The Gazette 1981

GAZETTE

SEPTEMBER 1981

Conditions of Sale and the Sale of Goods and Supply of Services Act, 1980 by Mark de Blacam, Barrister-at-Law

T HE drafting of conditions of sale for use in commercial contracts has become increasingly complex in recent years. For instance, the so-called "Romalpa clause" is now often regarded as an essential element of well-drafted conditions. But, for a variety of reasons, the wording of this clause has failed to become standardised. An additional burden on the draftsman of conditions of sale has been imposed by the new Sale of Goods and Supply of Services Act, 1980. This Act has given rise to a number of new problems which this article attempts to analyse. The article does not purport to be a comprehensive consideration of the 1980 Act; it is concerned solely with its effects on commercial contracts of sale. Protection by implied terms. A purchaser of goods continues to be protected by the implication of certain terms into the contract of sale. To this end, section 10 of the 1980 Act replaces sections 11, 12, 13, 14 and 15 of the Sale of Goods Act, 1893 with new provisions which are set out in the Table. These new provisions, as did the old ones, provide that certain implied terms are to be incorporated into a contract of sale. These terms can be summarised as follows. There is, generally, an implied condition that the seller has a right to sell the goods and an implied warranty that the goods are free from any undisclosed charge or encumbrance and that the buyer will enjoy quiet possession of them. 1 In the case of a contract for the sale of goods by description, there is an implied condition that the goods will correspond with the description. 2 The 1980 Act restates the caveat emptor rule by enacting that, subject to the provisions of the Act and of any statute in that behalf, there is no implied condition or warranty as to the quality of fitness for any particular purpose of the goods supplied under a contract of sale. 3 But where a seller sells goods in the course of a business there are, generally, implied conditions that the goods supplied are of merchantable quality and, where the buyer makes known to the seller any particular purpose for which the goods are being bought, reasonably fit for that purpose. 4 In the case of a contract for the sale of goods by sample, there are implied conditions that the bulk will correspond with the sample in quality; that the buyer will have a reasonable opportunity of comparing the bulk with the sample; and that the goods will be free from any defect, rendering them unmerchantable, which would not be apparent on

reasonable examination of the sample. 3 The Act defines expressly for the first time the phrase "merchantable quality" and includes in that definition the concept of durability. As will be noted, the terms implied by the 1980 Act are virtually identical to those implied by the Sale of Goods Act, 1893. The major innovation of the 1980 Act is contained in section 22, which replaces section 55 of the 1893 Act, which allowed the unrestricted contracting out of the statutory implied terms. Section 22 substitutes a new section for section 55. This new section reasserts a contracting party's right to contract out of the statutory implied terms, 6 but it renders void any term of a contract for the sale of goods which exempts all or any of the provisions of section 12. 7 It provides further that any term of such a contract which exempts all or any of the provisions of section 13, 14 or 15 is to be void where the buyer deals as consumer and, in any other case, is to be unenforceable unless it is shown that it is fair and reasonable. 8 This last provision raises a number of questions for the draftsman of conditions of sale. Among them: when can a purchaser be said to deal as consumer? And what is a term which exempts all or any of the provisions of section 13, 14 or 15? The two questions considered The phrase "dealing as consumer" is defined in section 3 of the 1980 Act. 9 There it is said that a party to a contract deals as consumer where "(a) he neither makes the contract in the course of a business nor holds himself out as doing so, and (b) the other party does make the contract in the course of a business, and (c) the goods or services supplied under or in pursuance of the contract are of a type ordinarily supplied for private use or consumption." The definition is not without difficulty. What constitutes, for example, goods "of a type ordinarily supplied for private use or consumption?" If somebody buys an item of goods which is to be used both by the purchaser and others, when does private use become non-private use? Perhaps even more difficult is the requirement that the purchaser must not make the contract in the course of a business nor hold himself out as doing so. Does the doctor buying a typewriter for his office make the contract in the course of a business? It would seem that he does. Benjamin's Sale of Goods) 0 considering an equivalent provision in the English Supply of Goods (Implied Terms) Act, 1973, says that:

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