Lee Chai

Boon

ADVOCATES & SOLICITORS

Commissioner for Oaths Intellectual Property Lawyers
Corporate & Commercial Lawyers
______________________________________________________________________________________
7th September 2010

In the
cour
se
of
busi
nes
s In the course of a business
The phrase in the course of a business A1 is
used to:
a)
place liability in respect of implied
conditions in the supply and/sale of
goods under the Sale of Goods and
Supply of Goods Act1;
b)

define a person dealing as consumer

that in turn depends on the consumer
not acting in the course of a business
vis--vis the supplier who does so act in
the course of a business 2 .

The width attributed to this phrase can therefore

work simultaneously to benefit and prejudice the
buyer. A wider meaning given to in the course of
a business for implied conditions under sections
14(2) and 14(3) of the Sale of Goods Act
improves helps consumers as there is a greater
scope for these conditions of quality to be
imposed on the supplier. By this token, the same
interpretation would potentially affect whether
the buyer acted in the course of a business, one
of the elements of the issue of the buyer dealing
as consumer under section 12(1) of the Unfair
Contract Terms Act.

Different interpretations to in the course

of a business

In effect, the English courts have given different

interpretations to in the course of a business
under sections 14(2) and 14(3) of the Sale of
Goods Act and section 12(1) of the Unfair
Contract Terms Act.
Under section 12(1) of the Unfair Contract Terms
Act, to determine whether a buyer entered into
the contract of sale (or contracts for transfer or
hire of goods)3 in the course of a business, the
test is whether the transaction entered into was
an integral part of the business carried on by the
buyer.4 If the buyer enters into the transaction
not in the course of a business, he does not deal
as consumer pursuant to the Unfair Contract
Terms Act.4A An one-off adventure in the nature
of trade carried through with a view to profit may
be an integral part of the business and thus be
carried in the course of the business5. Other
transactions that may otherwise be only
incidental in the carrying on of the business may
become integral to the business due to degree
of regularity in the transactions6.

Narrow meaning
The English courts have taken a narrow view of
when a buyer is deemed to have entered the
transaction in the course of a business 7. For a
freight-forwarding company that bought for a car
for both the personal use of its executive as well
as for company use and signed the agreement
in its name, the company was held not to be
dealing as consumer under the Unfair Contract
Terms Act as the purchase was merely
incidental to its business, and the necessary
degree of regularity had not been established,
and also the company had not held itself out as
making the contract in the course of business.8
Even if a company had signed a form stating
that they would be using the car for the
purposes of their business, this did not make it a
transaction entered into by the company in the
course of its business.8A This meant that the
implied contractual term purporting to exclude
liability for fitness for purpose was not of effect.9
Under this test, it is the transaction and not the
goods that must be integral to the business.10

Lee Chai

Boon

ADVOCATES & SOLICITORS

Commissioner for Oaths Intellectual Property Lawyers
Corporate & Commercial Lawyers
______________________________________________________________________________________

Even where a car is used almost exclusively by

the owner for the purpose of his
business as a self-employed
courier, the sale of the car with a
false trade description to the car
was held not to be a sale in the
course of business as the owner
business had no practice of
buying and selling cars which also
did not constitute stock-in-trade 11.
Where vehicles were purchased
with a view to selling them at a
profit, they were held to have
been entered into in the course of
a business under the UK hirepurchase legislation, though at
the time of purchase, the
purchaser had not yet taken any
formal steps to set himself up as
a motor dealer 12.

Wide meaning
For whether seller supplied in the course of a
business pursuant to section
14(2) of the Sale of Goods Act,
the English courts have adopted a
wide meaning of in the course of
business13.
So the sale of a
vessel by a seller who carried on
the business of a fisherman was
held to have sold the vessel (used
in the business) in the course of a
business.14 (The seller had sold
the vessel with a view to getting a
replacement for his business.)
This was so even though a strict
application of the narrow view of
in the course of a business
would have yielded a different
result15. This was justified by the
need to extend wider protection to
a
consumer
following
the
amendment of the Sale of Goods
Act.16 The court noted that to have
held that the sale of the very
asset without which the seller
could not have carried on his
business (with the intention of
purchasing a replacement for the
purpose
of
continuing
his
business) was not a sale made in
the course of a business, would

have yielded a curious result and

so declined to do so.17
The Singapore High Court, in interpreting s
14(2) appears to favour a narrow approach,
citing a seller, whose normal vocation being not
the selling of the product or thing, selling the
product as not something done in the course of
a business.18
___________________________________________________________

A1. Other references to things done or to be done by a

person in the course of a business include the
Unfair Contract Terms Act s 1(3), Sale of Goods
Act s 14(2) (satisfactory quality), s 14(3) (fitness
for purpose), s 14(5) (person acting as agent) and
the Supply of Goods Act ss 4(2), 9(2) (satisfactory
quality), 4(4), 9(4) (fitness for purpose), 4(8), 9(8)
(person acting as agent). See further [60.142],
[60.130], [60.132]. It may be observed that the
Unfair Contract Terms Act s 1(3) defines business
liability as that arising for breach of obligations or
duties arising from things done or to be done by a
person in the course of a business (whether his
own business or anothers). Business is defined
in s 14 as including a profession and the activities
of any Government department or local or public
authority. Accordingly, ss 27 (except for s 6) do
not apply to any dealings between two persons
who both do not transact in the course of any
business, for instance, a person selling his
personal furniture items in a private sale to
another who buys for use in his residence.
Generally, it may be said that the Unfair Contract
Terms Act covers either transactions between a
consumer and a non-consumer or between two
non-consumers (i.e. a businessmen acting in the
course of business). See however, s 6(4) which
extends the scope of s 6 to include liability arising
under any contract of sale of goods or hirepurchase agreement. Where an agent sells goods
on behalf of a principal, it is the principal who is
the seller under normal principles of agency. It
would be whether the principal (and not the agent)
is acting in the course of a business which
determines whether s 12 is satisfied, unless the
principal sells the goods to the agent who then resells the same.
1.

Sale of Goods Act (Cap 393, 1999 Ed) s 14(2), (3),

(5) (contracts for the sale of goods) and Supply of
Goods Act (Cap 394, 1999 Ed) s 4(2), (4), (8)
(contracts for the transfer of goods); s 9 (2), (4),
(8) (contracts for the hire of goods).

2.

Sale of Goods Act (Cap 393, 1999 Ed) s 61(4A)

(incorporates by reference to the section 12 of the
Unfair Contract Terms Act (Cap 396, 1994 Ed) the
definition of dealing as consumer)and Supply of
Goods Act (Cap 394, 1999 Ed) s 18 (4)

Lee Chai

Boon

ADVOCATES & SOLICITORS

Commissioner for Oaths Intellectual Property Lawyers
Corporate & Commercial Lawyers
______________________________________________________________________________________
(incorporates by reference to the section 12 of the
Unfair Contract Terms Act (Cap 396, 1994 Ed) the
definition of dealing as consumer).
3.

For contracts of transfer or hire of goods, similar

provisions under the Supply of Goods Act (Cap
394 1999 Ed) would apply.

4.

R & Customs Brokers Co Ltd v United

Dominions Trust Ltd [1988] 1 WLR 321 at pp
330E-331C. But note in Peter Symmons & Co v
Cook (1981) 131 NLJ 758, it was held with respect
to the Unfair Contract Terms Act 1977 (UK) s 12
(the English equivalent to the Singapore Unfair
Contract Terms Act s 12), that buying must
form at the very least an integral part of the
buyers business or a necessary incidental thereto
(per Mr RH Rougier). See also Rasbora Ltd v JCL
Marine Ltd [1977] 1 Lloyds Rep 645 (sale of
power boat from boat builders to private buyer
held to be a consumer sale under the Sale of
Goods Act 1893 (UK) s 55(7) which is equivalent
to the Unfair Contract Terms Act s 12). R & B
Customs Brokers has been affirmed by the recent
case of Feldarol Foundry Plc v Hermes Leasing
(London) Ltd [2004] EWCA Civ 74 7. See also
Rasbora Ltd v JCL Marine Ltd [1977] 1 Lloyds
Rep 645 (Sale of Goods Act 1893 (UK) s 55(7)
which is equivalent to the Unfair Contract Terms
Act s 12).

4A.

See section 12(1) of the Unfair Contract

Terms Act
(Cap 396 1994 Ed)

5.

R & Customs Brokers Co Ltd v United

Dominions Trust Ltd, see note 4 above.

6.

R & Customs Brokers Co Ltd v United

Dominions Trust Ltd, see note 4 above.

7.

R & Customs Brokers Co Ltd v United

Dominions Trust Ltd [1988] 1 WLR 321 approving
and adopting the test in Davies v Sumner [1984] 1
WLR 1301, the latter case dealing with the UK
Trade Descriptions Act 1968 s 1(1)(a) that
provides that: Any person who, in the course of a
trade or business, - (a) applies a false trade
description to any goods; or (b) supplies or offers
to supply any goods to which a false trade
description is applied; shall, subject to the
provisions of this Act, be guilty of an offence.
Section 1 of the UK Trade Descriptions Act 1968
has a Singapore equivalent in the Consumer
Protection (Trade Descriptions and Safety
Requirements) Act (Cap 53, 1985 Ed) s 4) dealing
with an analogous point, ie the phrase in the
course of a trade or business (see also Havering
London Borough Council v Stevenson [1970] 3 All
ER 609, [1970] 1 WLR 1375, DC; Wycombe
Marsh Garage Ltd v Fowler [1972] 3 All ER 248,
[1972] 1 WLR 1156, DC).

8.

R & Customs Brokers Co Ltd v United

Dominions Trust Ltd [1988] 1 WLR 321 at pp
326G- 327A, 328H-329A, 330E-331C, 333H,

336H. The stating in the finance application form

of the company business details of the company
and the company business , and the number of
years of trading, and the number of employees,
and the directors names and addresses was not
enough to constitute a dealing in the course of a
business (at p 328H-329A ).
8A. Feldarol Foundry Plc v Hermes Leasing (London)
Ltd [2004] EWCA Civ 747. In this case, where a
company in the aluminium foundry industry hirepurchased a car for its chairman/ managing
director, this was held to be a transaction
undertaken by the company not in the course of a
business, and to that extent, the company dealt as
a consumer, and the exclusion clause was invalid
under the Unfair Contract Terms Act s 6(2). The
Court of Appeal rejected the attempted distinction
that the company in R & B Customs Brokers was a
one-man private company and that the company
in this case was a public company whose books
must have recorded the car as part of its assets.
See fn. 4 above.
9.

See section 6(2) of Unfair Contract Terms Act (Cap

396, 1994 Ed).

10. Stevenson v Rogers [1999] QB 1028 at p 1042C

11. Davies v Sumner [1984] 1 WLR 130, a case
approved by R & Customs Brokers Co Ltd v
United Dominions Trust Ltd [1988] 1 WLR 321.
Curiously, though, in R & Customs Brokers Co
Ltd v United Dominions Trust Ltd, the courts gave
instances of transactions that would constitute
dealings in the course of its business: a) where a
company that runs a grocers shop buys a new
delivery van; b) whether a merchant bank buys a
car as a company car as a perquisite for a senior
executive employee; and c) where a farming
company buys a landrover for the person and
company use of a farm manager (at p 329B-C).
Under the Davies v Sumner standard, these would
not be dealings in the course of a business.
12. G E Capital Bank Ltd v Rushton [2006] 1 WLR 899
(dealing with the Hire-Purchase Act 1964 (UK) and
approving Davies v Sumner, and R & Customs
Brokers Co Ltd v United Dominions Trust Ltd.
13. Stevenson v Rogers [1999] QB 1028 at pp 10411042
14. Stevenson v Rogers [1999] QB 1028
15. In Stevenson v Rogers [1999] QB 1028, Potter LJ
remarked that had the [trial] judge .been correct
to apply the reasoning in Davies v Sumner [1984]
1 WLR 1301 to the sale of the Jelle, then I
consider that he was entitled to come to the
conclusion which he did (at p 1042 A-B).
16. Section 14 of the Sale of Goods Act (UK) was
amended by Supply of Goods (Implied Terms) Act

Lee Chai

Boon

ADVOCATES & SOLICITORS

Commissioner for Oaths Intellectual Property Lawyers
Corporate & Commercial Lawyers
______________________________________________________________________________________
1973 (UK): see Stevenson v Rogers [1999] QB
1028 at pp 1041F-G per Potter LJ.
17. Stevenson v Rogers [1999] QB 1028 at 1042B per
Potter LJ. The divergence in the varying
interpretation of in the course of a business as
applied to the buyer and seller becomes more
obvious in the following scenario. A seller sells his
boat (used in his business as a fisherman) to a
aluminium foundry company that buys it for the
use of its chairman. Here, on the seller side, he is
selling the course of his business (for SOGA
section14(2)), although this is a one-off sale. On
the buyers side, he is not buying in the course of
a business as this is a one-off purchase (for
whether there is a consumer transaction under
UCTA s 12(1)(a)). Note Potter LJ in Stevenson v
Rogers [1999] QB 1028 when he stated at p 1041
F: [a]s to the proper construction of section 14(2),
given the clear view which I have formed, I do not
consider it right to displace the construction simply
to achieve harmony with a decision upon the
meaning of section 12 of the Unfair Contract
Terms Act.
18. Darwish MKF Al Gobaishi v House of Hung Pte
Ltd [1998] 3 SLR 435 at para 92 (the court gave
the instance of lawyer selling his office computer
as not selling in the course of a business).As to
whether the seller deals in the course of a
business for derivative goods (ie products derived
from his goods), see Khong Seng v Ng Teong Kiat
Biscuit Factory Ltd [1963] MLJ 388 at 391 per Gill
J and Turnar v Mucklow (1862) 6 LT (NS) 690.

by Jeffrey Lee
For further enquiries please email:
jeffreylee@leechaiboon.com