Report No. 105

Chapter III

Further Developments in U.K. Law

3.1. In the U.K., law on Sale of Goods has been amended largely on the recommendations of the Law Commission of England. The Law Commission of England had made three reports on exemption clauses in contracts. The first report,1 a joint report of the English and Scottish Law Commission, contains a number of recommendations in relation to the sale of goods, amendments to sections 12 to 15 and 55 of the Sale of Goods Act, 1893, dealing with implied terms in the contract of sale and to the regulation of the clause excluding or limiting the effect of those terms.

On the basis of the first report, the Supply of Goods (Implied Terms) Act, 1973 was enacted. The main object of the 1973 Act was severely to limit the sellers' right to exclude these implied terms. The Act also implied those conditions, suitably adjusted, to contracts of hire purchase, and these provisions have now been re-enacted, with minor amendments, by the Consumer Credit Act, 1974. The 1973 Act also improves obligations on the supplier of goods on redemption of trading stamps that are to the same general effect as the implied conditions under a contract of sale or hire purchase. The legislation was consolidated by the Sale of Goods Act, 1979.1

1. U.K. Law Commission No. 24. See Law Commission No. 12.

2. The Law of Consumer Protection and Fair Trading by Brian W. Harvey, 2nd Edn., pp. 84-85.

3.2. The second report1 is concerned with provisions excluding or restricting any legal duty or obligation owed by one person to another and which does not fall within the ambit of Supply of Goods (Implied Terms) Act, 1973. While the first report is a joint report of the Law Commission of England and the Scottish Law Commission, in the second two Law Commissions have reached a wide measure of agreement on the main issues but have divergent conclusions on two matters of fundamental importance, largely based on the local laws.2 We are, however, not concerned with them in this report.

1. U.K. Law Commission No. 69; Scot. Law Commission No. 39.

2. U.K., lbid, paras. 4 & 5.

3.3. The second report, among other things, considered the purported exclusion of liability for 'negligence' and of liability for breaches of contracts other than contracts for the supply of goods. The Unfair Trade Practices Act, 1977, is largely based on the second report of the Commission. The second report deals with the contracts for supply of goods otherwise than by sale or hire-purchase of goods; like contract of hire of goods, contract for work and materials; regarding the condition of title, compliance with the description, merchantability and fitness and to ensure that the consumer obtains benefits in respect of these conditions despite any attempt to contract out of them.

3.4. The third report1 made by the Law Commission of England deals with the subjects which are not dealt with by the first two reports. It deals with the terms: to be implied in other contracts of supply, like contracts analogous to sale: such as contracts of barter and of work and materials.

1. U.K. Law Com. No. 95.

3.5. As pointed out1 earlier, the subject of unfair terms in standard form of contract is receiving our separate attention. Therein we deal with attempts to impose undue terms in contracts. That leaves us with the first and third reports of the English Law Commission.

Chapter 1, supra.

3.6. In the first report, the English Law Commission dealt with the amendments to sections 12 to 15 and 55 of the U.K. Sale of Goods Act. We have corresponding provisions in sections 12 to 17 in the Indian Sale of Goods Act, 1930. Section 12 of the U.K. Act deals with implied undertaking as to title etc. That section was recommended to be amended to provide that the exclusion or variation of the conditions of warranties should only be possible where it is clear that the seller is purporting to sell a limited title. In other words, the seller is not permitted to exclude the warranties of quiet possession, free from any charges or encumbrances in favour of the third parties. Section 13 dealing with sales by description is recommended to be amended to make it clear that the sale of goods in super-markets, where goods are exposed for self-selection by the buyer, is also to be treated as sale by description within the meaning of section 13 of the Act.