Seller's duties

An agreement for the sale of goods is a contract. In that contract, the rights and obligations of each party may be created by 'express' terms, i.e. terms that are specifically set out. Rights and obligations may also exist because of terms implied into the contract, i.e. terms that aren't specifically set out. These can include those implied by legislation protecting buyers.

Terms implied by legislation

There are various Acts that imply terms into contracts for the sale of goods, sale of digital content, the supply of goods and services (work and materials contracts), and hire purchase contracts. If the goods, or their supply, don't comply with these implied terms, the buyer can claim for breach of contract against the seller.

Ownership

There's an implied term that the seller has title to (i.e. owns) the goods and therefore has the right to sell them. There's also an implied term in a hire-purchase agreement that a hirer will have title to the goods when they pass title to the buyer.

Goods and digital content must correspond with description

The goods and digital content must correspond with the seller's description of them. This only applies if the buyer relies on the description of the goods. Goods and digital content sold to a consumer must also comply with the main characteristics stated in the pre-contract information supplied by the seller. (See Information Requirements in Consumer Contracts)

Goods must correspond with sample

If the goods are sold by sample, they must be the same as the sample.

Goods must match model

Goods sold to a consumer must match any model of the goods seen or examined by the consumer before they entered into the contract.

Goods and digital content must be of satisfactory quality

If goods and digital content are sold in the course of business, they must be of satisfactory quality. This means they must meet the standard a reasonable person would expect, considering factors like their description and price.

When assessing whether they are of satisfactory quality, their general state and condition are considered, as well as the following aspects:

• Safety
• Durability
• Appearance and finish
• Freedom from minor defects
• Fitness for all purposes for which goods of the kind in question are commonly supplied.

If the goods or digital content are not of satisfactory quality, the seller may have a defence if:

• The seller pointed out specific defects to the buyer before the contract was made; or
• The buyer examined the goods or digital content before the contract was made and should have noticed the defects.

Goods and digital content for special purposes

If goods or digital content are sold in the course of business, they must also be reasonably fit for any special purpose that the buyer tells the seller (including if that purpose is only implied).

This doesn't apply if the buyer is not relying on the seller's skill or judgement, or where it would be unreasonable for them to do so.

For example, if the buyer is an expert in relation to the goods, and the seller isn't, it wouldn't be reasonable for the buyer to rely on the seller's skill or judgement.

Goods installed for consumer

Under the Consumer Rights Act 2015, goods installed by the seller for the consumer as part of the contract must be installed correctly. If they aren't, the goods themselves won't conform to the contract.

Restriction of insolvency-related termination clauses

Contracts for the supply of goods and services will often allow suppliers to take action if the company they're supplying becomes subject to an insolvency procedure, e.g. by allowing them to end the contract. This helps the supplier to manage the risk of continuing to supply the goods/services but not getting paid.

The Corporate Insolvency and Governance Act 2020 prevents certain suppliers from making use of such clauses. This applies even if the right to end the contract arises before an insolvency procedure but wasn't taken up (the right is suspended when the insolvency procedure begins). The aim of this implied term is to prevent suppliers from stopping supplying, or threatening to stop supplying, companies in insolvency procedures.

This restriction doesn't apply where the company or supplier is involved in financial services, including insurance companies and banks.

A supplier can still end the contract if:

• the company stops paying them (provided the contract allows that);
• the company agrees; or
• a court allows it, which it can if it's satisfied that continuing the contract would cause the supplier hardship.