Business contract disputes – what you need to know

Business contract disputes are a common feature of commercial life and when they arise, parties do not always have a written contract to rely on. Where the contract is ambiguous or, where there is no contract, there are key pieces of legislation in which businesses can rely on: the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982. These Acts are crucial because, whilst the Consumer Rights Act 2015 now largely governs business-to-consumer transactions, the 1979 and 1982 Acts remain the primary legislation for business-to-business (B2B) contracts in respect of goods and services respectively. They introduce implied terms into contracts, even if not explicitly written, ensuring a baseline level of protection and expectation between commercial entities.

The Sale of Goods Act 1979

The Sale of Goods Act 1979 (SGA) applies specifically to contracts for the sale of goods.  Its core provisions imply several critical terms into such agreements. First, goods supplied must be of satisfactory quality, considering their description, price, and all other relevant circumstances.  Second, if a buyer makes known a particular purpose for which the goods are required and relies on the seller’s skill or judgement, there is an implied condition that the goods will be reasonably fit for that purpose. Third, where goods are sold by description, they must correspond with that description. Finally, the seller must have the right to sell the goods.

A breach of these implied conditions can lead to a dispute, allowing the aggrieved party to seek remedies such as damages or, in serious cases, contract termination.

The Supply of Goods and Services Act 1982

Where services are provided in a business-to-business context, the Supply of Goods and Services Act 1982 comes into play. It similarly implies terms into contracts for services. The service must be carried out with reasonable care and skill.  Where the time for carrying out the service is not fixed by the contract, it must be carried out within a reasonable time. Similarly, if the consideration for the service is not determined by the contract, the party contracting for the service must pay a reasonable charge.

Conclusion

These Acts provide a clear legal framework, and knowing your rights and obligations can help prevent disputes or resolve them swiftly and fairly when they do arise. That said, it is important to have the proper written contracts in place that are custom to your specific business.  Given the complexities inherent in B2B contracts, seeking proper legal advice is paramount when a dispute arises. B2B agreements often feature intricate clauses concerning liability, exclusion clauses and dispute resolution, making a breach challenging to navigate without expert guidance.

At Pinney Talfourd our experience spans a wide range of business sectors and different agreements that affect the daily running of your business. If you have a legal matter you would like to discuss, please reach out to a member of our Commercial Disputes team on 01277 283 707 or email