Implied Terms in Contracts for the Transfer of Goods: Sale and Hire-Purchase Agreements, Study notes of Business

Download Implied Terms in Contracts for the Transfer of Goods: Sale and Hire-Purchase Agreements and more Study notes Business in PDF only on Docsity! c i e AT 16 of 1996 SUPPLY OF GOODS AND SERVICES ACT 1996 Supply of Goods and Services Act 1996 Section 1 c AT 16 of 1996 Page 5 c i e SUPPLY OF GOODS AND SERVICES ACT 1996 Received Royal Assent: 18 June 1996 Passed: 19 June 1996 Commenced: 19 August 1996 AN ACT to re-enact with amendments the enactments relating to terms implied in contracts for the supply of goods and services; to amend the Sale of Goods Act 1983 and the Moneylenders Act 1991; and for connected purposes. PART 1 – IMPORTED TERMS IN CONTRACTS RELATING TO GOODS Implied terms as to title 1 Implied terms as to title: sale of goods [1983/9/12; P1979/54/12] (1) In a contract of sale, other than one to which subsection (2) applies, there are — (a) an implied condition on the part of the seller that in the case of a sale he has a right to sell the goods, and in the case of an agreement to sell he will have such a right at the time when the property is to pass; and (b) an implied warranty that — (i) the goods are free, and will remain free until the time when the property is to pass, from any charge or encumbrance not disclosed or known to the buyer before the contract is made, and (ii) the buyer will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed or known. (2) Where, in the case of a contract of sale there appears from the contract, or there is to be inferred from its circumstances, an intention that the seller Section 2 Supply of Goods and Services Act 1996 Page 6 AT 16 of 1996 c should transfer only such title as he or a third person may have, there are implied warranties — (a) that all charges or encumbrances known to the seller and not known to the buyer have been disclosed to the buyer before the contract is made; and (b) an implied warranty that none of the following will disturb the buyer’s quiet possession of the goods — (i) the seller; (ii) in a case where the parties to the contract intend that the seller should transfer only such title as a third person may have, that person; (iii) anyone claiming through or under the seller or that third person otherwise than under a charge or encumbrance disclosed or known to the buyer before the contract is made. 2 Implied terms as to title: hire-purchase [1976/8/8; P1973/13/8] (1) In every hire-purchase agreement, other than one to which subsection (2) applies, there are — (a) an implied condition on the part of the owner that he will have a right to sell the goods at the time when the property is to pass; and (b) an implied warranty that the goods are free, and will remain free until the time when the property is to pass, from any charge or encumbrance not disclosed or known to the hirer before the agreement is made and that the hirer will enjoy quiet possession of the goods except so far as it may be disturbed by any person entitled to the benefit of any charge or encumbrance so disclosed or known. (2) Where in the case of a hire-purchase agreement there appears from the agreement, or there is to [be] inferred from its circumstances, an intention that the owner should transfer only such title as he or a third person may have, there are implied warranties — (a) that all charges or encumbrances known to the owner and not known to the hirer have been disclosed to the hirer before the agreement is made; and (b) that none of the following will disturb the hirer’s quiet possession of the goods — (i) the owner; Supply of Goods and Services Act 1996 Section 3 c AT 16 of 1996 Page 7 (ii) in a case where the parties to the agreement intend that any title which may be transferred shall be only such title as a third person may have, that person; (iii) anyone claiming through or under the owner or that third person otherwise than under a charge or encumbrance disclosed or known to the hirer before the agreement is made. 3 Implied terms as to title: other contracts for transfer of property in goods [1985/1/2; P1982/29/2] (1) In a contract for the transfer of goods, other than one to which subsection (2) applies, there are — (a) an implied condition on the part of the transferor that — (i) in the case of a transfer of the property in the goods, he has a right to transfer the property and, (ii) in the case of an agreement to transfer the property in the goods, he will have such a right at the time when the property is to be transferred; and (b) an implied warranty that — (i) the goods are free, and will remain free until the time when the property is to be transferred, from any charge or encumbrance not disclosed or known to the transferee before the contract is made, and (ii) the transferee will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed or known. (2) Where, in the case of a contract for the transfer of goods, there appears from the contract, or there is to be inferred from its circumstances, an intention that the transferor should transfer only such title as he or a third person may have, there are — (a) an implied warranty that all charges or encumbrances known to the transferor and not known to the transferee have been disclosed to the transferee before the contract is made; and (b) an implied warranty that none of the following will disturb the transferee’s quiet possession of the goods — (i) the transferor; (ii) in a case where the parties to the contract intend that the transferor should transfer only such title as a third person may have, that person; Section 10 Supply of Goods and Services Act 1996 Page 10 AT 16 of 1996 c (3) The condition implied by subsection (2) does not extend to any matter making the quality of goods unsatisfactory — (a) which is specifically drawn to the buyer’s attention before the contract is made, (b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or (c) in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample. (4) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except 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. (5) An implied condition or warranty about quality or fitness for a particular purpose may be annexed to a contract of sale by usage. (6) The preceding provisions of this section apply to a sale by a person who in the course of a business is acting as agent for another as they apply to a sale by a principal in the course of a business, except where that other is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made. (7) In the application of subsection (4) to an agreement for the sale of goods under which the whole or part of the purchase price is payable by instalments, any reference to the seller includes a reference to the person by whom any antecedent negotiations are conducted. 10 Implied terms about quality or fitness: hire-purchase [1976/8/9; P1973/13/10; P1994/35/2/4] (1) Except as provided by this section and section 14 and subject to the provisions of any other enactment, there is no implied condition or warranty as to the quality or fitness for any particular purpose of goods let under a hire-purchase agreement. (2) Where the owner lets goods under a hire-purchase agreement in the course of a business, there is an implied condition that the goods supplied under the agreement are of satisfactory quality. (3) The condition implied by subsection (2) does not extend to any matter making the quality of goods unsatisfactory — (a) which is specifically drawn to the attention of the hirer before the agreement is made, Supply of Goods and Services Act 1996 Section 11 c AT 16 of 1996 Page 11 (b) where the hirer examines the goods before the agreement is made, which that examination ought to reveal, or (c) where the goods are let by reference to a sample, which would have been apparent on a reasonable examination of the sample. (4) Where the owner lets goods under a hire-purchase agreement in the course of a business and the hirer, expressly or by implication, makes known to the owner any particular purpose for which the goods are being hired, there is an implied condition that the goods supplied under the agreement are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the hirer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the owner. (5) An implied condition or warranty as to quality or fitness for a particular purpose may be annexed to a hire-purchase agreement by usage. (6) The preceding provisions of this section apply to a hire-purchase agreement made by a person who in the course of a business is acting as agent for the owner as they apply to an agreement made by the owner in the course of a business, except where the owner is not letting in the course of a business and either the hirer knows that fact or reasonable steps are taken to bring it to the notice of the hirer before the agreement is made. (7) Any reference in subsection (4) to the owner includes a reference to the person by whom any antecedent negotiations are conducted. 11 Implied terms about quality or fitness: other contracts for transfer of goods [1985/1/4; P1982/29/4; P1994/35/2/6] (1) Except as provided by this section and section 15 and subject to the provisions of any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods supplied under a contract for the transfer of goods. (2) Where, under such a contract, the transferor transfers the property in goods in the course of a business, there is an implied condition that the goods supplied under the contract are of satisfactory quality. (3) The condition implied by subsection (2) does not extend to any matter making the quality of goods unsatisfactory — (a) which is specifically drawn to the transferee’s attention before the contract is made, (b) where the transferee examines the goods before the contract is made, which that examination ought to reveal, or Section 12 Supply of Goods and Services Act 1996 Page 12 AT 16 of 1996 c (c) where the property in the goods is transferred by reference to a sample, which would have been apparent on a reasonable examination of the sample. (4) Where, under a contract for the transfer of goods, the transferor transfers the property in goods in the course of a business and the transferee, expressly or by implication, makes known to the transferor any particular purpose for which the goods are being acquired, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the transferee does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the transferor. (5) An implied condition or warranty about quality or fitness for a particular purpose may be annexed by usage to a contract for the transfer of goods. (6) The preceding provisions of this section apply to a transfer by a person who in the course of a business is acting as agent for another as they apply to a transfer by a principal in the course of a business, except where that other is not transferring in the course of a business and either the transferee knows that fact or reasonable steps are taken to bring it to the transferee’s notice before the contract concerned is made. (7) In the application of subsection (4) to a contract for the transfer of goods under which the consideration or part of the consideration for the transfer is a sum payable by instalments, any reference to the transferor includes a reference to the person by whom any antecedent negotiations are conducted. 12 Implied terms about quality or fitness: hire of goods [1985/1/9; P1982/29/9; P1994/35/2/6] (1) Except as provided by this section and section 16 and subject to the provisions of any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods bailed under a contract for the hire of goods. (2) Where, under such a contract, the bailor bails goods in the course of a business, there is an implied condition that the goods supplied under the contract are of satisfactory quality. (3) The condition implied by subsection (2) does not extend to any matter making the quality of goods unsatisfactory — (a) which is specifically drawn to the bailee’s attention before the contract is made, (b) where the bailee examines the goods before the contract is made, which that examination ought to reveal, or Supply of Goods and Services Act 1996 Section 17 c AT 16 of 1996 Page 15 Supplemental 17 Modification of remedies for breach of condition in non-consumer cases [P1973/13/11A; P1979/54/15A; P1982/29/5A,10A; P1994/35/4 etc.] (1) Where in the case of a contract of sale — (a) the buyer would, apart from this subsection, have the right to reject goods by reason of a breach on the part of the seller of a term implied by section 5, 9 or 13, but (b) the breach is so slight that it would be unreasonable for him to reject them, then, if the buyer does not deal as consumer, the breach is not to be treated as a breach of condition but may be treated as a breach of warranty. (2) Where in the case of a hire-purchase agreement — (a) the hirer would, apart from this subsection, have the right to reject by reason of a breach on the part of the owner of a term implied by section 6, 10 or 14(1)(a) or (c), but (b) the breach is so slight that it would be unreasonable for him to reject them, then, if the hirer does not deal as consumer, the breach is not to be treated as a breach of condition but may be treated as a breach of warranty. (3) Where in the case of a contract for the transfer of goods — (a) the transferee would, apart from this subsection, have the right to treat the contract as repudiated by reason of a breach on the part of the transferor of a term implied by section 7, 11 or 15(1)(a) or (c), but (b) the breach is so slight that it would be unreasonable for him to do so, then, if the transferee does not deal as consumer, the breach is not to be treated as a breach of condition but may be treated as a breach of warranty. (4) Where in the case of a contract for the hire of goods — (a) the bailee would, apart from this subsection, have the right to treat the contract as repudiated by reason of a breach on the part of the bailor of a term implied by section 8, 12 or 16(1)(a) or (c), but (b) the breach is so slight that it would be unreasonable for him to do so, Section 18 Supply of Goods and Services Act 1996 Page 16 AT 16 of 1996 c then, if the bailee does not deal as consumer, the breach is not to be treated as a breach of condition but may be treated as a breach of warranty. (5) This section applies unless a contrary intention appears in, or is to be implied from, the contract or agreement in question. (6) It is for the seller, owner, transferor or bailor to show that a breach fell within subsection (1)(b), (2)(b), (3)(b) or (4)(b), as the case may be. 18 Exclusion of implied terms [1980/18/9, 10; P1977/50/6, 7] (1) Liability for breach of the obligations arising under sections 1 to 3 (implied terms as to title in contracts for sale etc.) cannot be excluded or restricted by reference to any contract term. (2) Liability for breach of the obligations arising under section 4 (implied terms as to title in contracts for hire) cannot be excluded or restricted by reference to any contract term, except so far as the term satisfies the requirement of reasonableness. (3) As against a person dealing as consumer, liability for breach of the obligations arising under — (a) sections 5 to 8 (sale etc. by description), (b) sections 9 to 12 (quality or fitness), and (c) sections 13 to 16 (sale by sample etc.), cannot be excluded or restricted by reference to any contract term. (4) As against a person dealing otherwise than as consumer, the liability specified in subsection (3) can be excluded or restricted by reference to a contract term, but only so far as the term satisfies the requirement of reasonableness. (5) In relation to a contract term, the requirement of reasonableness for the purposes of this section is that the term is a fair and reasonable one to be included, having regard to — (a) the circumstances which were, or ought reasonably to have been, known or in the contemplation of the parties when the contract or agreement in question was made; and (b) in particular to any of the matters specified in Schedule 1 which appear to be relevant; but paragraph (b) does not prevent the court or arbitrator holding, in accordance with any rule of law, that a term which purports to exclude or restrict any relevant liability is not a term of the contract. (6) It is for the person claiming that a contract term satisfies the requirement of reasonableness to show that it does. Supply of Goods and Services Act 1996 Section 19 c AT 16 of 1996 Page 17 (7) The following provisions of the Misrepresentation and Unfair Contract Terms Act 1980 apply in relation to this section as follows — (a) section 15 (exemption clauses) applies in relation to subsections (1) to (6) as it applies in relation to Part II (in particular, sections 5 and 8) of that Act; (b) section 17 (international contracts) applies to the limits imposed by this section as it applies to the limits imposed by that Act; (c) section 18 (choice of law clauses) applies in relation to subsections (1) to (6) as it applies in relation to the provisions of that Act; (d) paragraphs 3 and 4 of Schedule 4 (saving for statutory terms etc.) apply to subsections (1) to (6) as they apply to Parts II to IV of that Act. (8) Subject to the preceding provisions of this section — (a) nothing in this Part affects section 54 of the Sale of Goods Act 1983 (rights etc. under contract of sale may be varied by express agreement, course of dealing or binding usage); (b) where a right, duty or liability would arise under a hire-purchase agreement, a contract for the transfer of goods or a contract for the hire of goods by implication of law, it may be negatived or varied by express agreement, by the course of dealing between the parties or by such usage as binds both parties to the contract. (9) An express condition or warranty does not negative a condition or warranty implied by this Act unless inconsistent with it. (10) Nothing in this Part prejudices the operation of any other enactment or any rule of law whereby any condition or warranty (other than one relating to quality or fitness) is to be implied in a contract to which sections 1 to 16 apply. 19 Contracts to which Part 1 applies (1) In this Part — “contract of sale” means a contract for sale of goods, that is, a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration (called the price), and includes both an agreement to sell and a sale (within the meaning of the Sale of Goods Act 1983); “hire-purchase agreement” means an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee; “contract for the transfer of goods” means a contract under which one person transfers or agrees to transfer to another the property in goods, other than — Section 21 Supply of Goods and Services Act 1996 Page 20 AT 16 of 1996 c (b) the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods — (i) fitness for all the purposes for which goods of the kind in question are commonly supplied, (ii) appearance and finish, (iii) freedom from minor defects, (iv) safety, and (v) durability. (5) For the purposes of this Part a party to a contract ‘deals as consumer’ in relation to another party if — (a) he neither makes the contract in the course of a business nor holds himself out as doing so; (b) the other party does make the contract in the course of a business; and (c) the goods passing under or in pursuance of the contract are of a type ordinarily supplied for private use or consumption; but on a sale by auction or by competitive tender the buyer is not in any circumstances to be regarded as dealing as consumer. (6) Except in the case of a sale by auction or by competitive tender, it is for a person claiming that a party does not deal as consumer to show that he does not. PART 2 – IMPLIED TERMS IN CONTRACTS FOR SUPPLY OF SERVICES 21 The contracts concerned [1985/14/12; P1982/29/12] (1) In this Part a “contract for the supply of a service” means, subject to subsection (2), a contract under which a person (the supplier) agrees to carry out a service. (2) For the purposes of this Part, a contract of service or apprenticeship is not a contract for the supply of a service. (3) Subject to subsection (2), a contract is a contract for the supply of a service for the purposes of this Part whether or not goods are also — (a) transferred or to be transferred, or (b) bailed or to be bailed by way of hire, under the contract, and whatever is the nature of the consideration for which the service is to be carried out. Supply of Goods and Services Act 1996 Section 22 c AT 16 of 1996 Page 21 (4) The Isle of Man Office of Fair Trading may by order provide that one or more of sections 22 to 24 shall not apply to services of a description specified in the order, and such an order may make different provision for different circumstances.1 (5) An order under subsection (4) shall not have effect unless it is approved by Tynwald. 22 Implied term about care and skill [1985/1/13; P1982/29/13] In a contract for the supply of a service where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill. 23 Implied term about time for performance [1985/1/4; P1982/29/14] (1) Where, under a contract for the supply of a service by a supplier acting in the course of a business, the time for the service to be carried out is not fixed by the contract, left to be fixed in a manner agreed by the contract or determined by the course of dealing between the parties, there is an implied term that the supplier will carry out the service within a reasonable time. (2) What is a reasonable time is a question of fact. 24 Implied term about consideration [1985/1/15; P1982/29/15] (1) Where, under a contract for the supply of a service, the consideration for the service is not determined by the contract, left to be determined in a manner agreed by the contract or determined by the course of dealing between the parties, there is an implied term that the party contracting with the supplier will pay a reasonable charge. (2) What is a reasonable charge is a question of fact. 25 Exclusion of implied terms, etc [1982/29/16] (1) Where a right, duty or liability would arise under a contract for the supply of a service by virtue of this Part, it may (subject to subsection (2) and to Parts II and III of the Misrepresentation and Unfair Contract Terms Act 1980) be negatived or varied by express agreement, or by the course of dealing between the parties, or by such usage as binds both parties to the contract. (2) An express term does not negative a term implied by this Part unless inconsistent with it. Section 26 Supply of Goods and Services Act 1996 Page 22 AT 16 of 1996 c (3) Nothing in this Part prejudices — (a) any rule of law which imposes on the supplier a duty stricter than that imposed by section 23 or 24; or (b) subject to paragraph (a), any rule of law whereby any term not inconsistent with this Part is to be implied in a contract for the supply of a service. (4) This Part has effect subject to any other enactment which defines or restricts the rights, duties or liabilities arising in connection with a service of any description. 26 Interpretation of Part 2 [P1982/29/18; P1994/35/2/6] In this Part “business” has the same meaning as in Part 1. PART 3 – MISCELLANEOUS AND SUPPLEMENTAL Sale of goods 27 Goods forming part of a bulk (1) [Amends rule 5 of section 18 of the Sale of Goods Act 1983 by adding paragraphs (3) and (4).] (2) [Inserts sections 20A and 20B in the Sale of Goods Act 1983.] 28 Acceptance or rejection of goods [Substitutes sections 34, 35 and 35A for sections 34 and 35 of the Sale of Goods Act 1983.] Consumer Credit 29 Regulations as to consumer credit [Amends section 8 of the Moneylenders Act 1991 by adding subsections (3) and (4).] Supplemental 30 Transitional provisions and savings The transitional provisions and savings in Schedule 2 shall have effect. Supply of Goods and Services Act 1996 Schedule 1 c AT 16 of 1996 Page 25 Schedule 1 MATTERS RELEVANT TO REASONABLENESS OF CONTRACT TERMS Section 18(5)(b) 1. The strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the requirements of the person to whom the goods were supplied (‘the customer’) could have been met. 2. 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. 3. Whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties). 4. 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. 5. Whether the goods were manufactured, processed or adapted to the special order of the customer. SCHEDULE 2 [Section 30] TRANSITIONAL PROVISIONS AND SAVINGS 1 Sections 1 to 4: implied terms as to title (1) In relation to a contract made before 18th June 1976, for section 1 substitute — “1 In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is — (a) an implied condition on the part of the seller that in the case of a sale he has a right to sell the goods, and in the case of an agreement to sell he will have such a right at the time when the property is to pass; (b) an implied warranty that the buyer will have and enjoy quiet possession of the goods; (c) an implied warranty that the goods will be free from any charge or encumbrance in favour of any third party, not declared or SCHEDULE 2 Supply of Goods and Services Act 1996 Page 26 AT 16 of 1996 c known to the buyer before or at the time when the contract is made.”. (2) Section 2 does not apply to a hire-purchase agreement made before 18th June 1976. (3) Sections 3 and 4 do not apply to a contract made before 1st June 1985. 2 Sections 5 to 8: transfer of goods by description (1) Sections 5(3) and 6(2) do not apply to a contract made before 18th June 1976. (2) Sections 7 and 8 do not apply to contracts made before 1st June 1985. 3 Sections 9 to 12: implied terms as to quality or fitness (1) In relation to a contract made before 18th June 1976 for section 9 substitute — “9 (1) Subject to this and any other Act, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods supplied under a contract of sale. (2) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he is the manufacturer or not), there is an implied condition that the goods will be reasonably fit for such purpose, except that in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose. (3) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or not), there is an implied condition that the goods will be of merchantable quality; but if the buyer has examined the goods, there is no implied condition as regards defects which such examination ought to have revealed. (4) An implied condition or warranty about quality or fitness for a particular purpose may be annexed by the usage of trade. (5) An express condition or warranty does not negative a condition or warranty implied by this Act unless inconsistent with it.”. (2) In relation to a contract of sale made on or after 18th June 1976 and before commencement, for section 9 substitute — “9 (1) Except as provided by this section and section 13 and subject to any other enactment, there is no implied condition or warranty Supply of Goods and Services Act 1996 SCHEDULE 2 c AT 16 of 1996 Page 27 about the quality or fitness for any particular purpose of goods supplied under a contract of sale. (2) Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition — (a) as regards defects specifically drawn to the buyer’s attention before the contract is made; or (b) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal. (3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller’s skill or judgment. (4) An implied condition or warranty about quality or fitness for a particular purpose may be annexed to a contract of sale by usage. (5) The preceding provisions of this section apply to a sale by a person who in the course of a business is acting as agent for another as they apply to a sale by a principal in the course of a business, except where that other is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made. (6) Goods of any kind are of merchantable quality within the meaning of subsection (2) if they are 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. (7) In the application of subsection (3) to an agreement for the sale of goods under which the whole or part of the purchase price is payable by instalments, any reference to their seller includes a reference to the person by whom any antecedent negotiations are conducted.”. (3) In relation to a hire-purchase agreement made before 18th June 1976, for section 10 substitute — “10 (1) Where, in the case of a hire-purchase agreement to which the Hire-Purchase Act 1939 applies, the hirer expressly or by SCHEDULE 2 Supply of Goods and Services Act 1996 Page 30 AT 16 of 1996 c does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the transferor. (5) An implied condition or warrant about quality or fitness for a particular purpose may be annexed by usage to a contract for the transfer of goods. (6) The preceding provisions of this section apply to a transfer by a person who in the course of a business is acting as agent for another as they apply to a transfer by a principal in the course of a business, except where that other is not transferring in the course of a business and either the transferee knows that fact or reasonable steps are taken to bring it to the transferee’s notice before the contract concerned is made. (6A) Goods of any kind are of merchantable quality within the meaning of subsection (2) if they are fit for the purpose or purposes for which goods of that kind are commonly supplied as it is reasonable to expect having regard to any description applied to them, the consideration for the transfer (if relevant) and all the other relevant circumstances. (7) In the application of subsection (4) to a contract for the transfer of goods under which the consideration or part of the consideration for the transfer is a sum payable by instalments, any reference to the transferor includes a reference to the person by whom any antecedent negotiations are conducted.”. (7) In relation to a contract for the hire of goods made on or after 1st June 1985 and before commencement, for section 12 substitute — “12 (1) Except as provided by this section and section 16 and subject to the provisions of any other enactment, there is no implied condition or warranty about the quality or fitness for any particular purpose of goods bailed under a contract for the hire of goods. (2) Where, under such a contract, the bailor bails goods in the course of a business, there is (subject to subsection (3)) an implied condition that the goods supplied under the contract are of merchantable quality. (3) There is no such condition as is mentioned in subsection (2) — (a) as regards defects specifically drawn to the bailee’s attention before the contract is made; or (b) if the bailee examines the goods before the contract is made, as regards defects which that examination ought to reveal. (4) Where, under a contract for the hire of goods, the bailor bails goods in the course of a business and the bailee, expressly or by implication, makes known to the bailor any particular purpose for Supply of Goods and Services Act 1996 SCHEDULE 2 c AT 16 of 1996 Page 31 which the goods are being bailed, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the bailee does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the bailor. (5) An implied condition or warranty about quality or fitness for a particular purpose may be annexed by usage to a contract for the hire of goods. (6) The preceding provisions of this section apply to a bailment by a person who in the course of a business is acting as agent for another as they apply to a bailment by a principal in the course of a business, except where that other is not bailing in the course of a business and either the bailee knows that fact or reasonable steps are taken to bring it to the bailee’s notice before the contract concerned is made. (6A) Goods of any kind are of merchantable quality within the meaning of subsection (2) if they are fit for the purpose or purposes for which goods of that kind are commonly supplied as it is reasonable to expect having regard to any description applied to them, the consideration for the bailment (if relevant) and all the other relevant circumstances. (7) In subsection (4) any reference to the bailor includes a reference to the person by whom any antecedent negotiations are conducted.”. 4 Sale etc. by sample (1) In relation to a contract of sale made before commencement, in section 14(1), after paragraph (a) insert — ‘(aa) that the buyer will have a reasonable opportunity of comparing the bulk with the sample; and’. (2) In relation to a contract made before commencement, in section 13(1)(b), 14(1)(c), 15(1)(c) and 16(1)(c), for “making their quality unsatisfactory” substitute “rendering them unmerchantable”. (3) In relation to a contract for sale or hire-purchase agreement made on or after 18th June 1976, or a contract for the transfer of goods or contract for the hire of goods made on or after 1st June 1985, the word “unmerchantable” in those provisions (modified as above) shall be construed in accordance with section 9(6), 10(6), 11(6A) or 12(6A) (as substituted by paragraph 3), as the case may be. (4) Section 14 does not apply to a hire-purchase agreement made before 18th June 1976. (5) Sections 15 and 16 do not apply to contracts made before 1st June 1985. SCHEDULE 2 Supply of Goods and Services Act 1996 Page 32 AT 16 of 1996 c 5 Modification of remedies in non-consumer cases Section 17 does not apply to a contract made before commencement. 6 Exclusion of implied terms (1) Section 18 does not apply to a contract (other than a contract of sale or a hire- purchase agreement) made before 1st July 1981. (2) In relation to a contract of sale made before 18th June 1976, for section 18 substitute — “18 (1) Nothing in this Part affects section 54 of the Sale of Goods Act 1983 (rights etc. under contract of sale may be varied by express agreement, course of dealing or binding usage). (2) The seller under a conditional sale agreement to which the Hire- Purchase Act 1939 applies shall not be entitled to rely on any provision in the agreement excluding or modifying the condition set out in section 9(3) unless he proves that before the agreement was made the provision was brought to the notice of the customer and its effect made clear to him. (3) In this section ‘conditional sale agreement’ means a contract for sale under which — (a) the price or part of it is payable by instalments, and (b) the property in the goods is to remain in the seller (even though the buyer is to be in possession of the goods) until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfilled.”. (3) In relation to a hire-purchase agreement made before 18th June 1976 for section 18 substitute — “18 The warranties and condition set out in sections 2 and 10 shall be implied notwithstanding any agreement to the contrary, and the owner shall not be entitled to rely on any provision in the agreement excluding or modifying that condition unless he proves that before the agreement was made the provision was brought to the notice of the hirer and its effect made clear to him.”. (4) In relation to a contract of sale made on or after 18th June 1976 and before 1st July 1981, for section 18 substitute — “18 (1) An express condition or warranty does not negative a condition or warranty implied by this Act unless inconsistent with it. (2) A term of a contract of sale or of any other contract exempting from all or any of the provisions of section 1 is void. (3) A term of a contract of sale or of any other contract exempting from all or any of the provisions of section 5, 9 or 13 — Supply of Goods and Services Act 1996 SCHEDULE 2 c AT 16 of 1996 Page 35 agreement to expect that compliance with that condition would be practicable; (e) whether the goods were manufactured, processed, or adapted to the special order of the hirer. (5) Subsection (4) does not prevent the court from holding, in accordance with any rule of law, that a term which purports to exclude or restrict any of the provisions of section 6, 10 or 14 is not a term of the hire-purchase agreement. (6) In this section ‘consumer agreement’ means a hire-purchase agreement where the owner makes the agreement in the course of a business and the goods to which the agreement relates — (a) are of a type ordinarily supplied for private use or consumption; and (b) are hired to a person who does not hire or hold himself out as hiring them in the course of a business. (7) The onus of proving that a hire-purchase agreement falls to be treated for the purposes of this section as not being a consumer agreement lies on the party so contending. (8) Any reference in this section to a term exempting from all or any of the provisions of any section of this Act is a reference to a term which purports to exclude or restrict, or has the effect of excluding or restricting, the operation of all or any of the provisions of that section, or the exercise of a right conferred by any provision of that section, or any liability of the owner for breach of a condition or warranty implied by any provision of that section. (9) It is hereby declared that any reference in this section to a term of an agreement includes a reference to a term which although not contained in an agreement is incorporated in the agreement by another term of the agreement.”. 7 Interpretation The definition of ‘business’ in section 20 does not apply in relation to a contract made before 18th June 1976. 8 Contracts for services Part 2 does not apply to contracts made before 1st June 1985. 9 Goods forming part of a bulk Section 27 does not apply to a contract made before commencement. Schedule 3 Supply of Goods and Services Act 1996 Page 36 AT 16 of 1996 c 10 Acceptance or rejection of goods Section 28 does not apply to a contract made before commencement. 11 Interpretation of this Schedule In this Schedule “commencement” means the day on which this Act comes into operation. Schedule 3 MINOR AND CONSEQUENTIAL AMENDMENTS Section 31(1) [Sch 3 amends the following Acts — Hire-Purchase Act 1973 q.v. Misrepresentation and Unfair Contract Terms Act 1980 q.v. Sale of Goods Act 1983 q.v] Schedule 4 ENACTMENTS REPEALED Section 31(2) [Sch 4 repeals the following Acts wholly — Supply of Goods (Implied Terms) Act 1976 Supply of Goods and Services Act 1985 and the following Acts in part — Misrepresentation and Unfair Contract Terms Act 1980 Sale of Goods Act 1983.] Supply of Goods and Services Act 1996 Endnotes c AT 16 of 1996 Page 37 ENDNOTES Table of Legislation History Legislation Year and No Commencement Table of Renumbered Provisions Original Current Table of Endnote References 1 Subs (4) amended by SD579/98. 2 Effective 19/8/1996