Legal Rules on Implied Terms for Sale of Goods and Supply of Services Contracts

This report discusses the legal rules on implied terms for sale of goods and supply of services contracts. It explains the rights and remedies available to consumers under the Consumer Rights Act 2015. The report also analyzes the implications of faulty products and the transfer of property in a business transaction.

BUSINESS REPORT

Table of Contents
MAIN BODY.................................................................................................................................................3
Ans. 1.......................................................................................................................................................3
Implied Terms for Sale of Goods Contract...........................................................................................3
Implied Terms for Supply of Services Contract....................................................................................3
Analysis................................................................................................................................................4
Ans. 2.......................................................................................................................................................5
Analysis................................................................................................................................................6
Ans. 3.......................................................................................................................................................7
Analysis................................................................................................................................................7
Ans. 4.......................................................................................................................................................9
Consumer Rights Act, 2015..................................................................................................................9
Analysis..............................................................................................................................................10
REFERENCES..............................................................................................................................................12

MAIN BODY
Ans. 1
To understand and evaluate the legal rules on implied terms the rules on implied terms
pertaining to sale of goods must be given preference. Implied rights are covered under the Part 1
of the Consumer Rights Act, 2015. This part particularly pertains to legal rules of 3 different
types of contracts discussed under the legislation. The implied terms discussed herein are largely
similar to the erstwhile Sale of Goods Act 1979. Following are listed below:
Implied Terms for Sale of Goods Contract
1. A quality standard of goods is to be maintained. The goods need to be necessarily of
satisfactory quality. The nature of such satisfaction is to be determined by way of
prudence of an objective reasonable person with respect to the price paid for the goods.
2. The goods need to be suitable and thus, fit for use. Specific Purpose for which the goods
are bought and any additional purpose the goods might perform are also to be counted
under this head.
3. The goods so supplied must match the description as provided under the order.
4. An additional implied term for the trader unlike the previous legislations is that of a legal
right to provide or supply the goods as a trader is available.
Implied Terms for Supply of Services Contract
The rules of service contracts are also very similar in nature. Services can largely be
provided without provision of any goods. The minimum standards or the implied terms as per the
legislation are:
1. The services must be performed with duty of care and the dealing shall be reasonable. All
actions must be skilled as any negligence of any sort is bound to get punished.
2. The price paid for a contract must be reasonable unless the same has not been agreed
prior to the agreement.

3. Similarly in the absence of an agreement about the time – period, time taken must not
exceed reasonable time as per the general business expectation.
4. Communications whether expressly written or spoken which act as a material factor in
purchase of such services are binding contractual implied terms; and cannot be avoided.
Any failure of proper installation might be considered as goods not being as per the
description if needed at all.
Analysis
After due analysis, it can be said that the contract as entered by Mister John was of the
provision of supply of goods, here in, a TV set and subsequent performance of services those
being that of delivery and installation of the TV set.
There seems to be no violation of the installation or delivery but the fact that the TV set
broke into fumes, signifies that the same was not a good product which could live up to the
“satisfactory quality” test . It thus, was a violation of an implied term well established under the
statute and Mister John can suitably seek a remedy as per the statute.

Ans. 2
As per Consumer Rights Act of 2015 there are certain remedies in case of violation of the
implied terms or a breach of express terms altogether. These breaches are part and parcel of a
commercial business and in general happen to create a lot of hassle. To protect the same, direct
and ample remedies have been provided under the CRA scheme. These remedies cannot be
contracted out by the seller, and such statutory protection is maintained by section 31: which
clearly talks about liability that cannot be restricted or excluded.
We shall look at the specific remedies for the seller and the buyer as follows:
1. Right to reject the goods exists as given under section 20 of the CRA. This is in
furtherance of the right to enforce the terms of the agreement so entered into by the trader
and the buyer (available under section 19). This right is available for a short period of
initial 30 days and in case the same is not exercised due to any reasons including general
satisfaction, following claims might be made.
2. Right to repair or seek replacement: In case the consumer seeks repairs or replacement of
a good can claim a repair or replacement as per this Right, which is directly available up
to 6 months. This might involve a partial rejection of the goods in question. T
The idea is to give an opportunity to the trader or seller to do good the harm caused by a
faulty product. While in the case of early right to rejection a full claim can be sought, if the fault
or issue is noticed or brought into light after a period of 30 days the above mentioned
opportunity to the seller is the protection of seller’s rights as well.
3. Right to repair or replacement is one where the seller has an opportunity to choose its
own way to do good the loss suffered by the buyer/consumer. To remedy a breach of the
implied terms or express terms the seller can choose a viable option from between the 2
available as per its prudence.
4. There is also a remedy for price reduction or complete rejection of the goods after a
period of 6 months in case the customer is not satisfied by the repairs or replacement
services so received. In case, the consumer decides to keep the faulty product then a
partial refund or price reduction is possible.

Analysis
An important issue that is very crucial in terms of evidence while discussing all these
rights and remedies for both buyers and sellers is the notion of burden of proof. Burden of proof
varies on the basis of the time period involved.
In cases where in the fault is discovered in the initial 30 days or subsequent to that in the
initial 6 months of the purchase, there is a presumption operating against the retailer that the so
called product in question was faulty or defective since the very beginning. Thus, it is the
retailer’s impetus to prove the opposite. A failure of repair or replacement can lead to complete
refund unless the consumer decides the opposite.
Similarly, discovery of fault after a period of 6 months by the customer requires the
customer or the buyer to prove that it was not any fault at his end that led to the loss or defect in
the device or product. Here the onus to prove does shift onto the consumer.
Applying the above reasoning and its evaluation, it can be said that as per the scheme of
settled law Mister John was well within his rights and the additional duty present due to the
applicability of section 31; allow him to seek a complete refund against a faulty product which
here was a TV set. The discovery of the fault negates any unfair terms to restrict Mister Jones
rights which are available to him. The trader at most can seek, (or could have got) a reprieve if
Mister John agrees for repair or replacement after further usage of another 7 to 10 days.

Ans. 3
Property is deemed to be transferred to a person only when certain control can be
exercised by an individual over that property this transfer can either be in the form of ownership
by way of complete transfer of rights and liabilities or can just be based on possession. In the
case of former we see that there is a contract with consideration being paid usually unless it is a
gift or otherwise, while cases of possession dealing with transfer of property are examples of
lease mortgage or pledge.
In the instant case the transfer of property in question deals with a TV set. A TV set by its
very nature is a movable property which does not qualify under the Law of Property Act 1925.
Therefore, the relevant legislation or statute is Sale of Goods Act 1979 which has now become
Consumer Rights Act 2015 for a better understanding of complex laws and frequent confusion in
the consumer section.
The erstwhile statute and its practice in courts have clearly stated that possession in a
property is transferred as and when the product is actually taken in possession from the dealer.
The same has been duly incorporated under section 29 of CRA titled Passing of Risk. Until such
time, the possession even if it is in the process of carriage rests with the Trader. Only exception
in this case can that be of customer appointing a carrier in which scenario the possession is
effectively transferred the moment such carrier is in the possession of goods so delivered to the
carrier by the trader.
Analysis
In light of the above stated statutory details, Mr John got possession of the TV set only
after the same was delivered to his place by the carrier of the trader. The transfer of property in
the form of possession was effected with the delivery whereas the moment in which such goods
or a particular TV set in question identified suitable as per the order of Mr John was recognised
and set aside to be delivered to him: ownership had transferred, though it was without control.
[section 29: Passing of Risk – The risk hadn’t passed as per s. 29 (2)]
It is clear from the above discussion of the statutory provisions that Mr John got
ownership of the product prior to the delivery but such ownership was lacking any form of
control which was duly given to him by the way of delivery thereby giving effect to possession.
The provisions as discussed above apply similarly to the trader who lost ownership of the
TV set so delivered to Mr John in the very instant it decided to choose and assign a suitable

product as per the contract. The moment such a TV set was recognised and separated from others
it was so to give effect to the title that had transferred to Mr John. Possession is nine points in
law and thus, more crucial as it is a concept based on control. The TV set remained in control of
the trader until the same was delivered to Mr John.

Ans. 4
The law on sale of goods has been reformed and now what operates instead of Sale of
Goods act 1979 is called Consumer Rights Act 2015. There exists a Consumer protection act
1987 which gives a consumer wide powers to give effect to its issues and get remedied even
from the manufacturer.
As per the CPA, the 'producer' is liable for all material defects being the manufacturer of
finished goods or individual components and all other persons to whom such production can be
attributed. Trademark usage helps in identification of such producers. Thus, it is clear that under
the CPA regime several parties can be held liable for a faulty good as the underlying principle is
that of strict liability which is joint and several.
A few possible defences that are relevant to the given scenario cover the following
aspects of:
 Fault in the product as not there when it was manufactured or supplied;
 It was not a product supplied in the due course of a business;
 a popular defence pertains to developmental risks which prevents any producer to
deliver a safe product as there is not concrete and viable scientific know-how on
the fault in question
Additionally in Howmet Ltd v Economy Drives Ltd [2016] EWCA Civ 847, it was
clarified that the consumer’s knowledge of the defect or the fault prior to the so called damage
claimed would exclude liability. Principle of volenti non fit injuria has been incorporated.
Consumer Rights Act, 2015
The Consumer Rights Act has replaced several implied terms which were used as per the
express provisions of Sales of Goods Act only by interpretation given by the courts which
created a lot of confusion in the consumer section.
Section 9 talks about satisfactory quality of the goods while section 10 course in
furtherance section 9 talks about such goods to be fit for a particular purpose. The goods as
delivered if recognised to be not as per the description of the initial contract, as per section 11,
such goods can be rejected as a matter of right. There is also a further right to match a sample in
case deliberation is needed as per section 13.

A few rights that have been enabled for a consumer in the CRA are listed as following:
 Early right to reject (S. 20)
Such a right exists for a period of 30 days from transfer of possession which can be
exercise if the goods are found faulty after installation from the time of such installation.
 Right to repair or replacement (S. 22)
This right exist in furtherance of the right to reject in case, delivered goods are found to
be faulty after a period of 30 days. The consumer has a right to seek repair or replacement on the
grounds that a reduction of purchase price or termination of contract would not be proportionate
to the use so made. This right is extended for a period of initial 6 months and can be exercised
against the retailer. The retailer is then bound to do the needful in the failure of which calls for a
legal action under the CRA.
 Right to Price Reduction (S. 24)
Right to repair or replacement once extinguished due to time is further extended. Where
in a fault is discovered after the period of 6 months a suitable reduction in price can be sought
against retailer depending on the situation as how the product so in question was handled by the
consumer.
The underlying principle of all these rights is the material relevance of the defect within
the good which was either catalyzed by an event for the defect was in itself the source cause of
damage to the product and thus, the consumer (Howmet Ltd v Economy Drives Ltd [2016]
EWCA Civ 847).
Analysis
I. In the instant case, as per the relevant facts, it is very clear that the product was in
possession of the consumer Mr John for a period of only 21 days or so.
The discovery of the faults which led the TV set to break into fumes could not have
been materially or physically identified by Mr John. Thus, the consumer can exercise its
early right to rejection as per the consumer rights act of 2015 and seek a suitable remedy as
per S. 20(7).
II. Certain contractual terms that were referred to by the retailer against Mr John
when he actually reported such faults with the good. These are unconscionable terms and
seem to be in the nature of one which promotes unfair dealing. Such unfair contract terms

are also dealt by the Consumer Rights Act of 2015 suitably. The rights and law pertaining
to unfair terms is under Part 2 of CRA, 2015.
Section 61 reduces the scope to only consumer contracts, and section 62 talks about
fairness requirements in the terms of a consumer contract. Any unfair terms are statutorily not
binding [62(2)]; and a term is unfair as per 62(4) if it causes a imbalance to of either parties’
rights and obligations operating to cause a detrimental effect to the consumer.
The Consumer Rights Act affords consumers certain minimum statutory rights like the
one in section 20 for early rejection of goods which cannot be waived by unfair terms, to be
taken up by the court as duty under section 71. Mr. John had these rights but was caught in unfair
terms which were in the nature of Head: 2, 3 and 18 of Part 1 of Schedule 2 as referred by
section 63.
These rights are still subject to them not being unfairly disproportionate on the retailer, or
simply impossible. Replacement or repair is a choice. In the instant case though, the retailer is
bound despite the unfair terms as they are unconscionable and not binding.

REFERENCES
Books and Journals
Bakar, N.M.A., Yasin, N.M. and Razali, S.S., 2018. Consumer Rights Act 2015 (United
Kingdom): Is it a Good Model in Protecting Banking Consumers from Unfair Terms in Islamic
Banking Consumer Contracts in Malaysia?. Jurnal Undang-undang dan Masyarakat, 22, pp.21-
31.
Barry, D., QC, E.J., Sumnall, C., Douglas-Jones, B. and Lloyd, D., 2016. Blackstone's Guide to
the Consumer Rights Act 2015. Oxford University Press, Incorporated.
Cartwright, P., 2016. Redress compliance and choice: Enhanced Consumer Measures and the
retreat from punishment in the Consumer Rights Act 2015. The Cambridge Law Journal, 75(2),
pp.271-300.
Conklin, K., Hyde, R. and Parente, F., 2019. Assessing plain and intelligible language in the
Consumer Rights Act: a role for reading scores?. Legal Studies.
Cormack, S., 2016. Reforming the Fairness Test in the Consumer Rights Act 2015. Edinburgh
Student L. Rev., 3, p.103.
El-Gendi, M., 2017. The Consumer Rights Act 2015: A One Stop Shop of Consumer
Rights. QMLJ, 8, p.83.
Micklitz, H.W., Stuyck, J. and Terryn, E. eds., 2010. Consumer Law: Ius Commune Casebooks
for a Common Law of Europe. Bloomsbury Publishing.
Twigg-Flesner, C., Canavan, R., Atiyah, P.S. and Adams, J., 2020. Atiyah and Adams' Sale of
Goods. Pearson.