Terms implied by statute 79Where there is a chain of innocent sellers, the loser will generally be the person who bought
from the thief, as in Rowland vDivall. Of course, this person could successfully sue the
thief, but in practical terms this would probably be a waste of money as it is most unlikely
that the thief could be found and would have the money to pay when the case reached
court.
However, if any of the the sellers in the chain has become insolvent then the person who
bought from that seller will be the one with no practical remedy.
For example, let us assume that a thief has stolen a car from its owner and then sold
the car to A, who sold it to B, who sold it to C, who sold it to D. As can be seen from the
diagram, A will be the loser.
But now let us further assume that B has become insolvent. D can recover from C, but C
cannot recover from B. Nor can C leapfrog B and sue A – there is no contract between the
two of them.
Section 12(2) implies two warranties. First, that the goods are free from encumbrances,
meaning that no-one has a mortgage or charge over the goods. Second, that no person will
interfere with the buyer’s right to enjoy quiet possession of the goods. This term would be
important if the seller owned the goods sold and had the right to sell them, but the buyer
was later prevented from using the goods because a third party had acquired a property
right, such as a patent, in the goods. The term will not be implied if the seller reveals before
the sale that the buyer will not enjoy quiet possession of the goods. As we have seen, when
a warranty is breached the injured party can claim damages for breach of contract, but can-
not treat the contract as terminated.
Correspondence with description (s. 13(1))
Section 13 of the SGA 1979 provides that:
Where there is a contract for the sale of goods by description, there is an implied [condition] that
the goods will correspond with the description.A seller has no obligation to describe the goods sold. Furthermore, the fact that the seller
has made a description does not necessarily mean that the goods were sold by that descrip-
tion so as to bring in s. 13.
Several hurdles must be overcome before s. 13 is satisfied. First, there must actually have
been a description of the goods. Second, the description must have been intended to be
a term of the contract. Section 13 will not apply if the description was intended to be a
representation or intended to have no legal effect. Third, the goods must have been sold
by reference to the description. So it must have been reasonably intended that the buyer
would rely on the description. For example, in Harlingdon & Leinster Enterprises Ltd v
Figure 3.4Who is the loser?