Chapter 16 - Sales and Consumer Protection

Question 1

Sales of Goods Act

Answer 1

Primary Purpose: implies terms into contract

◦ Intended to fill the gaps in the terms of a contract
- Example: If the parties fail to specify a date for payment and time for delivery

Question 1

When does the Sales of Goods Act apply?

Answer 1

The Act applies only to the sale of goods:
◦ Tangible items – watches, books, animals, seeds etc.
◦ Once a good becomes attached to land, it is no longer a good and the Act does not apply
◦ Does not cover services unless the sale primarily involves the delivery of goods

Sale of Goods Act does not apply to:
◦ Real property
◦ Services (except when it involves the installation of goods)

Question 2

Hearns v Rizzolo

Answer 2

Facts: Rizzolo exchanged his jeep for Hearns’
Dodge. Unfortunately, the jeep had a lien
against it that Rizzolo had no knowledge of
when the transaction was made. The finance
company with the lien demanded payment
of $10,738.18 from Rizzolo which he paid and
sued Hearns for implied warranty under the
SGA that the vehicle would be free and clear
of all encumbrances.

Held: SGA did not apply as this was a trade
not a sale of goods. No funds were
exchanged.

Question 3

Title and Risk

Answer 3

◦ SGA = Risk follows title
◦ Sale: title transfers immediately
◦ Agreement to Sell: title transfers at some future time

Question 4

Rights and Obligations of the Parties

Answer 4

The Sale of Goods Act implies both conditions and warranties into the contract
Breach of a condition:
◦ Victim can ignore it and accept the goods (but loses the right of discharge), or consider themselves no longer bound to the contract
Breach of a warranty:
◦ Warranties are minor terms
◦ Victim is not released from obligations under the contract

Question 5

Obligations of Seller

Answer 5

Implied terms under Sale of Goods Act:
◦ Seller must convey good title and quiet possession

Goods must:
◦ Be usable
◦ Be free of liens
◦ Match description – i.e. online description and pictures
◦ Be of merchantable quality and fit for purpose
◦ Match sample and be free of hidden defects

Question 6

Sellers’ Remedies on Default

Answer 6

When buyer defaults seller can:
◦ Retain goods until paid
◦ Stop delivery of goods
◦ Recover goods after delivery within 30 days
◦ Seller gets priority over other creditors in case of bankruptcy
◦ Sue for breach of contract and for damages

Question 7

Consumer Protection

Answer 7

Consumer transactions involve goods for personal consumption rather than business use
- Imposes standards & responsibilities on manufacturers and suppliers of goods
- Vulnerability of consumers, imbalance of bargaining power

Question 8

What does Consumer Protection protect against?

Answer 8

◦ Consumer protection legislation controls
◦ False or exaggerated claims
◦ Investigation of complaints

◦ Unconscionable transactions
◦ Cost of borrowing money and unacceptable business
practices
◦ Prepaid Cards
◦ Legislation regulates expiry dates and fees
- Gift cards cannot have expiry dates

Question 9

Federal Legislation

Answer 9

◦ Competition Act
◦ Act is intended to prevent business activities that interfere with free market (i.e. Shaw/Rogers merger)

Question 9

Provincial Legislation

Answer 9

When products are defective and cause injury or loss consumers have recourse in either contract or negligence

Question 10

Controlled Business Practices

Answer 10

Consumer protection legislation also places controls
on:
◦ Door-to-Door Sales
◦ Legislation provides for cooling-off period
◦ Many other prohibited or controlled business