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Provisional Proposals Relating to Amendments to Sections 12-15 Of 1 .4, N.B. This is a joint docment of the Law Commission and the Scottish Law Commission circulated for comment and criticism only. It does not represent the concluded views of the two Commissions. LAi7 COl.fMI SS I ON (Published Working Paper Bot. 18) and SCOTTISH LAV CONMISSION (Memorandum No. 7) PROVISIONAL PROPOSALS RELATING to &.IEI'?DI~~JTSTO SECTIONS lZJL5OF THE SALE OF GOODS ACT 1893 i and COl!lTRACTlXG OUT OF TH% CONDITIONS ADD 'V'bRRANTIES IMPLIED BY THOSE SECTIONS 22nd YJay 1968 In view of the urgency of this project it is requested that replies should be fornarded not later than 30th September 1968. All correspondence and inquiries should be addressed to: R.G. Greene, Law Commission, Lacon House, Theobalds Road, London, T.C.1. (Tel.: 01-405 8700, ext.- 239) PART I: IIVTRODUCTION 1 PART 11: SECTIONS 12-15 OF T-FEE SALE OF GOODS ACT 1893 2 A. Section 12 3 B. Section 13 4 C. Section 14cj 4 D. Section 14(2) 6 10 E. Section 14(3) I’ a& (4) F. Section 15 10 1 G. Third party bcndficiaries of conditions and warranties 11 PART III : CO-OFDIITATION WITH HIRE PUIiCHASE LEGISLATION 15 PART IV: hERCHAI’iDISX P&iR.KS ACT 1887 16 PART V: COlPEUCTIITG OUT OF COTTDITIONS &JD Yidm?mIES INPLED BY SECTIONS 12-15 OF m SAL;: OF GOODS ACT 1893 17 PUT VIr CONTRACTING OUT OF LIABIJJITY FOR RZGLIGENCE 28 PART VII: SUldiillRY OF COBCLUSIONS fND OF QUESTIOITS UPON WHICH COi’dMENT IS l2TVIm 30 APPENDICES A. Nmes of oenbcrs of the Joint Working Party 33 B, Sections 12-15 of the Sale of Goods Act 1893 34 C. S.2-302 of the U.S. Uniforn Comercial Code 37 D. Israeli Standard Contracts Law 1964 40 PUT I: INTRODUCTION 1. Under Item I1 of the Lav Commission's First Programie it was recommended that an examination be made of the following matters: (a) the desirability of prohibiting, invalidating or restricting the effects of clauses exempting from, or limiting liability for negligence; and (b) the extent to which the manner of incorporating such clauses, if permissible, should be regulated. Parapaph 12 of the Scottish Law Commission's First Programme proposed the examination, within the lmger framework of the law of obligations, of standazd form contracts and clauses purporting to exclude liability. 2. Although initially it had been recommended by the Law Commission that the exmining agency should be an interdepartmental committee., it was eventually decided, with the approval of the Lord Chancellor, the Secretary of State for Scotland and the Lord Advocate, that the examina- tion of this branch of the law should be carried out by the two Law P Cohissions themselves, and that they should be assisted by a joiiit Working Party with vide terms of reference, 3. The Vorking Party, the mer:;bersliip of which is shown in Appendix A, was established in June 1966. Its terms of reference amas follovis: "To colisider nhat restraints, if any, should be imposed on the freedom to rely upon contractual provisions exeipting from or restricting liability for negligence or any other liability that would othernise be incurred having regard in particulas to the protection of consumers of goods and users of services." These terms of reference combine the particular subject-matter of Item I1 of the Law Commission's First Progranme with other aspects of exemption clauses which are of importance to the wider study of the law of contract under Item I; they also cover part of the Scottish Law Commission's proposed study of the lam of obligations mentioned in paragraph 1 above. 4. In view of the important questions relating to consumer protection to which atto;?tion sias drawn in the Final Report of the Committee on Consumer Protection (the IIolony Committee Report - 1962 Cmnd, 1781), priority was given by the Working Pasty to consideration of the problems of exemption clauses in contracts of sale of goods. Next, in August 1966 the President of the Board of Trade asked the b-10 Lavi Commissions -1- /funder (under section 3(l)(e) of the La\;J Commissions Act 1965) for advice with regad to the Molony Committee's recornendations on thc amendment of the Sale of Goods Act; and this matter vas also referred to the Working Party for examination. 5. Initidly, therefore, the Working Party has been required to report to the Law Commissions on the following matters: (a) ahat agendments, if any, are required to ss.12-15 of the Sale of Goods Act; and (b) nhat restrictions, if any, should be placed on contracting out (i) of the conditions and warranties implied by those I sections, and (ii) of liability for negligence of the seller or manu- facturer or intermediate distributor. 6. On the 19th January 1968 the Working Pasty subnitted an Interim Report to the two Law Commissions. On those matters on which, after careful consideration of the Working Party's Intcrin Rcport, the Law Conmissions have reached preliminary conclusions, they have fornulwed provisional proposals; but on a certain number of points it has seemed appropriate not to formulate concrete proposals without first studying the views of those to nhom this paper is addressed. PART 11: SECTIONS 12-15 of the SALE OF GOODS ACT 1893 7. Most menbers'of the WorlQng Party thought that ss.12, 13 and 15 uorked reasonably nell, but that s.14 (andin particular s.l4(2)) REIS in need of amendment. Other members nerc critical of dl these sections. It was argued that from the Scottish point of vim the cffcct of ss.12-15 had been to reduce the protection afforded to the purchaser by the coqnon lan of Scotland; that s.12 added nothing to and merely tended to confuse the preexisting common law of Scotland; and that ss.13 and 15 were more limited in their scope than the lau of Scotland as it stood before the Sale of Goods Act1893 cane into operation. Not even that Act, however, imposed on Scots law the highly technical dichotony between "conditions" and "warranties" 'nhich nany English lawycrs also found to be unacceptablc. But it was generally agrced by the Working Party that to attempt to ~- - ~ ~- (1) The sections a.rz set out in Appendix B. -2- / eli~nate eliniaate this distinction fiould involve a radical revision of the whole lam of sale and indeed the general law of contract,nhich nould go beyond the scope of the present exercise. This long-term task is being under- taken undcr the Programmes of the Lau Comissions. 8. The Working Party noted that the Uniforn Lm on the International Sales of Goods has nou been enacted in the United Kingdon by the Uniform Lavs on International Sales Act 1967; but the Act will not come into operation until the Convention relating to the Uniforn Law has come into force. Even then, so far as’thc United Kingdom is conccrncd, it ail1 apply only if adopted by the parties, Nevertheless there uas considerable support within the Working Party for the Uniforin La17 as a code which, in comprchensivcncss and clarity, rcprcscntcd an inprovcmcnt on the Sale of Goods Act. Sone mcnbcrs comidcrcd that thc roplaccnent of the nholc Sale of Goods Act by thc Uniforn Lau r;ould bc preferable to picccmal amend- ncnt of thc Act. 9. Though the Lan Comissions synpatkisc nith this vim, and appreciate the advantages of having the sue code applicable to both domestic and international contracts of sale, thcy rcgmd a solution oil thcsz lincs as a long-term project outsidc thc =bit of thc prxcnt linitcd rcvicv. In any event, thcy consider that any rcassessnent of thc Uniforn Law should be dcfcrrcd until it has oporatcd for a period in practice. The Law Connissions agree nith the conclusion of the Working Party that it would be inpracticable nerdy to substitute Articlcs 33, 52 and 53 of thc Uniforn Law for ss.12-15 of the Salc of Goods Act, and thcy cndorsc the Working Party’s decision that the proper course in the present contcxt is to concentrate on possible menbents to thc Salc of Goods Act itself. A. SECTION 12 5 10. This scction contains thc conditions and warrantics (in Scotland: sirasranties or natcrid term) rclsting to titlo, quict possession and ficcdon from encmbrancc. The Scottish criticbn of this scction has already been nentioned in paragraph 7 above. The Lam Comissions think that the section should rcnain for the nonent and that the qucstion of its repeal should await a conprchonsivc revicn of the 1m of sale. 11. The Ilolony Coaxittee (paragraph 451) did not consider any mendnent to the section neccsswy. The Working Party mas in general agreenent aith this, subject to the follovting point. The Law Reforn Connittee, in their Twelfth Report on Transfer of Title to Chattels (Cnnd, 2958) pointed out (paragraph 36) that on a breach of the condition of title the -3 - /grcsent present law dlons the buyer to' recover the whole price paid by hin, without any ctllotiance for the &e and enjoynent of the goods. The Law Refom Connittee recornended ?hat the buyer should be able to recover no more than his actual loss, giiing credit for any benefit he nay have had ! from the goods while they ner4 in his possession, The Working Party I agreed with this recomendatibn. So do the Law Conaissions. 12. The Law Connissions propose that s.12 shoidd be mended so as to give effect to the recornendation contained in pctragcctph 36 of the '1 Twelfth Report of the Law Regom Cormittee.
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