Scope of the Acts

Question 1

“Goods” as defined in section 1 of the Sale of Goods Act

Answer 1

“Goods” means all chattels personal, other than things in action and money

Question 2

What is a contract of sale of goods under section 2(1) of the Sale of Goods Act?

Answer 2

a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for money consideration, called the price

Question 3

Does the buyer have to pay money if the goods are expressed in monetary terms?

Answer 3

No, the buyer does not have to pay money if goods are expressed in monetary terms (Messenger v Greene)

Question 4

Messenger v Greene

Answer 4

Sale vs Barter

1. RULE: Sales includes all agreements by which property is parted with for valuable consideration, whether there be a money payment or not, provided the bargain be made and the value measured in money terms.
2. FACTS: Store owner sues D under agreement they had where P provided groceries if D provided pulpwood at set value.
3. REASON: Agreement governed by SGA. Value was in monetary terms, an account was kept, and there was outstanding money owed. Court interprets this as P agreeing to sell provisions if D agrees to sell and P agreed to buy pulpwood approx. the value of the bills.

Question 5

What does an agreement to buy need to be considered a contract for sale of goods?

Answer 5

A legal obligation – ability to revoke is not enough (Helby v Matthews)

Question 6

Helby v Matthews

Answer 6

Leases

1. RULE: An agreement to buy “if he does not change his mind” is not an agreement to buy
2. FACTS: P owned piano he gave possession of to D. D sold it to pawnbroker. Contract: unless full sum paid, piano is still P’s. D could terminate P’s lease at any time.
3. REASON: An agreement to buy imports is a legal obligation to buy. But all D undertook was to make payments so long as he kept the piano, which is a lease. This is not a contract for sale of goods, so the pawnbroker cannot rely on “buyer in possession” protections.

Question 7

What governs contracts for skill and labour?

Answer 7

The common law and the Consumer Protection Act (Borek v Hooper)

Question 8

Borek v Hooper

Answer 8

Work & Materials

1. RULE: At common law, a person hired to do work has an implied warranty that the materials used to carry out the job will be of good quality and reasonably fit for purpose.
2. FACTS: Custom painting made for P started yellowing after 3 years.
3. REASON: Case law interpreted contract for skill and labour as one where certain materials pass to the P as ancillary to the main contract.

NB: Case predates SGA provisions. CPA came into force after and contains provision stating that the quality in a contract for services must be satisfactory.

Question 9

How does a court determine whether a contract is for goods or services?

Answer 9

A court will establish whether the substance of the contract was the SKILLS AND LABOUR involved or the GOODS THEMSELVES (Keillian West v Sportspage Enterprises)

Question 10

Keillian West v Sportspage Enterprises

Answer 10

Work & Materials

1. RULE: To determine whether a contract is for goods or services, a court will establish whether the substance of the contract was the skills and labour involved or the goods themselves
2. FACTS: Contract for $20k pamphlets with a personal guarantee to pay outstanding amounts.
3. ISSUE: Is this a contract for goods or services? If services, not covered by SGA.
4. REASON: A work of art is likely to depend more on skill and judgment of the artist than on the actual materials involved, but this was not the case here. No evidence that the work/skill as opposed to the pamphlets themselves were material to the success of the softball tournament
5. HELD: The contract was for the delivery of completed chattels in which the chattels themselves were more important that the skill applied to their production

Question 11

What kind of contract is the sale of food?

Answer 11

Sale of food is a contract for goods and requires implied warranty of fitness (Gee v White Spot)

Question 12

Gee v White Spot

Answer 12

Work & Materials

1. RULE: The sale of food is a contract for the sale of goods and there is an implied warranty that it be reasonably fit for human consumption
2. FACTS: P claims damages for poisoning he suffered at WS.
3. REASON: Case law has moved away from Old Innkeeper rule and regard it as a sale of goods. The person ordering is liable to pay for it, so it follows that there is a warranty that it is reasonably fit for consumption.

Question 13

What is a “mercantile agent” under section 1 of the Factors Act?

Answer 13

mercantile agent is someone who in the customary course of business as an agent has authority to sell goods or consign goods for the purpose of sale, or buy goods, or raise money on security

Question 14

Are there any limits on the validity of dispositions made by a mercantile agent (section 2(1) of the Factors Act)?

Answer 14

where they have consent of owner, any disposition made in the ordinary course of business is as valid as if the agent were expressly authorized

Question 15

When can the true owner recover their possessions from an agent (section 9(2) of the Factors Act)?

Answer 15

the true owner has the right to recover possession at any time before the disposition or ask for the money they are lawfully entitled to

Question 16

Discuss the case that applies s 2(1) of the Factors Act?

Answer 16

(Consignment, Sale & return)
Weiner v Harris
1. RULE: If you entrust goods to a mercantile agent with the understanding that they will sell on your behalf, any sale or pledge is as valid as it you did it.
2. FACTS: P manufactured jewellery that the D pawnbroker received from F, who was employed as mercantile agent.
3. REASON: No person who is a mercantile agent can buy what he is instructed to sell – his right is to pledge the goods under the Factors Act. F acted contrary to this, but the pawnshop was not aware so they acquire good title.
4. ALSO: The mere fact that the contract says “sale or return” is not conclusive of the nature of the contract. This was not a true sale and return clause b/c F did not have the right to buy because he was an agent.
5. HELD: Pawnbroker took valid title to the goods.

Question 17

Can you determine an arrangement merely by the parties calling it “consignment”?

Answer 17

No - the term consignment is not conclusive of arrangement, must look to the parties’ conduct (In re: Richardson)

Question 18

In re: Richardson

Answer 18

Consignment, Sale & Return

1. RULE: Term “consignment” is not conclusive of arrangement if future conduct suggests otherwise
2. FACTS: D claims that goods were not property of P and were not the property of the debtor but were held by the debtor on consignment (title remains with D)
3. REASON: Although documents say consignment, subsequent conduct shows no intention to deal on that basis. No separate accounts, proceeds not kept separately, no accounting, visits only for view of further orders, etc.

Question 19

Atari Corporation v Electronic Boutiquestores

Answer 19

Consignment, Sale & Returns

1. RULE: Sufficient notice as per s 19 of the SGA in a sale or return contract requires the buyer to sufficiently identify the goods and indicate that they are available to be picked up within a reasonable amount of time
2. FACTS: D paid for games delivered “for sale or return” giving them two months to decide to keep them or not. D wrote to P saying they would stop shelving goods and that they could come pick them up at the warehouse.
3. REASON: When goods are delivered to the buyer “for sale or return,” the property passes when (a) buyer signifies approval or does any act adopting transaction or (b) if he retains goods without notice of rejection then on the expiration of the fixed time allotted (or reasonable time if not affixed). A contract “for sale or return” creates a bailee relationship where holder is responsible until acceptance or rejection.
4. HELD: Notice was sufficient as the D made goods available for pick up within reasonable time.

Question 20

What does “sufficient notice” in a sale or return contract under s 19 of SGA require?

Answer 20

Sufficient notice as per s 19 of the SGA in a sale or return contract requires the buyer to sufficiently identify the goods and indicate that they are available to be picked up within a reasonable amount of time (Atari Corporation v Electronic Boutiquestores)

Question 21

Aurora v Whirlpool

Answer 21

Consignment, Sale & Return

1. RULE: Provisions in the SGA require privity: must be against the person selling the goods
2. FACTS: Class action against Whirlpool for unpleasant smell in washing machines, but not privity due to purchasing them from store (Sears, the Bay)
3. REASON: Ps bought their machines from stores, so Whirlpool is not a person who sells or agrees to sell goods under the SGA.

Question 22

What does the Sale of Goods Act require in a contract to enforce its provisions?

Answer 22

Privity

Question 23

What does the Sale of Goods Act apply to?

Answer 23

Business-to-business and business-to-individual transactions

Question 24

What does the Consumer Protection Act apply to?

Answer 24

Business-to-consumer transactions (consumer = individual acting for personal, family, or household purposes and does not include businesses) as well as to goods that are leased and services

Question 25

What governs business-to-business transactions involving leases or services?

Answer 25

Nothing! There is no statutory protection for such transactions.

Question 26

Can you agree to waive your rights under the Consumer Protection Act? What about under the Sale of Goods Act?

Answer 26

CPA: No, you can’t agree to waive your rights.
SGA: Parties can contract out.

Question 27

Can parties under a transaction covered by the Consumer Protection Act agree in advance on resolving disputes through arbitration?

Answer 27

No, under section 7 of the CPA parties cannot agree in advance to submit any disputes to arbitration – consumers have a right to bring claim in the SCJ. Arbitration clauses are therefore unenforceable – but parties can agree to arbitration after the dispute arises.

Question 28

What does “consumer agreement” mean?

Answer 28

An agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment (section 1, CPA).

Question 29

What is the quality requirement under the Consumer Protection Act?

Answer 29

Section 9(1), CPA: supplier is deemed to warrant that the services supplied will be of a reasonably acceptable quality

Question 30

Is there a difference between the implied conditions and warranties on leased goods in the SGA and CPA?

Answer 30

No, under section 9(2) of the CPA, leased goods have the same implied conditions and warranties as in the SGA with necessary modifications (reasonably fit for purpose, merchantable quality)

Question 31

What can be sold to minors or the mentally incompetent/drunk, despite the general requirement of CAPACITY to contract (under the SGA)?

Answer 31

Under section 3 of the Sale of Goods Act, capacity is not required when necessaries (goods suitable to conditions in life) are sold to minors or the mentally incompetent/drunk.

Question 32

What form must a contract be in under the SGA?

Answer 32

Contracts can be written, made orally, partly both, or implied from conduct (unless corporation) under section 4 of the SGA.

Question 33

Can “future” goods be sold under the SGA?

Answer 33

Under section 6(2) of the SGA, goods can either be existing at the time or future goods, even if based on contingency.