This paper will look to interrogate the law with a view to finding out whether it has in deed reached the 21st century. It is the contention of this paper that this has not been achieved. This paper will endeavour to present areas that the law could be improved in order to address the dynamics of the present times.
Discussion
For a long time the concept of transfer of property had proven to be a point of contention between buyers and sellers. The gist of the controversy was centred on the point at which property (ownership) passed from one party (seller) to another (buyer). The law has over time attempted to address this issue but unfortunately in some cases the dynamics of the present society have tended more often than not to overtake the changes.
When the Sale of Goods Act of 1872 was enacted, the general nature of trade entailed the exchange of goods and services for a consideration. Trade mostly and always involved finished products that were tangible and consideration involved money. This took a variety of different forms over time from salt, through to precious stones to coins and notes and presently to e-currency. This made it easy for both buyers and sellers, with property changing at the point of exchange of the good for the consideration. Form the arising challenges, as a result of transfer of property for goods that were being shipped overseas, there thus arose the need to define the point at which property passed.
Since at this time guarantee was not an integral aspect of goods production, this was not captured in the act. Over time and with increasing consumer awareness about their rights, coupled with increased competition and the desire by companies to cultivate loyal customers, guarantee of goods was introduced. Manufactures saw the need to ensure quality and specificity of their goods to the consumer.
This brought in a new dimension for consideration when factoring the passage of property. Other short falls included the inability to capture the continued lapse of time between dispatch of goods to the buyer, the delivery, dispatch of payment to the seller and the arrival of the payment. It became increasingly difficult and challenging allocating proprietorship of goods in transit, for goods acquired on consignment and those acquired in credit.
At around this time, there was found to be ambiguity in the description of goods when drawing contracts. More often than not, disagreements arose as a result of one party felling the other party had misrepresented facts concerning the nature of goods. This was mostly the case where the opportunity to ascertain the goods had not been available.
The Act therefore came to ensure that property passed only when the goods were ascertained in the cases of contracts where they had not been done so in advance. This gave the buyer the right to accept or reject goods if they did not feel they were precisely what they were paying for.
Another challenge arose in cases where the goods were specific and clearly ascertained by both parties and there was contract in place. There were increasing disagreements as pertaining to the point at which ownership passed from the seller to the buyer. The law was thus enacted with the express purpose of addressing this issue.
It thus addressed specifically and put in place guidelines as to parameters that needed to be fulfilled in order to ascertain to whom the ownership accrued. It was thus legally laid down that the property was to pass when it was intended to pass and in order to ascertain this intention, the conduct of the parties and the circumstances of each case were to be investigated where a conflict or disagreement arose.
In order to circumvent ambiguities in ascertaining the intention of both parties, some ground rules were laid down in the law in order to protect the integrity of contracts. It was determined that in cases where the contract was specific as to the description of the goods and the state at which they were to be delivered and there not being any condition attached to the contract, the property passed at the point of making the contract. This was not affected by delay in payment nor delivery nor both factors combined.
In some cases contracts were entered to for the goods to be delivered, but the seller had to perform additional functions. The seller wanted to the property to pass to the buyer yet the goods were not in a usable way. The law was therefore made to ensure only after the seller had performed the specific function required to make the goods deliverable did the property pass to the buyer. The seller could not perform this function without informing the buyer and expect the ownership to pass, the seller needed to inform the buyer of the completion of the functions, and they needed to buyer to acknowledge the completion of the said function. With the fulfilment if this requirement then the property could pass.
Similarly where the buyer is expected to confirm specific aspects of the goods like their weight, size or nature with a view to establish the price of the goods, and where a contract for the sale of specific goods in a deliverable state exists, the property would only pass with the fulfilment of the obligation. The buyer must have notice of the fulfilment of the obligation for the ownership to pass legally.
There were instances when goods were to be delivered to a buyer whom on inspection and satisfaction would inform the seller whether they were up to standard and thus pay. There arose cases where the buyer took their time in communication to the seller on status of the transaction thereof resulting from the delivery of the goods and by extension passage of property.
The Act was thus drafted giving specific parameters which on fulfilment would signify the passage of property from the seller to the buyer. The Act expressly stated that where the goods were delivered and the buyer did not make haste to inform the seller of the state of the transaction, with the passage of a reasonable time, and on not returning the goods or signifying intention to return, then the transaction was deemed to have been fulfilled by the seller thus the property of the goods passing to the buyer.
In the case of trading companies which did not produce their own goods but rather purchased goods for onward sale or on behalf of clients, they were constantly caught with goods they could not dispose as a result of clients changing requirements. This was especially prevalent as the goods on some instances took a long time in being delivered. It also applied to instances where a buyer wanted a good that was unique in design and function. This would imply that the good could only by used by the buyer and the seller could not find another buyer where the original buyer refused to buy on delivery.
The Act was drafted to remove this ambiguity. It stated that where a seller undertook certain specific actions in fulfilment of a contractual obligation with a buyer through the purchase of items to be used in the achievement of the final product, the buyer assumed ownership.
These initial provisions captured transactions as they happened in the late 19th century. At this time most transactions involved the transfer of goods for a consideration usually cash. However with time business transformed and diverse aspects were to come into play.
With the enactment of the Sale of Goods Act of 1979, most of this ground rules were retained. It tried to capture the modern day dynamics of business transactions. By the time of enacting this new act the internet had not grown to its present size and state. Where as the act captured cases where a buyer pays the consideration agreed upon with the seller and walks off with the goods, in online purchases, payment is made via a credit card and goods are shipped only to arrive days after they were paid for.
This thus raised issues of delivery of the purchased goods and the passage of property. Also in present day economics, goods are not necessarily purchased outright they could be leased, hired for a short time, hired with a view to purchase on completion of instalment payment or on leasing, or have the option of purchase at the end of the lease period.
Depending on the method of supply, the rights of the consumer and the passage of property will differ from situation to situation. Where as some aspects of these transactions may not differ over time, namely quality of goods supplied and remedies available in instances of breach of terms whether implied or expressed.
The Sale of Goods Act of 1979 at it best, describes transaction where the paper trail can be followed. This is not the case with online transactions. Especially in instances where services are offered online and money consideration transferred within the same medium, there can be no paper trail for which to follow in case of enforcement of a partys rights on breach of terms.
This makes the Sale of Goods Act 1979, not comprehensively covering all aspects of transactions affecting the present day businesses. It especially leaves buyers and sellers dealing with goods that have warranties and after sales service vulnerable. The buyer and the seller do not clearly know when property passes.
This is because even with the payment of the total monetary consideration to the seller by the buyer, there are still issues the seller needs to address on an ongoing basis in order to maintain the deliverability of the good. This will most of the time be at no additional cost to the buyer.
The Sale of Goods Act also falls short in addressing issues goods that are not tangible. In this class of goods will be found software and computer programmes. These do not have the characteristics of common tangible goods. It becomes tricky when seeking to identify the point at which property passes given the long-term relationship between the buyer and the seller because of the product. The trick is in identifying the implied aspect of these contracts in order to clearly get the point of passage of property.
It is in the implied realm that the Sale of Goods Act really falls short. Given that in todays world the implied is as important as the explicit, it is increasingly critical to cover all areas of implied obligations that accrue to any contract. This should make the enforcement in case of breach by any party easier and compensation clearer.
In later times there has been an effort to attempt and capture the different aspects and matters arising as a result of present day business transactions. This has lead to a myriad of laws spread all over making it very challenging to get a clear picture regarding to matters arising. Unlike the Sale of Goods Act of 1893 which had all aspects of business transactions, rights and obligations in one act, presently this is not the case. There is the need thus to have a comprehensive Act that will all encompassing in coverage.
The Act also needs to be widened in order to cover goods that have a service component in them. These types of contracts give rise to several possible different analyses. This area is so mucky that in some instances the courts have been stuck in this quagmire. In Jones V Gallagher (2005) 1 Lloyds Rep. 377 the appeal court (accurately) dealt with a contract for the installation of kitchen units under the Sale of Goods Act, but consequently (inaccurately) considered the rules on acceptance.
With the increasing separation on commercial sale contracts from consumer sale contract, the underlying factors though similar, the effects and repercussions are very different. This has resulted in an act that is deficient. In fact when looking critically at the act, another point of weakness is in the area of consumer remedy.
This issue brought to the fore the predicament the United Kingdom finds it self in. Buyers and sellers can choose to use either the local domestic law or go to Brussels and enforce European laws. This makes the other party be at a loss since both laws apply to a transaction entered to in United Kingdom.
Another shortfall of the Act is in apportioning risk inherent to a transaction. Where as, the Act ties up risk to the passing of property, increasingly in the present day, risk is linked to delivery. This is especially so for goods hat have a service component to them which is the increasing portfolio of goods.
This particular aspect is of special benefit to customers taking part in online transactions. For this particular type of business, the property only passes with the delivery of the good to the consumer. Loss or damage in the post or while in transit is chargeable to the seller.
Under the Sale of Goods Act the goods as enacted does not provide to protection of the seller from a buyer looking to blame natural wear and tear of a good on structural and initial defects present at the point of sale. This has resulted in manufactures preparing warranty cards. This helps the seller not to be liable for faults he could not do anything about.
In trying to cover oneself from unforeseen liability especially in business to business transactions, both sides use documents with conditions attached. There thus arises when there is a dispute, disagreement at to which set of documents to use in order to enforce compensation on breach.
Conclusion
It is clear that the Sale of Goods Act of 1979, though an improvement on the one of 1893 still lacks fundamentally in addressing matters arising. The Act of 1893 was so well drafted that it could and indeed served its purpose for such a long time. Unfortunately, in the present age, business dynamics are very fluid.
Business change and as a result, aspects that held true some times back find they are greatly challenged. The Act finds itself extended to the point of breaking. New aspects on doing business have also arisen. Where as when the act was drafted, the internet and the World Wide Web were only concepts in a few peoples minds, they have now collectively and combined become the centre of global business.
This has given rise to new transactions both in the goods transacted and the mode of payment. The rights of buyers and sellers have also expanded with each presenting additional requirements to the other. This in turn has resulted in some cases the blurring of the point at which property passes. These been a very crucial aspect in determining and allocating and assisting in arbitrating in cases of perceived and proven breach.
The need to revise and incorporate new business realities in to an improved Sale of Good Act is therefore very integral to facilitating transactions in the new age. There is need to consolidate all aspects of sale of both goods and services into one act to assist in ease of identification of rights and obligations accruing to each party. The domestic law relating to the passage of property needs to be moved from to the 20th century where it currently is, to the 21st century where it is needed.
This has to be done as a matter of priority in order to ensure the continued smooth running of business and eradication of ambiguities. This should help clear the way for the consolidation on all aspects of sale of goods and services into one act since they are presently so intertwined that they cannot operate independently.
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