Sale of Goods Contract Essentials
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Sale of Goods Contract Essentials

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Questions and Answers

What is the general approach of the courts when parties make an incompetent agreement?

  • The courts will penalize the parties for incompetence.
  • The courts will correct the agreement immediately.
  • The courts will declare the agreement void.
  • The courts will leave the agreement as it is. (correct)

    • What is an agreement to agree?

  • A contract that has expired.
  • An agreement to enter into a contract at a later date. (correct)
  • A contract that is already in force.
  • An agreement to enter into a contract immediately.

    • What is the key difference between lock-in agreements and lock-out agreements?

  • Lock-in agreements are enforceable, while lock-out agreements are not.
  • Lock-out agreements are enforceable, while lock-in agreements are not. (correct)
  • Lock-out agreements are only used in contracts between individuals.
  • Lock-in agreements are used in international trade, while lock-out agreements are used in domestic trade.

    • What is the effect of a cancellation clause that is too wide?

    <p>It invalidates the contract altogether.</p> Signup and view all the answers

    What is required for a mistake to render a contract void?

    <p>The mistake must occur before the contract is made.</p> Signup and view all the answers

    What is the result of a court finding that a contract is void due to mistake?

    <p>The contract is void.</p> Signup and view all the answers

    What is the case that determined that lock-in agreements are not enforceable?

    <p>Walford v Miles.</p> Signup and view all the answers

    What type of mistake can render a contract void?

    <p>A mistake of fact.</p> Signup and view all the answers

    What is the seller entitled to be paid in according to s28?

    <p>In cash</p> Signup and view all the answers

    What happens if a cheque is not honoured?

    <p>The seller can sue the buyer</p> Signup and view all the answers

    What is the consequence of payment by credit card?

    <p>The seller cannot sue the buyer if the credit card company fails to pay</p> Signup and view all the answers

    Why is it advisable to include a provision ensuring that payment takes place only when a cheque has been cleared?

    <p>To protect the seller in case the cheque is not honoured</p> Signup and view all the answers

    Why is it sensible to include a specific contractual provision to allow the seller to claim interest in the event of late payment?

    <p>Because certain statutes allow interest to be awarded for late payment</p> Signup and view all the answers

    When does the credit period commence?

    <p>When the seller issues an invoice</p> Signup and view all the answers

    What is the significance of the Law Reform (Miscellaneous Provisions) Act 1934?

    <p>It allows the seller to claim interest for late payment</p> Signup and view all the answers

    Why is it in the seller's interests to make time for payment of the essence?

    <p>To protect the seller's interests</p> Signup and view all the answers

    What is the main obligation of the seller in a sale of goods contract?

    <p>To deliver goods of a certain description and quality</p> Signup and view all the answers

    What type of terms are considered fundamental to the contract and breach of which will entitle a party to terminate?

    <p>Representations and Conditions</p> Signup and view all the answers

    What is the purpose of an indemnity clause in a contract?

    <p>To make good another's loss on the happening of a particular event</p> Signup and view all the answers

    What is the term for standard clauses which are common to agreements of a certain type?

    <p>Boiler-plate clauses</p> Signup and view all the answers

    What is the purpose of a Limitations and Exclusions clause in a contract?

    <p>To limit or exclude a party's liability</p> Signup and view all the answers

    What type of clause provides that all of the obligations of the parties are recorded in one document?

    <p>Entire Agreement Clause</p> Signup and view all the answers

    What is the term for the end of the contract where the parties provide their signatures?

    <p>Execution clause</p> Signup and view all the answers

    What is the main obligation of the buyer in a sale of goods contract?

    <p>To pay the price</p> Signup and view all the answers

    What is the main purpose of a No-Authority Clause in a contract?

    <p>To prevent unauthorised variations to contracts by limiting who within a business is able to agree to a valid variation</p> Signup and view all the answers

    What is the term for a clause that prevents oral variations to a contract?

    <p>No-Oral-Modification (NOM) clause</p> Signup and view all the answers

    What was the outcome of the MWB Business Exchange Centres Ltd v Rock Advertising Ltd case?

    <p>The Supreme Court held that a NOM clause is legally effective</p> Signup and view all the answers

    What is the consequence of including a NOM clause in a contract?

    <p>Parties must comply with the formalities set out in the clause if they wish to vary the contract</p> Signup and view all the answers

    What is the purpose of restricting the grant of variations or waivers to certain members of staff?

    <p>To prevent unauthorised variations to contracts</p> Signup and view all the answers

    What is the effect of a seller reneging on their promise to accept £8,000 for goods?

    <p>The seller can demand an extra £2,000 from the buyer as payment is not a continuing obligation</p> Signup and view all the answers

    What is the consequence of not complying with the formalities set out in a NOM clause?

    <p>The variation to the contract is invalid</p> Signup and view all the answers

    What is the main purpose of including a NOM clause in a contract?

    <p>To prevent unauthorised variations to contracts</p> Signup and view all the answers

    What is the primary factor in determining the satisfactory quality of goods in a sale?

    <p>The price of the goods</p> Signup and view all the answers

    What is implied by s14(2B) in relation to satisfactory quality?

    <p>The goods are fit for the common purposes of the goods, among other factors</p> Signup and view all the answers

    What is the primary consideration in determining whether goods are fit for a particular purpose?

    <p>The purpose the buyer makes known to the seller</p> Signup and view all the answers

    In the absence of any information to the contrary, what is the seller entitled to assume about the goods?

    <p>The goods will be used for their normal purpose</p> Signup and view all the answers

    What is the implication of s14(3) in relation to the sale of goods?

    <p>The goods are fit for a particular purpose</p> Signup and view all the answers

    What is considered in determining whether goods are of satisfactory quality?

    <p>The facts of each particular case</p> Signup and view all the answers

    What is a factor that is taken into account in determining whether goods are of satisfactory quality?

    <p>The price of the goods</p> Signup and view all the answers

    What is a consideration in determining whether goods are fit for a particular purpose?

    <p>The purpose the buyer makes known to the seller</p> Signup and view all the answers

    Study Notes

    Sale of Goods Contract

    • A seller is obliged to sell and deliver goods of a certain description and quality.
    • A buyer is obliged to pay the price.

    Representations and Conditions

    • Fundamental terms of the contract, breach of which will entitle a party to terminate.
    • Warranties are less important terms, breach of which normally gives rise to damages only.

    Indemnities

    • One party promises to make good another's loss on the happening of a particular event.

    Limitations and Exclusions

    • The contract may seek to limit or exclude a party's liability for a particular event.
    • Such limitations and exclusions will be subject to reasonableness under UCTA 1977.

    Boiler-Plate Clauses

    • Standard clauses common to agreements of a certain type.
    • Address the mechanics of an agreement and common legal points relevant to most transactions.
    • Examples include an Entire Agreement Clause.

    Execution Clause and Signature

    • The end of the contract will normally provide for the signatures of the parties.
    • Formalities required for execution depend on the identity of the parties and the type of contract.

    Agreements to Agree

    • An agreement to enter into a contract at a later date, or an agreement that a certain provision will be agreed between the parties after the commencement of the contract.
    • Such agreements are void.

    Lock-In Agreements

    • A lock-in agreement is where A is contractually obliged to negotiate with B and no-one else.
    • These are distinct from lock-out agreements, where A is not obliged to negotiate with B, but agrees not to negotiate with anyone else.
    • Lock-out agreements may be enforceable, but lock-in agreements will not be.

    Cancellation Clauses

    • If a cancellation clause in the contract is too wide, it may have the effect of invalidating the contract altogether.

    Mistake

    • An erroneous belief, at contracting, that certain facts are true, may render the contract void.
    • To have an effect on the contract, the mistake must have occurred before the contract was made.

    Drafting to Prevent Unauthorised Variation

    • No-Authority Clauses are intended to prevent unauthorised variations to contracts by limiting who within a business is able to agree to a valid variation.
    • These clauses may restrict the grant of variations or waivers to certain members of staff or prevent oral variations.

    Method of Payment

    • The seller is entitled to be paid in cash (s28).
    • It is advisable to include a provision ensuring that payment by cheque is treated as a conditional payment.
    • Payment by credit card is an absolute payment, so a failure by the credit card company to pay the seller does not entitle the seller to sue the customer.

    Interest on Late Payment

    • Certain statutes allow interest to be awarded for late payment, e.g., the Law Reform (Miscellaneous Provisions) Act 1934.
    • It is sensible to include a specific contractual provision to allow the seller to claim interest in the event of late payment.

    Satisfactory Quality

    • In a sale in the course of a business, the goods are to be, objectively, of satisfactory quality (s14(2)).
    • The price and description of the goods will be taken into account in deciding whether or not the goods are of satisfactory quality.
    • Factors to be considered include fitness for the common purposes of the goods, appearance and finish, freedom from minor defects, safety, and durability.

    Fitness for Purpose

    • s14(3) implies a term that the goods are fit for any particular purpose which the buyer makes known to the seller, either expressly or by implication.
    • In the absence of any information to the contrary, the seller is entitled to assume that the goods will be used for their normal purpose.
    • Where a buyer requires goods for a particular (non-normal) purpose, it must inform the seller before the contract is made to benefit from this right.

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    Description

    This quiz covers the fundamentals of a sale of goods contract, including the obligations of the seller and buyer, and the differences between representations, conditions, and warranties.

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