Supply of Goods and Services Act, 1982

Supply of Goods and Services Act, 1982

The area of law to which the scenario relates is the Supply of Goods and Services Act (SGSA) 1982 and the Sale of goods Act (SOGA) 1979. Both acts complement each other by having numerous implied obligations and if these terms are breached then the buyer can seek a remedy under the specific section which applies to them.

The implied terms in both acts are very similar to each other such as in the description and quality of goods. The purpose of these obligations is to protect the consumer from any contractual breach by the seller.

The legal position of the trader and the customer on the supply of goods and services has come about as a result of many legal developments but is now based on the Supply of Goods and Services Act, of 1982 (note that in Scotland the legal position is still based on common law).

The Act is described below but notices that it does allow a trader and a customer to agree that the customer’s legal rights in any transaction should not apply or should be limited in some way.

The law says that certain terms are implied in every transaction for the transfer of goods and that the goods must:

  • Correspond with the description given
  • Be of satisfactory quality

If the Implied Conditions Are Breached

If the goods do not ‘correspond with the description’ or are not of ‘satisfactory quality’ or are not ‘fit for the purpose’ the customer can reject the goods and is entitled to his money back. He does not have to accept a credit note and he may even be entitled to compensation for any losses or expenses incurred.

There are some exceptions to this rule for situations such as where defects were brought to the customer’s attention before the sale or if the trader had made clear he was not sure whether, e.g., a particular part would be suitable for a particular purpose.

You may have read discussions of these types of issues in, e.g., motor magazines where journalists try to identify when it might be possible to reject a car that has been purchased.

Effect of a Manufacturer’s Guarantee

The rights of the customer under the law are against the supplier rather than the manufacturer and a manufacturer’s guarantee does not take those rights away. Both the customer and the supplier will benefit if customers complete and post the manufacturer’s guarantee and registration cards.

Lapse of Possible Claim for Defective Goods

Once goods have been ‘accepted’ the customer loses his right to reject them and therefore claim back what he has paid. Acceptance can be either by an explicit acknowledgment or by, e.g., keeping them for more than a reasonable time.

This is an area where car dealerships have attracted some doubtful publicity and where there have been calls for changes to the law.

Trader and Responsibility for Liability for Negligence

Traders’ ability to limit their own liability is restricted by the Unfair Contract Term Act, 1977 (applicable in England & Wales only) under which traders cannot exclude or limit liability for death or personal injury arising from negligence but can exclude or restrict their liability for other loss or damage arising from negligence providing the exclusion clause meets the test of ‘reasonableness’.

This test is very difficult to summarize but the court will consider the circumstances that were known to the parties (or should have been known) when the contract was made and will pay particular attention to such issues as the relative bargaining strength of the parties, whether the customer received any special inducements and whether the customer knew or should reasonably have known about the restriction clause. It is the trader who has to prove that the clause was reasonable.

Sale of Goods Act, 1979

Wherever goods are bought they must “conform to contract”. This means they must be as described, fit for purpose, and of satisfactory quality (i.e. not inherently faulty at the time of sale).

  • Goods are of satisfactory quality if they reach the standard that a reasonable person would regard as satisfactory, taking into account the price and any description.

  • Aspects of quality include fitness for purpose, freedom from minor defects, appearance, and finish, durability, and safety.

  • It is the seller, not the manufacturer, who is responsible if goods do not conform to the contract.

  • If goods do not conform to the contract at the time of sale, purchasers can request their money back “within a reasonable time”. (This is not defined and will depend on circumstances).

  • For up to six years after purchase (five years from discovery in Scotland) purchasers can demand damages (which a court would equate to the cost of a repair or replacement).

  • A purchaser who is a consumer, i.e. is not buying in the course of a business, can alternatively request a repair or replacement.

  • If repair and replacement are not possible or too costly, then the consumer can seek a partial refund, if they have had some benefit from the good, or a full refund if the fault/s has meant they have enjoyed no benefit.

  • In general, the onus is on all purchasers to prove the goods did not conform to the contract (e.g. inherently faulty) and should have reasonably lasted until this point in time (i.e. perishable goods do not last for six years).

  • If a consumer chooses to request a repair or replacement, then for the first six months after purchase it will be for the retailer to prove the goods did conform to the contract (e.g. we’re not inherently faulty).

  • After six months and until the end of the six years, it is for the consumer to prove the lack of conformity.

Inherent Fault

A fault present in the product at the time of purchase like:

  • An error in design and consequently the product is manufactured incorrectly

  • An error in manufacturing where a faulty component was used.

  • The “fault” may not become apparent immediately but it was there at the time of sale and so the product was not of a satisfactory standard.
  • Vallanadu Narayanan Viswanathan, (2008), Consumer Rights in Service Sector, Concept Publishing Company

  • Sanjay Kaptan, (2003), Consumer Movement in India: Issues and Problems, Sarup & Sons

  • A.C. Fernando, (2011), Business Environment, Pearson Education

  • Dr. A Sarangapani, (2009), A Textbook on Rural Consumer Behaviour in India – A Study of FMCGs, Laxmi Publications Ltd.

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