Week 9: Chapters 21, 27 Flashcards
Definition of sale of goods under the act:
A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer goods to the buyer for money
Sale vs Agreement to sell
Sale - immediate
Agreement to sell - in the future, goods may not exist/be available
Sale of Goods Act Criteria: For Goods
The agreement must be for goods distinct from land or anything attached to land
Item must be tangible - not for financial instruments
Not for wages or labour
Sale of Goods Act Criteria: Goods for money
To be under the act the goods must be transferred for monetary consideration
Excludes barter or consignment transactions
Sale of Goods Act Criteria: In Writing
No particular form is required
Contracts over $50 must be evidenced by a written memorandum, signed by the party to be charged
Sale of Goods Act Criteria: In writing - how to avoid putting it in writing
Parties can avoid putting the agreement in writing if at least one of the following occur:
i. Buyer accepts part of the goods sold
ii. Buyer makes part payment of contract price
iii. Buyer gives something in earnest (deposit) to bind the contract
Sale of Goods Act Criteria: Transfer of title
There must be transfer of legal ownership/title of property to the buyer
Ownership usually goes with possession, but not always
Parties can give up possession and retain ownership
Title may pass at a different time than the transfer of possession
If title has not passed, risk of loss born by the seller
Transfer of Title Rule #1 (Unconditional contract for sale of goods already in deliverable state)
If there is an unconditional contract for the sale of specific goods in a deliverable state then the title passes when the contract is made, and time of delivery and payment are irrelevant
Transfer of Title Rule #2 (need to put specific goods in deliverable state)
Where the sale of specific goods requires something to be done to put in a deliverable state, then the title doesn’t pass until the thing is done and the buyer is notified
Transfer of Title Rule #3 (requirement to measure specific goods for sale)
In a contract for the sale of specific goods that requires the seller to do something (measure, weigh, etc.) to determine the price then the title does not pass until the thing is done and the buyer is notified
Seller must be obligated to do the thing required
Transfer of Title Rule #4 (goods delivered on approval)
When goods are delivered to the buyer on approval (option to return) the title transfer to the buyer when the buyer signifies acceptance or retains the goods without notice of rejection at the expiry of the specified time for approval.
Transfer of Title Rule #5 (contract for unascertained goods)
The title transfers when the goods in a deliverable state are unconditionally appropriated to the contract with the buyer.
In pursuance of contract, seller delivers goods to buyer or carrier for the purpose of transmission to buyer, and does not reserve right of disposal
Contractual Duties of the Seller under SGA
The SGA allows parties to include and terms and conditions they wish and the seller must adhere to them
Condition + what happens when breached:
A term of contract that is essential/to the root of it
breach of a condition the other party to treat breach as discharge, meaning the innocent party is released from further performance
Warranty + what happens when breached
A minor term in the contract
breach only entitles wronged party to sue for damages
The SGA determines whether terms are conditions or warranties
Condition of Title under the SGA
An implied condition in the sale of goods that the seller has the right to sell the goods
Seller must have the right to sell at the time the title needs to be transferred
Warranty of Title under the SGA
There’s a warranty that goods are free from encumbrance, unless seller has informed buyer of charge or encumbrance
Warranty for buyer to take “quiet possession”
- means no future claims to title by others
Condition for when goods are sold by description
When goods are sold by description, there is a condition that they actually correspond to the description, if not, the buyer can reject
Condition for when goods are sold by sample
Where goods are sold by sample alone there is a condition that the bulk of the goods will match the sample quality
Also a condition that they are free from any defect that would render them unmerchantable
- Applies unless the defect is such that inspection would reveal it and the buyer fails to notice
James Drummond & Sons v E.H. Van Ingen:
The buyer conducted a reasonable inspection but couldn’t detect a defect
The goods had a hidden defect that rendered them unmerchantable
Inspections are to be conducted with the care and due diligence of what someone with ordinary merchant knowledge would have
Caveat Emptor Translation
Let the buyer beware
Caveat Emptor and Fitness for Use Intended
As to the fitness of a good for a certain purpose, the buyer is subject to caveat emptor
Law assumes that upon examination the buyer is able to determine if the good is suitable for their needs
Caveat Emptor condition for when seller supplies a specific kind of goods + the exemption
When the seller supplies particular kind of goods and the buyer relies on the skill and knowledge of seller there is an implied condition that the goods are reasonably fit for purpose intended
This doesn’t apply if the buyer asked for specific goods by name, since they didn’t rely on the seller to make the purchase
Condition surrounding delivery of goods
The seller has the duty to deliver the goods in the right quantity, at the right place and time as specified in the contract
If seller fails to deliver on time the buyer can reject the goods since it’s a condition
Conditions and proceedings regarding the quantity of goods
The quantity of goods delivered is a condition
If too little is delivered the buyer can reject. If they accept, they pay at the contract rate
If too much is delivered the buyer is not obliged to accept the excess or can reject entire amount
- if the buyer accepts entire quantity, must pay at contract rate
Limitation of liability (by the seller)
In contracts between businesses the seller may include an express term that declines the implied terms and conditions of the SGA
If they do, seller’s obligations are strictly enforced and interpreted
Consumer Protection Statuses for Door-Door Sales
There is a cooling off period for contracts made at a place other than the seller’s place of business
The buyer has a specified time to give notice of their intention to reject
This is to give consumers an out if door-door sellers are pressuring them
Contractual duties of the buyer under the SGA
Examine goods, take delivery and pay
Payment of price and delivery of goods are generally concurrent obligations, unless contract provides otherwise
Payment is only a warranty, not a condition unless expressly stated
- meaning if breached the seller still has to deliver goods but then can sue later
Buyers Remedies: Recission
If the seller’s breach is fundamental to the contract then the buyer has the right to repudiate the contract
They can refuse to pay, or recover what they have paid
Can also refuse the goods, go buy them elsewhere, and sue the seller for the price
Buyers Remedies: Damages
For when the seller’s breach is only of a warranty
The buyer cannot repudiate the contract, only sue for damages
If the property has already been transferred but the seller breached a condition, the buyer can pursue the lesser remedy of damages
Buyers Remedies: Specific Performance
For if the goods are very unique and cannot be obtained elsewhere
Monetary damages are inadequate in this scenario
Discretionary remedy
Sellers Remedies: Lien
Sellers can’t normally repudiate a contract due to non-payment since it’s a warranty
Seller isn’t obliged to deliver goods until they get paid
The seller can claim a lien (hold) on the goods until they have received payment or confirmed credit
If they have already delivered the goods to the buyer they lose their lien rights
Sellers Remedies: Action for the Price
When the seller has delivered the goods and the title has passed, but the buyer hasn’t paid, or they have unreasonably refused the goods
The seller can sue for the price
Sellers Remedies: Damages
Seller can sue for damages relating to the acceptance of the goods
Seller can also resell the goods and then sue the buyer for the loss incurred
Goals is to return seller to original position
Seller’s Remedies: Retention of Deposit
If the buyer refuses to perform the contract the seller can retain any deposits paid as damages
It must be in the contract that the deposit can be retained as liquidated damages
Deposit money retained by seller must reasonably cover the damages from the breach
Seller’s Remedies: Stoppage in Transitu
The right of the seller to stop the delivery of goods by the carrier if the buyer is insolvent
If the buyer isn’t actually insolvent and the seller stops delivery the buyer can take action for damages
Seller’s Remedies: Resale
If the seller retains the goods since they didn’t receive payment from the buyer, and the buyer never tenders payment then the seller can resell the goods to a second purchaser
Four Basic Kinds of Consumer Protection Legislation
- Product Safety
- Product quality and performance
- Credit granting and reporting
- Business practices generally
5 Approaches to Consumer Protection Legislation
- disclosure of information to the consumer
- expanded legal rights
- minimum standards for safety, quality, performance
- registration and licensing of sellers etc.
- prohibition of certain practices
Consumer Packaging and Labelling Act
Prohibits misleading advertising claims,
penalties for violations, civil cause of action
At Commons Law Consumers have the right to damages
Purpose of new Legislation for Product Quality and Performance Protection
Prohibits sellers from exempting sales of consumer goods from the implied terms and conditions of the SGA
New legislation is trying to balance the rights of all parties
Motor Vehicle Arbitration Plan
If a new car is defective, the consumer must first give the manufacturer an opportunity to fix it
If their repairs are unsuccessful the issue is taken before an arbitrator who has the power to:
- Order repair
- Rescind contract;
- Dismiss the complaint;
- For new vehicles during warranty period, and for a
fixed time after: buy-back If owned more than 1 yr,
price discounted for use
Saskatchewan Consumer Protection Act
provides penalties where product doesn’t meet advertising claims
- applies to all goods
- includes protection for those who acquire goods by gift
- action for breach of statutory warranty, statute precludes
privity of contract defence
- makes advertising claims express warranties, makes
breaches actionable for consumer
- provides for remedies, exemplary damages where
manufacturer willfully breaches
Business Practices Act, R.S.O 1990
- General statute regarding business practices
- Prohibits false advertising including deceptions regarding performance, quality, that are designed to induce consumers to contract
Consumer Protection from Door-Door Sellers
The dynamic of door-door sales makes the consumer vulnerable because they may feel under pressure to buy to get rid of the salesperson
There is a mandatory cooling-off period in which buyer can repudiate contract without penalty
If contract is over a certain value it needs to be in writing
- identify goods and itemized price
- full details of credit arrangements
Motor Vehicle Repair Act - to reduce unfair business practices
Requires repair shops to provide written estimates to customer
Repair charge can’t exceed the estimate by 10%
Work must be guaranteed to last a certain mileage
List of activities deemed to be unfair in the Consumer Protection Act
- false, misleading or deceptive representations
- unconscionable transactions that take advantage of vulnerable consumers.
- Misleading statements of opinion
- Use of undue pressure to induce a consumer to enter into a transaction
-Take advantage of infirmity, language problems; or ignorance - Price grossly exceeds market value
- Consumer has no prospect of paying price
- Includes one-sided, inequitable contracts as well
Consequences for violating the Consumer Protection Act
Provides fines to business in violation + permit rescission or damages where rescission unavailable
Also punitive damages
Director has investigative powers, can issue cease and desist orders, cancel registration or licensing
Restrictive Trade Practices + the Competition Act
Business practices that restrict trade to the detriment of the consumer or competitors
Competition Act prohibits false and misleading advertising, bait and switch advertising, monopolies and price fixing
Collection Agencies
- Hired to collect debts
- By license or registration
- Not permitted to harass, cannot use forms that resemble “legal” forms
- Not permitted to collect debt from other family members, or harass persons other than the debtor to pressure debtor into payment
- Can only contact debtor’s employer to confirm employment
