Does the Sale of Goods Act 1979 Put too Much Emphasis on the Concept of Property - Research Paper Example

Does the Sale of Goods Act 1979 put too much emphasis on the concept of property' How, if at all, should the law be changed' Introduction: The sale of goods within the UK is legally governed and directed by the Sale of Goods Act 1979 which has been further amended by the Sale and Supply of Goods Act 1994 and the sale of Goods and Amendment Act 19951. The Acts specify the duties of the seller and the buyer as the seller is legally bound to deliver the goods, the buyer has to accept and pay for them according to terms of contract. As the seller should be ready to give possession of the goods to the buyer, the buyer is legally responsible to pay for the goods to take possession of them. These are fundamental duties of the seller and buyer and if one party fails to maintain terms of contract another can sue for damages and cancel the contract. The Sale of Goods Act 1979 has undergone several amendments and changes since its introduction and has become more and more consumer focused to uphold the quality of goods and buyer rights2. In this analysis, the legal perspectives of the Sale of Goods Act will be considered determining whether the Act places too much emphasis on the concept of ownership, possession and property. The law will be examined to understand needs for change in the legal structure, if any and the procedure for doing this. Sale of Goods Act, 1979 - An Overview: The terms of the contract and the legal framework in place determines the obligations of both the parties in the buying and selling arrangement. Contractual terms are written or oral and signed between or agreed to by both the parties. Often these are express contractual terms representing the seller's terms and conditions incorporated into contracts for sale of goods. These terms and conditions laid down by the seller should be notified to and agreed upon by the buyers and should also be reasonable3. Contractual terms can also be implied in all contracts for sale of goods for regular purchase from retailer by consumer or commercial sales on a larger scale. This implies that4 The seller has a right to sell the goods and the buyer will own the goods after the act of selling is complete The goods should be according to buyer wants and specifications The goods should be of satisfactory quality to the consumer If the buyer gives the purpose of the purchase, the goods should fit the purpose If sample are shown to consumer before selling of the specified goods, then the goods should conform or be similar to the sample shown These are the terms and conditions of the contract and both the seller and the buyer have obligations to maintain these terms of contract5. Any breach of contract can entitle the purchaser to reject the goods and seek reimbursement on the purchase price or even claim damages by taking legal action6. Thus the Act specifies the fact that all traders must sell goods that are as described and shown to the consumer and they should also be of satisfactory quality. If the products do not meet the requirements of the consumer, then the consumer can reject them and claim reimbursement and money back on the goods and they have to do this quickly. The Sale of Goods Act has recently had another amendment and is specified in the Sale and Supply of Goods to Consumers Regulations 20027. This amendment of the Goods Act has definitely given many benefits to the consumers8. The duties of the sellers and the buyers are distinct and the measures available to the buyer in case the seller fails to maintain the terms of contract can also be given9. Duties for sellers - Sellers should give possession of goods to the buyers on the completion of purchase and provide goods in accordance with the needs of the consumer maintaining the terms of the contract Sellers should deliver the goods at a reasonable time and convenient place or at a specified time and place given in the contract Sellers should sell goods only of satisfactory quality which will suit the purpose it is intended for Sellers should sell goods that are in conformity with or similar to the standards of the sample shown for selling or promotional purposes. Duties of buyers - Buyers are required to maintain the terms of contract and pay for the goods purchased Buyers are required to take possession of the goods they have ordered Options for buyers 10- If the buyer are not happy with the product and the goods fail to serve the specified purpose, the buyer can resort to the guarantee or warranty obligations Buyers can reject or terminate the contract if they don't receive the goods according to specifications Buyer can claim for damages or sue the sellers Buyers can refuse to perform own obligations Buyers have the right to recourse to specify the sellers' obligations11 Duties of the sellers and buyers12 and the obligations on both the parties in terms of the contract can vary for each case. Even the options available to buyers can vary considerably depending on the nature of contract, the terms expressed and implied as well as the kind of goods bought. The rejection of goods and termination of contract can entitle a reimbursement of the purchase price paid but this option is only available for a certain category of goods and such an option may not be available due to intervening factors. Thus the buyer could be left only with the option of claiming for damages. Applications of the Act - The Act applies to all goods bought or sold after 1January, 1894. The contract is a legal agreement in which the seller transfers or agrees to transfer property in goods to the buyer in exchange for a price given in money. The contract sale may be between a part owner, owners and a buyer or buyers and has to be absolute and conditional13. A contract of sale may be made in writing or oral, or partly written and partly oral or may be implied from the relationship and behaviour of buyers and sellers. The agreement may or may not be signed or sealed and the agreement may or may not be in a written form. As for instance, in case of buying from regular shops or supermarkets, the agreement of quality and price seem to be implied rather than expressed although the seller in these cases lays down the terms and conditions14 The Act gives an emphasis to the concept of 'property' and suggests that under a contract of sale the property in terms of goods should be transferred from the seller to the buyer immediately or at a specified time and this transaction is called a sale. If the agreement is to transfer the property in terms of goods at a later time, the contract is called an agreement to sell. When the sale conditions are fulfilled and the property is transferred to the buyer, the agreement materializes to sale15. The buyer and the seller are expected to have the capacity to buy and sell as the seller should have the capacity to supply the goods according to the quality expected and the buyer should have the financial capacity to buy the goods according to the financial terms and price laid out in the contract. If the goods delivered is accepted by a minor or a person with mental illness who is incompetent to fulfil the terms of the contract then the price is paid by the buyer. The goods that are mentioned in the contract may be either existing goods already possessed or owned by the seller that awaits transfer to buyer, or are to be manufactured or acquired by him and in the Act this is known as future goods16. The contract operates as an agreement to sell the goods based on the acquisition of the goods. If the goods perished at a time that the contract is made without the knowledge of the seller, then the contract stands void. If goods perish without the fault of either the buyer or the seller, then the agreement is avoided. As far as pricing issues are considered, the price is fixed or agreed or determined between the parties. The reasonable price is dependent on the particular case in consideration and the buyer has to pay that price in keeping with contractual obligations. Agreement on a price may also be fixed on the basis of third party valuations and if the third part is prevented from making a valuation due to actions of the seller or the buyer, then the innocent part has the right to claim for damages. The stipulation of time may not be the essence of the contract and its implications tend to vary. In certain cases, if the seller fails to keep up to the terms of the contract, the buyer may waive the condition or may consider the condition as a breach of warranty rather than a breach of contract per se. It is implied that goods are free and remain so until the time when the 'property' is passed to the buyer and the buyer enjoys the possession of the goods unless it is disturbed by a person entitled to benefits on the property and is legally entitled for claiming such benefits. The buyer is entitled to examine the goods or the sample when the purchase is made and is expected to be delivered the same good or similar goods if a sample has been used instead17. Goods should also correspond to the description given and are selected by the buyer. The implied terms of contract are that the goods sold would be of satisfactory quality and the fitness of purpose of the goods for the sale is not implied in the contract. Quality of goods would imply characteristics of safety, durability, with no minor defects and having a good appearance or finish. Fitness or suitability of the goods or the purpose for which it is used is not implied but nevertheless taken care of. The contract of sale suggests that the bulk should correspond with the sample in terms of quality18. The contract also states that the goods in terms of property should pass on to the buyer at the time it intends to pass or be transferred19. Unless the transfer is completed, the goods remain at seller's risk and any damages to the goods before transfer are compensated by the seller. After transfer and completion of the sale act or purchase, any damage to the goods may be responsibility of the buyer. The seller has rights of both disposal and delivery of goods as the condition warrants. When the buyer subscribed to a bulk of goods, good are delivered only for which the payment has been made. In case of payment by instalments, the property or goods can remain in part possession of the seller until the buyer pays the price in full. However if the payment has been made in full, the buyer may not accept delivery in instalments. If the buyer fails to take delivery of the goods in time, he is liable to pay the costs of damages if any or the maintenance costs incurred from late receipt of goods or property. If the buyer becomes insolvent and the seller remains unpaid, the seller has full legal right to retain the goods20. If the seller already delivers part of the goods, he has right to retain the remaining part until the payment is received from the buyer. The buyer on the other hand can request the seller to repair or replace the goods but such activity would be dependent on the nature of goods and the purposes for which the goods are acquired21 . General Features of the Act - The Act emphasizes on the fact that goods bought must conform to contract. This means that the standards of the goods must conform to the description; they must also fit the purpose and be of satisfactory quality. Thus goods cannot be inherently faulty at the time of sale and must be of satisfactory quality and should reach a standard that can be generally regarded as satisfactory considering the price and the description which should be in accordance with the product's use and purpose. Quality includes fitness or suitability of purpose, freedom from minor defects, appearance and finish, durability and safety. If goods do not conform to contract, it is the seller who is responsible and not the manufacturer to either reimburse the money to the customer or replace the product. Purchasers and consumers can request refunds within a reasonable time or ask for replacement or repair of products although this can largely depend on the circumstances. Demands on damages after purchase or repair and replacement can be made up to five or six years after purchase and if the replacement is too costly or not possible, then the customer can seek a partial refund if they have gained some form of benefit from the goods or a full refund if they have enjoyed little or no benefit22. The onus is however on the customer who have prove it legally and otherwise that then goods did not conform to the standards specified in the contract, although it has to be kept in mind that perishable goods do not last for more than six years. If the consumer chooses to ask for repair or replacement, then the onus is on the seller or retailer to prove that the product or goods did conform to the standards of the contract within the first six months period. From the period of six months to six years the purchaser or consumer has to prove that goods are not of satisfactory quality. ' The Concept of Property in the Act In the entire Act the notion or concept of property or possession is very important as it seems that the moment of possession defines whether damages will have to be paid by the retailer or the purchaser. The seller retains and possesses the goods as property only until the moment he sells the goods. After the goods are sold, it is the buyer or the customer who owns the property and pays for its damages or maintenance23. According to the statements used in the Act 'Where there is a contract for the sale of a specified quantity of unascertained goods in a deliverable state forming part of a bulk which is identified either in the contract....... the property in those goods then passes to that buyer'. It also lays down the condition that 'property in an undivided share in the bulk is transferred to the buyer'. The Sale of Goods Act 1979 gives a great deal of emphasis to property and the fact that goods are considered as property there may changes necessary to the implications of the law that stresses on the need to define goods as property. Miller (1994) examines several proposed changes to the law on sale and supply of goods and suggests that the current legislation set out in the sale of Goods Act 1979 and the Sale and Supply of Services Act 1982 is in need of reform24. There has been an investigation by the law commission that has identified the weaknesses of the present legal system and has also recommended a number of major changes. The new legal changes are aimed to clarify anomalies that have arisen over the years as a result of shortcomings in current legislation. Miller argues that retailers or sellers and distributors within all business sectors should review the existing terms and conditions of sale and ensure that they get a fair deal. ' In terms of conformity to quality and delivery standards an overview of the law can be given as 'the goods must be of the quality requisite...at the time of the passing of property, or, where property and risk are separated, at the time of the passage of risk'25. This means that the concept of risk could be used or should pass with property. The law also states that the goods remain at the seller's risk until the property in them is transferred to the buyer, but when the property in them is transferred to the buyer the goods are at the buyer's risk whether delivery has been made or not. This would mean that the risk passes from seller to buyer at the time of passing of property or ownership and not necessarily at the time of delivery. This also means that the property passes from seller to buyer because risk passes, sometimes however risk passes independently of property. Thus the concept of property which seems to be central to the Sale of Goods Act is also closely associated with the concept of risk. Thus it is important to analyse at what point of the agreement or the contract the concept of risk passes and whether it is possible to suggest that the concept of risk and the concept of property pass together'26 The Sale of Goods Act introduced in 1979 has been amended through 1994 and 1995 and the amendments have resulted in Sale and Supply of Goods Act (1994) and Sale of Goods Amendment Act (1995). The purpose of the Sale and Supply of Goods Act 1994 has been stated as follows: An Act to amend the law relating to the sale of goods; to make provision as to the terms to be implied in certain agreements for the transfer of property in or the hire of goods, in hire-purchase agreements and on the exchange of goods for trading stamps and as to the remedies for breach of the terms of such agreements; and for connected purposes27. The Sale and Supply of Goods Act 1994 also emphasises on the importance of quality and attributes of safety and durability of goods and products and the importance of the ownership and property in relation to the goods suggesting remedies for breach of contract and agreements by both the parties. The Sale of Goods Amendment Act 1995 has been done as 'An Act to amend the law relating to the sale of unascertained goods forming part of an identified bulk and the sale of undivided shares in goods' (Sale of Goods Amendment Act, 1995)28 The Amendment Act also brings in the concept of property as the sale of bulk and undivided shares in goods relates to the concepts of risk and property. Further to this the sale and supply consumer regulations 2002 were done to improve consumer protection and this regulation enables the buyers to reject or return goods or even demand replacement29. The nature of the Acts, the focus of the amendments and the new emphases on regulations show that consumer relates to goods in terms of ownership, possession and property and the Acts are largely based on this concept of property and ownership and defines the buyer-seller relationship. The concept of property within the Sale of goods Act 1979 can be implied in the facts that 1. passage of risk is through passage of property 2. goods are considered in terms of their property and ownership 3. seller or buyer pays damage for property on the basis of time of ownership 4. goods are transferred according to the concepts of possession and property ownership 5. payment and pricing policies determine the nature of ownership 6. contractual terms of the agreement are based heavily on the concept of property and possession Before the 1995 amendment, rules related to passing of property from buyer to seller were complex and were not in accordance with expectations of the consumer. The commercial expectations of the buyers and the sellers were not met and this resulted in more complications in commercial retailing and transactions30. However the 1995 Sale of Goods Act amendment and the consequent 2002 regulations simplified the process of transactions and gave more importance to the needs and legal rights of the consumer31. In this context we can provide further analysis on how this law should be changed or could be changed for the purposes of better applicability and wider acceptability in the business community. Analysis and Conclusion: The Sale of Goods Act 1979 laid considerable emphases on the concept of property and possession so much that the buyer and seller relation seem to have depended largely on the transfer of this ownership of goods32. In fact property of the goods could be transferred even before actual delivery although after delivery the goods are completely owned by the consumers. Some of the ways in which the buyers have access to property ownership of the goods relate to the fact that property of the goods is transferred after the buyer-seller transaction is commercially or financially completed. Following the completion of the transaction both the parties are expected to reach an agreement or maintain and follow the agreement already reached and in case of damages the consumers have full responsibility if the goods were delivered in perfect condition33. The sellers are however given six months to show that they have provided goods with quality according to the terms of the contract. The buyers get up to the next five or six years if they are dissatisfied with the services and seek damages or resort to legal procedures. The crucial centrality of the concept of ownership of property in terms of goods is important here as it highlights that it is the property that is transferred from seller to buyer and this property is in the form of goods. This concept may just be too inflexible and the legal foundations may not be exactly specific to the mode of transaction and the nature of the goods. Although the legal framework seem to have sufficient allowances for the nature of goods or the purposes for which the goods are used the concept of ownership and possession seem to be inflexible across all these cases. It is here that a change in legal framework and approach may be necessary. Considering the amendments of the Act since 1995 and the new regulations in 2002, the amendments and changes to the Sale of Goods Act seem to have been based on the needs of the consumer and with a focus towards consumer protection34. This approach although helpful to simplify the commercial transaction processes may not be sufficient in crossing the inherent complexities of the Act and its stress on the concept of property. With further research and analysis it would be possible to suggest whether there can be a shift in the legal implications of the Act. Bibliography: Blair, Michael C. Sale of Goods Act 1979 /'by Michael C. Blair. London :'Butterworth,'1980. Chalmers, M. D.,'Sir'(Mackenzie Dalzell) Chalmers' Sale of Goods Act 1979 :'including the Factors Acts 1889 & 1890. 8th ed. /'by Michael Mark with assistance from Jonathan Mance. London :'Butterworths,'1981. de Lacy J. Selling in the Course of a Business Under the Sale of Goods Act 1979 Modern Law Review, Volume 62,'Number 5, September 1999, pp. 776-791(16) Blackwell Publishing Hudson Cyril L. Buying-selling: Greater integration in the seventies' Industrial Marketing Management, Volume 1, Issue 1, September 1971, Pages 59-79 Miller C. Defective Goods: : Liability under the New Law International Journal of Retail & Distribution Management, Volume 22,'Number 8, August 1994, pp. 39-40(2) Emerald Group Publishing Limited Thomas, Bill. The Sale of Goods Act explained /'Bill Thomas. Norwich :'Stationary Office,'2000. Zekos G.I. Negotiable bills of lading and their contractual role under Greek, United States and English Law Managerial Law, Volume 40,'Number 2, March 1998, pp. 5-24(20) Emerald Group Publishing Limited New UK Law on Sale and Supply of Goods - Changes to the UK Law Relating to Contracts for the Sale and Supply of Goods Computer Law and Security Report, Volume 11,'Number 2, March 1995, pp. 95-97(3) Elsevier Science I. Lloyd Liability for defective software' Reliability Engineering & System Safety, Volume 32, Issues 1-2, 1991, Pages 193-207 Taylor, Martin Morgan and Naidoo, Andr' 2002 The Draft Regulations to Adopt the Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees- Problems of the Time of Conformity for the Quality Obligation Web Journal of Current Legal issues, Issue 3. Sale of Goods Act, 1979 from http://www.jus.uio.no/lm/england.sale.of.goods.act.1979/doc Other useful sites - Sal of Goods Act, 1979, retrieved 2005 http://www.netlawman.co.uk/acts/sale-of-goods-act-1979.php Sale and Supply of Goods Act 1994, retrieved 2005 http://www.opsi.gov.uk/acts/acts1994/Ukpga_19940035_en_1.htm The Sale and Supply of Goods to Consumers Regulations 2002, retrieved 2005 http://www.opsi.gov.uk/si/si2002/20023045.htm Sale of Goods Act 1979, retrieved 2005 http://www.swarb.co.uk/acts/1979SaleofGoodsAct.shtml Sale of Goods (Amendment) Act 1995, retrieved 2005 http://www.opsi.gov.uk/acts/acts1995/Ukpga_19950028_en_1.htm SALE OF GOODS ACT 1979, retrieved 2005 'http://www.john.antell.name/SOGA1979.htm Sale of Goods (Amendment) Act 1994, retrieved 2005 http://www.opsi.gov.uk/acts/acts1994/Ukpga_19940032_en_1.htm Read More