3. Buyer’s Remedies for Failures in Quality, Safety and Fitness for Purpose

At the start of this discussion, I need to point out a central difference in the way in which the bases of liability in the French and English laws relate to their remedial consequences. In French law, following Roman law, the traditional remedial focus of the garantie légale (p.251) was a right to return the property and to recover the price or a right to a reduction in the price if the property is kept: damages were available only where the defect was known by the seller on delivery.²²³ This focus was reflected in the bref délai, a restrictive time element appropriate to where a contract is to be unravelled. When liability in damages was extended in the 1960s to vendeurs professionnels, the bref délai became increasingly inappropriate and its avoidance the motive for the development of less restricted bases for the imposition of liability in damages, notably obligations d’information and obligations de conformité (though either could also found a claim for résolution of the contract).²²⁴

By contrast, the technique of implied term used by English courts and then adopted by the legislature had a very different remedial impact from the beginning: for breach of any term of a contract which causes loss will in principle attract liability in damages. Of course, the Sale of Goods Act 1893 went further, designating its implied terms as ‘conditions’ and providing that their breach would give rise to a right to reject the goods and terminate the contract (whether on tender or at some later stage), but the Act subjected this right to a restrictive set of rules as to its loss by ‘acceptance’ of the goods. Unlike French law, therefore, English law has not needed to develop new bases of seller’s liability in damages so as to escape restrictive rules primarily concerned with the rights of rescission or price reduction. This central difference accounts for the relative unity of regime of the English law of implied terms in sale, differences in the bases of liability having no necessary impact on the nature or timescale of the remedies available.

(a) The right to reject the goods and repudiate the contract

According to the scheme of classification accepted by the Sale of Goods Act 1893, the statutory implied terms are all ‘conditions’ with the result that their breach entitles the buyer to reject the goods on tender by the seller or after delivery and to repudiate the contract.²²⁵ In both situations and following the general position as regards rescission or repudiation for breach of contract, in principle the buyer has a right to act unilaterally, without any need to invoke the aid or any order of the court, though the seller may subsequently challenge the buyer’s right so to act. Where a buyer has lawfully rejected the goods for breach of condition, he ceases to be liable to the price and may recover the price if already paid subject to the requirement of a ‘total failure of consideration’.²²⁶

Until 1994, these rights of rejection and repudiation in the buyer were entirely unfettered: the breach of the term did not have to be serious,²²⁷ nor the exercise of the right fair.²²⁸ This absoluteness gave a very powerful remedy to a buyer of goods, useful (p.252) both as a threat to encourage a seller to deliver goods conforming to the standards set by the statutory terms and as a means of getting out of the contract if the terms were in fact broken. In its best light, the remedy allows a buyer who receives unsatisfactory goods to avoid the contract and purchase a substitute elsewhere, any difference between their cost and the contract price being made up by way of damages.²²⁹ It requires no waste of time (by making any requirement of recourse to court) and may therefore be thought of as peculiarly appropriate to commercial contexts where the buyer requires conforming goods to perform his own obligations to a sub-buyer. On the other hand, the remedy sacrifices the interest of the seller in performing the contract and, after delivery, may upset any reliance he may have on the stability of the transaction. Moreover, in this classic form, an unscrupulous buyer may take advantage of an unimportant breach of condition to avoid a bad bargain or to take advantage of a changed market and buy a substitute more cheaply.²³⁰

English law has therefore put in place two important restrictions on the buyer’s right of rejection for breach of the implied terms. The older one excludes rejection and repudiation where the buyer has affirmed or is deemed to have affirmed the contract. Under the general law, affirmation of a contract on breach is an act by which the injured party chooses to maintain the contract rather than to rescind it and, for this reason, an injured party must know of the right to rescind before he can be said to have affirmed.²³¹ While the law of sale of goods allows a buyer aware of a breach of condition by his seller to elect to maintain the contract while retaining any claim for damages,²³² it makes special provision for ‘deemed acceptance’ of the goods by the buyer with a concomitant loss of the right to rescind the contract for breach of condition. The law provides that a buyer will lose his right to reject by acceptance (i) by intimating to the seller that he accepts the goods; (ii) where he ‘does any act in relation to them which is inconsistent with the ownership of the seller’, or (iii) he retains the goods after the lapse of a reasonable time without intimating to the seller that he has rejected them.²³³ None of these situations of ‘deemed acceptance’ are conditional on any requirement that the buyer is aware of any breach of the statutory implied conditions which would give rise to a right of repudiation, though as regards the first two no acceptance will be deemed to have taken place where a buyer has not had a reasonable opportunity of examining the goods so as to ascertain whether they are in conformity with the contract.²³⁴ ‘[A]cts inconsistent with the ownership of the seller’ typically consist of cases where the buyer cannot return the goods (though it no longer includes cases where they are delivered under a sub-sale)²³⁵ and the mere fact that the buyer ‘asks for, or agrees to, their repair by or under an arrangement with the seller’ does not justify a finding that the buyer is deemed to have accepted the goods.²³⁶

(p.253) Nevertheless, a buyer may lose his right to reject the goods for breach of the statutory terms on the lapse of a reasonable time, even though he was unaware of his right to rescind at any time during the relevant period,²³⁷ and while the length of time considered reasonable depends on the circumstances including the discoverability of any defect by the buyer, it tends to be measured in days or weeks rather than months.²³⁸ Despite this apparent unfairness, the Law Commission has rejected the idea that there should be a longer-term right to reject goods in sale, recognising the importance of the existing policy which ‘favours finality’,²³⁹ and preferring to ‘retain a relatively short-lived right to reject with a corresponding automatic right to return of the purchase price’ unabated to take into account any use by the buyer.²⁴⁰ It also rejected the introduction of an ‘arbitrary’ fixed period to replace the ‘reasonable time’²⁴¹ and the creation of statutory guidelines to be taken into account in assessing reasonableness for this purpose on the basis that they would either be so general as to be ‘obvious and unhelpful’ or so detailed as to be ‘inappropriate and misleading’ for some situations.²⁴² On the other hand, following the Law Commission’s recommendation, the availability of a reasonable opportunity for examining the goods was made explicitly relevant to the determination of a ‘reasonable time’,²⁴³ and the buyer’s arranging for the goods to be repaired by the seller must not settle the issue,²⁴⁴ which ‘shows that time taken merely in requesting or agreeing to repairs, and…for carrying them out, is not to be counted’.²⁴⁵

Secondly, since 1995 a buyer who does not ‘deal as consumer’ cannot reject the goods for breach of the statutory implied terms where ‘the breach is so slight that it would be unreasonable for him [to do so]’.²⁴⁶ Given the wide interpretation which has been given by the courts to the phrase ‘dealing as consumer’, this provision restricts the right of rejection to buyers who have bought goods in the course of their business of a type which forms a regular part of their business²⁴⁷ and, given this context, it is not surprising that the restriction may be excluded by the express or implied intention of the parties.²⁴⁸ The change was expressly made to avoid an unjustifiable or market-oriented rescission to the prejudice of the seller in cases of minor defects and, conversely, to avoid the temptation for a court to hold that there is no breach in order to avoid rescission, this also ruling out any remedy in damages.²⁴⁹ On the other hand, the Law Commission felt that those ‘dealing as consumer’ should retain their absolute right to reject inadequate goods since they are not usually in the position easily to dispose of defective goods and it may be difficult to quantify their loss in money terms, especially where a defect is minor.²⁵⁰ An absolute right to reject puts a (p.254) consumer in a stronger and clearer bargaining position with a seller, and he can purchase goods of the same description from someone else if he has lost confidence in the original seller.²⁵¹

The Law Commission also considered the possibility for consumer sales of substituting a right to repair or replacement (‘cure’) of the goods by the seller for the buyer’s right of rejection, the seller having ‘the right to “cure” any defect but if he did not do so the buyer could reject’.²⁵² While this proposal found considerable support among those the Law Commission consulted, the idea was somewhat reluctantly dropped as it gave sellers a ground upon which they could argue that the buyer was not entitled to return the goods and recover the price and that many questions of the detail of the scheme remained unsettled, leading to dispute and uncertainty, almost certainly to the detriment of consumers.²⁵³ For all these reasons, the absolute nature of the right of rejection of inadequate goods was retained for consumers.

(b) Restitution of the price

The question whether breach of a statutory implied term as to the quality or fitness for purpose of the goods gives rise not merely to a right of rejection but also a right of restitution of the price (if paid) forms part of a much wider question as to the availability of restitution of money or property ‘on a failure of consideration’.²⁵⁴

From the buyer’s point of view, a claim for restitution (if established) has the advantage over damages that he would not have to establish or mitigate his loss and can even avoid a bad bargain, but it has the disadvantage of not allowing any recovery for loss of a good bargain.²⁵⁵ At present, the law as to its availability remains that even after rejection of goods on the ground of breach of condition, a buyer can recover the price only on a total failure of consideration,²⁵⁶ by which is generally meant a failure of the ‘bargained-for counter-performance’.²⁵⁷ In the context of hire-purchase, this requirement has been held to mean that a hirer failed to recover back the price on the ground that he had used and enjoyed the goods for a period of time,²⁵⁸ whereas in the context of breach of the implied term as to the seller’s title to the goods, some considerable use by a buyer (and his own purchaser) has been held not to prevent a total failure of consideration²⁵⁹ and it has been argued that this approach should be followed in the context of breach of implied terms as to quality and fitness for purpose, possibly (p.255) subject to a right to counter-restitution for any benefits received.²⁶⁰ Given the contentious state of the law and the frequency of some use by a buyer of goods in cases of rejection after delivery, the Law Commission’s reference to the buyer’s ‘short-lived right to reject with a corresponding automatic right to return of the purchase price’²⁶¹ may be over-optimistic.

(C) Damages

Unlike the French position, breach of the implied terms as to description, quality and fitness for purpose have always allowed a buyer to recover damages for losses occasioned by their breach, the knowledge or otherwise by the seller as to the existence of any defect being irrelevant.²⁶² In terms of the measure and quantum of damages, the Sale of Goods Act ‘codified’ the common law, expressing the general law of breach of contract in the context of the buyer’s remedies for failures in quality of the goods.²⁶³ In common with English law generally, there is a complex law governing the measure and quantification of damages, unlike the French position where this is all but left to the assessment of the juges du fond.²⁶⁴

Where the buyer rejects the goods and repudiates the contract, he is said to be able to treat the seller’s failure to deliver conforming goods as a simple failure to deliver, with the result that, where there is an available market for the goods,²⁶⁵ damages will prima facie be assessed by reference to the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered.²⁶⁶ So, on rejection, the buyer is entitled to go into the market, buy substitute or near-substitute goods and recover their cost by way of damages, but this is the prima facie basis of his damages even if he chooses not to buy any substitute.²⁶⁷ Underlying these rules one can see the law of mitigation of damage, both empowering a buyer and creating an incentive for a buyer who has rejected the goods to obtain their substitute elsewhere.²⁶⁸ In this way, English law recognises a right in the buyer to replacement goods, but these are to be obtained from a third party and then charged to the seller’s account as damages rather than required from the seller himself.

Where the buyer is not entitled to reject the goods or has chosen not to do so, the prima facie measure of damages for breach of the statutory implied terms is the difference in value of the goods if they had conformed to standard and their actual value.²⁶⁹ While English law does not distinguish a separate right in the buyer to the reduction of the price on the account of the goods’ defects (such as the action aestimatoire of (p.256) French law²⁷⁰), he is entitled to set off any damages based on the difference in value against the seller claiming an unpaid price.²⁷¹ But this measure of damages is only a prima facie rule and the buyer may instead claim damages for the reasonable cost of repair of the goods²⁷² or of their replacement. Indeed, he may be under a ‘duty’ to replace the goods under the law of mitigation of damage if doing so reduces any consequential losses.²⁷³

Moreover, a buyer can recover any loss of profits or other consequential losses subject to a statutory version of the test of remoteness of damage established in Hadley v Baxendale,²⁷⁴ that is, losses ‘directly and naturally arising, in the ordinary course of events, from the breach’ as well as ‘special damages’, that is, one’s compensating losses arising from facts within the special knowledge of the seller. In either case, these may include damages for personal injury, and for damage either to the goods themselves or to other property.²⁷⁵ Furthermore, damages for breach of the implied terms may include the recovery of an indemnity loss, that is a loss caused by the buyer being held liable either to his sub-buyer under the law of sale or to a third party.²⁷⁶ In both cases, the effect of the law of remoteness of damage restricts the range of recovery. So, an indemnity is recoverable in respect of a sub-sale where at the time of making the contract the buyer would or probably would resell the goods and that this contract would or probably would contain the same or similar terms as to the goods and it was not unlikely that breach of the seller’s undertakings would cause the buyer to be liable to his own sub-buyer.²⁷⁷ Similarly, an indemnity in respect of liability in the tort of negligence to a third party may be recovered as long as the third party was not unlikely to be injured as a result of the defect and as a result the buyer was not unlikely to be held legally liable.²⁷⁸ Other consequential damages may be available to a buyer, for example, for the disappointment caused to a buyer of a vehicle to be used for a holiday,²⁷⁹ or a consumer buyer may recover modest damages for his loss of pleasure in receiving goods conforming to their standard.²⁸⁰

Finally, I should note that actions for damages for breach of the statutory implied terms and of any corresponding express conditions are subject to the general law of (p.257) limitation of actions for breach of contract. The action becomes barred after six years²⁸¹ and time runs from the delivery of the goods rather than the time when the defect is or could have been discovered or when damage results.²⁸² However, this law does not apply to claims for personal injuries or death which possess their own regime.²⁸³ Here, the limitation period is only three years, but it starts either from the date of delivery or from the date of the claimant’s knowledge of the significance of his injury and its attribution to the defendants act in delivering inadequate goods, although his knowledge of the significance of the latter in law is irrelevant.²⁸⁴ It is to be noted that the special and restrictive provisions as to the buyer’s ‘deemed acceptance’ of the goods have no bearing whatever on the time within which claims for damages may be brought.²⁸⁵

(d) Comparative observations

The comparison of the remedies available in respect of failures in quality, safety and fitness for purpose in English and in French law is by no means straightforward, given the complexities of legal basis and remedy within each system and differences in understanding of a number of the apparently similar concepts used.

(i) The significance of the seller’s business

While in both English and French law the business status of a seller justifies an increased responsibility, its understanding and its significance differ.

The French understanding of vendeur professionnel is relatively narrow, referring either to a seller whose business is to sell the general type of property sold in the relevant transaction or who otherwise possesses a special skill or expertise in relation to the type of property sold,²⁸⁶ whereas the English understanding of a seller ‘acting in the course of a business’ is broader, applying to any sale made as part of the seller’s business, whether regular or not.²⁸⁷

The primary significance of being a vendeur professionnel is that it justifies the imposition of liability in damages under the garantie légale,²⁸⁸ whereas other sellers (including those businesses who sell things outside their regular trade) may be liable in damages on this basis only if they were aware of the defect on sale.²⁸⁹ A similar pattern is found as regards pre-contractual liability, any seller being liable in damages for knowingly misinforming or failing to inform the buyer of a significant aspect of the property sold (dol), but vendeurs professionnels also being liable under the law of obligations (p.258) d’information.²⁹⁰ Moreover, while liability for ‘contractual non-conformity’ can in principle apply to all sellers of goods given that its legal basis is the express or implied agreement of the parties, French courts do not appear to use this ‘general law’ to impose liability in damages for failures in general quality of the goods on non-professionnels.²⁹¹

In English law, sale in the course of business is a condition of the existence of any remedy under the statutory implied terms of quality and fitness for purpose, whether rejection of the goods, restitution or damages.²⁹² Its broad understanding of ‘the course of business’ is therefore of considerable importance, as it leaves aside from their protection only sales by private individuals, which can give rise to liability only under the law of sale by description,²⁹³ under an express contractual warranty²⁹⁴ or under the law of misrepresentation.²⁹⁵ All these bases of liability have in common a prerequisite that the seller has to have said something before liability will be imposed: in principle, a knowing silence is not enough to ground liability.²⁹⁶ On the other hand, the breadth of application of the statutory implied terms of quality and fitness for purpose and the expansion of the ambit of remedies for misrepresentation in English law have reduced the need to expand either the law or the practice of express warranty for commercial and consumer sales.

(ii) Buyer’s right of rejection and the hierarchies of remedies

For the most part English law treats a buyer’s right to reject the goods and to repudiate the contract to the same regime.²⁹⁷ In contrast to the position in French law apart from commercial sales, the English right of repudiation requires no judicial authority.²⁹⁸ For English law, the right is central to the system of remedies available for breach of the statutory implied terms and so, while it has been subject to a test of reasonable exercise in the case of commercial buyers,²⁹⁹ its free exercise for other buyers has been retained despite the risk of unfair prejudice to sellers.³⁰⁰ In principle, a buyer is entitled to end his dealings with the failing seller and go elsewhere and he does not have to mitigate by accepting his own seller’s offer of repair or replacement of the goods. Even more, the availability and exercise of the right of repudiation has an impact on the measure of damages: where the goods are rejected, English law’s general assumption is that the buyer will buy a reasonable substitute in the market and either claim back his money by way of restitution or damages for his lost bargain; where goods are retained, the buyer will usually recover either the difference in value between the goods as they are and as they should have been or the cost of remedial action, subject to a criterion of reasonableness.³⁰¹

However, while potent, the buyer’s right of repudiation is short-lived. Under the law of ‘acceptance of the goods,’ a buyer may lose his right of repudiation of the contract after acceptance of delivery of the goods, by ‘intimating’ to the seller that he has accepted them, by using them in a way inconsistent with the seller’s ownership or after a ‘reasonable lapse of time’, even if he did not know of the goods’ inadequacy at the (p.259) relevant time.³⁰² While a reasonable time will depend on the nature of the goods in question, and any other relevant circumstance (so, for example, time spent in discussions of possible repairs will not be included), it is to be measured in days or weeks, rather than months.³⁰³ On the other hand, none of these restrictive rules on ‘acceptance’ affect the seller’s liability in damages: these rules are aimed at securing the finality of transactions, leaving open the possibility of a subsequent financial adjustment via damages.

By comparison with repudiation for breach of the statutory implied terms, rescission for misrepresentation also provides a general right for a buyer to escape the contract, return the property and gain restitution of the price, but a misrepresentee will not lose his right to rescission by affirmation without knowing of it and the delay within which this time must be exercised is rather longer. On the other hand, while a right to rescind for innocent misrepresentation is subject to a general discretion in the court where rescission would be inequitable,³⁰⁴ a right to reject the goods for breach of condition is subject to a test of reasonableness only in the case of commercial buyers.³⁰⁵

There are also a number of differences between the remedies for breach of the statutory implied terms and for breach of any express term governing the quality or fitness for purpose of the goods. In principle, if the parties have made clear that breach of such an express term should give rise to a right to terminate the contract, this stipulation will be given effect:³⁰⁶ there is no formal discretion in the court to refuse rescission for breach nor does the buyer lose the right after a ‘reasonable time’, though he can do so after knowledge of the right by renunciation.³⁰⁷ On the other hand, where the parties have not made clear whether or not the breach is intended to give rise to a right to rescind, the courts determine its availability according to whether the breach has substantially deprived the buyer of the benefit of the contract.³⁰⁸

The French law differs here in a number of respects. First, it distinguishes more sharply between the right of a buyer to reject the goods on delivery on the ground of their lack of conformity and to terminate the contract after receipt of the goods, return them and claim back the price.³⁰⁹ In French law, rejection of the goods on delivery must be on the ground of ‘contractual non-conformity’ since any ‘defect’ must be patent so as to give a buyer a reason for their rejection,³¹⁰ but it is not clear that a non-commercial buyer is entitled to reject the goods without first asking the court to ‘dissolve’ the contract.³¹¹ Here, as elsewhere, French law seeks to maintain the contract in the interest of protecting the right of a debtor (the seller) to perform.³¹² This looks very restrictive next to the English position, but it should be recalled that the buyer has the right in French law to require the delivery of conforming goods from the seller and so, on receipt of non-conforming goods, may demand their exchange, if necessary by action and court order: the creditor (the buyer) has a right to performance.

The French approach appears rather less restrictive than the English to termination of the contract on the ground of (latent) defects in the goods after they have been delivered, providing the action rédhibitoire of the garantie légale³¹³ for all categories of (p.260) buyer and all types of seller.³¹⁴ While until February 2005 in French law a buyer used to lose this right to terminate the contract after expiry of a bref délai,³¹⁵ in English law a buyer is likely to do so by ‘accepting’ the goods, which can be deemed to have occurred after a fairly short (‘reasonable’) period after their delivery.³¹⁶

Overall, however, English and French law have adopted very different policies in relation to the buyer’s remedies in respect of deficiencies in the goods, reflecting wider differences in relation to the relative interests of the parties on non-performance. In general, English law gives the buyer faced with breach of one of the statutory implied terms a free choice whether to repudiate the contract or claim damages, but no right to claim repair or replacement of the goods by the seller; if the buyer wishes to obtain a substitute performance, he need not and has no right to look to the seller, but must instead seek the substitute elsewhere, whether by replacement or repair. And if he does not terminate the contract, his remedy in damages may be limited to the difference in value of the goods as delivered and as they should have been.³¹⁷ If there is a hierarchy of remedies in respect of breach of the seller’s obligations, it is rejection of the goods first; damages second, with specific enforcement not featuring.

By contrast, French law, before the implementation of the Consumer Guarantees Directive, possesses two patterns of remedies, one under the ‘general law’, and in particular on the ground of ‘contractual non-conformity’, and one under the garantie légale. So, where a buyer claims that goods delivered fail to conform to the contract under the ‘general law’, in principle, he can claim delivery of a substitute: the buyer has the right to proper performance and the seller has a right to perform. Termination of the contract, with the concomitant loss of the seller’s right to perform and gain the price, must be sought from a court and may be refused;³¹⁸ similarly, non-commercial buyers must seek judicial authorisation before they can obtain a substitute for the goods elsewhere.³¹⁹ Otherwise, damages may be recovered in French law (subject to the conditions already set out) and are important for the recovery of consequential losses.³²⁰ Here, the traditional concern of French law to maintain performance of contractual obligations can be seen, termination and damages being seen as distinctly second-best for both parties.

By contrast, the garantie légale places termination of the contract (by the action rédhibitoire) at the forefront of its analysis and makes it generally available, supplemented by the more modest action aestimatoire which one can see as a partial rescission.³²¹ Of course, damages are important, especially for consequential damage, but they remain less widely available than termination. Under the garantie légale, therefore, the French hierarchy of remedy is much more like the English, the seller risking losing the contract for a short time after delivery of property with latent defects.