Terms implied by statute 77case law on statutory implied terms is concerned with terms implied by the Sale of Goods
Acts. We therefore consider the terms implied by the Sale of Goods Act 1979 before we
consider the terms implied by the SGITA 1973 and the SGSA 1982.
Scope of the Sale of Goods Act 1979
The SGA 1979 applies only to contracts of sale of goods. Such contracts are defined by s. 2(1)
of the Act:
A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the
property in goods to the buyer for a money consideration, called the price.Reading s. 2(1), we can see that a sale occurs when a buyer pays money in return for
ownership of goods. It does not matter whether the buyer pays cash, by cheque or by credit
card. A free gift, however, where the buyer pays no money, cannot be a sale. Nor is it a sale
where goods are bartered (exchanged) for other goods.
Note also that the seller must transfer the property in goods (ownership of the goods) to
the buyer. This requirement rules out contracts to hire or to lease, where possession of the
goods is transferred but ownership is not.
As long as there is a definite commitment to pass ownership in return for money,
either immediately or in the future, it does not matter that the money is paid later or that
ownership is transferred later. If the contract agrees that the property in the goods should
be transferred at some future date, or when some condition has been satisfied, then this
is an agreement to sell goods rather than a sale of goods. Agreements to sell goods are
governed by the SGA 1979 and become sales of goods when the time elapses or the condi-
tion is fulfilled. For example, a merchant might agree to sell 100 tonnes of wheat of a certain
type, to be delivered on 1 August next year. This is an agreement to sell goods and is
governed by the SGA 1979. On 1 August next year the agreement becomes a sale of goods.
Meaning of goods
Section 61(1) of the SGA 1979 defines goods as ‘all personal chattels other than things in
action’.
A personal chattel is a physical thing which can be touched and moved, for example a
car, a cup or a computer. Land and houses cannot be moved and are real property rather
than personal chattels.
A thing in action is a right which can be enforced only by suing (taking legal action). A
guarantee, for example, is a thing in action. A guarantee may be written on a piece of paper
but the paper is not the property. The property is the right which the guarantee gives and,
ultimately, that right can only be enforced by suing the person who gave it. Debts and intel-
lectual property rights are other examples of things in action.
The terms implied by the Sale of Goods Act 1979
Sections 12–15 of the SGA 1979 contain five major implied terms, all of which are condi-
tions. These terms do not need to be mentioned by the buyer or the seller, as the Act will
automatically imply them into contracts of sale of goods. The five conditions implied by the
SGA 1979 are as follows.
(i) Section 12(1) implies a condition that the seller has the right to sell the goods.
(ii) Section 13(1) implies a condition that the goods will correspond with any description by
which they were sold.
(iii) Section 14(2) implies a condition that the goods are of satisfactory quality.