Implied Terms III

Conditions on the Sale of Goods I

The Sale of Goods Act, as amended in 1980, provides certain basic protections for consumers when they deal with a business, which cannot generally be overridden, or in some cases, may be overridden, only to the extent that the amendments are fair and reasonable.

A seller of goods undertakes that he has title to them and is entitled to sell them.  If the goods do not belong to the seller, or if another party has an adverse interest in them, then he has breached this condition.

The goods must comply with their description. If a product is described or labelled in a particular way, it must correspond with this description.

Where goods have been sold by sample, it is an implied condition, that the bulk corresponds with the sample. The buyer must be given a reasonable opportunity to inspect the sample.  If the bulk and sample are defective, the seller is liable unless the defect was apparent.


Conditions on the Sale of Goods II

Goods must be of so-called “merchantable quality”.  In broad terms, this means that they must be good for their normal use. They must be fit for the purposes for which goods of that kind are commonly bought. They must be as durable as is reasonable to expect, having regard to any description applied to them, their price and any other relevant circumstances.

The implied condition of merchantability does not apply to defects which have been specifically brought to the buyer’s attention, before the contract or where on examination prior to contract, the defects were or ought to have been revealed.

Where prior to the sale, a buyer makes the seller aware of the particular purpose for which the goods will be used, they must be fit for this purpose. The seller may not be liable if he can show that the buyer did not rely on his skill or judgement.  If for example, the buyer is more skilled and experienced than the seller, it may be possible to show that this is the case.

The implied terms in relation to title, merchantability and fitness for purpose, apply to hire purchase and consumer hire agreements. This covers most hiring and leasing contracts.


Condition on Supply of a Service

In a contract for the supply of services, the following conditions are implied

  • that the supplier has the necessary skill to render the service;
  • that he supplies the service with due skill, care and attention;
  • that any materials used will be sound and reasonably fit for purpose;
  • that goods supplied are of merchantable quality.

Restriction on Contracting out of Statutory Implied Terms

Consumer protection legislation restricts the extent to which it is possible to vary the implied terms. A person is presumed to be a consumer until it is shown otherwise.

Where the buyer is a consumer, any attempt to “contract” out or agree contrary to the implied conditions in relation to the sale of goods by description, merchantability, fitness for purpose and correspondence with the sample, are void.

Other exemption clauses are not enforceable unless they are shown to be fair and reasonable.

In the context of services, where

  • the buyer does not enter the contract in the course of a business (i.e. he is a consumer).
  • the seller/service provider enters the contract in the course of a business and
  • the goods and services supplied under the contract are of a type for private use and consumption

then a variation of the following implied rights and obligations by the seller/service provider is enforceable, only if it is shown to be fair and reasonable,

  • implied terms regarding the provision of services
  • exclusion of liability for misstatements

In a sale by tender or auction, or a sale of goods of a type specified by Ministerial order, the buyer is not regarded as a consumer.


Test of Fair and Reasonable

In determining whether a term is fair and reasonable, regard is to be had to the circumstances which were, or ought reasonably to have been known to, or in contemplation of the parties when the contract was made. Regard is to be had in particular to any of the following which appears to be relevant:

  • the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) any alternative means by which the customer’s requirements could have been met;
  • whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having to accept a similar term;
  • whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard, amongst other things, to any custom of the trade and any previous course of dealing between the parties);
  • where the term excludes or restricts any relevant liability if some condition is not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;
  • whether any goods involved were manufactured, processed or adapted to the special order of the customer.

Guarantees I

A “guarantee” covers any document, notice or other written statement, howsoever described, supplied by a manufacturer or other supplier, other than a retailer, in connection with the supply of any goods and indicating that the manufacturer or other supplier will service, repair or otherwise deal with the goods following purchase.

A guarantee shall

  • be clearly legible and shall refer only to specific goods or to one category of goods;
  • state clearly the name and address of the person supplying the guarantee;
  • state clearly the duration of the guarantee from the date of purchase; different periods may be stated for different components of any goods;
  • state clearly the procedure for presenting a claim under the guarantee which procedure shall not be more difficult than ordinary or normal commercial procedures;
  • state clearly what the manufacturer or other supplier undertakes to do in relation to the goods and what charges, if any, including the cost of carriage, the buyer must meet in relation to such undertakings.

Where the seller of goods delivers a guarantee to the buyer, irrespective of when or how it is delivered, the seller shall be liable to the buyer for the observance of the terms of the guarantee as if he were the guarantor unless he expressly indicates the contrary to the buyer at the time of delivery.


Guarantees II

Where, however, the seller, being a retailer, gives the buyer his own written undertaking that he will service, repair or otherwise deal with the goods following purchase, it is presumed, unless the contrary is shown, that he has not made himself liable to the buyer under another guarantee so delivered.

Rights under a guarantee shall not in any way exclude or limit the rights of the buyer at common law or pursuant to statute. Every provision in a guarantee which imposes obligations on the buyer which are additional to his obligations under the contract shall be void.

A provision in a guarantee which purports to make the guarantor or any person acting on his behalf the sole authority to decide whether goods are defective or whether the buyer is otherwise entitled to present a claim is void.


Guarantees III

The buyer of goods may maintain an action against a manufacturer or other supplier who fails to observe any of the terms of the guarantee as if that manufacturer or supplier had sold the goods to the buyer and had committed a breach of warranty. The court may order the manufacturer or supplier to take such action as may be necessary to observe the terms of the guarantee or to pay damages to the buyer.

In this context, “buyer” includes all persons who acquire title to the goods within the duration of the guarantee. Where goods are imported, the “manufacturer” includes the importer.

In any case, in which a guarantor is liable to an owner in damages, the court may at its discretion and on such terms as the court may deem just afford the guarantor the opportunity of performing these obligations under the guarantee to the satisfaction of the court within a time to be limited by the court.

Consumer protection legislation allows for the possibility of prescribed terms in relation to invoices, contracts or guarantees. No regulations have been made pursuant to this power.


Obligations to Conform I

Consumer goods must conform with the contract.  Goods are presumed to conform with the contract if

  • they comply with the description and possess the qualities which the seller has held out to the consumer in a sample or model;
  • they are fit for any purpose for which the consumer requires them, which has been made known and which the seller has accepted;
  • they are fit for the purposes for which goods of the same type are normally used
  • show the quality and performance which are normal in goods of the same type as the consumer may reasonably expect, given the nature of the goods and taking into account public statements on their characteristics made by the seller, the producer or their representatives, particularly in advertising or on labelling.

Where a producer of goods has made public statements regarding them, those statements are given legal effect in many cases. This may cover many advertisements. This does not apply where a consumer could not reasonably have been aware it was contracted or it did not influence the consumer.

Where goods are installed by or on behalf of the seller, there is an implied term that they will be correctly installed.

Exclusion clauses which purport to diminish consumer rights or limit liability in respect of the implied terms in the EU Consumer Sales regulations or the Sale of Goods Act are not binding on the consumer.


Obligations to Conform II

If the lack of conformity with contractual or the implied statutory terms becomes evident within six months, it is deemed to have existed at the date of the contract. This does not apply where due to the nature of goods, this presumption would be unreasonable.

Where there is a lack of conformity, buyers are entitled to have the goods repaired or replaced free of charge within a reasonable time and without significant inconvenience unless this would be impossible or disproportionate. Alternatively, they may be entitled to a reduction in price or to have the contract cancelled.

Guarantees for consumers must state that the buyer’s rights under the legislation are not limited by the guarantee. They must set out the procedure for making a claim. A copy of the guarantee must be made available to the consumer.


Credit Sales and Hire Purchase Agreements

Consumers under credit sales and hire purchase agreements enjoy much the same rights as consumer purchasers. A hirer of goods or a business which arranges finance for the purchase of goods is deemed to be party to the sales contract. The seller and financier may accordingly, be made liable for breach of the contract, where the goods fail to meet contractual or statutorily implied terms.

The Sale of Goods Act implied terms apply to hire purchase agreements. The hiree has the same rights as a purchaser.  Accordingly, where goods are let in the course of business the implied obligations of merchantable quality, fitness for purpose, et cetera apply.

Exemption clauses which seek to limit the hirer /owner’s liability for breach of the statutorily implied terms are prohibited. Certain other limitations of liability are permitted, only where they are fair and reasonable.


Regulation of Hire Purchase Agreements

For financial and technical legal reasons, consumer hire purchase agreements were once a very popular form of consumer credit. Their importance has diminished in recent years. A hire purchase agreement is one in which goods are hired by the consumer where the consumer has an option to buy the goods, or under which the consumer will become the owner of the goods if the agreement is complied with.

There is substantial protection for the hiree under a consumer hire purchase agreement.The agreement must be in writing and signed by all parties. Certain information on the cost of credit must be given to the consumer in writing in advance. Certain information and warnings must appear prominently, including details of the price, instalments, amounts due, date payable, costs and penalties.

Consumer hire agreements are agreements for the leasing of goods without a purchase option. There are similar requirements as in the case of hire purchase agreements. The agreement must be in writing and signed. There are implied terms in relation to the goods, including merchantability, fit for purpose, availability of spare parts and servicing, and the safe conditions of motor vehicles.


Hiree Rights in Hire Purchase

The hiree has certain rights to terminate the consumer hire purchase agreement. The hiree of goods may pay half the amount of the total hire purchase price (if the total of instalments already paid has not reached that amount). If he has not paid half the hire purchase price the consumer may return the goods but remains liable for the difference between the payments he has made and half the hire purchase price.  If the goods are damaged in any way, the consumer is liable for the damage caused.

The consumer may purchase the goods by paying the difference between the amount already paid and the total hire purchase price. There is usually a reduction in the overall amount due, as the finance is paid off earlier than due. This reduction is calculated using a recognised formula for early loan repayments.

A notice must be given setting out the hiree’s right to terminate the agreement and on the legal restrictions on the right to recover the goods. There is a cooling off period, during which the hiree may terminate the agreement. Once the agreement is made, a copy of the agreement must be given to the hiree personally or delivered to him within ten days.

If the above requirements are not complied with, the hirer may lose many of its rights. The courts may exonerate the breach or may do so on terms and conditions. The court must be satisfied that the noncompliance was not deliberate and did not prejudice the consumer.


Restriction on Recovery

Once one-third of the purchase price has been paid, there are restrictions on the hirer/ owner’s rights to repossess. The owner may recover the goods, only by court proceedings. If goods are wrongfully repossessed, the hiree is relieved of liability for sums due under the agreement and sums already paid, can be recovered. There are certain exceptions.

Where one-third of the price has been paid or offered, the court has discretion in relation to legal proceedings by the owner/hirer for their recovery.  It may order delivery or it may stay or defer an order for delivery. It may direct the owner to transfer title to part of the goods and require the return of the rest.


Implied Terms in the Supply of Services

In the case of supply of services, the following terms are implied;

  • that the supplier has the necessary skill to render the service;
  • that it will be supplied with due skill, care, and diligence;
  • that materials will be of sound quality and reasonably fit for purpose;
  • that goods supplied will be of merchantable quality.

The implied terms may be excluded by trade usage, express terms or by a course of dealing. In the case of a consumer, the express term will not be binding unless specifically brought to his attention and unless it is fair and reasonable.


Unfair Contract Terms

The unfair terms in consumer contracts regulations apply to consumer contracts that have not been individually negotiated. The price itself and key commercial terms cannot be challenged as unfair Most other terms and conditions may potentially be invalidated in favour of a consumer.

The Competition and Consumer Protection Commission may apply to the High Court for an order prohibiting the use of particular unfair terms, in certain types or classes of contracts. The regulations impose an overriding good faith obligation. They apply to most consumer contracts, except those relating to employment or family matters. They apply where the agreement has been substantially drafted in advance or where the consumer has not been able to influence its substance. The fact that some terms are negotiated, does not take the remaining terms outside the regulation.

Particular regard is had to the following factor;

  • the strength of the parties’ bargaining positions;
  • whether the consumer had an inducement to agree on the term;
  • whether the goods were sold or supplied to the special order of the consumer;
  • the extent to which the supplier has dealt fairly and equitably with the consumer, whose legitimate interest he has taken into account.

There is a list of terms which are presumptively unfair.

Contracts are to be drafted in plain and intelligible language. There is no specified consequence if this obligation is not complied with. Where there is any doubt about the meaning of a term, the interpretation most favourable to the consumer is to apply.


References and Sources

Irish Texts

Consumer Law Rights & Regulation    Donnelly & White (2014)

Consumer Protection Act 2007 Annotated  Bird (2008)

Consumer Rights Long (2004)

Commercial & Consumer Law: Annotated Statutes O’Reilly, P (2000)

UK Texts

Consumer Sales Law: The Law Relating to Consumer Sales and Financing of Goods 3rd ed

John MacLeod, James Devenney (2019)

Electronic Consumer Contracts in the Conflict of Laws 2nd ed Zeng Sophia Tang (2018)

The Law of Consumer Redress in an Evolving Digital Market: Upgrading from Alternative to Online Dispute Resolution Pablo Cortes (2017)

Blackstone’s Statutes on Commercial & Consumer Law 2017-2018 Francis Rose

Consumer and Trading Standards: Law and Practice 2017 Bryan Lewin, Jonathan Kirk

Woodroffe and Lowe’s Consumer Law and Practice Woodroffe and Lowe’s Consumer Law and Practice 10th ed Geoffrey Woodroffe, Chris Willett, Christian Twigg-Flesner (2016)

Butterworths Trading and Consumer Law Looseleaf Annual Subscription Deborah L. Parry, Roland Rowell (2016)

Butterworths Commercial and Consumer Law Handbook 8th ed Richard B. Mawrey, Tobias Riley-Smith (2015

Consumer and Trading Standards: Law and Practice 4th ed

Legislation

Sale of Goods Act 1893 56 & 57

Sale of Goods and Supply of Services Act 1980

The 2011 Report of the Sales Law Review Group,

Consumer Protection Act 2007 19/2007

Competition and Consumer Protection Act 2014 29/2014