International Journal of Research and Review Vol.7; Issue: 8; August 2020 Website: www.ijrrjournal.com Review Paper E-ISSN: 2349-9788; P-ISSN: 2454-2237 Critical Analysis of the “Implied Term” of a Contract Set Out in Sale of Goods Act 1979 in 1995 Isaac Olaitan Okeya1, David Funso Dare2, Abiodun Thomas Ogundele3 1Management Consultant Liverpool, England, Former Dean Faculty of Management Sciences, College of Technology, Esa Oke, Nigeria and Former Controller Owena Bank plc Nigeria. 2Senior Lecturer, Department of Banking and Finance, Adekunle Ajasin University, Akungba Akoko, Nigeria. 3Lecturer, Department of Banking and Finance, Afe Babalola University, Ado Ekiti, Nigeria. Corresponding Author: Isaac Olaitan Okeya ABSTRACT barter. [1] The terms of contract define the rights and duties arising under the contract. This paper centred, among many other things, These terms are either of two kinds, that is matters which broadly affect the standard of EXPRESS TERM AND IMPLIED TERM. goods in relation to the concept of satisfactory The sale of Goods Act, 1979, [2] quality introduced into the Sale of Goods Act sections 12-15 imply certain terms into 1979 in 1995, and its subject matter, the most and primary focus which will be the „‟ Implied contracts for the sale of goods which are for Term‟‟ of a contract. This paper considered the protection of the buyer. For instance, S. comments from various authors, precedent old 12 makes it an implied condition that the and recent cases, as well as Law Commission seller shall have title of the goods or a right Report. It is pertinent to mention that to sell and an implied warranty that the Commonwealth/non commonwealth countries buyer shall enjoy quiet possession and S.13 have adopted the Act for all trades between makes it an implied condition that the goods themselves and UK. One of the good things shall correspond with their descriptions. about the Sale of Goods Act is its clarity and the Then, S. 14 makes it an implied condition shortness of the Act itself. It is easy to read and that goods shall be fit for its purpose. understood. The common law courts have Also it is important to briefly note here the aspects of UK contract of law relevant to reluctantly backed implied terms in the sales international business –Sale of Goods Act 1979, of goods, for fitness or quality and the Sale and Supply of Goods Act 1994, Unfair principle of caveat emptor was the guiding [3] Contract Terms Act 1977, general contractual principle for buyers. issues relevant to business, such as discharge of As earlier noted, that implied terms a contract, frustration and privity of contract. are supported by courts in contracts of sale, S. 14, [4] however, stands a great deal in Keywords: Sale of Goods Act, Consumer Rights protecting buyers from defective or Act, Law Commission Report, Unfair Contract fraudulent commodities. The Act provides, Terms Act and Implied Term. under S. 14(1) that: “except as provided by this section and S. 15 below and subject to INTRODUCTION any other enactment, there is no implied The Sale of Goods Act 1979 applies to term about the quality or fitness for any sale of goods contracts which are defined in particular purpose of goods supplied under the Act. Its provisions do not apply to any a contract of sale‟‟. other types of contract. The sale of goods is The supply of goods, now supports one of the earliest forms of business all contracts to contain terms, implied by transaction, existing from the time when statute, which requires the goods delivered money was first introduced to replace to be a of a certain standard and quality. [5] International Journal of Research and Review (ijrrjournal.com) 49 Vol.7; Issue: 8; August 2020 Isaac Olaitan Okeya et.al. Critical analysis of the “implied term” of a contract set out in sale of goods act 1979 in 1995 Therefore, the main characteristics of goods as suitable, was extended to cover implied terms are such that it arises sales by business sellers to buyers, and was automatically, by operation of law, and are first defined by statute in the Supply of thus relatively easy to prove. [6] Goods (Implied Terms) Act [12] 1973. The Sale and Supply of Goods to Under the implementation of the Consumers Regulations [7] came into force caveat emptor principle, the protection On March 31, 2003 seeking to implement offered to buyers were seen to be fragile, the Directive on Certain Aspects of the Sale unless an express term was inserted into the of Consumer Goods and Associated contract, to protect their interest in the Guarantees. The Regulations in executing supply of goods. its Directive, thus only apply to sales. Also, the Regulations, in implementing these Merchantable Quality Directives, made significant amendments to The Law Commission[13] proposed the concept of satisfactory quality in that “Merchantable quality”, in relation to relations contracts for the sale and supply of the implied terms of a contract should be goods to buyers. [8] redesigned in order to create more clarity to In critically assessing whether goods its applicability to “minor defect and the are of satisfactory quality, Regulation 3 durability of the goods”. According to the which amended the provision of s.14 [9] by report, [14] introducing a subsection (2D) thus provides “One of the modifications to the 1893 Act is inter alia that account should be taken of a matter which we are concerned about in “any public statements on the specific this report, namely the implied promise on characteristics of the goods made about the part of the seller that the goods will be them by the seller, the producer or his of merchantable quality. The implied term representative, particularly in advertising relating to quality was slightly amended in or on labelling”. Again the Regulations 1973 by the introduction of a statutory provided for new buyers remedies in cases definition of “merchantable quality....” where the goods do not conform to the The original meaning of contract. This includes cases in which the merchantable quality was defeated when its goods are of unsatisfactory quality (or are in scopes were extended and defined under the breach of the other implied terms contained Sale and Supply of Goods (Implied Terms) in ss.13-15 of the Sale of Goods Act 1979; Act 1973, to cover sales by business sellers and cases where there was a breach of to buyers, in what later became S. 14(6) of implied terms under the s.13 as to the Sale of Goods Act 1979. [15] Again, it reasonable care and skill in the Supply of was noted that there were some Goods and Services Act 1982. This also uncertainties which had raised criticisms as covers cases where there is a breach of any to the scope of implied term in relation to express term of the contract. [10] Although quality, in the Sale of Goods Act cover the remedies of rejection and damages still “minor defect”. [16] This led to a Private exist, provisions are now in place for new Member‟s Bill that was introduced into remedies such as repair, replacement, price parliament in 1978, with the aim of altering reduction and rescission, which now co- the definition of merchantable quality. This exist together under the same Act. [11] became apparent, as the extended notion of Historically, before the enactment of neither the word „merchantable‟ nor the the Sale and Supply of Goods Act, the reference to fitness for purpose adequately general impressions for describing the conveyed the concept of acceptable quality, quality of goods which buyers in certain although there was considerable difficulty in cases, was of „merchantable quality‟, which finding an appropriate substitute. [17] tends to convey that, one merchant buying As earlier discussed, the 1893 Act from another would have regarded the did not provide a definition for International Journal of Research and Review (ijrrjournal.com) 50 Vol.7; Issue: 8; August 2020 Isaac Olaitan Okeya et.al. Critical analysis of the “implied term” of a contract set out in sale of goods act 1979 in 1995 „merchantable quality‟, and the present The implied term which requires definition under S. 14(6) was not introduced goods to be of satisfactory quality, are of until 1973, however, prior to these date, true two terms, firstly, that the goods shall be of meaning and definition by merchantable satisfactory quality, and that: quality had been attempted by two main “Where.... the buyer, expressly or by approaches. [18] Firstly, there was the implication, makes known ....any particular “Acceptability Test” [19] and then the purpose for which the goods are being “Usability Test”, [20] which clearly illustrate bought, there is an implied term that the some of the difficulties inherent in trying to goods supplied under the contract are define the nature of quality of goods. [21] reasonably fit for that purpose”. [27] The Law Commissions 1968, in its The provision of implied term under consultative document [22] proposed some S. 14(2) applies only to goods transacted amendments to the Sale of Goods Act, between parties in the course of business, which cautiously recommended an extended especially in professional capacity, activities and better design of the acceptability test. of government or public authority [28] but This consultation paper described does not cover private sale [29] which merchantable quality as: [23] requires conformity with description. “... means that the goods tendered in Due to the fact that the implied term performance of the contract shall be of such as to satisfactory quality is a condition, it type and quality and in such condition that only implied if the goods are sold “in the having regard to all the circumstances, course of a business”.