Contractual terms implied by statute
With the aim of improving the services of his Port Harcourt hospital, Dr Goodluck decides to acquire vehicles for use as ambulance in emergency cases. He contacts TJ Motors, who specialise in importing cars for sale in Nigeria. He places an order for two Peugeot 504 Station Wagon vehicles and is promised that they will be delivered in two weeks.
After taking delivery of the cars, Dr Goodluck arranges for them to be repainted and converted for use in ambulance services. Unfortunately, both vehicles break down after working for two months. The mechanic whose service is engaged informs him that the cars are not suited for heavy use. However, the problem can be rectified if certain parts of the vehicles are changed.
Dr Goodluck is very reluctant to spend any more money on the vehicles. He contacts TJ Motors and demands that they take back their station wagons. He claims to be entitled to a full refund of the purchase price, seeing that the vehicles are not suitable for his desired purpose. In response, TJ Motors declare that they were not informed of the purpose for which the vehicles were purchased. As a result, their company is not liable for any breach.
What are the legal effects of the terms of this transaction?
As previously stated, contracts are concluded within a society of people with social and commercial practices which are recognised and accepted as part of the contract. This is done regardless of the fact that there may not be the express inclusion of such terms by the parties. To protect the weaker party (usually the buyer), some terms are enforced by the courts in transactions of sale of goods. These are terms implied by statute.
This case above covers the following legal issues:
- The application of terms implied by statute.
- Implied terms relating to sale of goods.
- The remedy for breach of implied terms.
In 1893, the British Parliament passed the Sale of Goods Act as a documentation of the common law of sale. The Act applies to Nigeria directly as an English statute of general application enacted before 1900. It should be noted that the Western Region of Nigeria enacted its own Sale of Goods Law, the same with Lagos State and Bendel State (now Edo & Delta States). However, the terms of the sale of goods laws are similar to the provisions of the English Act. Some of the terms implied by the statute in Nigeria are:
Implied condition as to title. By section 12(1) of the Act, in any contract for the sale of goods, there is an implied condition on the part of the seller that in the case of a sale, he has a right to sell the goods, and that in the case of an agreement to sell, he will have the right to sell the goods at the time when the property is to pass.
- Sale by description. By section 13 of the Act, when goods are sold by description, there is an implied condition that they shall correspond with the description and if the sale is by sample as well as by description, they must correspond with the description as well as the sample.
- Fitness for purpose. By section 14(1) of the Act, where the buyer expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgement, there is an implied condition that the goods shall be reasonably fit for such purpose.
In the case of Dr Goodluck and TJ Motors, a couple of vehicles were purchased for use in ambulance services. After only two months of operation, both vehicles ceased to function. The buyer has made a case for the cancellation of the contract on the basis that the goods purchased are not fit for purpose. The sellers, on the other hand, deny liability, claiming that the purpose of the purchase was not communicated to them.
Indeed, it is arguable that if the purpose for which goods are required is not made known, there is no liability. In the case of Ijoma v. Mid Motors, the plaintiff purchased a truck for carrying passengers but could not use it on account of mechanical defects in the vehicle. Subsequently, he sued for breach of contract. His case was dismissed by the court on the ground that there was no evidence that he made known the purpose for which the truck was required.
With due respect to the court, it is contended that a seller for goods such as vehicles must guarantee the fitness of the goods for the purpose of transportation. In the learned opinion of Professor Sagay, “since they were selling an automobile, they must have been aware that it would be required for mobility. Hence, the court should have held that there was a breach of the condition of fitness of purpose.”
Finally, where a breach is established, it is necessary to determine the remedy available to the injured party. In most cases of breach of contract covered by the Sale of Goods Act, the only remedies which will be available are damages. By section 11(1)(c) of the Act, the right to repudiate a contract is severely limited. The breach of any condition can only be treated as a breach of warranty and not a ground for rejecting the goods and treating the contract as repudiated.
Principles and cases are drawn from Sagay: Nigerian Law of Contract