Part VI
Sale or supply of goods not related to business

6.1                                      We noted in Part III that UCTA section 6 [s 20] applies not only to consumer and business-to-business contracts but also when the seller or supplier is not making the contract in the course of a business. Thus section 6 [s 20] applies to sales by a consumer to a business (for example a sale of a used car to a car dealer) and to purely “private” sales (for example, a sale of a used car by one private motorist to another). The section imposes controls on clauses affecting the implied obligations as to title and as to description and sample. In this very short Part we consider whether these controls should be retained.

1. Obligations as to title

6.2                                      Section 6(1) [s 20(1)] of UCTA prevents any seller or supplier under a hire-purchase agreement from excluding or restricting his obligations under the SGA 1979 section 12 (seller’s implied undertakings as to title) or SOGITA section 8.[1]

6.3                                      We have already said[2] that we consider that these implied obligations reflect a fundamental principle of the law of moveable property, namely, that a seller or supplier of goods should have a good title to pass to the purchaser. We do not see any case for reducing the protection offered by these sections of UCTA. A seller who is unsure whether he has title can limit his liability, provided the fact that the title may be doubtful is brought home to the buyer:

the seller can contract out of the obligation to transfer full title by stipulating for sale with a restricted title; but section 6 of [UCTA] prevents him from excluding or restricting his obligations as to title in any other way.[3]

Moreover, we are not aware of any difficulties over these provisions.

6.4                                      Maintaining controls over sales by consumers to businesses and other “private” contracts that fall within section 6 [s 20] may have implications for the form of the legislation we envisage. It is likely to mean that the legislation will contain a separate section on sales by consumers and a separate part dealing with “private” contracts.[4] We think the resulting complexity is justified by the importance of these controls.

6.5                                      We provisionally propose that the existing controls over clauses excluding or restricting implied obligations as to title, etc in contracts for the sale or supply of goods where the seller or supplier is not acting for business purposes should be replicated in the new legislation.

6.6                                      Section 6(3) [s 20(2)] prevents any seller from excluding or restricting liability for breach of the obligations arising under the SGA or (for hire-purchase) SOGITA as to correspondence with description or sample.[5]

6.7                                      It may seem odd that these controls should apply to “private sellers”. We have been unable to discover why it was thought that they should. Section 6 [s 20] is derived from SOGITA, which was passed following the Law Commissions’ First Report on Exemption Clauses. Part V of the Report suggested two formulations for legislation to control contracting out of the conditions and warranties implied by sections 13–15 of the SGA. Alternative A would have prohibited exclusion of sections 13–15 in consumer sales only; alternative B would also have prohibited unreasonable exclusion of these sections in other contracts of sale. It is pointed out that alternative B allows for a simpler definition of “consumer sale”,[6] but there is no mention of “private” contracts, nor of sales by consumers. Alternative B was preferred by the legislature, and discussion of the resulting Supply of Goods (Implied Terms) Bill in Parliament does not clarify the issue. By the time of the Second Report, the Law Commissions seem to have come to the conclusion that it was only in consumer contracts and business-to-business contracts that controls were needed over other types of contract[7] and other types of exemption clause. No recommendations were made as to the existing provisions that became UCTA section 6 [s 20].[8]

6.8                                      We are not convinced that there is any need for controls over clauses excluding or restricting the implied obligations as to description or sample in sales by consumers to businesses or as between private parties. We suspect that the controls are of no practical importance. On the other hand we have no evidence that they do any harm.

6.9                                      However, to keep them in their present form might cause an inconsistency in the new legislation if, as we have provisionally proposed, the controls over such clauses in business-to-business contracts were to be somewhat more limited than at present. It will be recalled that the controls in UCTA section 6 apply whether or not the clause was “negotiated” between the parties. We have provisionally proposed that in business-to-business contracts the controls over negotiated exclusion clauses in UCTA section 6(3) [s 20(2)(ii)] are not needed and that it would suffice for “standard” or “non-negotiated” terms to be subject to the general fairness test.[9] It would be rather paradoxical to provide that, as between one business and another, a negotiated clause is exempt from control but to provide control over even a negotiated clause that is used by a consumer against a business.

6.10                                      One possibility would be to limit the controls over “private” sales and “sales by consumers” to non-negotiated clauses. It will be seldom if ever that a private seller has a set of standard conditions, but it may be that the seller will sometimes write out a clause that is not negotiated between the parties, and which, had it been in a business-to-business contract, would thus fall within the controls we propose. Another possibility would be simply to remove these controls from “private” sales and sales by consumers to businesses altogether. Or a third is simply to preserve the effect of section 6(3) [s 20(2)(ii)] in respect of sales by consumers and “private” sales, even at the risk of some inconsistency.

6.11                                      Our provisional view is that the third solution is probably the best one.

6.12                                      We provisionally propose that clauses which exclude or restrict liability for breach of the obligations arising under the SGA 1979 or (for hire-purchase) SOGITA as to correspondence with description or sample should remain subject to a “fair and reasonable” test when the sale is between private parties or is by a consumer to a business, irrespective of whether the clause has been negotiated.