Business Law in Canada, 8the

1
Business Law in Canada, 8th/e
7-1

• Chapter 10
• Sales and Consumer Protection

2
Sales of Goods Act
7-2

• Statute embodies case law and complements normal
  rules of contract law
• applies to all situations where goods are bought
  and sold but not to the transfer of real
  property
• intended to fill the gaps in the terms of a
  contract- implies missing terms
• terms in contract prevail over most provisions of
  Act

3
Goods and Services
7-3

• Sale of Goods Act applies to
• Goods - tangible items
• Sale of Goods Act does not apply to
• Services- except when it involves the
  installation of goods

4
Transfer of Goods

• Goods must actually be transferred (present or
  future) in order for the Act to apply
• The transfer of the possession of the goods in
  exchange for money must be intended or
  anticipated as in a conditional sale

5
Statute of Frauds
7-4

• Requirement of Writing
• Goods over a specified value (30-50) must be
  evidenced in writing to be legally enforceable in
  some jurisdictions (not in B.C.)
• unless some money has changed hands
• or there has been part performance

6
Title and Risk     
7-5

• Risk follows title
• Sale title transfers immediately
• Agreement to Sell Title transfers at some
  future time

7
Transferring Title
7-6

• Methods of specifying who will bear the risk
• 1. C.I.F. contracts
• 2. F.O.B. contracts
• 3. C.O.D. contracts
• 4. Bill of Lading

8
Transfer of Title
7-7

• Timing of transfer determines whether seller can
  sue for entire price of goods or only damages
  when purchaser defaults.
• 5 Rules set out in Sale of Goods Act
• Parties can contract out of Sale of Goods Act
  but.

9
Note 5 rules for transfer of title

• 1) Specific goods in deliverable state
• Title transfers immediately on contract
• 2) Work to be done on goods
• Title transfers when work done and notice
• 3) Goods to be weighed or measured
• Title transfers when done and notice
• 4) Goods taken on approval
• Title transfers when approval given or
  acceptance
• 5) Unascertained goods
• Title transfers upon selection and assent

10
Rights and Obligations
7-9

• Terms of a sale of goods contract are called
  conditions or warranties
• The victim of a breach of a condition can
• ignore it and accept the goods - cannot later
  claim a breach of contract
• consider themselves no longer bound to contract

Continued on 7-10
11
Rights and Obligations/2
7-10

• The victim of a breach of warranty is not
  released from obligations under the contract but
  may be entitled to damages

12
Obligations of Seller
7-11

• Seller must convey good title
• Goods must be usable (quiet possession)
• Goods must be free of liens
• Goods must match description

• Goods must be of merchantable quality and Durable
• Goods must match sample and be free of hidden
  defects
• Note Section 20 of B.C. act

13
Section 20

• For a retail (consumer type) sale of new goods,
  any attempt to contract out of the warranties and
  conditions set out in sections 16, 17 18 or 19 is
  void

14
Other Implied Terms
7-12

• When following terms are not stipulated in
  contract
• must pay a reasonable price
• whether time of delivery is a condition or
  warranty will be implied from conduct
• With bulk goods purchaser can choose to return or
  keep goods and pay less when wrong quantity is
  delivered

15
Remedies for Purchasers Default
7-13

• Sellers can retain goods until paid for
• stop delivery of goods in transit
• Bankruptcy and Insolvency act allows recover
  after delivery within 30 days
• Seller gets priority over other creditors in case
  of bankruptcy
• sue for breach of contract and for damages
• but must mitigate losses by reselling immediately

16
Remedies for Sellers Default

• Rescission for innocent misrepresentation
• Damages for fraudulent or negligent
  misrepresentation
• Withhold payment for breach of condition
• Withhold enough to cover loss with breach of
  warranty
• Purchaser can sue if goods have been paid for but
  not delivered
• Damages are recoverable if defective goods cause
  injury

17
Remedies for Default/2
7-14
18
Consumer Protection
7-16

• Consumer transactions involve goods intended to
  be used by the consumer and not resold
• Consumer protection legislation controls
• use and disclosure of information
• unethical business practices
• Provincial and federal legislation

19
New B. C. Statutes

• B.C. Business Practices and Consumer Protection
  Authority act
• Body incorporated with all Powers of a natural
  person
• The purposes of the authority are to deliver
  consumer protection services throughout British
  Columbia, to promote fairness and understanding
  in the marketplace and to administer in the
  public interest any Act, the administration of
  which is delegated to the authority.

20
New B. C. Statutes /2

• B.C. Business Practices and Consumer Protection
  act
• Comprehensive consumer protection statute
• Sets out deceptive acts and practices
• Limits responsibility for unsolicited goods and
  services
• Sets out controls for consumer credit and
  responsibilities and rights of guarantors.

21
B. C. act continued

• Consumer contracts and practices controlled
• Funeral and future purchases
• Direct sales (10 day cancellation)
• Continuing services and time shares
• Distance sales contracts.
• Credit reporting, debt collection
• Licensing, Inspection, Enforcement, Offenses,
• Penalties, Compensation fund.

22
Responsibility for Goods Sold
7-18

• Sale of Goods Acts impose responsibility on
  sellers (different statutes in various provinces)
• Victims of unsafe products can sue manufacturer
  in tort but must prove fault
• and seller under contract law-if they purchased
  the product themselves
• Privity of contract applies but

23
Competition Act (Federal)
7-26

• Act is intended to prevent business activities
  that interfere with free market system
• Violators are subject to prosecution
• Competition Act
• controls mergers
• prohibits abusive trade practices, e.g..
  Misleading advertising
• restricts agreements between merchants

24
Other Federal Legislation
7-27

• Contain consumer protection components
• Food and Drug Act
• strict enforcement provisions
• Hazardous Products Act
• controls the manufacture, importation and sale of
  products that are inherently dangerous
• Other Acts enforce the proper disclosure of
  information about products