By Makeda Brown - Law Student @ Queens' College, Cambridge
The Sale of Goods Act 1979 (SGA 1979) is a key governing statute in commercial law, providing a standardised framework for the buying and selling of goods between businesses, thus regulating trade. The Act defines the sale of goods as “…a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.”
Initially, this provision appears straightforward. However, in an era with exponential technological developments, we must question what counts as ‘money consideration’ and whether retaining this requirement is suited to the 21st century.
Commonly, the money which we discuss refers to standard fiat currency (i.e., pounds and pence). Halsbury’s Laws of England (Vol. 49) argues that:
“The modern concept of ‘money’…is legal tender, issued by a sovereign government or central bank which is universally accepted as…payment for goods and services.”
Cryptocurrencies such as Bitcoin and Ethereum do not fit this definition of ‘money’ as:
In England and Wales, they are not currently recognised as legal tender,
Their appeal lies in the fact that they are not issued by sovereign governments or central banks,
They are not yet universally accepted as payments for goods and services; and
It may also be worth noting that cryptocurrencies are not yet regulated by the Financial Conduct Authority.
Taking Halsbury’s Laws at face value, the debate appears settled – companies cannot pay for their goods using cryptocurrency under English law. Yet, we are not considering whether companies could currently use cryptocurrency to pay for goods. Whilst courts in England and Wales have been hesitant to pass judgement, judges in other countries, for example the USA, appear to support the view that cryptocurrency may equate to money:
“…Bitcoin can be used as money. It can be used to purchase goods or services…The only limitation of Bitcoin is that it is limited to those places that accept it as currency.” (SEC v Shavers [2013], Judge Mazzant)
Thus, global developments - El Salvador announced its recognition of Bitcoin as legal tender in June 2021 - and judicial commentary suggest that paying for goods using cryptocurrencies may be decreasingly science fiction and increasingly science fact.
Ultimately, whether the law should recognise Bitcoin as satisfying s.2(1), requires the following questions to be considered:
Should ‘money’ include more than fiat currency in the 21st century?
If a key objective of the SGA is to regulate commercial trade, can we achieve this by allowing the use of an unregulated commodity to pay the price of goods?
Could this debate be settled by judicial development of the law, or would it require legislative intervention from Parliament?
Further reading:
Halsbury's Laws of England, Vol. 49
Sale of Goods Act, 1979