breach of the contract. The

requirements include a provision that the seller must provide the buyer with

the terms and conditions upon which he is prepared to do business and that they

must be available in a durable form which the buyer can access and retain. Of

course, this does not permit the buyer to affect the terms and conditions other

than to decide that he will or will not purchase and, if the seller has a monop-

oly on the market, that choice is effectively non-existent if the buyer needs the

goods or services being offered. Assuming that the buyer does purchase and that

a breach occurs, the enforcement of his rights raises issues regarding which laws

will apply and through which courts the buyer may seek a remedy.

The enforcement of legal rights, even if seller and buyer are in the same jur-

isdiction, can be problematic. We have already referred to situations in which

the seller and buyer may be of significantly different size such that the seller can

effectively force his terms and conditions on the buyer. This imbalance con-

tinues in respect of enforcement as the small business or consumer may feel

unable to take on a big corporate seller in court for fear of losing the case and

becoming liable for the costs of the seller. The difference between the buyer

knowing his rights under the Sale of Goods Act and being able to enforce them

may, in practice, be significant.

Mention has already been made of the role of the European Union in con-

trolling the market for the sale and supply of goods and services on the Internet.

However, its role in respect of contracts of sale has gone wider than that and will

continue to play a part in the future. Traditionally, amendments to sale of goods

legislation have been made by Parliament as a result of ongoing debate and

Law Commission reports.31 However, the most recent amendment to the Sale

of Goods Act 1979 affecting consumer contracts resulted from the passage of

Directive 1999/44/EC on certain aspects of the sale of consumer goods and asso-

ciated guarantees.32 This Directive introduced a new regime of remedies for situ-

ations when the goods supplied under the contract are not in conformity with

30

This Directive was given effect in the United Kingdom by the Electronic Commerce (EC

Directive) Regulations 2002 (SI 2002/2013). These Regulations are discussed in detail in Part 2

Chapter 5.

31

For example, the change from merchantable quality to satisfactory quality and the other

provisions of Law Commission, Sale and Supply of Goods (Report No. 160, 1987).

32

This Directive was given effect in the United Kingdom by the Sale and Supply of Goods to

Consumers Regulations 2002 (SI 2002/3045).

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Sale of goods policy

money. The section goes on to stipulate that there can be sales between one

part owner and another,35 that a sale may be absolute or conditional,36 and that

where the transfer of the property is to take place at some future time or when

some precondition to the sale has been satisfied, the contract will be termed an

agreement to sell.37

This definition distinguishes contracts for the sale of goods from other simi-

lar contracts under which purchasers may acquire goods such as contracts of

bailment, contracts of barter and contracts for works and materials. While the

distinctions remain important, if only to ensure that any legal action is taken

under the correct statutory provision dependent upon the nature of the con-

tract, in practice the statutes are very similar in many respects and the case

law under one statute can be called upon in a dispute arising under a different

statute. An obvious example of these parallel provisions would be the implied

conditions relating to title, description, quality and sale by sample contained in

sections 12–15 of the Sale of Goods Act 1979 and which also appear, sometimes

verbatim, in the corresponding provisions of other statutes,38 although it should

be remembered that the Acts may develop at differing rates and there may be a

time lag between an amendment to the Sale of Goods Act and similar amend-

ments to other statutes.

Nonetheless, it remains important to recognise the differences between the

varying types of contract under which a purchaser may acquire ownership,

or at least possession, of goods. These alternative contracts fall into two main

groups: those where the consideration is something other than money, and

those where the buyer may only be acquiring possession of the goods with, in

some instances, an option to acquire the property in the goods at a later stage

or where the transfer of the property occurs as an integral part of a different cat-

egory of contract. A further, more modern issue, arises in respect of contracts

for computer software.