Extract from notes by the late Ms. Kilonsi Kobusingye (lecturer, Uganda Christian University )
Applicable law :
Sale of goods Act.
Case law.
Not all statements uttered during negotiations of a contract amount to terms of the contract. There may be statements that are mere representations. These are outside the contract. The common ones include commercial puff, which is merely aimed at colouring the contract to induce the purchasers to buy. However, whether a statement is a mere representation or a term of a contract will mainly depend on the conduct of the parties and the circumstances of the case. For instance, if a person is buying a car from a shop, a statement from a professional mechanic attached to the shop may be given greater weight than a statement from a sweeper in the same shop.
OSCAR CHESS LTD V WILLIAMS (1557) ALLER 325
Facts: A dealer purported to sell a car to a customer quoting the date in the registration book as the model of the car. He said it was a 1948 model, which he uttered honestly, not knowing it was false, yet it was a 1939 model.
Held: The dealer was only liable for innocent misrepresentation.
Question: Do you think the court would have reached a different decision if the dealer knew the actual model of the vehicle but intended to defraud the purchaser?
DICK BENTLEY PRODUCTIONS LTD V HAROLD SMITH MOTORS LTD (1965) 2 ALLER 65
Facts: There was a sale of a car that was said to have covered 20,000 miles when in fact, it had covered 100,000 miles.
Held: Since this was a statement coming from an expert salesman, then he was liable.
This case shows that liability may be founded on a statement made by a professional dealing in goods or services as the subject matter of the contract.
CONDITIONS AND WARRANTIES
These are terms of a contract.
A condition is a major term of a contract, the breach of which entitles the aggrieved party to repudiate the contract and/or sue for damages.
A warranty is a minor term of the contract, whose breach entitles the other party to sue for damages only.
According to S1 (1) of the Sale of Goods Act, a warranty is a term collateral to the main purpose of the contract. The section also provides that whether a term breached is a condition or a warranty depends on the conduct of the parties and the circumstances of each case.
The section further provides that a breach of condition may be treated as a breach of warranty. In this case, the aggrieved party will have waived his right to repudiate or end the contract, i.e. reject the goods and opt to sue for damages.
The distinction between a condition and a warranty can be seen from the remedies available for either.
KAMPALA GENERAL AGENCY (1942) LTD V MODYS E.A LTD [1963] EA 549
Facts: X sold goods to Y, to be delivered at a certain place, but they were delivered to a different place from the agreed one.
Issue: Whether a condition or warranty had been breached?
Held: A warranty was breached and the purchaser could only sue for damages, but could not repudiate the goods. A condition of a contract of sale is an obligation essential to the performance of the contract which when not performed will amount to a substantial failure to perform the entire contract.
EXPRESS TERMS OF A CONTRACT
These are openly said or written i.e. in an oral or written contract respectively, however, not all terms are expressly stated in a contract. Consequently, certain terms may be implied by statute or by the courts. As we shall see, terms are implied only in well-defined circumstances mainly because of the doctrine of freedom of contract which allows parties to freely and voluntarily contract, provided they have the capacity to do so.
IMPLIED TERMS (by Law)
Implied terms may be those implied by fact, i.e. not expressly set out in the contract, but which the parties must have intended to include.
Terms may also be implied by custom or by law. Such laws include the Sale of Goods Act. The general rule is Caveat Emptor i.e. Buyer beware. When a buyer purchases goods, having reasonably examined them, and they later turn out to be defective, s/he shouldnt be heard complaining. This doctrine has origins in the era of feudalism where persons were obliged to investigate title to land. This doctrine was, however, found unfair and the law had to come in to imply certain terms in the contract of sale to protect the purchasers. Such terms include:
IMPLIED CONDITION AS TO TITLE (S 14 Sale of Goods Act)
The section provides that in a contract of sale, the seller has the right to sell the goods while in an agreement to sell. The seller shall have the right to sell the goods when the property is to pass. Where this condition is breached, the buyer can either repudiate the contract or sue for damages.
Section 14 of the Sale of Goods act states that; Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and if the sale is by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.
ROWLAND V DIVALL
Held: Where this section is not complied with, i.e. where there is a breach of condition as to title, the purchaser can reject the goods and in addition, recover the whole of the purchase price paid.
The Sale of Goods Act further provides that the seller must sell the goods free from encumbrances i.e. free from adverse claims or interest in the goods. It also provides that the seller must guarantee the buyer quiet possession and enjoyment of the goods. These two are warranties and when they are breached the buyer is entitled to sue for damages.
Examples
I)John sells a car to Kenneth at 5,000,000/=, which Kenneth pays in cash. While driving the car, Kenneth is stopped by court bailiffs who produce an agreement and executed transfer forms showing that John had already sold the car to Thomas who had paid him 7,000,000/=. This fact was not disclosed to Kenneth. What remedies are available to Kenneth?
Kenneth could either repudiate the goods or sue for damages since this was a breach of implied condition as to title.
2)Kenneth, while driving the car, is stopped by John, who says Kenneth must give him a lift to visit his girlfriend. What is the position of the law?
Kenneth can sue for damages on the claim that John was not giving him quiet possession and enjoyment of the goods i.e. breach of warranty.
IMPLIED CONDITION AS TO DESCRIPTION (S14 Sale of Goods Act)
Example
Abdullah contracts to sell to Joanita 10 bags of one colored beans (white). Abdullah delivers 10 bags of multi-colored (black, white and green) beans. What is the position of the Law? Is Joanita obliged to take the delivery of the multi-colored beans?
Section 14 of the Sale of Goods Act states that; Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and if the sale is by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.
3) IMPLIED CONDITION AS TO MERCHANTABILTY OF THE GOODS (S15 Sale of Goods Act)
S 15(b) of the Sale of Goods Act provides that the goods sold must be of merchantable quality.
Its states that; Subject to the provisions of this Act and of any Act in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows (a) where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the sellers skill or judgment, and the goods are of a description which it is in the course of the sellers business to supply, whether the seller is the manufacturer or not, there is an implied condition that the goods shall be reasonably fit for the purpose; except that in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose; (b) where goods are bought by description from a seller who deals in goods of that description, whether the seller is the manufacturer or not, there is an implied condition that the goods shall be of merchantable quality; except that if the buyer has examined the goods, there shall be no implied condition as regards defects which the examination ought to have revealed; (c) an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade; (d) an express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent with it.
GRANT V AUSTALIAN KNITTING MILLS
Held: Goods were said to be of merchantable quality if they are commercially saleable i.e. if they can readily obtain the market intended for them.
Thus, merchantable quality does not mean brand new. A contract for second hand clothes is good, except where the parties expressly agreed that the clothes must be brand new. This, however, applies where the buyer has examined the goods and has relied on his own skill and judgment. Consider Ugandas situation.
Example
Florence purchases a box of biscuits and later discovers that 4 packets have been eaten by rats. Can she recover for the defects in the quality of the goods?
Merchantability refers to the liability of the sellers for the defects in the quality of the goods.
Critique of the law
But is this fair? Can courts uphold caveat emptor in such a situation of packed goods like biscuits as above? How often do people examine goods to find defects, which are not apparent but are latent? Do sellers permit people to open these packed goods anyway? Which shop-owner would let a customer examine the packaged goods before purchase? How many people know of the existence of these laws? How many can afford to hire lawyers for litigation purposes?
IMPLIED CONDITION AS TO FITNESS FOR PURPOSE (S 16 Sale of Goods Act)
S 16 provides that the goods sold must be fit for the purpose for which they are sold. This is where the purpose is made known to the seller except where the goods have an obvious or single purpose. It should be noted that goods may be merchantable but not fit for the purpose for which they are bought.
It should be observed that the law gives with one hand and takes away with another. Although the Sale of Goods Act provides for these implied terms, it still maintains in S16, the opening paragraph thereof, “there is no implied warranty or condition to the quality or fitness for purpose of goods supplied under a contract of sale...”
Under S16 (a) the proviso says, “in the case of a contract for sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose.”
Furthermore, S 16(c) and (d) refer to annexing an implied term by usage of trade. S 54 provides that terms may be varied by express agreements between the parties. The latter provision creates a loop hole in which the Law uses freedom of contract to take away the liberties meant to be protected by the implied terms. It is essential to analyse the provisions.
IMPLIED CONDITION AS TO SAMPLE (S 17 Sale of Goods Act)
S 17 provides that where there is a sale of goods by sample, there is an implied condition that the bulk shall correspond with the sample. The buyer should be availed reasonable opportunity to compare the bulk with the sample. For example, if Coffee Ltd. contracts to sell 10 tonnes of coffee to a consignee in Japan and send 10kgs as a sample of clean coffee, the 10 tonnes must correspond with the 10kgs in description and quality.
6)STIPULATIONS AS TO TIME
According to s.11 of the Sale of Goods Act Cap 82, unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale; whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract.
The Contracts Act of 2010 provides for Time and place for performance of a contract. In s.42 (a) it provides that where the time for performance is not specified in a contract, the engagement shall be performed within a reasonable time. As to what a reasonable time is, that depends on the circumstances of each case and the subject matter involved.
Critique of the law
To what extent do these implied terms protect a purchaser of goods from an unscrupulous seller? Did the Chalmers Sale of Goods Act 1893 (the original SOGA in England, on which our SOGA was based) intend to protect the purchaser/consumer of the goods? The Act was enacted in 1893 in the era of monopoly capitalism, but was a codification of the laws on Sale of goods which held sway in the era of competitive capitalism which was characterized by interalia notions like freedom of contract. The laws were designed mainly to protect the interests of the industrial capitalists to the detriment of the workers and peasants who were the consumers of the goods produced by the industry. The notion of freedom of contract runs through the very spirit and letter of the Sale of Goods Act cap 82.
S2 of the Sale of Goods Act stresses the contract between the seller and the buyer. Despite the implied terms in the Act, the ugly head of caveat emptor still remains entrenched in the Act. S 15 illustrates this. One hand of the law provides that the seller is under the obligation to sell goods that are fit for the purpose while the other takes this away in the proviso where the goods are sold by their trade name or patent. Most often than not, however, most of the goods are sold by their trade names. S 15 provides that the seller must sell goods which are of merchantable quality but lodges a caveat on this, that the sellers obligation disappears the moment the purchaser has examined the goods.
Arent these provisions empty? Do they protect the customer/purchaser? The ugly head of freedom of contract, once again. How does an impoverished peasant benefit from these provisions? Does he care about quality when he is not adequately supplied with the defective ones? How strong is our Bureau of standards to enforce quality? How strong is the pre-inspection system? Do sellers actually afford reasonable opportunity to purchasers to examine the goods? What about the misleading adverts? What about the dumping of cheap worthless quality goods by the developed North to the South? What is the level of awareness among our own people? These laws are couched in complicated legal jargon, which even the literate may not be able to understand without the help of a lawyer.
How many can afford the costs of litigation? Can the argument be that these provisions were inserted to facilitate exchange of goods and ensure surplus profit for the capitalist seller to the detriment of the purchasers, the majority of whom are peasants and workers? It should be noted that the state may be quick to put forward laws or reforms as a way of hood-winking workers, who have risen against it by way of trade unions. Also, it must be noted that the first Sale of Goods Act was enacted primarily to promote the interests of capitalism, probably to calm down the tempers of the workers who were complaining of defective products at the time.
Was it fair to over emphasize the doctrine of freedom of contract with the prevalent and unequal bargaining power between the capitalist sellers and the purchasers? What can be done, considering that Uganda has merely inherited such laws which represent an unfair state of affairs for the general public whom they are meant to protect?
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