Boyter v Thomson

Section 14(5) of the Sale of Goods Act 1979 applies whenever a person acting in the course of a business sells goods as agent for another, whether the principal is disclosed or undisclosed. Unless the statutory exception applies, the implied conditions concerning merchantable quality and fitness bind the transaction.

The subsection operates alongside the ordinary law of agency. A buyer may therefore enforce the contractual obligations against the principal. The exception applies where the principal is not selling in the course of a business and the buyer knows that fact, or reasonable steps are taken to notify the buyer before contracting.

The defender privately owned a cabin cruiser and instructed a marine broker to sell it as his agent. The pursuer bought the boat believing that the broker owned it. The vessel had defects which made it unseaworthy and unfit for its purchased purpose.

The sheriff assoilzied the defender. The sheriff principal recalled that decision and awarded the pursuer £3,370. The Extra Division of the Court of Session, 1994 SC 186, dismissed the defender’s appeal, holding that section 14(5) of the Sale of Goods Act 1979 extended to the principal and not merely to an agent for an undisclosed principal.

The issue before the House was the proper construction of section 14(5), particularly whether the purchaser could recover from the principal for breaches of sections 14(2) and 14(3).

1. Appeal dismissed unanimously. Lord Jauncey of Tullichettle delivered the leading speech. Lord Lloyd of Berwick, Lord Nolan, Lord Nicholls of Birkenhead and Lord Hoffmann agreed with his reasons.

2. Per Lord Jauncey, section 14(5) of the Sale of Goods Act 1979 applies to any sale by an agent on behalf of a principal, whether the principal is disclosed or undisclosed, provided the statutory exception does not apply. Its effect is not confined to imposing liability on an agent acting for an undisclosed principal.

3. The restricted construction advanced by the defender would make the exception beginning with “except” wholly superfluous. A buyer who is unaware even of a principal’s existence could not know whether that principal was selling in the course of a business. The exception therefore presupposes that section 14(5) can operate where the buyer knows that a principal exists.

4. The overlap between section 14(5) and sections 14(2) and 14(3), where a principal sells in the course of business through an agent, did not justify the restricted construction. That construction would also alter the ordinary agency rules governing the liability of disclosed and undisclosed principals and would substantially defeat the purpose identified by the Law Commissions.

5. Section 14(5) operates together with the ordinary common law of principal and agent. An undisclosed principal may be sued upon a contract made on the principal’s behalf. Where an agent contracts for a disclosed principal, the principal alone is ordinarily liable on the contract.

6. No attempt had been made before the contract to notify the purchaser that the defender was not selling in the course of a business. The statutory exception therefore did not apply. The purchaser was entitled to recover damages from the defender under sections 14(2), 14(3) and 14(5). The judgment of the Extra Division was affirmed.

1. House of Lords: Dismissed the defender’s appeal unanimously and affirmed the Extra Division.

2. Extra Division of the Court of Session: In 1994 SC 186, affirmed the sheriff principal’s interlocutor and dismissed the defender’s appeal.

3. Sheriff principal: Recalled the sheriff’s interlocutor and granted decree for the pursuer in the sum of £3,370.

4. Sheriff at Kirkcaldy: Assoilzied the defender.