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Commercial Law and the Sales of Goods Act
In the United Kingdom, our Commercial Law regulates the selling and buying of goods and services, when doing business within the UK. Commercial law could be defined very broadly to encompass all aspects of commercial life and so include the law of contract, property, trusts, company, agency, sale of goods, banking, intellectual property, competition, taxation, and insurance. Commercial law cuts across numerous discrete areas of law.
The Sale of Goods Act 1979 is the primary statute applied to the sale of goods. Historically, the Sale of Goods Act distinguished between consumer and non-consumer sales. Certain provisions were added to the SGA which applied only to consumer sales and other provisions were applicable only to business-to-business contracts.
In providing greater protection for the consumer, the Sale of Goods Act 1979 (as amended) and other legislation, such as the Unfair Contract Terms Act 1977 (UCTA), became part of a shift from the general principle of caveat emptor (buyer beware) - according to which it was for the buyer to ensure goods did not suffer from any defects to the principle of caveat venditor (seller beware). This cautions that the seller is responsible for any problem that the buyer might encounter with a service or a product.
At the same time, in the area of commercial sales the law has given some support to the seller. For example, ss.15A and 30(2A)-(2B) meant that the non-consumer buyer could no longer reject defective goods or a delivery of an incorrect quantity of goods where the breach is so slight as to make rejection unreasonable.
In spite of the development of distinctions between the law applying to commercial (business-to-business) sales and applying to consumer sales (business-to-private-buyer), the rules remained mixed together in the same legislation: the SGA and related statutes, such as the UCTA 1977. This resulted, especially in the minds of consumers, in some degree of confusion and calls to create separate codes for the different types of sale.
This resulted in passing of the Consumer Rights Act in 2005. The primary purpose of the CRA was to create two separate statutory regimes: one, concerned with business-to-business contracts, is governed by the SGA; the second, concerned with trader-to-consumer contracts, is governed by the CRA 2015. A major effect of the CRA is to remove contracts for the sale of goods to a consumer from the ambit of the SGA.
The CRA is much wider in scope than the SGA. It is intended to be a single code which applies a common set of rules to all consumer contracts involving the sale or supply of goods, services and digital content. The SGA is limited in scope to contracts for the sale of goods alone. The CRA also includes its own regime for unfair terms in consumer contracts, whereas unfair terms in business-to-business sales are addressed by the UCTA. The CRA also includes a wider range of remedies for consumer buyers of goods than are available to buyers under the SGA. In Young & Marten, Atkin LJ stated that the SGA is common law that is summarized and given a statutory footing. Notwithstanding that some protections remain in place for commercial buyers under the UCTA, with the passing into law of the CRA, the SGA can now be regarded as perhaps a more complete code in respect of business-to-business sales.
The first point to make is that the SGA adheres to the principle of freedom of contract: under s.55(1). There are, however, restrictions on this freedom. One of them is that the sub-section does not allow the parties to vary the principles of contract law determining matters such as what constitutes a binding contract or the effect of misrepresentation and illegality. the general approach taken by the courts is to look at the substance of the transaction and not its form - in other words, is it a sale even though the parties may refer to it as something else? As was the case in PST Energy 7 Shipping v OW Bunker, a contract may be regarded as a sale but in essence may be something else. It could be a gift, a barter, a contract of bailment etcetera.
Being commercial law students, you also need to know the difference between a sale and an agreement to sell, and need to engrave in mind the difference between the two. Agreement to sell is where the transfer of property (roughly, the transfer of ownership; also called title) in the goods does not take place at the same time as the contract is agreed. The sale involves both a contract and the conveyance of title to goods, whereas the agreement to sell does not convey title, although it does include promises as to conveyance. A contract can still be construed as an agreement to sell even if at the outset it is known that the seller may not be able to acquire the goods in order to convey the title.
The price must be in money, either paid or promised. This includes payment by cheque, credit card or other forms of money transfer.