Topic 3 - Parties Obligations under SGA & CRA Flashcards
(118 cards)
1
Q
What determines the rights and obligations in a contract for the sale of goods?
A
The express terms and statutory implied terms in the contract, classified as conditions, warranties, or innominate terms.
2
Q
What is an exclusion clause?
A
A term that bars specific liabilities in a contract.
3
Q
What is a limitation clause?
A
A term that does not bar liability entirely but caps it at a certain amount.
4
Q
What is a force majeure clause?
A
A clause allowing parties to terminate obligations due to unforeseeable events beyond their control.
5
Q
What is an innominate term?
A
A term that is neither a condition nor a warranty, where the seriousness of the breach determines the remedy, introduced in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962) by Diplock LJ.
6
Q
What is the seller’s primary duty under the SGA 1979?
A
To deliver goods that conform to the contract.
7
Q
What is the buyer’s primary duty under the SGA 1979?
A
To accept the goods and pay for them, unless there is a lawful reason to reject them.
8
Q
What does s.28 SGA 1979 state about delivery?
A
Delivery and payment are concurrent conditions, meaning neither party must perform unless the other does.
9
Q
Where should goods be delivered if the contract is silent on the delivery location?
A
The seller’s place of business or residence (s.29(2) SGA 1979).
10
Q
What happens if the seller delivers the wrong quantity of goods?
A
The buyer may reject or accept the amount delivered and pay proportionally (s.30 SGA 1979). However, the buyer may not reject if the shortfall or excess is so slight that it would be unreasonable to reject.
11
Q
What does s.12 SGA 1979 require regarding title?
A
The seller must have the right to sell the goods.
12
Q
What is the legal significance of Rowland v Divall [1923]?
A
A seller without title must refund the buyer, even if the buyer has used the goods. Buyer’s claim based on total failure of consideration, i.e. good title to the car.
13
Q
What are the two warranties implied by s.12(2) SGA 1979?
A
The goods are free from any charge or encumbrance not disclosed or known to the buyer before the contract is made, s.12(2)(a).
The buyer will enjoy quiet possession of the goods, except for any charge or encumbrance disclosed or made known, s.12(2)(b).
14
Q
What does s.13 SGA 1979 require in terms of goods’ description?
A
Goods must correspond to their description.
15
Q
What is the legal principle from Arcos Ltd v Ronaasen [1933]?
A
Even minor deviations from the description can justify rejection. Difference in dimension of the staves.
16
Q
What does s.14(2) SGA 1979 require regarding quality?
A
Goods must be of satisfactory quality.
17
Q
What does s.14(3) SGA 1979 require regarding fitness for purpose?
A
Goods must be reasonably fit for any purpose the buyer makes known.
18
Q
What does s.15 SGA 1979 require for sales by sample?
A
The bulk must match the sample and be free from hidden defects.
19
Q
What is the main legal issue in Beale v Taylor [1967]?
A
The car was misdescribed, violating s.13 SGA 1979. Half the car was of an earlier model.
20
Q
In which case did the court rule that a faulty gearbox in a second-hand car did not make it of unsatisfactory quality?
A
Thain v Anniesland Trade Centre [1997]. The price paid is an important factor in determining whether a product is of satisfactory quality.
21
Q
Can a seller exclude the right to sell required by s.12, SGA.
A
No, the SGA s.12 requirement cannot be excluded, ss. 6 and 20, UCTA 1977.
22
Q
Can sellers exclude ss.13–15 of the SGA?
A
Only if the exclusion clause passes the reasonableness test, ss.6 and 20 UCTA.
23
Q
What is the reasonableness test under UCTA 1977?
A
The clause must be fair and reasonable (s.11), considering bargaining power,(Caithness Flagstone Ltd v Ballyvesey Holdings Ltd (2020)), and notice given.
24
Q
What did George Mitchell v Finney Lock Seeds [1983] decide?
A
An exclusion clause excluding liability for defective seeds was not reasonable.
25
Why was the exclusion clause valid in Caithness Flagstone v Ballyvesey Holdings [2020]?
It was negotiated between legal teams, showing equal bargaining power.
26
Which Act replaced the SGA 1979 for consumer contracts?
The Consumer Rights Act 2015.
27
What is the consumer’s short-term right to reject under CRA 2015?
A 30-day right to reject faulty goods (s.20).
28
What remedies does a consumer have under s.23 CRA 2015?
Right to repair or replacement.
29
What is the consumer’s final right to reject under CRA 2015?
If repair or replacement fails, the consumer can reject the goods for a refund (s.24). The consumer also has a right to a refund or price reduction under s.24.
30
Under CRA 2015, can traders exclude liability for faulty goods?
No, liability cannot be excluded, s.31 CRA 2015.
31
What is the difference between a condition and a warranty?
A condition allows contract termination, a warranty only allows damages.
32
What did Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] establish?
The concept of innominate terms, originated by Diplock LJ.
33
What case ruled that time is of the essence in commercial contracts?
Bunge v Tradax [1981].
34
Can international contracts exclude all implied terms?
Yes, under s.26, UCTA 1977.
35
What case ruled that bank overdraft charges are part of the price and cannot be assessed for fairness?
Office of Fair Trading v Abbey National plc [2009]. The charges were part of the overall package of banking services (the price) offered to customers and that they fell within the exemption provided by Regulation 6(2)(b) of the UTCCR 1999: the assessment of fairness of a term shall not relate… to the adequacy of the price or remuneration. Reg 6(2)(b) is replaced by s.64(1)(b), CRA 2015.
36
Under s.29(5), SGA 1979, when can a demand or tender of delivery be ineffective?
If it is made at an unreasonable hour, which is a question of fact.
37
What case established that refusal to accept delivery can be a repudiatory breach?
Fercometal SARL v Mediterranean Shipping [1988].
38
Under s.32(1) SGA 1979, when is delivery to a carrier considered delivery to the buyer?
When the goods are handed over to the carrier, unless otherwise agreed.
39
What case ruled that incorrect labeling could amount to a breach of delivery obligations?
Albright & Wilson v Biachem Ltd [2002]. Sodium chlorite with a delivery note for epichlorohydrin.
40
What case ruled that lack of proper documentation could breach s.12(2)(b) SGA 1979?
Great Elephant Corp v Trafigura Beheer BV [2012]
41
What was the ruling in Rubicon Computer Systems v United Paints Ltd [2000] regarding s.12(2)(b) SGA 1979?
Installing a time lock that prevented the buyer from using software violated quiet possession.
42
Under s.14(2B) SGA 1979, what are five factors that determine whether goods are of satisfactory quality?
(1) Fitness for common purposes, (2) Appearance and finish, (3) Freedom from minor defects, (4) Safety, (5) Durability.
43
What was the ruling in Bernstein v Pamson Motors [1987] regarding minor defects?
Minor defects may be classified as "teething troubles", not necessarily making the goods unsatisfactory.
44
What did Clegg v Olle Andersson [2003] establish about the test for satisfactory quality?
It is objective—based on what a reasonable person would consider satisfactory.
45
In a consumer contract, can a trader exclude liability for breaches of s.9 (satisfactory quality)?
No, liability cannot be excluded, s.31, CRA 2015.
46
What was the ruling in Messer (UK) Ltd v Britvic Ltd [2002] regarding exclusion clauses?
A clause excluding liability under s.14(2) SGA 1979 was unreasonable because the seller controlled product safety.
47
What did Air Transworld Ltd v Bombardier Inc [2012] clarify about exclusion clauses?
Exclusion clauses do not need to reference "condition" explicitly to be valid.
48
What is the legal significance of Director General of Fair Trading v First National Bank plc [2001]?
Courts took a restrictive approach to excluding terms from fairness assessment. Interest on o/s debts after court judgment were not part of the "core terms" and thus not subject to exclusion from fairness assessment under Reg 6(2), UTCCR 1999.
49
What additional protection does s.68 CRA 2015 provide for consumers?
It imposes a transparency requirement, meaning contract terms must be clear.
50
Under s.69 CRA 2015, how should ambiguous contract terms be interpreted?
They should be interpreted in the way that is most favorable to the consumer.
51
What does the duty to deliver under the Sale of Goods Act 1979 encompass?
It includes all the seller’s express and implied obligations regarding the goods, such as title, description, quality, and fitness for purpose.
52
When does a buyer’s rejection of goods constitute non-delivery?
If an implied condition is breached and time is of the essence or has become so, rejection due to that breach is treated as non-delivery if time is of the essence and the seller is unable to re-tender in the available time.
53
How is “delivery” defined in s.61(1) of the Sale of Goods Act 1979?
As the “voluntary transfer of possession from one person to another”
54
Can delivery occur without physical possession being transferred?
Yes, constructive delivery includes scenarios where legal control or a right to possession is transferred.
55
Does delivery to a carrier always constitute delivery to the buyer?
Yes, under s.32(1), it is generally deemed delivery to the buyer, but only for specific legal purposes such as risk transfer.
56
What section outlines the seller's core duty to deliver goods in accordance with the contract?
Section 27 of the Sale of Goods Act 1979.
57
Can a non-conforming tender of delivery still be effective?
Yes, if the buyer accepts it or the defect is minor under s.15A of the Act.
58
What is the distinction between taking delivery and accepting goods?
Taking delivery involves physical receipt; acceptance involves affirming the goods conform to the contract.
59
What is “constructive delivery”?
It’s delivery without physical possession, including methods like handing over documents or keys, attornment, or transfer to a carrier.
60
What role does a document of title play in constructive delivery?
Transfer of such a document, like a bill of lading, can constitute delivery if it grants the buyer control over the goods.
61
What is an example of constructive delivery through physical control?
Giving the buyer keys to a warehouse where the goods are stored
62
What is attornment in the context of delivery?
It is when a person lawfully acknowledges that goods they hold are now held on behalf of the buyer.
63
Can attornment occur with goods held by a third party?
Yes, if the third party lawfully agrees to hold the goods for the buyer with the seller's authority.
64
When is buyer’s existing possession of goods treated as delivery?
If the buyer already possesses the goods and is then entitled to them in their own right under the sale contract.
65
Under s.32(1) SGA 1979, when does delivery to a carrier count as delivery to the buyer?
When the seller is authorized or required to send the goods to the buyer.
66
Does s.32(1) apply to delivery to non-carrier bailees like packing houses?
No, s.32(1) only applies to delivery to carriers and excludes consumer contracts.
67
What determines whether a seller is “authorized” to send goods under s.32(1)?
Either explicit contract terms or implied terms from delivery instructions (e.g., “send,” “dispatch,” or f.o.b. terms).
68
What is the significance of whether the carrier acts for the buyer or seller?
If the carrier is the buyer’s agent, delivery to the carrier is delivery to the buyer; otherwise, risk and delivery remain with the seller.
69
How do courts identify whether a transporter is a “carrier” under s.32(1)?
By examining whether the transporter undertakes transit responsibility as a principal, and is not merely an intermediary.
70
What displaces the presumption of delivery to buyer under s.32(1)?
If the seller reserves the right of disposal—e.g., by retaining control documents or instructing the carrier not to release to the buyer
71
What is the significance of delivery of part in the name of the whole?
It may be treated as constructive delivery of the entire goods, depending on intention and context
72
How is the place of delivery determined when the contract is silent?
By default rules under s.29(1) of the Sale of Goods Act 1979, typically the seller's place of business.
73
What effect does specifying a delivery point in a contract have?
It may either limit the seller’s delivery obligation or indicate who bears the cost beyond that point.
74
Can the delivery point influence where documents must be handed over?
It is unclear whether, when delivery is to be made by transfer of documents, s 29 SGA applies to fix the delivery point of the documents. However usually, documents are deliverable against payment, in which case the delivery point and place of payment will usually coincide.
75
When can a buyer reject a late delivery?
Only if time is of the essence or has become so, or an unreasonable time has passed.
76
What if the contract doesn’t specify a delivery time?
The seller must deliver within a reasonable time, s.29(3) SGA.
77
What is the delivery time limit in consumer contracts under UK law?
30 days from the contract date unless otherwise agreed, s.28(3)(b), CRA 2015.
78
Who bears the cost of tendering delivery?
The seller, unless otherwise agreed, s.29(6) SGA.
79
Who bears the cost of taking delivery?
The buyer, unless the contract states otherwise.
80
When is a seller’s duty to deliver suspended or discharged?
When there’s frustration, buyer’s repudiation, or failure to pay, among other legal excuses.
81
What are the buyer’s two distinct obligations related to delivery?
To take delivery and to accept the goods—these are separate legal duties. The taking of delivery is not as such an acceptance of the goods, though it is usually the first step towards acceptance; and s 37 of the Sale of Goods Act 1979 inferentially imposes on the buyer the positive duty to take delivery as an obligation distinct from the negative duty to accept, ie to refrain from unjustifiably rejecting. The legal significance attached to the taking of delivery is indeed quite different from that annexed to acceptance. In taking delivery, the buyer does no more than give up his right to treat the act of tender as ineffective because made at the wrong time or place or in the wrong manner, and is not to be taken as signifying satisfaction with or willingness to retain the goods, as in the case of acceptance. (15.04)
82
Must a buyer accept delivery by instalments?
No, not unless the contract expressly provides for instalment delivery, s.31(1).
83
Does shipping goods under separate bills of lading automatically create an instalment contract?
No, not if the contract calls for a single tender of documents.
84
If a buyer accepts less than the contract quantity, must they accept the remainder later?
No, the buyer may insist on a single delivery unless otherwise agreed, implied by s.31(1) SGA.
85
How do courts determine whether deliveries are made under one contract or several?
By examining documentation, timing, and whether contract terms are unified or varied.
86
Do general terms of sale constitute a contract of sale?
No, they only govern future contracts unless displaced.
87
What is a “call-up” arrangement in sale contracts?
It allows the buyer to request goods from a total agreed quantity over time—typically a single, severable contract.
88
If a contract allows instalments but each is to be a separate contract, does this create multiple contracts?
No, courts treat this as a single severable contract unless the clause would cause artificial division.
89
What makes an obligation “divisible”?
If each instalment of performance is matched with a corresponding part of the price or consideration, implied by s.31(2).
90
Is the right to spread performance the same as a divisible obligation?
No, divisibility requires a link between individual performances and payments, not just spread-out delivery.
91
Does an instalment clause automatically make a delivery obligation divisible?
No, unless there is an express or implied term that each instalment has its own price or consideration.
92
What is the main effect of an indivisible delivery obligation?
A breach or rejection of one instalment may amount to repudiation of the entire contract, s.31(2).
93
Can a seller demand part-payment for partial delivery under an indivisible contract?
Only if the buyer elects to accept that partial delivery.
94
What happens if a buyer improperly rejects an instalment in an indivisible contract?
It constitutes repudiation of the whole contract, s.31(2).
95
What if a seller tenders a defective instalment too late to retender under an indivisible contract?
The breach may discharge the entire contract, even if the seller wants to perform the remainder.
96
How does a seller’s lien operate in indivisible contracts?
The seller may withhold all undelivered goods if the buyer defaults, since the delivery and payment obligations are treated as one.
97
Can destruction of part of the goods frustrate an indivisible contract?
Yes, if the loss occurs before risk passes to the buyer,
98
Can a buyer reject future instalments after accepting one under an indivisible contract?
Yes—acceptance of one instalment no longer bars rejection of later instalments unless they are part of the same commercial unit.
99
What is the effect of divisibility on remedies for breach of one instalment?
Each instalment is treated as a separate contract; breach of one does not automatically repudiate the whole.
100
How does the Consumer Rights Act 2015 affect instalment deliveries?
Consumers are not bound to accept instalments unless agreed; remedies include rejection, damages, or contract termination depending on the breach, s.26(1).
101
Which of the following best describes a sale "in the course of a business" for the purposes of s.14(2) SGA 1979
1. A business sells any goods. (Correct)
2. A business sells goods only with the intention to make a profit.
3. A business sells goods to make a profit and does so.
102
In any given case, all of the criteria in s.14(2) SGA 1979 must be considered when deciding whether the goods are of satisfactory quality?
False
103
The criteria set out in the s.14(2B) GGA 1979 are an exhaustive list, no other can be considered?
False
104
In B2B contracts, what is meant by exclusion and limitation clauses?
An exclusion clause aims to eliminate liability for a particular circumstance. A limitation clause caps liability. Such clauses are subject to the Unfair Contract Terms Act 1977, which makes excluding liability for death or personal injury as a result of negligence invalid, s.2(1). Other exclusions must pass the reasonableness test set out in s.11
105
In consumer contracts, how are exclusion and limitation clauses regulated?
By the CRA 2015. Governs B2C contracts made on or after 1 October 2015. A clause must be 'fair', s.62. A trader cannot exclude or restrict liability for death or personal injury resulting from negligence, s.65(1). Under s.31(1), liability cannot be excluded for unsatisfactory quality, s.9, fit for particular purpose, s.10, or description, s.11, also ss.12-17, s.28 and s.29.
106
What is a force majeure clause?
A clause that frees a party from liability or obligation for an event beyond their control. English law does not imply force majeure clauses — they must be expressly included. Without it, a party may need to rely on the more restrictive doctrine of frustration.
107
What is the 'grey list'?
Under Sch.2, terms that are prima facie unfair.
108
In a B2B contract, can a party exclude or restrict liability for negligence?
Yes, provided the exclusion or restriction is reasonable under s.11 UCTA.
109
Can liability for breach of s.12 SGA be excluded or restricted?
Never, s.6(1) UCTA
110
In a B2B contract, can liability for breach of any of ss. 13, 14, or 15 be restricted or excluded?
Yes, if reasonable, s.6(1A).
111
What are the advantages and disadvantages of the use of the innominate term?
Whether a contract can be terminated or not depends on the severity of the effect of the breach.
Such terms increase uncertainty, since future effects are unknown.
112
What is meant by delivery?
Voluntary transfer of possession from one person to another ; except that in relation to sections 20A and 20B above it includes such appropriation of goods to the contract as results in property in the goods being transferred to the buyer.
113
What provision of the SGA, does Rowland v Divall align with?
S.12, Implied terms about title, etc.
114
What important principle did Harlingdon & Leinster Enterprises v Christopher Hull Fine Art (1999) introduce?
A descriptive statement does not fall under s.13 SGA unless it is a contractual term.
115
Why did Harlingdon & Leinster Enterprises v Christopher Hull Fine Art (1999) create controversy?
Because it introduced reliance on the description as necessary for a buyer to invoke s.13(1).
116
In Lord Diplock's view, in Ashington Piggeries v Christopher Hill (1972), when would a description not conform to s.13(1)?
When the goods tendered were 'of a different kind'. Only if the goods cannot be identified by the description, can s.13(1) be invoked.
117
In Qatar Investment v Eskenazi, why was s.13(1) held not to be applicable?
Statements given by the seller were not 'description' under s.13(1) but simply opinion.
118
What are the pros and cons of the usefulness of s.13?
1. Harlingdon potentially narrows s.13’s scope, but it also brings clarity to its operation—requiring that a description must form a contractual term, not just a seller’s opinion or puffery.
2. Ashington Piggeries and The Diana Propserity posit that only those descriptive words that identify the kind or essential characteristics of the goods are covered by s.13.
3. In Peter Darlington & Partners v Gosho Co and Steel & Busks v Bleecker Bik, the courts considered trade norms in deciding whether goods conformed to their contractual description.
