In a contract for the sale of goods, the Sale of Goods Act 1979 (SGA) implies a number of terms into an agreement. It is possible, to a certain extent, to disclaim some but not all of these implied terms. The terms implied by the SGA include a condition that the seller has the right to sell the goods (Section 12), that the goods conform to their description (Section 13), that the goods are of satisfactory quality (Section 14) and a condition that the goods supplied will be reasonably fit for purpose (Section 14).
Where there is a supply of goods, terms are also implied (but similarly, may to an extent be disclaimed) by the Supply of Goods and Services Act 1982 (SGSA) relating to the description (Sections 3 and 11C) and the quality (Sections 4 and 11D) of the goods transferred. In a Supply of Services, terms are implied relating to the care and skill with which the work is performed (Section 13), requiring the work to be carried out within a reasonable time (Section 14) and that, where consideration is not expressed in the contract, the party contracting the supplier will pay a reasonable charge. Sections 13 and 14 are covered by common law rather than statute in Scotland.
The extent to which terms implied by the SGA and the SGSA may be excluded is largely controlled by the Unfair Contract Terms Act 1977 (UCTA). In a commercial contract, some of the implied terms, such those relating to quality or fitness for purpose, can be disclaimed (commonly referred to as “excluded”) but only insofar as this is “reasonable.” A typical approach is to expressly exclude an implied term, replacing it in the commercial contract with a more specific expressed term to cover the same issue. For example, the contract might exclude implied terms as to quality or fitness but expressly include terms agreeing that the goods will conform with the bespoke specification.
The restrictions in UCTA do not apply to international supply contracts (where contracting parties have places of business in different countries and the goods either cross from one country to another or where offer and acceptance take place in different countries).
The rules set out above in this section do not apply to consumer contracts. The Consumer Rights Act 2015 sets out a consumer's statutory rights over the quality of the goods, services and digital content that are supplied and the consumer's statutory remedies for the trader's breach of the supply contract. For example, the same quality requirements of the SGA and the SGSA referred to above are treated as the terms of the consumer supply contract for goods and services while similar, but different, rules apply to digital content. There are a number of terms in consumer contracts which cannot be excluded. The terms of consumer contracts and notices may also be considered unfair and not binding on consumers.