Interactive glossary

From the beginning (see ‘Void contract’).

An unconditional acceptance of all the terms of an offer.

A buyer will be deemed to have accepted the goods when they do one of three things: (a) intimates to the seller that they have accepted them (s 35(1)(a) of the Sale of Goods Act 1979 (SGA 1979)); (b) when the goods have been delivered to them, they do any act in relation to them which is inconsistent with the ownership of the seller (s 35(1)(b)); (c) when, after the lapse of a reasonable time, they retain the goods without intimating to the seller that they have rejected them (s 35(4)).

A type of authority given by the principal to the agent authorising them to enter into arrangements with third parties on their behalf. This can either be express or implied.

An agency of necessity might arise in a case where, as a result of an emergency, an agent is compelled to exceed their authority to protect their principal’s property.

A person who is authorised to act on another’s (the principal’s) behalf. An agent has the power to bind the principal in contracts with third parties.

Whereas actual authority derives from an agreement between the principal and the agent, apparent authority arises where the principal makes a representation so as to give an impression to the third party that the agent has authority to act on their behalf. Apparent authority arises where the third party has been induced into entering the contract with the principal by an agent who appears to have authority to act but in fact has no such authority. It is no more than an illusion of authority created by the principal’s representation.

When the correct quantity of the goods has been set aside for delivery to the buyer.

A person who takes possession of the goods with the owner’s (bailor’s) consent.

All parties to the agreement ­assume obligations under the contract.

The most important type of contractual term, which typically goes to the heart of the contract. A breach of a condition is likely to cause significant consequences for the innocent party and, if breached, the condition will usually entitle the innocent party to regard the contract as at an end. No further performance will be required and the innocent party will also be entitled to sue for damages.

An act, forbearance, or promise by one party to an agreement that constitutes the price for which they buy the promise of the other party. Without consideration, a promise is not binding. With contracts of sale, the consideration must be money (s 2(1) SGA 1979).

an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft, or profession (s 2(3) Consumer Rights Act 2015 (CRA 2015)).

‘An agreement between an individual (“the debtor”) and any other person (“the creditor”) by which the creditor provides the debtor with credit of any amount’ (s 8(1) of the Consumer Credit Act 1974 (CCA 1974). It includes a consumer credit agreement which is cancelled under s 69(1) or becomes subject to s 69(2) so far as the agreement remains in force.

‘An agreement made by a person with an individual (the “hirer”) for the bailment or the hiring of goods to the hirer, being an agreement which is not a hire-purchase agreement and is capable of subsisting for more than three months’ (s 15(1) CCA 1974).

Where the court determines a contractual term to be ambiguous, it will be construed against the party that imposed its inclusion in the contract.

‘A contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price’ (s 2(1) SGA 1979).

Terms that either define the subject matter of the agreement or are concerned with the adequacy of the contract price.

One to whom a debt is owed.

Where the parties agree that payment will be made upon the occurrence of a specific event rather than on a particular date.

One who owes a debt.

Where the creditor is not also the supplier and has no business connection with the supplier. The creditor merely provides the credit for the transaction. The agreement is not made under pre-existing arrangements or in contemplation of future arrangements between the creditor and the supplier.

Where the creditor is also the supplier or has a business connection with the supplier. The agreement is made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between themselves and the supplier, or which is financing a transaction between the debtor and the creditor. Typical D–C–S agreements are credit sales or where the payment is made by credit card.

An action seeking to have some right, status, etc, judicially declared (Scottish law).

A type of agency where the agent undertakes to act as surety in respect of the performance of contracts that they have entered into on their principal’s behalf. In return for acting as surety, the agent receives a specially agreed commission.

The voluntary transfer of possession from one person to another (s 61(1) SGA 1979).

Data which are produced and supplied in digital form (s 2(9) CRA 2015).

Where the principal is named or where the agent indicates that they are acting on behalf of a principal rather than on their own behalf. The third party knows that the agent is acting as agent on behalf of a principal even if they don’t know the exact identity of the principal.

A clause that seeks to exclude all liability for certain breaches of the contract or to exclude a contractual obligation.

A term used to describe both exclusion and limitation clauses.

Goods that are either owned or possessed by the seller (s 5(1) SGA 1979).

Terms that have been expressly agreed either orally or in writing.

A person who acts on behalf of another in a position of trust.

Where the fiduciary is under a duty to act in good faith and with due regard to the best interests of the other party or parties.

Any other facility (other than running-account credit) under a consumer credit agreement whereby the debtor is enabled to receive credit (whether in one amount or by instalments).

An event, that is the fault of neither party, that may render the contract impossible to perform or radically different from that agreed and that may lead to the contract being frustrated and the parties being discharged from further performance.

Goods to be manufactured or acquired by the seller after the making of the contract of sale (ss 5(1) and 61(1) SGA 1979).

Any tangible, moveable items, although this includes water, gas, and electricity but only if they are put up for supply in a limited volume or set quantity such as with bottled water, gas cylinders, or batteries (s 2(8) CRA 2015).

An arrangement where a person hires the goods on credit terms for a fixed term with an option to purchase them at the end of that term.

A term that has not been agreed but may be implied in a number of different ways. One of these ways is by statute (see, e.g. the statutory implied terms in the SGA 1979).

A term where the consequences or seriousness of the breach determine whether or not it takes effect as a condition or a warranty. In this way, if the consequences of the breach are so fundamental that the innocent party has been deprived of substantially the entire benefit of the contract, they will be entitled to treat the contract as repudiated and sue for damages. If the effects of the breach are only minor, it will be treated as a breach of warranty.

A party’s right to keep hold of the property belonging to another until an obligation, usually payment, has been fulfilled.

A clause where a party to the contract seeks to limit their liability for certain breaches of the contract.

A false statement of fact that induces another to enter into a contract.

‘No one can transfer what he has not got.’

An indication of willingness to be legally bound upon the other party’s acceptance.

See ‘Apparent authority’.

The person on whose behalf the agent acts.

A claim or an award of payment to reflect what a person deserves.

If an agent carries out an act in the name of a principal for which they were not authorised the principal may decide to ratify (approve and adopt) the transaction.

A consumer credit or consumer hire agreement that is not exempt under the provisions of the CCA 1974.

Where a party to a contract acts in a way that demonstrates that they do not intend to be bound by the terms of the contract.

A point not covered by an earlier decision or by a rule of law.

The thing is lost to the owner.

To cancel the contract and relieve the parties of any further obligations under it.

Where the contract is set aside and restores the parties to their original pre-contract positions.

See ‘Retention (or reservation) of title’.

A clause that allows a supplier to retain ownership over the goods supplied until such time as certain conditions (usually payment) are met, thus providing the supplier with a form of security against the buyer’s default or insolvency.

A clause named after the leading case of Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd (1976)—see ‘Retention (or reservation) of title’

A facility under a consumer credit agreement whereby the debtor is enabled to receive from time to time (whether in their own person or by another person) from the creditor or a third party cash, goods, and services (or any of them) to an amount or value such that, taking into account payments made by or to the credit of the debtor, the credit limit (if any) is not at any time exceeded.

Goods that are identified and agreed upon at the time a contract of sale is made (s 61(1) SGA 1979).

A remedy that may be available when monetary damages are inadequate. The courts will usually be slow to make such an order, although nowadays it is more readily available to enforce the additional rights of the consumer buyer (repair and replacement of the goods).

A person acting for purposes relating to that person’s trade, business, craft, or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf (s 2(2) CRA 2015).

Goods that are not specifically identified at the time of the contract of sale. Unascertained goods are not defined in the SGA 1979 but are, in effect, all goods that are not specific.

Where the agent doesn’t reveal that they are acting on behalf of a principal. The third party, therefore, is unaware that the agent is acting as agent.

Only one party assumes an obligation under the contract.

A contract that has no legal force, being void ab initio (from the beginning). No party can therefore enforce the agreement.

A contract which is capable of being voided. It may be set aside by the innocent party, but unless and until he does so, it has full legal effect. The innocent party can therefore choose whether or not to be bound by it.

A contractual term that is less important than a condition. A breach of warranty is still a breach of contract but will not entitle the innocent party to terminate the agreement. They will only be entitled to sue for damages.

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