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Report No. 105

3.7. Section 14 dealing with implied conditions as to quality or fitness and section 15 dealing with sale by sample are sought to be amended to provide that the conditions implied therein continued to be applicable to goods which are supplied under a contract of sale even if such goods are themselves not the subject-matter of the sale: the condition of fitness for purpose should no longer be confined to sales where the goods are of a description which deals with the sellers business to supply, but should be extended to cover all sales in which the seller is acting in the course of the business.

The provision about reliance on the sellers' skill and judgment involved in the contract of sale is replaced by a provision whereby the condition for fitness will be implied unless the circumstances are such as to show that the buyer did not rely or that it was unreasonable for him to rely on the seller's skill and judgment. Section 15 is sought to be amended to make it clear that the definition of merchantable quality applies not only to sale of goods in the course of business but also to sales by samples. Section 55 is sought to be amended to negative the right to exclude implied terms and conditions in a contract of sale. As stated earlier, these recommendations are given effect to by the Supply of Goods (Implied Terms) Act, 1973.

3.8. The Unfair Contract Terms Act, 1977, which is primarily concerned with making nugatory exemption clauses negativing liability in negligence by one contracting party to another also contains provisions to restate the position with regard to attempts to exclude or modify the implied conditions contained in sections 12 to 15 of the Sale of Goods Act, 1893 (now the 1979 Act) (and the parallel legislation for contracts of hire purchase).

3.9. It would appear that all these attempts to amend the law about the implied conditions e.g. merchantable quality etc. did not fully clarify the position and the public concern about sale of faulty goods is highlighted in the introduction of a Private Member's Bill in November, 1978, the Supply of Goods (Amendment) Bill. This Bill was later withdrawn and instead the Lord Chancellor referred the matter to the Law Commission who were asked to consider:1

(a) whether the undertakings as to the quality and fitness of goods implied under the law relating to sale of goods, hire purchase and other contracts for the supply of goods require amendment;

(b) the circumstances in which a person, to whom goods are supplied under a contract of sale, hire-purchase or other contract for the supply of goods, is entitled, where there has been a breach by the supplier of a term implied by statute to

(i) reject the goods and treat the contract as repudiated;

(ii) claim against the supplier a diminution in or extinction of the price;

(iii) claim damages against the supplier;

(c) the circumstances in which by reason of the Sale of Goods Act (1979) a buyer loses the right to reject the goods.

1. See Brian W. Harvey, (supra), p. 98.

3.10. The Law Commission recommended in its 95th Report on "Implied Terms in Contracts for the supply of goods" that there should be legislation imposing clear terms as to title correspondence with description, merchantability and fitness for purpose in all contracts for the transfer of goods (other than those contracts primarily dealing with Sale of Goods and Hire Purchase Agreements). The draft Bill annexed to the Report makes it clear that the statutory term should apply not only to contracts of hire and barter but also to contracts for work and materials, the implied terms applying in respect of the materials.

3.11. No legislative action on the Law Commission's proposals appears to have yet been taken and the problem is still under consideration1

1. See Brian W. Harvey, (supra), p. 98.

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