What is to be done about sale of goods?, L.Q.R.

2003, 119(Apr), 173-177

For educational use only

Journal Article

Law Quarterly Review

L.Q.R. 2003, 119(Apr), 173-177

Subject
Sale of goods

Other related subjects

Keywords
Consumer protection; EC law; Guarantees; Sale of goods

Legislation cited
Directive 1999/44
Sale and Supply of Goods to Consumers Regulations (Draft)

*L.Q.R. 173 SINCE the law of sale of goods was first codified in 1893, it has been the subject of statutory change on at
least 10 occasions without counting the consolidation itself in 1979. If Sir Mackenzie Chalmers were alive to read the Act in
its current version, he might be mystified by references to credit brokers in section 14 and he would in all probability find it
difficult to follow the thread of changes made to the rules on examination and acceptance in sections 34-35, some, but not all,
of which are due to the recognition of consumer sales as a case apart. Whatever criticisms he might have about section 35,
however, would surely pale into insignificance if he read the lengthy draft Regulations designed to transpose the Directive on
Consumer Sales Guarantees (99/44) ("the 1999 Directive"). The draft Regulations depart in matters of both style and substance
from an earlier draft contained in a consultation paper issued by the DTI in February 2002. In both cases, the impact of the
Regulations upon the scheme of the Sale of Goods Act 1979 ("the 1979 Act") and related statutes is drastic. There are two
main ways in which a directive may be transposed in English law. The first, available where there is no statutory base upon
which to engraft it, is simply to implement the ipsissima verba of a directive, leaving it to the courts to make whatever sense
of it as they are able. This was done with the Commercial Agents Directive (86/653) (transposed by the Commercial Agents
(Council Directive) Regulations 1993 (SI 1993/3173) and subsequent regulations). The other way is to integrate the directive
into an existing statutory framework, however painful that might be. This is the method adopted in draft Regulations for the
Directive on Consumer Sales Guarantees.

The Sale of Goods Act 1893 was passed to codify case law dealing with what were, by today's standards, small-scale commercial
transactions. The legislation has been stretched by subsequent changes to accommodate *L.Q.R. 174 consumer transactions
and is now set to be changed again by regulations made to transpose the remedial scheme of the Directive on Consumer Sales
Guarantees. The Directive, together with the rest of the acquis communautaire concerning consumer transactions, has had such
a disturbing impact upon parts of the German Civil Code as to have led recently to major changes in the provisions dealing with
breach of contract and remedies (see Schlechtriem (2002) Oxford U. Comparative L. Forum 2). In comparison with that, its
impact upon English law is less drastic, if only because English lawyers, not repelled by unintegrated case law and statute and
anchored in the tradition of an uncodified private law, are more tolerant of amended statutes that have lost their shape. Even
so, it is timely to ask the question whether a single Sale of Goods Act can continue to embrace a community of different types
of sale contract. It is not just that a divide has opened up between commercial and consumer sales. There are also radically
different types of commercial sale. On the London metal exchange, one might fairly justify the rule for assessing damages
for nondelivery by reference to the market on the due date of performance, on the ground that the buyer might already have
prepared the ground by negotiations with alternative sellers in case of the original seller's default (see Shearson Lehman Hutton

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Inc v Maclaine Watson & Co Ltd (No 2) [1990] 3 All E.R. 723 at p.731). Buyers on a smaller scale of goods that they intend
to use or consume will nevertheless have difficulty seeing the point of the presumptive market rule of damages assessment.
Those same buyers, receiving defective but repairable goods that they intend to retain, might also prefer to see a rule of damages
assessment that looks expressly to the cost of repair rather than to a difference in value between the goods they did receive and
the goods they ought to have received (section 53).

The tension between commercial and consumer sales is also played out in the history of the condition of merchantable quality.
As a standard for small-scale commodity dealings, it could aptly be infused with meaning by case law development without
there being a true statutory definition. Commodities, as we are told, can exist in the market--a highly varied field of activity--in
any grade or condition, and yet all be merchantable if they are priced and described accordingly. Once, however, the standard of
merchantable quality comes increasingly to embrace manufactured goods, especially sophisticated goods capable of multiple
uses, the lack of a statutory definition poses real problems. The continuing focus of the implied term on merchantable goods
also appears incongruous, so that recourse has to be made to an alternative epithet, "satisfactory", which introduces difficulties
of a different kind. The satisfaction of a diner and of an examiner are not at all the same thing, hence the need to tease out the
meaning of the implied term in increasingly complex statutory language. Moreover, the emergence of the consumer dimension
compounds these problems because any statutory definition that emerges no longer need *L.Q.R. 175 serve only a dispositive
purpose; it must also serve the didactic purpose of educating the consumer or consumer rights organisation reading the statute.
This may account for the laboured debate of a generation ago about whether a definition of merchantable quality that expressly
mentions fitness for purpose impliedly includes also cosmetic standard and finish, or whether the failure of the Westminster
draftsman to mention this latter feature condemns the consumer buyer of manufactured goods that are functionally serviceable
to accept them notwithstanding cosmetic blemishes.

It is not just a matter of the needs of different types of buyer being accommodated with difficulty in common statutory provisions.
Latterly, certain provisions of the 1979 Act have no application or a differential application to consumer buyers. Hence the
"slight" breach rule in section 15A, already very limited in its effect, is confined to non-consumer sales. Further, consumer
buyers may not waive the right to examine that acts as a bar to prior conduct amounting to an intimation of acceptance of goods
or an act inconsistent with the seller's ownership (section 35(3)). A consumer buyer may therefore no more surrender the right
of rejection than he can surrender the right to receive satisfactory goods or goods that are reasonably fit for purpose (under the
Unfair Contract Terms Act 1977).

The draft Regulations that are designed belatedly to implement the 1999 Directive will widen the gap between provisions
confined to consumer sales and provisions of general application and in the process will load the Act with an encumbrance that
will compromise its structure. The buyer's current rights in the face of non-conforming goods are to reject them and recover the
price paid, which may then be applied, if the buyer wishes, to the purchase of substitute goods from another source. There may
or may not also be a damages claim representing out-of-pocket expenses. According to the draft Regulations, the buyer may
avail himself of additional rights to have the goods repaired or replaced, a type of specific performance on terms that leaves it
unclear whether the seller or buyer chooses repair or replacement. The buyer "has the right … to require the seller to repair or
replace the goods": does this mean the buyer may require the seller to choose between the two or may require either one of the
two remedies? It probably means the former since "right" is mentioned once and only in the singular.

In other cases, the buyer may choose the civil law remedy of a price reduction (actio quanti minoris), which is not a damages
action, or seek the (undefined) "rescission" of the contract "with regard to the goods in question" (whatever that means).
Although its effects may otherwise be similar, rescission in the draft Regulations is not the same as rejection and termination: it
is not subject to the acceptance rules in section 35. Indeed, the draft Regulations clearly contemplate that the buyer may seek in
appropriate cases rescission more than six months after delivery. They also *L.Q.R. 176 provide for any benefit--a function of
extensive use--that the buyer has received from the goods to be offset against any reimbursement due to him. The earlier draft
Regulations subjected the right of rescission to cases where the lack of conformity was not "minor". Since consumer buyers
rejecting goods are not subject to the "slight" breach rule in section 15A and the "minor" restriction has disappeared in the
current draft Regulations, consumer buyers will now acquire new rights that are additional to and quite incompatible with rights
they already have under the Sale of Goods Act. In other respects, the draft Regulations seek to create a protocol between the
sets of remedies in the present Act and the new remedies. As a result of a type of statutory election, a buyer seeking repair or
replacement will not be permitted to reject the goods and terminate the contract for a breach of condition.

Apart from all of these additional remedial provisions, set out in a style that jars dreadfully with those provisions of the 1979 Act
dating from 1893, there are other complex provisions relating to evidence and time periods, risk and the definition of satisfactory
quality. Moreover, it is not just the 1979 Act that will be ploughed over if these or new regulations are passed. The Supply of

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Goods (Implied Terms) Act 1973, the Unfair Contract Terms Act 1977 and the Supply of Goods and Services Act 1982 are
all the beneficiaries of new provisions.

The time has come to separate consumer and non-consumer sales. A consumer sales statute is imperatively needed. One may
sympathise with the Department of Trade and Industry in coping with the imposing task of transposing the 1999 Directive
whilst leaving the consumer buyer's existing rights untouched, but the likely result will be a blot on English law. For the sake
of simplicity, it would be better if the buyer's rights and remedies in respect of non-conforming goods were to be drafted anew
in accordance and starting with the terms of the Directive on Consumer Sales Guarantees. It might be thought appropriate
that the existing rules of rejection, acceptance and termination be dispensed with altogether for consumer cases. The buyer's
existing right to reject and terminate is largely illusory when the buyer does not know if the brief acceptance period has tolled.
In addition, certain provisions of the 1979 Act (such as the sections on title transfer) might be dropped from a consumer sales
statute. A consumer sales statute might even be consolidated with other consumer statutes, the whole possibly incorporating
the existing acquis communautaire in the field of consumer law.

If consumer sales were to be extracted, the way would be open to revise for commercial sales a statute that, dating from the late
nineteenth century, codified cases decided throughout that century. This could be done as part of an integrated plan to codify
commercial law, a measure cogently advocated by Professor Goode as essential for the continuing influence of English law
on the world stage. It may be some considerable time, if ever *L.Q.R. 177 it occurs, before we have a European contract or
commercial code superseding national laws. As all of this is being done, we might also consider breaking ranks with India and
Japan and joining the other 62 countries or so that have adopted the United Nations Sales Convention of 1980. The English
commercial law of sale may be more than adequate for commodity sales but there is much to be said for the view that the
UN Convention is better suited for certain types of sale, especially those involving continuing co-operation, such as contracts
for the supply of machinery to be installed by the seller, where contractual continuance is more desirable than hair-trigger
termination rights.

The total package outlined above may be seen as a pipe dream, for why should one suppose there has occurred any particular
event justifying the interruption of the steady degradation of English commercial law statutes? However that may be, the
transposition of the 1999 Directive makes an immediate case for the separation of consumer sales and commercial sales.

MICHAEL BRIDGE.

Footnotes

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