Sub-contractors and Suppliers - Scottish Construction Contracts - page 285

whichconnectsthemaincontractor'sabilitytodeductdiscountwithpromptpayment,
the courts are likely to view the discount as being no more than a reduction in the
sub-contract price, see Team Services plc v. Kier Management and Design Ltd (1993).
11.11 Suppliers
Contracts of supply or sale are regulated by the Sale of Goods Act 1979, as amended by
the Sale and Supply of Goods and Services Act 1994. In terms of s.14 of the 1979 Act
as amended by s.(1) of the 1994 Act, there is an implied term that the goods supplied
under a contract of supply or sale are of 'satisfactory quality'. The quality of goods is
deemed to include their state and condition and, in appropriate cases, their fitness for
allthepurposesforwhichgoodsofthekindinquestionarecommonlysupplied,their
appearance and finish, their freedom from minor defects, their safety and their dura-
bility. Fitness for purpose can also include supplying goods that comply with Building
Regulations, see Lowe & Anor v. WMachellJoineryLtd (2011).
If the purchaser has made known the purpose of the goods, then the implied con-
dition of fitness for purpose can only be discharged by evidencing that the purchaser
did not rely on, or that it is unreasonable for him to rely on, the skill or judgement of
theseller.heCourtofAppealcaseof BSS Group Plc v. Makers (UK) Ltd (2011) held
that the onus is on the seller to show that this exception applies, and it may be difficult
where the seller is a 'specialist' dealer.
11.12 Retention of title clauses
Suppliers' terms and conditions commonly include a retention of title clause. The
object of such a clause is to protect the supplier against the insolvency of its customer
by delaying the passing of ownership of the goods in question to the customer until
paymenthasbeenmade.Otherwise,theownershipofthegoodswillnormallytransfer
upon delivery, by virtue of s.17 of the Sale of Goods Act 1979.
Section 19 of the Sale of Goods Act 1979 permits a seller to retain ownership of
goods, notwithstanding delivery to the purchaser, in the event that the parties to the
contract expressly provide that change of ownership is to be conditional. The most
obviousconditionwill,ofcourse,beastopaymentoftheprice.Section19isarestate-
ment of the position at common law and under the Sale of Goods Act 1893. The
period between the mid-1970s and 1990 saw considerable litigation on the subject
of retention of title clauses, starting with Aluminium Industrie Vaassen BV v. Romalpa
Aluminium Ltd (1976) and ending with Armour v. hyssen Edelstahlwerke AG (1990).
In the latter case, the House of Lords held that 'all sums' retention of title clauses were
efectiveinScotland,ashadbeenthecaseinEnglandforsometime.Priortothe
decision by the House of Lords, the Scottish courts had restricted the applicability of
retention of title clauses to the extent that they reserved title to the seller of goods in
the event that the purchase price for those goods had not been paid. The courts had
refused to give effect to retention of title clauses which purported to reserve title to the