Keenan and Riches’BUSINESS LAW

Chapter 10Contracts for the supply of goods and services

terms, which were previously implied into these con-
tracts by the common law, follow the pattern established
by ss 12–15 of the Sale of Goods Act 1979 as amended,
in relation to contracts for the sale of goods.
Section 2 contains an implied condition that the
transferor has the right to transfer the property in the
goods, and implied warranties that the goods are free
from undisclosed third-party rights and that the buyer
will enjoy quiet possession of the goods. Where there is
a contract for the transfer of goods by description, under
s 3 there is an implied condition that the goods will
correspond to the description. Section 4 provides that
where goods are transferred in the course of a business,
there are implied conditions that the goods are of sat-
isfactory quality, and reasonably fit for the purpose.
According to s 5, where there is a transfer of goods by
reference to a sample, there is an implied condition that
the bulk will correspond with the sample.
These implied terms apply in exactly the same way
as the terms implied by ss 12–15 of the Sale of Goods
Act 1979 as amended. Similarly, attempts to exclude the
obligations contained in ss 2–5 of the 1982 Act are sub-
ject to control on the ‘Sale of Goods’ model. The implied
terms as to title (s 2) cannot be excluded or restricted by
any contract term. Sections 3–5 cannot be excluded or
restricted where the transferee is dealing as a consumer;
if the transferee is not dealing as a consumer, the exemp-
tion is subject to the reasonableness test, as laid down in
the Unfair Contract Terms Act 1977.

Contracts for the hire of goods

The second set of implied terms in Part I can be found
in ss 7–10. They apply to contracts under which ‘one
person bails or agrees to bail goods to another by way of
hire’ (s 6). This includes both consumer and commer-
cial hire agreements, but HP agreements are expressly
excluded. The terms implied in hire contracts by ss 7–10
match, as far as is possible, the implied terms in contracts
for the sale of goods. Section 7 provides that there is an
implied condition that the bailor has a right to transfer
possession of the goods to the bailee and that the bailee
will enjoy quiet possession of the goods during the period
of hire. By s 8, where there is a contract for the hire of
goods by description, there is an implied condition that
the goods will correspond with the description. Section
9 provides that, where goods are hired in the course of a
business, there are implied conditions that the goods are
of satisfactory quality and reasonably fit for the purpose.

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Section 10 covers implied conditions in relation to con-

tracts for the hire of goods by reference to a sample.

The implied terms contained in s 7 (right to transfer

and quiet possession) can be excluded or restricted if the

exemption satisfies the reasonableness test. The implied

terms as to description, quality and sample cannot be

excluded or restricted as against a person dealing as a

consumer; in a non-consumer transaction, these implied

terms can be excluded subject to the requirement of

reasonableness.

Additional rights and remedies of consumers

under the Sale and Supply of Goods to

Consumers Regulations 2002

The Sale and Supply of Goods to Consumers Regulations

2002 make amendments to the Supply of Goods and

Services Act 1982 to ensure that the additional rights and

remedies made available to consumers under the Sale of

Goods Act 1979 are also extended to consumers who

obtain goods other than by way of a contract for the sale

of goods, e.g. by hire, HP or exchange. From 31 March

2003, the transferor of goods acquires liability for public

statements made by himself, the producer of the goods

or his representative. The new remedies for consumers

are for repair or replacement or, if repair or replacement

is impossible or disproportionate or the transferor fails

to repair or replace the goods within a reasonable time

and without significant inconvenience, the transferee

may claim a full or partial refund.

Implied terms in contracts for

the supply of services (Part II)

Recent years have witnessed a dramatic growth in the

service industry, which has been matched by a cor-

responding increase in customer dissatisfaction. The

National Consumer Council (NCC) highlighted the

problems in its report, Services Please, published in 1981.

Part II of the Supply of Goods and Services Act 1982,

which deals with contracts for services, is based largely

on the recommendations put forward by the NCC. Part

II of the Act came into force on 4 July 1983. A contract

for the supply of services is one ‘under which a person

(“the supplier”) agrees to carry out a service’ (s 12). This

covers agreements where the supplier simply provides a

service and nothing more, such as dry-cleaning or hair-

dressing. It also includes contracts where the provision