What should a buyer be aware of in a contract for the sale of goods?

How could a buyer breach a term of the contract?

Consumers who act as the buyer in a contract for a sale of goods are protected by a number of statutory instruments. For example the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contract Regulations 1999. The statutory protection is in place to aid the more vulnerable parties to a contract. It is important to remember however that the statutory rules do not imply that a consumer has no responsibly or liability in a contract. The buyer also obviously needs to perform his side of the agreement in order for it to be properly executed. A failure to do this will mean that a buyer may be liable for damages or loss attributed to the seller. Compensation for a breach of a fundamental condition of the contract by the buyer could mean that he has to pay of damages or it could also mean that the seller could to cancel the contract and have the right to be reimbursed for any loss as a result.

What duties does a buyer have?

Accepting delivery

According to section 27 of the Sale of Goods Act 1979 one of the fundamental duties between a buyer and seller in a contract for the sale of goods is that the seller has a duty to deliver the goods and the buyer has a duty to accept the goods in accordance with the terms of the contract. According to the Act the buyer must accept the goods which are delivered to him by the seller if there is no good reason not to do so. If the buyer fails to take delivery of the goods in a reasonable time then this will mean that he will be liable to the seller for any loss incurred as a result. It is possible to include further and more expansive provisions in the contract concerning when the buyer should take delivery and any adequate time limits. The buyer should follow the express contract terms for accepting delivery carefully in order to avoid being held liable.

Paying for the delivery

Also according to the Sale of Goods Act 1979 it is the buyer’s duty to pay the price in accordance with the terms of the contract. Usually a price will be expressly fixed in a contract for the sale of goods. In the unusual case of no such price being stated then the Sale of Goods Act 1979 further suggests that in this instance a price must be ‘reasonable’ and the payment should be due in cash at the seller’s residence. The 1979 Act also states that if a price is not fixed in a contract it will be due to be paid on the delivery of the goods. A buyer needs to be aware of the 1979 Act and how the fall back provisions may effect when any payment may be due. Failing to pay would also be a fundamental breach of a contract for the sale of goods and would again result in the buyer being held liable for the seller’s consequential loss arising from the breach.

Reservation clauses and how they can effect a buyer rights

In some contracts for the sale of goods a seller may incorporate a reservation cause. The wording of reservation clauses can vary but a simple one may say;

  • ‘The seller retains the title to the goods until the price is paid’

This means that the seller wishes to retain the ownership of the goods until the buyer has paid for them. The seller will usually only try to enforce such a clause when a buyer becomes insolvent and the seller wishes to recoup any goods. These types of clauses are often challenged in court proceedings however a prospective buyer needs to look out for such a clause and be aware of how this clause could affect him and any goods delivered under a contract.

Exclusion clauses and how they can effect a buyers rights

A buyer should also be aware and look out for exclusion clauses drafted by the seller in a contract in order to reduce liability for losses caused by him. An exclusion clause could for example limit the amount of damages which could be awarded to the buyer in the event of a default by the seller. The exclusion clauses will always be under scrutiny if raised by the seller and will have to be deemed reasonable in order to apply to a consumer. However exclusion clauses are very common in contracts and should be read carefully. Although an exclusion clause can never exclude liability for the loss of life or personal injury suffered as a result of the seller’s actions, an exclusion clause could validly reduce the amount of liability for losses suffered by the buyer.