Boyter v Thomson

The sole issue was the construction of section 14(5) of the Sale of Goods Act 1979. The House held that section 14(5) applies to any sale effected by a person who in the course of a business is acting as agent for a principal, whether the principal is disclosed or undisclosed, unless the principal is not selling in the course of a business and either the buyer knows that fact or reasonable steps were taken to bring it to the buyer's notice before contract.

Accordingly, where an agent sells a boat on behalf of a principal who is not in business and no notice is given, the buyer may sue the principal under sections 14(2) and 14(3) for breaches of the implied conditions of merchantable quality and fitness for purpose. The court relied on the statutory language and the Law Commissions' purpose in introducing the subsection to avoid hardship where buyers rely on an agent's reputation.

Background and facts:

• The defender owned a cabin cruiser and instructed Harbour Marine and Leisure to sell it under a brokerage and agency agreement. The pursuer bought the boat. The boat was defective and unfit for the purpose for which it was purchased.
• The pursuer sued the defender for damages for breaches of sections 14(2), 14(3) and 14(5) of the Sale of Goods Act 1979.

Procedural history:

• The sheriff at Kirkcaldy assoilzied the defender but made findings of fact that the pursuer believed the boat to be owned by Harbour Marine and Leisure and had not been told the identity of the owner or that Harbour Marine and Leisure were acting merely as agents.
• The sheriff principal affirmed those findings in fact and in law but recalled the interlocutor and granted decree in favour of the pursuer for £3,370.
• An Extra Division of the Court of Session (1994 SC 186) affirmed the sheriff principal and dismissed the defender's appeal, concluding that section 14(5) covered the principal.
• The defender appealed to the House of Lords.

Issue: Whether section 14(5) of the Sale of Goods Act 1979 applies so as to permit a buyer to sue a principal (disclosed or undisclosed) for breaches of sections 14(2) and 14(3) where the goods were sold by an agent, or whether subsection (5) applies only to render an agent liable when acting for an undisclosed principal.

Court's reasoning:

• The Law Commissions had drafted subsection (5) to address the injustice that buyers dealing through agents might otherwise suffer where private sellers were not subject to implied conditions. The statutory text, particularly the proviso beginning with "except", presupposes situations where the buyer is aware of the principal's existence and where notice might be required.
• A restricted construction limiting subsection (5) to agents acting for undisclosed principals would render the proviso redundant and would produce unintended statutory changes to normal common law agency rules.
• The House concluded that subsection (5) applies to sales by an agent on behalf of a principal whether disclosed or undisclosed, subject to the stated exception; the ordinary common law rules of principal and agent continue to have effect where subsection (5) applies.

Disposition: The appeal was dismissed. Because there had been no attempt to bring to the buyer's attention that the defender was not selling in the course of business, the pursuer was entitled to damages from the defender under sections 14(2), 14(3) and 14(5).

Context: The court noted the remedial purpose of subsection (5) as intended by the Law Commissions to protect buyers who rely on an agent's reputation when purchasing goods from private sellers by means of an agent or auctioneer.

Appeal dismissed. The House held that section 14(5) of the Sale of Goods Act 1979 applies to sales effected by an agent for a principal whether the principal is disclosed or undisclosed, unless the principal is not selling in the course of business and the buyer knows that fact or reasonable steps are taken to give notice; therefore the buyer could recover damages from the principal where no such notice was given.

Sheriff at Kirkcaldy: defender assoilzied with specified factual findings. Sheriff principal: affirmed findings and granted decree in favour of the pursuer for £3,370. Extra Division of the Court of Session: affirmed sheriff principal and dismissed the defender's appeal (1994 SC 186). House of Lords: appeal heard 15 May 1995; judgment delivered 15 June 1995, appeal dismissed ([1995] UKHL 20).