ABSTRACT
[10.01] Introduction. This book is concerned for the most part with contracts for the supply of goods 1 and loans taken out to finance such acquisitions. 2 Apart from the special rules for auctions (see para 10.10 ), in the fundamentals of contract the SGA simply refers back to general contractual principles (s 62(2)); most related Acts do not even bother to include such a cross-reference, e.g. SOGIT; CCA; UCTA; SGSA; but there are some special rules for website sales ( para 10.09A ). The general rules as to the formation of contract will be found in the standard works 3 but their application in the present context requires mention as follows:
Agreement. There will be considered below the process of agreeing (see para 10.02 , et seq.), mistake (see para 10.14 ) and invalidity (see para 10.18 ). Into that agreement, written terms may be incorporated (see para 18.04 ): if a party is foolish enough to accept (say) harsh standard terms (see para 11.08 ), prima facie at common law he is bound by them; 4 but he may be able to escape those terms under the Unfair Terms in Consumer Contracts (UTCC) Regulations (see para 11.12 , et seq.). In a supermarket, where the contract is usually made at the check-out, 5 the price is likely to be charged according to a bar code (see para 2.06 ). As to advertisements, see para 8.05.
Consideration. Whilst consideration is not required for a deed (see para 9.01 ), in the case of a simple contract to supply goods, consideration is likely to take the form of price, rent or goods taken in part exchange (see respectively paras 2.06, 1.18and2.09 ). At common law, only one who provides that consideration will be privy to the contract. This rule has two aspects:
The burden of the contract. Only a person who is a party to the contract is subject to its burdens, a rule which will be relevant as regards restrictions on the use of goods which purport to bind a sub-buyer (see para 2.14 ) and exemptions (see para 18.05 ).
The benefit of the contract. Whilst at common law, disregarding agency (see para 10.06 ) and assignment (see para 7.17 ), usually only the promisee can enforce the benefit of a contract against the promisor, for our purposes there are three important statutory exceptions: (i) deemed agents (see para 10.24 ); (ii) connected lenders (see para 16.11 ); and (iii) named beneficiaries (see para 17.08 ).
Intent to create legal relations. Where an agreement is made between businessmen, it is presumed that they intend to enter a binding contract, 6 though this may be negatived. 7 At the other end of the scale, a domestic arrangement to exchange goods for cash is more likely to constitute reciprocal gifts (as to gifts, see para 2.08 ). Advertisements may fall either side of the line. 8 Further, goods supplied under a statutory obligation may not give rise to contractual obligations, e.g. drugs dispensed under the NHS (see paras 1.07and4.29–30 ).
Governed by English law. Where a contract has an international flavour, it will not necessarily be enforced by English law, but perhaps by another legal system, e.g. of Scotland, Germany or the United States. This issue is determined by the Conflict of Laws rules governing (i) the courts and (ii) the law applicable, which may differ where one of the parties is outside the jurisdiction. In the consumer context, these Conflict rules are most likely to affect supplies where the contract is made by way of the internet. 9 On the other hand, these Conflict rules may be ousted where the parties show a contrary intention (see para 18.13 ); and many suppliers to consumers are likely to take advantage of such an opt-out in a consumer contract, as by a standard-form provision (a choice of laws clause) that a contract with a Scottish consumer is to be governed by English law. 10 Such a choice of laws clause in a consumer contract may be struck down as being an unfair term. 11 For reform proposals, see para 18.27.
