Implied Terms of Sales of Goods Act

COMMERCIAL LAW - IMPLIED TERMS.
The Sales of Goods Act contains a number of terms that may be implied into the contract. Generally, parties to a contract expect that the terms of the contract will be set out in writing (express terms). However, it is possible for the courts to imply certain terms (implied terms) into a contract in certain situations.
The breach of an implied or express term gives rise to a remedy, although the nature of that remedy depends on the significance of the term, unless the parties have stipulated a remedy. The law of contract categorises terms as conditions, warranties and innominate terms, although the SGA only refers to the first two categories. Whether a stipulation in a sale contract is a condition or a warranty depends on the construction of the contract, this is a question of law for the court, except where the SGA designates a term as a condition or warranty. The court will
look at the substance and not the form: in other words, a term is not a condition or a warranty merely because it is labelled as such by the parties.
A condition is a term of such importance to the contract that its breach entitles the
innocent party to treat the contract as discharged, and so reject the goods
and demand the repayment of the price. The buyer can waive the breach or treat
it as a breach of warranty.
A warranty is a less significant term. Its breach entitles the innocent party only to
damages for loss suffered, but does not excuse that party from performing their obligations under the contract.
An innominate term is an intermediate term which cannot be defined as either a "condition" or a "warranty".
Let's now take a look at some implied terms.
Section 12: Implied condition as to title.
The provision in s.12 would be satisfied where the seller agreed to sell goods owned by another person and the seller arranges for title to be transferred to the buyer, either through the seller or directly from the third party. Under s.12(3) and (4), where the seller contracts to pass only ‘such title as he or a third
person may have’, there is an implied term that the seller has disclosed all charges or encumbrances before the contract.
S.13: Implied term as to description.
Where there is a contract for the sale of goods by description, there is an implied
condition that the goods correspond with the description. The strictness of the obligation is illustrated by Arcos v Ronaasen, where
the contract for half-inch thick wooden staves was breached when most of the
staves failed to meet this requirement.
S.14: Implied term as to quality.
Sections 14 and 15 contain implied terms as to quality, but they are prefaced with the caveat emptor (let the buyer beware) principle and aside from
those sections, ‘there is no implied term about the quality or fitness for any particular purpose of goods supplied under a contract of sale’. Section 14(2) refers to ‘goods supplied under the contract’, so not just the subject
matter of the contract, but also anything that is supplied with those goods must be of satisfactory quality.
Whether flaws render goods unsatisfactory may depend on the description and the price, and the fact that the defect does not affect the function of the goods is not necessarily decisive. A scratch on the bodywork may render a car unsatisfactory where it is new, although the result may be different where the car is second-hand.
S.15: Implied terms in sale by sample.
In a contract of sale by sample there are implied conditions ‘that the bulk will
correspond with the sample in quality’ (s.15(2)(a)) and ‘that the goods will be free
from any defect making their quality unsatisfactory which would not be apparent on reasonable examination of the sample’ (s.15(2)(c)).