Chapter 7
The Sale of Goods Act 1979
In this chapter important rules laid down by the Sale of Goods Act 1979 are examined. This
is not the first time that the Sale of Goods Act has been considered. In Chapter 3 ss. 12–15
of the Act, which imply statutory terms into contracts of sale of goods, were examined.
Before examining the nature of the statutory implied terms, the definition of a contract of
sale of goods was considered. If you have forgotten this definition you should re-read it.
It is necessary to remember the definition of a contract of sale of goods because the rules
considered in this chapter apply only to contracts of sale of goods. Similar rules do not
apply to other types of contracts.The passing of ownership and risk
The purpose of a contract of sale of goods is to pass ownership of the goods from the
seller to the buyer in return for payment of the price. The SGA 1979 sets out rules which
determine exactly when ownership does pass. It can be important to know exactly when
ownership passes for two main reasons:(i) The goods might become lost or damaged. The party who owned the goods at the time
of the loss or damage will generally have to bear the loss.
(ii) Either the buyer or the seller might become insolvent. The rights of the solvent party
will depend upon whether or not ownership had passed at the time of the insolvency.The goods become lost or damaged
Riskmeans the risk of the goods becoming lost, damaged, stolen or destroyed. Section 20(1)
of the SGA 1979 provides that, unless the buyer and seller have agreed otherwise, the risk
of the goods being lost or damaged remains with the seller until ownership of the goods
passes to the buyer. Once ownership of the goods has passed to the buyer, then the risk of
loss or damage passes to the buyer. The parties might of course agree that the rule set out
in s. 20(1) should not apply, but generally they do not do this. So if the goods are acciden-
tally lost or damaged, the loss will usually fall upon the person who has ownership of the
goods. It is worth noticing straight away that ownership of the goods is not the same thing
as possession of the goods. Section 20(1) provides that the risk passes with ownership
whether the goods have been delivered to the buyer or not.
Section 20(4) makes an exception to the rule set out in s. 20(1). It provides that where the
buyer deals as a consumer the goods remain at the seller’s risk until they are delivered to
the consumer. The complex definition of a person who ‘deals as a consumer’ for purposes