If you supply goods and services in the course of your business, then the supply will be governed by the Supply of Goods and Services Act 1982 (“the SGSA”). One result of this is that it is implied into every such contract that the goods supplied must be of satisfactory quality.
The quality of the goods is assessed by reference to what a reasonable person would expect, given the price and description of the goods and any other relevant circumstances.
The SGSA states that, when judging quality, the following factors should be taken into account:
- State and condition
- Fitness for all the purposes for which goods of the kind in question are commonly supplied
- Appearance and finish
- Freedom from minor defects
So, bearing all this in mind, how close to perfection must a completed job be to comply with the requirements of the SGSA? If the work has been finished subject to one or two snagging issues, will the contractor still be entitled to the contract price provided it rectifies the problems? This issue was explored in a recent case which, although decided by a Scottish court, applied the SGSA.
In one recent case, a contractor had installed windows at the customer’s property. The work was complete except for one or two defects, the estimated cost of repairing which amounted to around one sixth of the contract value. The contractor argued that “practical completion” (meaning that the work has been completed to an extent allowing the property to be used) had taken place and therefore that the work was to be regarded as satisfactory for the purposes of the SGSA. The contractor insisted that he was entitled to the contract price, less the estimated cost of repairs.
The court disagreed. It was decided that the existence of snagging issues that could be rectified at a cost of one sixth of the contract price meant that the work was not “satisfactory” under the SGSA. The concept of “practical completion” did not have a place in this type of dispute (though it might have if it had concerned a construction contract).
The point made in this case is that goods and services supplied under the SGSA must meet a fairly high standard to be considered “satisfactory” and goods that are “almost right” will not be good enough. If the goods supplied are anything less than satisfactory, the contractor cannot insist on being paid under the contract, even if it agrees to some reduction (although it would be open to the contractor to claim compensation for the work actually performed).
DDI – 0117 9453 042