Sale of goods

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January 1995.</div> <bR> <div> <B>A contract of sale of goods:</B> can be defined as when the seller of goods transfers or agrees to transfer the ownership of goods to the buyer for an agreed sum of money.</div> <bR> <div> <B>Types of contract:</B> are known as sale, when the goods are given to the buyer at the time the contract is formed and agreement to sell when the goods are given to the owner at some time after the contract is formed. </div> <bR> <div> <B>Types of conditions:</B> of which there are two suspensive conditions which means that the contract is only an agreement to sell on the understanding that conditions are fulfilled before the sale can go through and resolutive conditions which will cancel out a contract if this condition is fulfilled. </div> <bR> <div> <B>Real rights and personal rights:</B> real rights apply when the seller has sold the goods to the buyer who has the right of ownership and personal rights apply to the buyer when there is only an agreement to sell and the buyer cannot consider the goods as belonging to him.</div> <bR> <div> <B>Goods:</B> are considered by the Act as all corporeal moveable this includes all property that has a physical substance and property that does but which can be bought and sold.</div> <bR> <div> <B>Goods:</B> can be broken down into further categories i.e. Existing goods that are in the possession of the seller or future goods that seller will make or receive from another seller after the contract has been formed.  Specific goods are outlined by S61 of the Act as goods which have identified and agree on at the time the contract was formed and unascertained goods which are non-specific goods i.e. goods that are not identified and agreed on at the time the contract is formed.</div> <bR> <div> <B>Capacity to enter a contract of sale of goods:</B> if a person is supplied necessaries and is later found to be the supplier of the goods a reasonable price for them (which is not necessarily the contract price) under S3 of the Act.</div> <bR> <div> <B>The Price:</B> when the seller transfers the ownership or agrees to transfer ownership of goods for payment, money must change hands or the provisions of the Act will not apply.</div> <bR> <div> <B>The implied terms</B></div> <div> Under section 12-15 of the Act the implied terms include by implication terms that will protect a buyer under the sale of goods act, these terms are automatically included in a contract of sale. </div> <div> <B>Title</B></div> <div> Title is dealt with under section 12 of the Act.  The following are implied terms that are build into a contract of sale of goods.</div> <bR> <div> In a sale the seller has a right to sell the goods</div> <div> In an agreement to sell, that the seller will have the right to sell the goods at the time when ownership transfers to the buyer</div> <div> That the goods are free from any change or encumbrance in favour of a third party which was not disclosed to the buyer before the contract was made</div> <div> That the buyer will enjoy quiet possession of the goods undisturbed by the claims of any third party</div> <bR> <div> There are a number of cases, which show how section 12 of the sale of goods Act work these are</div> <div> Rowland v Divall (1923) 2 QB 500</div> <div> Niblett Ltd v Confectioners Materials Co (1921) All ER 459</div> <div> McDonald v Provan (of Scotland Street) Ltd 1960 STL 231</div> <bR> <div> <B>Description</B></div> <div> Description is dealt with in section 13 of the sale of goods act.  It is necessary under the terms of section 13 that goods are sold by.  Items that are exposed for sale are not exposed for the sale are not Goods may be described as in the case of Grant v Australian Knitting Mills (1936) AC 85.</div> <bR> <div> <B>Satisfactory quality and reasonable fitness for the purpose.</B></div> <div> Section 14 (2) of the Act deals with satisfactory quality.  Where goods are sold by a business there is an implied term that the goods supplied under the contract are of a satisfactory quality.  The implied terms however does not extend to things, which makes the goods unsatisfactory:</div> <bR> <div> Which is specifically brought to the buyer's notice before the contract is formed </div> <div> or</div> <div> Where the contract for sale is made on the dependency of a sample that would have been seen on a reasonable inspection of the sample.</div> <bR> <div> Section 14(2A) States that the goods are of satisfactory quality if they meet the standard that a reasonable person would consider satisfactory taking into consideration a description of the goods, the price and any other relevant circumstances.  Section 14 (B) helps further by specifying that the state and condition of goods in part of the quality of goods and in certain cases there:</div> <bR> <div> Fitness for all purposes for which foods of that kind are commonly supplied</div> <div> Appearance and finish</div> <div> Freedom for minor defects</div> <div> Safety </div> <div> Durability</div> <bR> <div> <B>Reasonable fitness for the purpose</B></div> <div> Section 14 (3), when the buyer expressly or by implication, tells the seller of goods in course of a business that he has chosen the goods for a specific purpose then there is an implied term that the goods supplied by the seller will be fit for that specific purpose, whether or not that is a use for which the goods are normally supplied.  Exceptions to this are</div> <bR> <div> 1. Where circumstances show that the buyer does not rely on the skill or   judgment of the seller: or</div> <bR> <div> 2. Where circumstances show that it is unreasonable for the buyer to rely on the sellers skill and judgment.</div> <bR> <div> <B>The requirement that the sale is `in the course of a business'</B></div> <div> The requirements that the goods be of satisfactory quality, or reasonably fit for a specific purpose are only put into effect when goods are sold in the course of a business.</div> <bR> <div> <B>The relationship between satisfactory quality and reasonable fitness or purpose.</B></div> <div> If goods are not of satisfactory quality it is reasonable to assume that they are not reasonably fit for the purpose for which they are sold.  Goods however may be of a satisfactory quality but still may not be reasonably fit for a particular purpose.  If a person buys goods with a particular purpose in mind and he makes that purpose known to the seller either expressly or by implication, then it becomes apparent that the goods are not reasonably fit for the purpose for which they were purchased.  The seller is liable for a breach of term implied by s 14 (3)</div> <bR> <div> <B>Goods supplied under the contract</B></div> <div> Goods `supplied' under a contract are covered by s 14.  Under this section it is not only the goods themselves that have to be of reasonable fitness and merchantable quality but also the packaging that they come in.</div> <bR> <div> <B>The sellers liability is `strict'</B></div> <div> A sellers liability is said t be strict when they are in breach of a term implied by section 14.  In terms of the buyer this means that they do not have to prove that the seller has been negligent as the contract into by the buyer and seller, has the requirement put in by s 14 that goods of a satisfactory quality and reasonably fit for the purpose for which they are bought.  If the goods are found to be of unsatisfactory quality or not reasonably fit for the buyers purpose then the seller is in breach of contract.  The seller also must compensate the buyer if the defective goods damage other property or injure the buyer.</div> <bR> <div> <B>Sale goods.</B></div> <div> When buying sale goods the buyer is entitled to the same rights, unless the defect is the reason for the goods being reduced and it was drawn to the attention of the buyer before the purchase.</div> <bR> <div> <B>Consumer credit</B></div> <div> The Consumer credit act of 1974 was set up to form a system that laid down a number of rules that would govern all types of credit that would provide protection for consumers.</div> <bR> <div> The Director General of Fair Trading will give a license to those that he deems fit to provide consumer credit.</div> <bR> <div> <B>Regulated Agreements under the Consumer credit Act 1974</B></div> <div> A personal credit agreement (Consumer credit Agreement) is an agreement in which the creditor (the person providing the loan) gives the debtor credit.  The 1974 Act covers individuals and partnership but excludes corporate bodies.  With this type of agreement between creditor and debtor the sum must not exceed £25,000.</div> <bR> <div> There are a number of different credit agreements that are covered by the 1974 Act, these acts are altogether known as regulated agreements.</div> <bR> <div> <B>Running Account Credit and Fixed Sum Credit</B></div> <div> This type of credit enables the debtor to receive credit up to an agreed amount of demand.  Running accounts credit include bank overdraft facilities, budget accounts with shops and some credit cards.</div> <bR> <div> Fixed - sum credit allows the debtor to receive credit of set amounts by way of a single sum or by instalments.</div> <bR> <div> A hire purchase agreement allows one person to hire goods from another in return for payments to be made over a specific period of time, once that time has elapsed the person making the payment has the option to buy.</div> <bR> <div> <B>Debtor Creditor Supplier Agreements and Debtor Creditor Agreements.</B></div> <div> All regulated consumer credit agreements come under two main categories of credit transactions; these are either a debtor creditor supplier agreement or a debtor credit agreement.</div> <bR> <div> <B>Consumer Hire Agreements</B></div> <div> Consumer hire agreements are also covered by the Consumer Credit Act 1974.  To be classed as a consumer higher agreement the agreement must </div> <div> Not be a hire purchase agreement</div> <div> Be capable of lasting more than three months</div> <div> Not require the hirer to pay more than £15,000</div> <bR> <div> <B>The debtors right to copies of the agreement</B></div> <div> A regulated agreement remains unexecuted until both parties have signed. The debtor must receive at least one copy of the agreement under s62 and s63</div> <bR> <div> <B>The Debtors right to cancel certain agreements within a cooling off period</B></div> <div> When credit is applied for the applied for the application may be withdrawn at any time before the creditor accepts it.  If the withdrawal is effective this stops the binding consumer credit agreement from being formed.  In some cases after a contract is formed however the debtor can cancel certain types of regulated agreements under s67 of the act.  A cooling off period applies in certain circumstances allowing for an agreement to be cancelled.  For an agreement to be cancelled certain factors must be satisfied</div> <bR> <div> During negotiations before the contract is formed, verbal representations must have been made, when the debtor has been present, by either the creditor, or if it is a debtor creditor supplier agreement- by the supplier;</div> <bR> <div> And</div> <bR> <div> The agreement must have been signed by the debtor off trade premises.  The debtor has no right to cancel a regulated agreement if he signs the agreement at the premises of either the creditor or the supplier.  The debtor has the right to cancel if he signs the agreement in his own home or at his own work place.</div> <bR> <div> <B>Exercising the Right to Cancel</B></div> <div> In the circumstances when a regulated agreement can be cancelled, a copy of the debtors right to cancel telling them how and when this may be done must be included with every copy of the agreement that the debtor receives.</div> <bR> <div> The debtor can cancel the agreement by serving a notice of cancellation within the 5 day cooling off period which starts the day after receipt of the either the notice or the second copy of the agreement.</div> <bR> <div> <B>Consequences of Cancellation.</B></div> <div> Under s71 any sums that the debtor has already paid must be returned to him.  Under s72 goods the debtor must take reasonable care of goods that have been given to him and return them when asked.</div> <bR> <div> <I><B><U>Rowland v Divall 1923</U></B></I></div> <div> <B>Facts:</B></div> <div> <I><B><U>Divall</U></B></I> bought a car from a man who had stolen it and then sold it on to <I><B><U>Rowland</U></B></I>. </div> <div> <I><B><U>Rowland</U></B></I> repainted the car and sold it again to a third party. </div> <div> The police seized the car from the third party, and <I><B><U>Rowland</U></B></I> reimbursed him the purchase price, seeking then to recover his purchase price from <I><B><U>Divall</U></B></I>.</div> <bR> <div> The Court held that the defendant was in breach of s 12 of The Sale of Goods Act, which implies conditions and warranties into the sale of goods. The court also held that there had been a total failure of consideration in spite of the fact that R had had the use of the car. Restitution of the purchase price was allowed, with no deduction for the period of use, on the basis that R had contracted for the ownership of the car and not merely the ability to use it.</div> <bR> <div> <B>Point of Law:</B></div> <div> A defective title of ownership in goods cannot pass on a good title to a subsequent buyer, even if that buyer purchases in good faith.</div> <bR> <div> <B>Laws affecting consumer rights</B> </div> <div> The law on sale of goods was first codified in the Sale of Goods Act 1893.  Much of what the Act achieved was positive but it also introduced some concepts from English law into Scots law.  The 1893 Act was amended in 1973 and the present Act, the Sale of Goods Act 1979 (the “SGA”), is a consolidating statute that, at the time, introduced nothing new to existing law.  Further changes have been made to the SGA by the Sale and Supply of Goods Act 1994 and the Sale of Goods (Amendment) Act 1995.  </div> <bR> <div> <B>Definition of a contract of sale of goods</B></div> <div> The Act's provisions apply to contracts where the seller transfers or agrees to transfer the property (ownership) in the goods to the buyer for a money consideration called the price.</div> <bR> <div> <B>Types of Contract</B></div> <div> Types of contract are know as a sale, when the goods are given to the buyer at the time the contract is formed and agreement to sell is when the goods are given to the owner at some time after the contract is formed</div> <bR> <div> <B>Types of Conditions</B></div> <div> A contract may be subject to two types of conditions, <B>suspensive conditions </B>and <B>resolutive conditions.  </B>A suspensive condition is one that must be fulfilled before a sale is able to proceed.  The presence of a suspensive condition means that a contract is an agreement to sell and not a sale.  An example would be the condition that a sale will go through only if the buyer obtains a bank loan.</div> <div> A resolutive condition is one that will have the effect of dissolving the contract should it be fulfilled.  An example of this in a context other than sale of goods would be a condition that insurance cover shall lapse if an insured car is not kept overnight in a garage.</div> <bR> <div> <B>Real rights and personal rights</B></div> <div> Where there is a sale the buyer acquires <B>real rights </B>in the goods.  This means that the buyer has a right of ownership that may be exercised against the whole world.  Where there is an agreement to sell, the buyer merely acquires <B>personal rights </B>which may be exercised only against the seller.  This means that the buyer may not consider the goods as his own and his remedies are limited to bringing an action for breach of contract against the seller should the seller fail to implement the contract.</div> <bR> <div> <B>Goods</B></div> <div> The Act's provisions apply only to contracts of sale of `goods'.  Goods for purposes of the Act section 61(1) can be defined as all corporeal moveables except money.  The section also provides that growing crops and things attached to, or forming part of, the land and which must be severed from the land before sale is also to be regarded as goods.  Accordingly, a farmer's agreement to sell his potato crop or a landowner's agreement to sell a forest for timber would be contracts of sale of goods to which the Act would apply.</div> <bR> <div> <B>Corporeal Moveables</B></div> <div> All property in Scotland is classified as either heritable or moveable.  Heritable property consists of land and buildings.  Moveable property consists of things which are not heritable - i.e., property other than land and buildings.  Moveable property may be either corporeal moveable property or incorporeal moveable property.  Corporeal may be thought of as meaning tangible or having physical substance.  Corporeal moveable property is property you can see and feel.  It includes cars, clothing, jewellery, books, boats, and caravans - in fact any property that has a physical presence and which is not land and buildings.  Incorporeal moveable property is property that has value, which can be bought and sold which does not have physical substance.  It is perhaps easier to think of it6 as a right rather than a thing - e.g., ownership of copyright in a book or of the patent of the everlasting lightbulb or the goodwill of a business.</div> <bR> <div> The rules of law contained in the Sale of Goods Act 1979 apply only where the contract is for the sale of corporeal moveable property.  The Act does not apply to contracts for the purchase of a house or the transfer of copyright.</div> <bR> <div> <B>Classification of Goods</B></div> <div> `Goods' are further classified for the purpose of the Act.  In terms of section 5 of the Act goods may be either <B>existing goods </B>or <B>future goods.  </B>Existing goods are goods that the seller owns or has in his possession at the time the contract is made.  Future goods are goods that the seller will have to manufacture or acquire from a third party after the contract is made.  A contract for the sale of future goods shall be an agreement to sell.  It is also necessary to distinguish between <B>specific goods </B>and <B>unascertained goods.  </B>Specific goods are defined by section 61 of the Act as being goods that are identified and agreed on at the time the contract of sale is made.  At the time of offer and acceptance, the buyer knows the very item that he is going to buy.  There are two types of unascertained goods:</div> <div> ?<B> </B>Unascertained goods which are <B>an unsevered portion of a particular quality of      goods.  </B>In this case, the buyer knows the bulk, from which his goods will come - e.g., 100 tonnes of wheat from the 1000 tonnes being transported abroad the ship HMS Glasgow.  The 100 tonnes of wheat are not specific goods because at the time of contracts formation the buyer could not know which of the grains of wheat in the ship's hold would come together to form his 100 tonnes.  The buyer can identify his wheat only when it is separated from the other 900 tonnes; for example, when it is loaded onto his truck on the quayside.</div> <div> ?<B> </B>Unascertained goods which are purely <B>generic goods.  </B>Generic goods comprise of a quantity of a commodity from any source whatsoever - e.g., 100 tonnes of wheat or 10 tonnes of coal.  The buyer neither knows nor cares where the seller is obtaining his supplies from.</div> <bR> <div> <B>Capacity to enter a contract of sale of goods</B></div> <div> The common law of contract regulating contractual capacity applies equally to contracts of sale of goods.  Section 3 of the Act does provide that where a person supplies necessaries to a person who is insane or to a person who lacks capacity through intoxication, the supplier of those necessaries is entitled to be paid a reasonable price for them.  Note that the statute provides for the payment of a reasonable price rather than the contract price that may be judged to be too high. </div> <bR> <div> <B>Formalities of a Contract of Sale of Goods</B></div> <div> A contract of sale of goods requires no special formalities.  Section 4 of the Act provides that the contract may be made in writing, or verbally, or it may be implied from the conduct of the parties.</div> <bR> <div> <B>The Price</B></div> <div> The definition of a contract of sale of goods states that `the seller transfers or agrees to transfer ownership of goods to the buyer in exchange for a money consideration called the price'.  Money must change hands; otherwise the Act's provisions do not apply to the contract.  The act does not cover barter - i.e. a straight exchange of goods.  However, part-exchange is covered by the Act so long as some money changes hands.  Accordingly, the Sale of Goods Act 1979 applies where, for example, Sid buys a new car from a garage and meets the purchase price of £8000 by trading in his present car for £3000 and paying £5000 in cash.</div> <div> Section 8 of the Act provides that the price may be fixed by the contract, or left to be calculated in a manner set out in the contract, or determined by the course of dealing between the parties.  Where the contract does not fix a price, the buyer must pay a reasonable price.  What constitutes a reasonable price will depend upon the circumstances of each case, but it is generally held to be the market price of the goods at the time of delivery.  Section 9 provides that where there is an agreement to sell and the parties have agreed that the price is to be fixed by a third party who is to value the goods, failure by the third party to make the valuation shall cause the agreement to be terminated.  However, should the goods have been delivered to and used by the buyer, a reasonable price has to be paid for them.  Where the valuer is prevented from making the valuation by one of the parties, the innocent party is entitled to bring an action for damages against the party preventing the valuation.</div> <bR> <div> <B>The Implied Terms</B></div> <div> Sections 12-15 of the Act operate to incorporate by implication into a contract of sale of goods certain terms that protect the buyer.  These implied terms are automatically part of a contract of sale of goods.  The parties do not have to include these provisions as express terms in their contract.</div> <bR> <div> <B>Title</B></div> <div> Section 12 of the Act:  This term implies that, when a person buys goods, the seller has the right and title to sell them.  So, for example, stolen goods must always be returned to their original owner and a seller of such goods, even if acting in good faith, may have to pay damages to a disappointed buyer.  This implied term also means that the buyer of the goods will enjoy what is called “quiet possession” of them, now and in the future; in other words, no one will be able to interfere with the buyer's enjoyment of his own property.  <B> </B></div> <bR> <div> There are a number of cases, that show how section 12 of the Sale of Goods Act work, these are:</div> <div> 1. Microbeads A.G. Vs Vinhurst Road Markings Ltd (1975) 1 WLR 218</div> <div> 2. Rowland Vs Divill (1923) 2 QB 500</div> <div> 3. Niblett Ltd Vs Confectioners Materials Co (1921) A11 ER 459 </div> <div> 4.  McDonald Vs Provan (of Scotland Street) Ltd (1960) STL 231 </div> <bR> <div> <B>Description</B></div> <div> Section 13 of the Act:  Goods sold must be “as described”.  Obviously there are many different ways of describing goods including verbally, in writing, by picture, cartoon, illustration or photograph.  It is important not to confuse the description of goods with quality.  Thus, if a buyer goes into a shop to buy peanuts and is supplied with mouldy peanuts, they are still peanuts, i.e. as described, although clearly of inferior quality.  If he is supplied with a mixture of fresh peanuts and raisins, the goods are not as described, although their quality could be exemplary.  See cases:</div> <bR> <div> 1.  Beale Vs Taylor (1967) 1 WLR 1193</div> <div> 2.  Ashington Piggeries Ltd Vs Christopher Hill (1972) AC 441 </div> <bR> <div> <B>Satisfactory quality and reasonable fitness for the purpose</B></div> <div> Section 14 (2) of the Act:  From 1893 until 1995, the term “merchantable” quality was used in sale of goods legislation.  It was an obscure and out-dated expression and few have mourned its passing.  Under the replaced section 14(2), when goods are sold in the course of a business they must be of satisfactory quality.  They must meet a standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances.  The quality of goods includes their state and condition.  The following are also relevant in regard to quality:</div> <bR> <div> 1. fitness for the purposes for which the goods are commonly supplied</div> <div> 2. appearance and finish</div> <div> 3. freedom from minor defects</div> <div> 4. safety</div> <div> 5. durability</div> <div> For cases relating to section 14(2) see Millars of Falkirk Ltd Vs Turpie (1976) SLT 66 and Bartlett Vs Sydney Marcus (1965) 1 WLR 1013</div> <bR> <div> <B>Fitness for particular purpose</B></div> <div> Section 14(3) of the Act:  This is not the same as satisfactory quality.  Whilst it is common for terms 3 and 4 to go together, they need not do so and are clearly distinguishable. Goods may well be of satisfactory quality, yet not be fit for a particular purpose.  That purpose, however must either be stated by the seller or it must be clearly implied by the circumstances. For example, if, say, a buyer goes to a paint shop and requests paint suitable for use on external metalwork but is given paint only suitable for internal woodwork, the paint he has been given is not fit for its particular purpose, although its quality may well be perfectly satisfactory.  However, if he did not specify the kind of paint he required or did not describe the circumstances, in which he would be using it, he would not be in a position to reject the goods.  Goods `supplied' under a contract are covered by section 14.  Under this section it is not only goods themselves that have to be of reasonable fitness and merchantable quality but also the packaging that they come in.    </div> <div> For cases relating to section 14(3) see Baldry Vs Marshall Ltd (1925) 1KB 260,    Frost Vs Aylesbury Dairies (1905) 1KB 608, (as footnote 8 page 186-7)        McCallum Vs Mason (1956) SC 50, Griffith Vs Peter Conway (1939) 1 A11 ER 1313</div> <div>  </div> <div> <B>Sample Conformity </B></div> <div> Section 15 of the Act:  Where there is a sale by sample (i.e. where there is an express or implied agreement to that effect), the main bulk of goods must be of satisfactory quality and correspond to the sample produced.  The buyer must have a reasonable opportunity to examine the sample. </div> <bR> <div> <B>The Sellers Liability</B></div> <div> A sellers liability is said to be strict when they are in breach of a term implied by section 14.  In terms of the buyer this means that they do not have to prove that the seller has been negligent as the contract into by the buyer and seller, has the requirement put in by section 14 that goods of a satisfactory quality and reasonably fit for the purpose for which they are bought.  If the goods are found to be of unsatisfactory quality or not reasonably fit for the buyers purpose then the seller is in breach of contract.  The seller also must compensate the buyer if the defective goods damage other property or injure the buyer.  </div> <div> If an action is being raised under the implied terms, the pursuer can choose more than one.  In the case of Godley Vs Perry (1960) 1 WLR 9, three of the implied terms had been breached.</div> <bR> <div> <B>Sale Goods</B></div> <div> When buying sale goods the buyer is entitled to the same rights, unless the defect is the reason for the goods being reduced and it was drawn to the attention of the buyer before purchase.</div> <bR> <div> <B>Consumer Credit</B></div> <div> Generally, all loans for sums of under £15000 are subject to the terms of The Consumer Credit Act 1974.</div> <div> The Act regulates simple loans, revolving credit, hire purchase and credit cards. The list is extensive but includes most of the everyday types of credit that a consumer will come across.</div> <div> The Act regulates the loan industry and attempts to ensure that the consumer knows what he is getting into before he signs an agreement.</div> <bR> <div> <B>Types of Credit Agreement</B></div> <div> There are three main types of credit agreement that are covered. </div> <div> The conditional sale agreement is one where ownership of the goods does not pass to the buyer until the entire loan is paid. This allows the lender to retain ownership until the loan contract has been fulfilled.</div> <bR> <div> The second agreement is the Hire Purchase Agreement. Generally speaking the goods remain in the ownership of the lender until lender exercises an option to buy or some other similar event contained in the contract occurs. </div> <bR> <div> The last is the credit sale agreement. Ownership passes in the goods as soon as the contract is signed. Thus if repayments are not kept up the lender cannot repossess the goods as they are not his but the lenders.</div> <bR> <div> The Act also covers the following:</div> <div> a) If you have signed a credit agreement and you want to cancel it you can do so within a certain period of time as long as you did not make the deal over the phone and you did not sign the agreement at the seller's shop, office or workplace (this can include an exhibition stand). Therefore if you signed the agreement in your own home you will be able to cancel after you have signed the agreement. </div> <div> b) A creditor cannot demand early payment, try to get the goods back or end the agreement without first serving a written notice on you giving you 7 days notice of their intention to take such action, (Default Notice). </div> <div> The notice has to be written in a particular way. </div> <div> The notice should contain the following:</div> <bR> <div> 1.The notice should say how much should be paid to bring payments up to date.    2.When payments should be made.                                                                            3.What will happen if payments are not made.                                                                          4. How the agreement can be brought to an end and that if payments are made the agreements will not be brought to an end.</div> <bR> <div> c) If you have paid a third of the total price of the goods under a HP agreement then the creditor cannot take the goods back without first getting a court order. Even if they apply for a court order you can ask the court to suspend the "Return Order" and accept your offer to pay the outstanding amounts by instalments. </div> <div> If you agree that they can have the goods back they will not need a court order. If you do not agree and the creditor has not got a court order, but takes the goods back anyway you can sue the creditor and claim back all the money you have paid under the agreement. The creditor cannot enter your premises to repossess the goods without your permission or without a court order.</div> <bR> <div> d) If a credit agreement is unfair then you can apply to the court and ask them to look at the agreement and put in place a new agreement or alter the old one. However, the court will only do this if it can be shown that the agreement is "extortionate". </div> <bR> <div> To decide this, the court will look at such things as your age, experience, "business knowledge", state of health and the amount of financial pressure put on you when you entered the deal. </div> <bR> <div> The court also considers the creditor's position, such as the level of risk accepted by the creditor, including the value of any security, the creditor's relationship to you, whether the creditor deliberately inflated the cash price to make the credit charges seem reasonable.            </div> <bR> <div> The court can also consider any other relevant matters. </div> <div> e) A seller can be the person who grants you credit or they may arrange for you to get credit from a 3rd party or that 3rd party may arrange to supply the goods to you. Your protection is that you can choose whom to sue. </div> <div> You can either sue the seller or the provider of the credit or both. This helps you because if the seller goes bust you can try and get your money from the credit provider instead. </div> <bR> <div> You must be given certain written information about the credit agreement that must include:</div> <bR> <div> i) The total charge for credit. </div> <div> ii) The Annual Percentage Rate (APR). </div> <div> iii) The cash price for the goods. </div> <div> Not all credit agreements have the above protection.</div> <div> You are entitled to a copy of the Agreement to keep. If a credit agreement is broken the court can decide to either:</div> <bR> <div> i) Make a time order giving the borrower extra time to pay. </div> <div> ii) Make an order that the borrower must return the goods to the creditor. </div> <div> iii) Make a transfer order allowing the borrower to keep part of the goods, but return the other part.</div> <bR> <div> <B>Running Account Credit and Fixed Sum Credit</B></div> <div> This type of credit enables the debtor to receive credit up to an agreed amount of demand.  Running accounts credit include bank overdraft facilities, budget accounts with shops and some credit cards.</div> <bR> <div> Fixed-sum credit allows the debtor to receive credit of set amounts by way of a single sum or by instalments.</div> <bR> <div> A hire purchase agreement allows one person to hire goods from another in return for payments to be made over a specific period of time, once that time has elapsed the person making the payment has the option to buy.</div> <bR> <div> <B>Consumer Hire agreements</B></div> <div> Consumer hire agreements are also covered by the Consumer Credit Act 1974.  to be classed as a consumer higher agreement the agreement must:</div> <bR> <div> 1. not be a hire purchase agreement</div> <div> 2. be capable of lasting more than three months</div> <div> 3. not require a hirer to pay more than £15,000.</div> <bR> <div> <B>Exercising the Right to Cancel</B></div> <div> In the circumstances when a regulated agreement can be cancelled, a copy of the debtors right to cancel telling them how and when this may be done must be included with every copy of the agreement that the debtor receives.</div> <div> The debtor can cancel the agreement by serving notice of cancellation within the 5 day cooling off period that starts the day after receipt of either the notice or the second copy of the agreement.</div> <bR> <div> <B>Consequences of Cancellation</B></div> <div> Under section 71 of the Act:  Any sums that the debtor has already paid must be returned to him.  Under section 72, the debtor must take reasonable care of goods that have been given to him/her and return them when requested.</div> <bR> <div> <B>APPENDIX 1</B></div> <div> <B>Sale of Goods Act 1979 (amended with Sale and Supply of Goods Act 1994)</B> </div> <div> Goods must fit the description used in any advert, label, or packaging etc that relates to them - such as the year or make, type, colour, size or materials used. These must be accurate. The goods must also be of satisfactory quality - and should be fit for their purpose. </div> <bR> <div> The retailer has a legal obligation to sort out your problem if the goods do not meet these requirements, as long as you act within a 'reasonable time'; the catch is that this period is not defined - it could be as little as a few days depending on the goods. If you complain after this period, you cannot reject the goods and get a full refund, but you are entitled to compensation for faulty goods - normally the cost of repair. </div> <bR> <div> <B>Consumer Protection Act 1987</B> </div> <div> This says that only safe goods should be put on sale. It also prohibits misleading price indications. The so-called "28 day rule" is covered by this act. If you have any complaints about being charged more at the till than the price on the shelf, you should initially contact your local trading standards office, rather than the shop. </div> <bR> <div> <B>Supply of Goods and Services Act 1982 (amended by Supply of Goods and Services Act 1994) </B></div> <bR> <div> This states that work covered by the contract - which exists as soon as you ask someone to carry out some work for you, such as plumbing, dry cleaning, or building, must be carried out with reasonable skill and care, within a reasonable time, and for a reasonable price (if that's not stated) - but what is reasonable is not defined by law. </div> <bR> <div> If something goes wrong as a result of the work done - ask the contractor to put the work right, and if s/he won't, you are legally entitled to employ another contractor to rectify the problem and claim the costs from the original contractor.</div> <bR> <div> <B>Unfair Contract Terms Act 1977 (and Unfair Terms In Consumer Contracts Regulations 1994) </B></div> <bR> <div> If terms in pre-printed contracts are unreasonable the Office of Fair Trading can make the company change the contract. The regulations apply only to standard (pre-printed) contracts. </div> <bR> <div> <B>Consumer Credit Act 1974</B> </div> <bR> <div> If you buy your goods with a credit card, then as long as the goods cost over £100 the credit card company is also liable for the faulty goods or services. If you buy on hire purchase or other credit arranged by the supplier and the supplier would not put things right you can claim from the finance company.</div> <div> If purchasers sign a credit agreement at home, they are given a cooling-off period during which they can change their mind and cancel the agreement. Many credit cards also provide insurance for purchases (in case of accidental damage), but not all do. </div> <bR> <div> APPENDIX 2</div> <div> Transfer of Ownership of Unascertained Goods</div> <div> Prior to 19 September 1995, section 16 provided that where there is a contract for the sale of unascertained goods, ownership does not transfer to the buyer unless and until the goods are ascertained.  Ownership in goods will be able to pass only once the parties know which particular items are going to be appropriated to the contract.  The effects of this provision may be seen in Hayman & Son Vs McLintock 1907 SC 936.</div> <bR> <div> Transfer of Ownership of Specific Goods</div> <div> Under section 17, where goods are specific, or have been ascertained, ownership passes when the parties intend it to pass, i.e. they can make their own rules if they wish.  If it is not clear from the contract what the parties intended, the so-called “five rules” apply.  Rules 1-3 deal with specific goods, rule 4 with specific or ascertained goods and rule 5 with unascertained goods.</div> <bR> <div> <B>Rule 1.  </B>Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made.  It does not matter if payment or delivery (or both) are postponed.  Goods are said to be “deliverable” when they are such that the buyer would be bound to take delivery of them (section 61 (5)).  If the delivery is delayed through the fault of either buyer or seller, risk, as distinct from ownership, lies with the party at fault.  If property has passed from seller to buyer, but the seller still has possession, he must take reasonable care of the goods.  The same standard would apply where a buyer is in possession, but property has not yet passed to him (section 20).  If without the knowledge of the seller, specific goods have perished at the time of formation of the contract, the contract is void (section 6).  If specific goods are accidentally destroyed before the risk has passed to the buyer, the contract is avoided (section 7).</div> <bR> <div> Clearly there are occasions, where rule 1 will not be “consumer friendly”,  Anyone caught by the severity of the rule will normally attempt to show either that the goods were not specific or that they were not in a deliverable state.</div> <bR> <div> <B>Rule 2.  </B>Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods to put them into a deliverable state, property does not pass until (1) such a thing is done and (2) the buyer has been informed.  In practice, it does not seem to matter how small the “something” is.  It might, for example, merely involve alterations to a garment or fitting mud flaps to a particular car.</div> <bR> <div> <B>Rule 3.  </B>Where there is a contract for the sale of specific goods and the seller is to weigh, measure or otherwise test the goods in order to calculate the price, ownership passes to the buyer only once this has been done and the buyer has been notified that it has been done.  See Nanka-Bruce Vs Commonwealth Trust Ltd (1926) AC 77.  If specific goods are to be weighed or tested by someone other than the seller, rules 1 or 2 apply unless the parties have agreed otherwise rule 3 only applies where the weighing, measuring or testing is to calculate the price. </div> <bR> <div> <B>Rule 4.  </B>When goods are delivered to the buyer on approval or sale or return, property passes when (a) he informs the seller that he is accepting the goods, or (b) he “adopts the transaction” by acting as though he no longer regards the seller as being the owner, e.g. he puts his name on the article or sells to a third party, or (c) keeps the goods beyond any agreed limit, or (d) where there is no limit, he keeps them beyond a “reasonable” time.  The problem area is clearly (b), where the prospective buyer sells goods which are not his, yet by selling them<B>, </B>they become his so that he can give a valid title to a third party.  See Bryce Vs Ehrmann (1904) 7 F 5. </div> <bR> <div> <B>Rule 5.  </B>Where there is a contract for the sale of unascertained goods, property in goods of that description and in a deliverable state passes when they are unconditionally appropriated to the contract.  This “unconditional appropriation” may be done by the seller or the buyer with the consent of the other.  This consent may be given before or after the appropriation and it may be express or implied.</div> <bR> <bR> </td> </tr></table></body>