Whether you are buying stock from a supplier or selling goods to customers, understanding your rights and obligations under English law is essential. One of the most important pieces of legislation governing commercial transactions in the UK is the Sale of Goods Act 1979 (SGA 1979).
This article explains what the SGA 1979 is, when it applies, and what it means in practice for your business. If you have a question about a specific dispute or contract, our commercial law solicitors are on hand to help.
What is the Sale of Goods Act?
The Sale of Goods Act 1979 is a UK statute that sets out the legal framework for contracts involving the sale of goods. It implies a set of terms into those contracts automatically, regardless of whether the parties have agreed to them in writing.
In plain terms, this means that even if your contract is silent on certain issues, the SGA 1979 fills in the gaps. These implied terms protect both buyers and sellers and set a baseline standard for what constitutes a legally compliant sale.
The Act has been amended several times since 1979, most significantly by the Sale and Supply of Goods Act 1994 and the Sale of Goods (Amendment) Act 1995.
When does the Sale of Goods Act apply?
The SGA 1979 applies to contracts for the sale of goods between businesses (business-to-business, or B2B, transactions). It does not generally apply to consumer transactions, which are now governed by the Consumer Rights Act 2015.
For the SGA 1979 to apply, the contract must involve:
- A transfer of ownership of goods in exchange for a money consideration (the price)
- A seller who is legally capable of transferring title (i.e., ownership) in the goods
- Goods that are tangible and moveable (not land, services, or digital content)
Contracts for services, or mixed contracts where services are the dominant element, fall outside the SGA 1979. Similarly, contracts involving digital downloads or software licences are not typically covered.
Key implied terms under the Sale of Goods Act 1979
The SGA 1979 implies several important terms into every qualifying contract. These are not optional extras; they apply automatically by law.
Satisfactory quality
Under section 14(2) of the SGA 1979, goods sold in the course of a business must be of satisfactory quality. This means they must meet the standard that a reasonable person would regard as acceptable, taking into account the price, description, and all other relevant circumstances.
Satisfactory quality covers:
- The fitness of the goods for their common purpose
- Their appearance and finish
- Freedom from minor defects
- Safety
- Durability
Fitness for purpose
Section 14(3) implies a term that goods must be fit for any particular purpose the buyer has made known to the seller, whether expressly or by implication. If a buyer tells a supplier they need goods for a specific use, and the supplier provides goods that cannot fulfil that use, this term may have been breached.
Goods matching their description
Under section 13, where goods are sold by description, they must correspond with that description. This applies even where the buyer has had the opportunity to inspect the goods. If a seller describes components as having a particular specification, but delivers goods with a different one, this term is likely breached.
Title and quiet possession
Section 12 implies that the seller has the right to sell the goods and that the buyer will enjoy quiet possession of them. In practice, this means the seller must own the goods (or have authority to sell them) and must not sell goods that are subject to an undisclosed third-party claim.
What remedies are available?
Where a seller breaches an implied term under the SGA 1979, the buyer may have several remedies available depending on the nature and timing of the breach.
These include:
- Rejection of the goods: A buyer may be entitled to reject goods and treat the contract as terminated if the breach is serious and the buyer has not yet “accepted” the goods under the Act.
- Damages: A buyer can claim financial compensation for losses caused by the breach, including the cost of replacement goods or consequential losses in some cases.
- Price reduction: Where the buyer has already accepted the goods, they may be able to claim a reduction in the price to reflect the defect.
The right to reject is time-sensitive. Once a buyer is deemed to have accepted the goods, the right to reject is lost. Businesses should therefore act promptly when they identify a problem.
How the Sale of Goods Act 1979 interacts with the Consumer Rights Act 2015
It is important for businesses to understand that the SGA 1979 does not apply to sales made to consumers. Since 1 October 2015, consumer transactions are governed by the Consumer Rights Act 2015 (CRA 2015), which gives consumers additional and stronger protections.
If your business sells goods to individual consumers, you will need to ensure compliance with the CRA 2015, which includes a 30-day right to reject, rights to repair or replacement, and further remedies beyond those available under the SGA 1979.
For B2B transactions, the SGA 1979 remains the primary legislation.
What this means for your business
Whether you are a buyer or a seller, the SGA 1979 has direct practical implications for your commercial contracts.
As a seller, you should:
- Ensure your terms and conditions are consistent with your obligations under the SGA 1979
- Not attempt to exclude implied terms in ways that are unenforceable under the Unfair Contract Terms Act 1977 (UCTA 1977)
- Document the goods you are supplying accurately and retain evidence of specifications
As a buyer, you should:
- Act quickly if goods do not meet the required standard, to preserve your right to reject
- Keep records of what was agreed and any representations made by the seller
- Take advice before signing contracts that purport to limit or exclude your statutory rights
How Ignition Law can help
Disputes over the sale of goods can escalate quickly, and the financial consequences for businesses can be significant. At Ignition Law, we support businesses across the UK in understanding their rights and obligations under the SGA 1979 and related legislation.
Our commercial law solicitors advise on everything from drafting and reviewing supply contracts to resolving disputes and advising on remedies. As a B Corp certified law firm, we are committed to providing practical, transparent advice that helps your business move forward with confidence.
If you have a question about a contract involving goods, or want to ensure your terms and conditions are legally robust, contact Ignition Law today.
Frequently asked questions
Does the Sale of Goods Act 1979 apply to B2B contracts?
Yes. The SGA 1979 applies primarily to contracts between businesses. Consumer transactions are now governed by the Consumer Rights Act 2015.
Can businesses exclude implied terms under the SGA 1979?
In B2B contracts, it may be possible to exclude or limit some implied terms, but only where it is reasonable to do so under the Unfair Contract Terms Act 1977. Certain terms, such as the implied term of title, cannot be excluded at all.
What is the difference between rejection and a claim for damages?
Rejection allows the buyer to treat the contract as ended and recover the purchase price, provided they have not yet accepted the goods. Damages compensate for financial loss caused by the breach, and may be available even after acceptance has occurred.
Is the Sale of Goods Act 1979 still in force?
Yes. The SGA 1979 remains in force for B2B transactions in the UK. It has been amended over the years but continues to be the principal statute governing commercial sales of goods.
What counts as “acceptance” of goods under the SGA 1979?
A buyer is deemed to have accepted goods when they indicate acceptance, when they carry out an act inconsistent with the seller’s ownership, or when they retain the goods beyond a reasonable period without rejection. Acting quickly when a problem arises is therefore important.
