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III. The Sale of Goods Ordinance

The Sale of Goods Ordinance (“SGO”) provides that goods for sale must be:

  • Of merchantable (satisfactory) quality. Goods must meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price and all other relevant circumstances. The quality of goods includes their appearance and finish, their safety and their durability. Goods must be free from defects, even minor ones, except where these defects have been brought to your attention by the seller ( section 16 of SGO ).

  • Fit for their purposes, including any particular purpose mentioned by you to the seller. For example, if you are buying a CD player and you tell the seller that the player must also play DVDs, the seller must not give you a CD player that cannot read a DVD ( section 16 of SGO ).

  • As described on the package or a display sign, or by the seller. For example, if you are told that a shirt is 100% cotton, then it should not turn out to be cotton and polyester ( section 15 of SGO ).

  • Correspond with the sample. If you are making a bulk purchase and you were shown a sample of the goods before receiving the whole lot, the bulk shall correspond with the sample in quality. You should also be given the chance to examine the whole lot ( section 17 of SGO ).

If the sellers fail to meet any one of the above conditions, they are "in breach of contract". Under these circumstances, consumers are entitled to reject the goods and demand a full refund (see question below).

You should also note that under section 36 of the SGO , the buyer has the right to be given reasonable time to inspect the goods.

"Goods" as defined in the SGO

The term "goods" is defined under section 2(1) of the SGO as personal property other than things in action ( which includes cheques, debentures or share certificates) and money. Personal property should also be distinguished from, and does not include, “real property” (which includes real estate such as land, buildings and flats).

"Consumer" as defined in the SGO

You are a "consumer" under section 2A of the SGO if:

  1. you neither make the contract in the course of a business (a commercial transaction) nor hold yourself out as doing so;
  2. the other party does make the contract in the course of a business (a commercial transaction); and
  3. the goods passing under or in pursuance of the contract are of a type ordinarily supplied for private use or consumption.

In other words, you are dealing as a "consumer" if you purchase goods from a businessman or a company for your private use (you are the end user) but not for business purposes (such as resell to another party for profit making).

The goods that I have ordered are delivered to me in poor condition. Can I reject the goods and ask for a refund?

Generally speaking, sellers have a duty to deliver the goods and buyers have a duty to accept and pay for the goods in accordance with the terms of the contract. Section 37 of the Sale of Goods Ordinance provides that buyers are deemed to have accepted the goods when:

  • they tell or intimate to the sellers that they have accepted the goods;
  • when the goods have been delivered to the buyers and they act in relation to the goods in a manner which is inconsistent with the ownership of the sellers (e.g. the buyers claim that they are the owners and then resell the goods); or
  • after a reasonable time they retain the goods without intimating to the sellers that they have rejected the goods (whether a “reasonable time” has elapsed can be determined by whether the buyers had a reasonable opportunity to examine the goods).

Rejection of Goods

You are entitled to reject the goods and get your money back if the goods:

  • are faulty;
  • are not of satisfactory quality;
  • do not match their descriptions; or
  • are different from the ones you ordered.

In order to make a valid rejection, there must be a clear indication that the goods were not accepted and remain at the risk of the seller (i.e. the buyer takes no responsibility for the goods). You should call the seller immediately, return the goods by yourself, or ask the person who delivered the goods to take them back.

Under section 38 of the Sale of Goods Ordinance , where goods are delivered to the buyer, and the buyer refuses to accept them with a lawful reason (e.g. the goods are not of satisfactory quality), that buyer is not bound to return them to the seller (although he may still do so). It is sufficient if that buyer intimates to the seller that he refuses to accept them.

A clear and prompt rejection is particularly important if you are not buying at a shop or on the spot. For instance, when you are ordering by phone, fax or on the internet, you don't get to see the products until they are delivered to you, and often you have to pay in advance.

Return of Goods

If you find out some problems on the goods after accepting them , you may not be entitled to return the goods and demand a full refund. However, you can sue the seller for compensation if the seller refuses to replace the goods with the new ones.

Delivery

The seller must deliver your goods by the agreed date. The seller should let you know if the goods can't be delivered on time. If the date for delivery has passed and you haven't received anything, you may treat it as though you had never placed the order (if you have previously emphasized that punctual delivery is necessary). If you have already paid, demand a full refund.

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