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Contract and Commercial Law Lecture 4 Section 14(3) Acceptance

Contract and Commercial Law Lecture 4 Section 14(3) Acceptance. Steph Shaw March 2010. Lecture Change. Next week’s lecture will be on Monday March 08 at 11 in BB 4.05. Section 14(3) SGA.

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Contract and Commercial Law Lecture 4 Section 14(3) Acceptance

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  1. Contract and Commercial LawLecture 4Section 14(3)Acceptance Steph Shaw March 2010

  2. Lecture Change • Next week’s lecture will be on Monday March 08 at 11 in BB 4.05

  3. Section 14(3) SGA • Section 14(3) states that if the buyer expressly or impliedly makes known to the seller any particular purpose for which the goods are being bought then there is an implied condition that the goods are reasonably fit for that purpose • Contrast with s14(2)-fitness for all the purposes for which goods of the kind in question are commonly supplied

  4. The basic ingredients of section 14(3) are that there is an implied condition that the goods must be reasonably fit for the buyer's particular purpose provided the buyer: • Has expressly or by implication made known to the seller the particular purpose for which s/he (the buyer) is purchasing the goods. • And the buyer • Is relying on the seller's skill or judgment that the goods will be reasonably suitable for this purpose (this reliance is presumed).

  5. Exceptions • where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller ... • s 14(3) frequently overlaps with s14(2) (satisfactory quality) • If goods are unfit for their one common use there is likely to be a breach of both implied conditions e.g. brand new car is found to be unroadworthy

  6. However where section 14(3) comes into its own and potentially provides the buyer with an additional remedy is where the buyer wants the goods for a use which is not common • Unlikely to be a breach of s14(2) if fit for the purposes for which it is commonly supplied but there could be a breach of s14(3) if certain requirements are satisfied

  7. Buyer must make known the particular purpose for which he is buying the goods • Priest v Last [1903] 2 KB 148 Can be implied when there is one obvious purpose as in: • Griffiths v Peter Conway [1939] 1 All ER 685. Followed by: • Slater v Finning [1997] AC 473. • Aswan Engineering v Lupdine [1987] 1 WLR 1

  8. Reliance • There must be reliance on the seller’s skill or judgment • The reliance must be reasonable • Onus on seller to prove this is not the case • Jewson Ltd v Kelly [2003] • Kelly bought 13 electric boilers which worked well but had the effect of giving the flats low home energy ratings • Unusual purpose was unknown to the seller • Seller could not have reasonably been expected to discover it

  9. Exclusion • Exclusion of the term in s14(3) or liability for its breach is regulated by UCTA 1977 s.6 • s14(3) cannot be excluded in consumer sales s6(2) UCTA • In non-consumer sales liability can be restricted or excluded only in so far as the term satisfies the test of reasonableness-s6(3) UCTA 1977

  10. Section 35 SGA Acceptance • Loss of right to reject goods • s11(4) where the buyer has ‘accepted’ the goods, breach of condition can only be treated as breach of warranty –buyer cannot reject (unless contract provides otherwise) • The buyer’s right to damages will remain

  11. s34 SGA Rules on acceptance • When the seller tenders delivery of goods to the buyer, he is bound on request to afford ther buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract Steph Shaw-Applied Contract Law

  12. Section 35 SGA • s 35(1)The buyer deemed to have accepted the goods when: • (a) He intimates to the seller that he has accepted or • (b) When the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of seller-resells or gifts goods, using goods more than necessary to determine conformity, consuming, attempting to repair goods

  13. Section 35 (2) • Where goods are delivered to the buyer, and he has not previously examined them, he is not deemed to have accepted them until he has had a reasonable opportunity of examining them • Time for rejection runs from date of delivery, not date of discovery of defect.

  14. Section 35 (4) • The buyer is also deemed to have accepted the goods when after the lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them

  15. If Buyer Rejects • Buyer does not have to return the goods but he must make them available to the seller to repossess Steph Shaw-Applied Contract Law

  16. Consequences of Rejection • Property revests in seller • Risk of damage/loss revests in seller • Position is as if the seller had not delivered. • If buyer has paid the price then he is entitled to recover • Buyer must take care since if he rejects in circumstances where he is not entitled to do so then he will be in breach of contract Steph Shaw-Applied Contract Law

  17. What is a Reasonable Time? • A question of fact • Nature of goods-perishable, complex • Conduct of the parties-seeking info • Nature of the market-volatile prices therefore time for rejection shorter • Any custom of the trade • What the parties expected the buyer to do with the goods-resale means longer time Steph Shaw-Applied Contract Law

  18. Rules continued • Reasonable time – attempt to specify shorter subject to UCTA (consumer/non consumer) • Attempt to specify longer time also subject to UCTA because allowing the buyer a long time to reject may be interpreted as allowing him to refuse performance of the contract Steph Shaw-Applied Contract Law

  19. Rules continued • Section 35 (6)(a) - Buyer not, by virtue of this section, deemed to have accepted because: • Asks for or agrees to repair by arrangement with seller J & H Ritchie v Lloyd or • s 35 (6)(b) the goods are delivered to another under a sub – sale • where the seller knows that the buyer will resell the goods a reasonable time would usually be the time expected to be needed to resell the goods plus an additional time in which the sub-buyer might inspect the goods and try them out – Truk (UK) Ltd v Tokmakidis GmbH [2000] Steph Shaw-Applied Contract Law

  20. Retention beyond a reasonable time-s35(4) • Bernstein v Pamson Motors (Golders Green)Ltd -3 weeks too long to reject • Clegg v Anderson Marine – five months not acceptance • J&H Ritchie Limited v Lloyd –seller repaired but would not tell buyer what the problem had been. A separate agreement had been entered into, a repair and inspection agreement. Seller’s refusal to provide info was in breach of that agreement • Fiat Auto Financial Services v Connelly [2007] • NB • s36 buyer not bound to return goods • Where right to reject lost - damages Steph Shaw-Applied Contract Law

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