Chapter 9: Sale of Goods & Consumer Protection Law Flashcards
1
Q
9.1 The sale of goods &
A
- Consumer: Purchaser who is the end user of goods.
2
Q
9.2 Nature of a Contract of sale of goods.
A
- In a contract for sale of goods the title (right of ownership) passes to the buyer immediately whereas in an agreement for sale, title passes at a later time.
- The act applies for movable property sold for money consideration but not for services.
- The parties should specify when title will pass since risk of loss generally follows title.
- Unless otherwise specified, goods not in a deliverable state remain at seller’s risk.
3
Q
Transfer of Title.
Figure 9-1.
A
- 5 Rules of Sale of Goods:
- *Rule 1-Unconditional contract for specific goods in a deliverable state: property passes to the buyer at the time the contract is made.
- *Rule 2-Contract for specific goods but the seller must do something to make goods deliverable: property passes when such thing is done and the buyer has received notice.
- *Rule 3-Contract for specific goods but the seller must ascertain price: property passes when the ascertainment is complete and the buyer has received notice.
- *Rule 4-Contract for specific goods on approval: property passes when the buyer approves, accepts or adopts the goods, or when the buyer retains them beyond a specified reasonable time.
- *Rule 5-Agreement to sell for unascertained goods of goods not yet produced: property passes when the goods ordered by description are put into a deliverable state and unconditionally appropriated to the contract , either by the seller or (with the seller’s consent) by the buyer.
4
Q
9.3 Conditions & Warranties.
A
- Implied conditions under the Sale of Goods Act include essential terms such as the seller having title to the goods, the time for delivery, goods corresponding to the description or to the sample, and goods being free of any defects.
- Condition: Essential/Fundamental term in a contract.
- Warranties: Minor terms, and a breach of warranty under the Sale of Goods Act would give rise to a claim for damages, although not a recession.
5
Q
9.4 Caveat Emptor “Let the buyer beware”
A
- Concept that assumes that in business, when a purchaser has the opportunity to examine goods, he/she has the ability to discern whether they are fit for the intended purpose.
- The Sale of Goods Act specifies that where the seller is in the business of supplying a particular line of goods, where the buyer makes known the reason he/she wants such goods, an implied condition the goods will be fit for the buyers purposes.
6
Q
Exception Clauses and Consumers.
A
- The implied conditions of the Sale of Goods Act can be excluded when the business elect to do so; however, when a consumer is one of the parties the use of exemption clauses is restricted.
- Legislation provides further protection for the consumer: verbal warranties or conditions not expressed in writing but made at the time of the sale are binding on the seller; and a cooling off period is permitted for door sales giving a consumer a chance to change his/her mind.
7
Q
9.5 Contractual Duties of the Buyer.
A
- The buyer has the obligation to examine goods provided on approval and take delivery of goods ordered.
- Since there are multiple forms of payment arrangements, payment is usually regarded as a warranty rather than a condition unless is specified as a condition in the contract.
- If there is fundamental breach by a seller, rescission is available as a remedy to the buyer.
8
Q
Other Remedies of the Buyer.
A
- Damages are available for a breach of warranty by the seller, but he/she is not entitled to repudiate the contract.
- If the goods are unique and could not readily be obtained elsewhere following an award of damages, a court may issue an order for specific performance requiring the seller to perform the promised contract.
9
Q
Remedies of the seller.
A
- If the seller is still in possession of the goods, he/she still may place a lien on them, giving him/her a right to hold the goods as security until the obligation of the buyer is fulfilled.
- If on the other hand, the seller has delivered the goods/title, the buyer may bring an action for the price.
- Ordinary damages for breach of a condition may also be sought by the seller when there has been non acceptance of the goods by the buyer.
- The seller can resell the goods to someone else and proceed to sue the buyer for lost profit.
- Retention of the deposit by the seller as liquidated damages is permitted when a buyer refuses to perform as promised.
- Stoppage in transit may occur when a common carrier is in the process of delivering the goods to the buyer but is intercepted by a message from the seller and requested to return when the seller discovers that the buyer is not meeting debts.
- Bankruptcy and Insolvency Act lets the seller recover delivered goods within 30 days.
- Resale of the goods after repossession is permitted if the buyer does not make payment.
10
Q
9.7 Consumer Protection Legislation.
A
- A consumer is someone making a purchase for personal use, not for resale to a customer.
- Consumer protection legislation prevents sellers from using exemption clauses attempting to preclude liability for implied conditions on the sale of goods; also, requires sellers to warrant that equipment sold to consumers would function for a reasonable period of time.
11
Q
9.8 Consumer Safety.
A
- There is Federal/Provincial/Territorial legislation to control products that might cause harm to consumers.
- The Foods and Drugs Act imposes strict liability on manufacturers for false or deceptive labelling.
- The Hazardous Products Act regulates the handling of extremely dangerous products which must bear warning symbols on the packaging.
12
Q
9.9 Consumer Information.
A
- Consumer legislation is designed for the purpose of allowing consumers to make direct comparisons of products and prices and enable them to make their own determinations/selections.
- The Weights and Measures Act creates uniform system for comparison of products and the Consumer Packaging and Label prevent public from being misled by improper product packing.
13
Q
9.10 Product Quality & Performance.
A
- New Brunswick and Saskatchewan have expanded buyer’s rights and seller’s obligations for goods that do not deliver a reasonable level of performance of durability.
- Similarly the Canadian Motor Vehicle Arbitration Plan (CAMVAP) disputes resolution process for owners of new vehicles still under warranty, helps consumers achieve satisfaction from manufacturers of vehicles which have turned out to be defective.
14
Q
9.11 Consumer Protection Related to Business Practices.
A
- Itinerant or Direct Sellers may pose a special problem for consumers since the selling occurs at the prospective buyer’s residence, making it difficult for the consumer to walk away.
- Direct sellers are required to be licensed or registered, and a cooling off period of 2-10 days is allowed for consumers to change their minds without liability when they have entered contracts in these circumstances.
15
Q
Unfair Business Practices
A
- One of the goals of Consumer Protection Legislation is promoting fair competition among merchants.
- It also prevents false/misleading statements designed to induce consumers into unconscionable contracts.
- It allows rescission and damages, and punitive damages as well for inequitable/unconscionable transactions.
