Lloyd's Maritime and Commercial Law Quarterly
THE MODERNIZATION OF SALES LAW?
The Sale and Supply of Goods Act 1994
The terms relating to quality implied by legislation into sale and supply contracts for goods have undergone a dramatic change in character during recent years. From default rules which applied unless the contrary was expressed, the terms have become nonexcludable incidents of such contracts involving consumers and are only excludable where reasonable in commercial contexts. Criticism remained, however, that the central quality condition—”merchantable quality”—was outdated and that what may have been a useful term between merchants in the 19th century was not appropriate for the needs of the modern consumer society. The Sale and Supply of Goods Act 1994 remedies this defect by remodelling the implied term as one of “satisfactory quality”.
Those who view these changes as a mere sop to the consumer movement would do well to remember that the new term also applies to commercial transactions, and even the restrictions on contracting out apply to a limited extent to commercial transactions. These might be viewed as a new co-operative welfarist ethic which extends beyond consumerism.1 Such issues cannot be explored fully in this Comment; instead it will concentrate on showing that the change of terminology and definition may bring significant benefits to buyers if the courts treat this as a signal to provide a more purposive application of the term, especially in consumer transactions. Yet it will be argued that an opportunity was missed for fundamentally modernizing the law by the failure (i) to modernize the remedies available for breach of contract; (ii) to extend the parties responsible for the quality of the goods to include manufacturers and to allow donees and successors in title to benefit from the implied terms; and (iii) to create a coherent scheme covering both the implied terms and those guarantees voluntarily offered sometimes by retailers, but more commonly by manufacturers.
“Satisfactory quality”
Case law on the merchantable quality condition had fluctuated between being based on an “acceptability” test and a “usability” test. The statutory definition (enacted in the Supply of Goods (Implied Terms) Act 1973) was weighted towards the usability approach, which because of its emphasis on functionality tended to be detrimental to consumers. It provided2 that:
Goods of any kind are of merchantable quality … if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances.
There was no inherent need for this standard to be unfair to consumers and many commentators believed the courts had remedied mistakes made in the past by a series of
1. Similar issues are explored in Brownsword, Howells & Wilhelmsson, Welfarism in Contract Law (Dartmouth, London, 1994).
2. See Sale of Goods Act 1979, s. 14(6) (now repealed).
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