Contracts involving the sale of goods, such as yachts, are subject to a number of statutory provisions, including terms which will be implied by law into the sale contract. One of the main statutes governing this area of law is the Sale of Goods Act 1979 (“The Act”).
The Act implies terms relating to title, description, quality and fitness for purpose into contracts for the sale of goods. The Act sometimes makes a distinction between a seller or purchaser who is acting in the course of a business and a seller or purchaser who is acting as a private individual, i.e. business to business, consumer to consumer or business to consumer transactions. The Act will therefore apply to contracts for the sale and purchase of a yacht between private or commercial parties, as well as to yacht construction contracts.
A seller must hold good title to the goods in order to have the right to sell them on to a purchaser. As a consequence, a purchaser of stolen goods will not obtain good title from the seller and may be required to return the goods to the rightful owner without compensation for the price paid.
When buying a yacht, a purchaser should therefore take care to ensure a seller has good title to the yacht before parting with their money. Purchasers should also check, so far as is possible, that the yacht is free of any liens or charges which burden the seller’s title to the yacht and which may pass to the purchaser on the sale.
Sale by description implies a term into the contract that the goods being sold will match any description given by the seller. If the purchaser relied wholly or in part on any description made by the seller, the goods must correspond with that description. This applies to private sales as well as sales made in the course of a business. Therefore it must be ensured that the yacht matches the description provided at the time the contract was entered into (and as may have been amended during construction).
Additional points that need to be assessed:
- Quality and fitness for purpose
- Sale by Sample
- Remedies for Breach of the Implied Terms
- Unfair Contract Terms Act
Implied terms relating to title under section 12 of the Act cannot be excluded by a seller in any sales contract. However, the implied terms relating to description, quality and sale by sample under sections 13, 14 and 15 of the Act may be excluded in a business to business sale by agreement as long as the exclusion clause satisfies the reasonableness test. These implied terms cannot be excluded where the purchaser is acting as a consumer.
