Conformity of contract

Regulation 4 deals with the passing of risk and is implemented into the SGA through s. 20(4). Under this regulation the consumer is only responsible for the goods once he has received them, and only then does the risk pass. The seller cannot pass the risk by giving the goods to a delivery company as stated by s. 34(4). Under the pre-regulations system s. 20(1) SGA provided that the goods remained at the sellers risk until the property in them was transferred to the buyer. Risk passed therefore with ownership rather than possession.

The question then became, when does the property pass to the buyer? The answer to this depended upon whether the goods were specific goods or unascertained goods. Specific goods are defined as goods identified and agreed upon at the time of sale9. Unascertained goods are goods that become identified and agreed upon only after the contract is made. They are a specified quantity of goods from an unidentified bulk. If the goods are specific then the property will pass as soon as the parties intend it to pass (s.17 SGA 1979).

To establish when the parties intended it to pass reference could be made to the terms of the contract and the circumstances of the case. In a hypothetical contract it is possible to consider that the contract would specify the time for delivery and the time for payment, however, it would be rare for the contract to deal with the time when the property is to pass to the buyer. In this situation, where it was impossible to determine the intentions of the parties, then the rules in s.

18 are applied. If the goods are unascertained goods then no property will pass until the goods become ascertained. For the goods to become ascertained the parties must identify the specific goods that relate to that specific buyer as distinct from any bulk. The reason for this is that when goods are in an unascertained bulk they are individually unidentifiable as belonging to a certain buyer and as such there can be no unconditional appropriation of the contract.

10 If the court is unsure if the goods have been ascertained they can look for guidance from s. 18 SGA 1979. Essentially, under s. 18 (Rules 4 & 5), the property will have passed to the buyer when the goods have either; been unconditionally appropriated to the contract by either the seller or the buyer regardless of delivery; or at the time of delivery the buyer signifies his acceptance of the goods or he retains possession of the goods without giving notice of rejection.

If the seller retains his 'right to disposal' before delivery then there can be no unconditional appropriation to the contract. This means that the goods are at the sellers risk until they have been delivered to and paid for by the buyer (s. 19 SGA 1979). However, generally when the seller is authorized to send the goods to the buyer, delivery to a carrier for that purpose will normally constitute a complete performance of the seller's duty (s. 32(1) SGA)11. The liability of risk in transit was dealt with in s. 31(1) SGA.

Under this section when the seller gave the goods to the carrier for the purpose of them being transferred to the buyer it was prima facie deemed to be delivery of the goods to the buyer. This rule applied to both specific and ascertained goods. The consumer therefore carried the risk during transit for those categories of goods. The seller seemed to have the advantage by being able to blame any damage on delivery.

However, the 2002 Regulations introduced s. 32(4) into the SGA 1979. This section states that where the buyer deals as a consumer the above provisions under s.31(1) are to be ignored. It specifically states that in pursuance of a contract of sale, where the seller has been authorized to send the goods to the buyer, that delivery of the goods to the carrier is not delivery to the buyer. As such it reverses the nature of the risk of delivery to one that the seller is liable for. This undoubtedly advantages the consumer in the present climate and gives consumers the ability to shop across boarders with much more confidence. Acceptance The traditional system was based on fundamental principles of offer and acceptance.

Under these principles acceptance only took place when either the buyer informed the seller that he had accepted the goods, or where the buyer took delivery and did some act that was consistent with being the owner, or where the buyer retains the goods for more than a reasonable length of time without informing the seller that he rejects them (s. 35 SGA). However for the first two of these will only amount to acceptance if the buyer had a reasonable opportunity of examining the goods either before the contract was made or after delivery (s. 35(2)).

A much more stringent approach has been taken in the 1999 Directive and consequent 2002 Regulations. Regulation 5 introduced into the SGA as s. 48A states at ss(3) that goods that do not conform to the contract of sale at any time within 6 months of the goods being delivered, will be taken as not conforming at the date of delivery. However this is a rebuttable presumption and if the seller can show that the goods did conform at that date then this section would not apply. There is a stark contrast to be observed between the two approaches.

The traditional system is based on whether the buyer had a reasonable time to inspect the goods and whether he had treated them as his own, and if so then he lost the right to rescission of the contract. The new approach aims to protect buyers from goods that become faulty within 6 months of delivery. In doing so it ignores the principle of acceptance and allows buyers to bring a claim regardless of the opportunity to inspect the goods. However, the new regulations will take account of how much the buyer has made use of the goods when determining the remedy available to him and the amount of damages payable (s.48(C3) SGA.

Whether a court would grant a new remedy of rescission at six months after the delivery date is perhaps doubtful, at least in the absence of the seller complying with the requirement to repair or replace. In assessment of the benefits to consumers it is probably best to say that this system is fundamentally simpler than the traditional one. It also gives a greater number of consumers the ability to bring a claim for faulty goods, even though the result may be similar to what might have been reached under the traditional system. Guarantees

Regulation 15 introduced provisions relating to 'commercial guarantees'. It was stated that where goods are sold which offer a consumer guarantee, then the guarantee is enforceable as an obligation of the seller. The Regulation sets out the form, content and requirements of consumer guarantees and gives powers to enforcement authorities to apply for an injunction in the event of non-compliance. It is argued that this does not change the position for consumers because it does not make sellers provide a guarantee, it just establishes that if one is given it must conform to their standards and be legally binding.

Conclusion The Directive provides a minimum set of common consumer rights on faulty goods within the EU with the aim of encouraging people to shop across boarders knowing they have protection for faulty goods. They are a simple and easily comprehensible set of guidelines that can be absorbed much easier by the consumer population than the traditional approach which was confusing and complex. The Directive and the ensuing Regulations have clarified and strengthened consumer rights in a number of key areas. Of particular note is the addition of four new remedies of repair, replacement, partial refund or rescission.

However, because of the disproportionality test, the remedies of repair and replacement may in large measure be dictated by the seller who would opt for a reduction in the purchase price. It is submitted that in these circumstances the benchmark for reduction in price should equate broadly to the cost of repair. It is also noted that rescission is not available when non-conformity is minor. A particularly strong feature of the new legislation relates to goods that are faulty within six months of delivery whereby the consumer can request repair or replacement.

The legislation assumes that these goods were faulty on the date of delivery and the onus of proof switches to the seller to prove that they were satisfactory at the time of delivery. The implied terms in the pre-existing legislation corresponds to a great extent with the elements of conformity of contract. An exception is the liability in respect of public statements that are misrepresentations on the part of the seller. The onus of proof is on the seller to show that the public statements were not relevant to the contract.

This change could help ensure that sellers use correct information about the product and its characteristics if they are to avoid these problems. The Directive has considerably strengthened the position of the consumer in the transfer of risk, and in doing so, facilitated and encouraged consumers to trade inter and intra EU countries. This alteration of the law means that the seller retains responsibility for the goods through delivery, the risk has changed from being a problem for the consumer, to being a problem for the seller.

The Directive should also encourage consumers to trade on the internet with other traders in the EU as it gives protection to new and second hand goods. From a consumers perspective this change in the law is to be welcomed regardless of the improvements, whether they are marginal or material. But possibly the greatest advantage to the average consumer is that, together with the broad geographical jurisdiction, the new system is simple and easily comprehensible and the law is laid out in a clear precise manner in intelligible language.