MCS 3040 Lecture Notes - Lecture 6: Canadian Broadcast Standards Council, Caveat Emptor, The Seller

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Week 6
Chapter 23 Sales and Marketing: the contract, product, and promotion
Overview of Marketing Law
-Regulated by all three levels of government: federal, provincial, and municipal
-All areas of law that influence and direct the creation, promotion, pricing, and
distribution of goods, services, or ideas
-Main objectives of these laws are:
To protect consumers from physical harm
To foster fair competition
To protect consumers from unfair selling practices
Contract of Sale:
-Common Law
The foundation of the common law concerning the product is contained in the
Latin phrase caveat emptor.
Caveat emptor means “let the buyer beware” or “let the buyer take care”
-Sale of Goods Legislation
Developed in response to the harshness of caveat emptor
Provides a measure of protection for the purchaser in contacts for the sale of
goods.
-Sale of Goods Act
Only applies to: Personal property in its tangible, portable form, as well as items
attached to land that can be severed
Protects buyers by implying terms into a contract for the sale of goods
Gives buyers remedies depending on the type of terms breached
Terms are either:
oConditions: important or essential to the purpose of the contract
Implied conditions in the sale of goods:
The seller has the right to sell the goods
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The goods will be reasonably fit for the intended purpose
The goods will be of merchantable quality
The goods will correspond to the sample
The goods are equivalent to their description
Remedies for Breach of Condition:
May give the innocent party the right not only to sue for
damages but also to reject the goods and treat the
contract as ended
oWarranties: minor term that is not classified as a condition under sale of
goods legislation
Implied warranties in the sale of goods
The buyer will have and enjoy quiet possession of the
goods, which generally means that third parties will not
claim rights against them.
The goods are free from liens and encumbrances in favor
of third parties that were not declared or known to the
buyer at the time the contract was made.
Remedy for Breach of warranty
Legislation permits the buyer to maintain an action for
damages or ask the court to reduce the purchase price but
the buyer must continue with the contract.
oLimitations of sale of goods legislation
Generally only applies to goods, not land or services
Requires privity of contract
Permits contracting out of the implied terms
Does not address pre-contractual representations made by the
vendor
-Delivery of Goods
Bill of lading: Shipping document that serves as a contract between the seller (PPC) and
the carrier (custom trucking)
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oStoppage in transit: The right of a seller to demand that goods be
returned by a shipper to the seller, provided the buyer is insolvent
Cost, Insurance, and Freight
oC.I.F: Seller is responsible for arranging the insurance and shipping
Free on board
oF.O.B: Buyer specifies the type of transportation to be used, and seller
arranges and delivers the goods to that shipper
Cash on delivery
oC.O.D: Purchaser is obliged to pay for the goods on delivery
-Risk of loss and transfer of title
Sale of Goods Act sets out a series of rules that determine when title changes in
the absence of terms in a contract
Specific goods: Goods that are identified and agreed on at the time a contract of
sale is made
Unascertained goods: Goods not yet set aside and identifiable as the subject of
the contract at the time the contract was formed
Rule 1: Where there is an unconditional contract for the sale of specific goods in
a deliverable state, the property in the goods passes to the buyer when the
contract is made, and it is immaterial whether the time of payment or the time
of delivery or both is postponed.
Rule 2: Where there is a contract for the sale of specific goods and the seller is
bound to do something to the goods for the purpose of putting them in a
deliverable state, the property does not pass until the thing is done and the
buyer has received notice.
Rule 3: Where there is a contract for the sale of specific goods in a deliverable
state but the seller is bound to weigh, measure, test, or do some other act or
thing for the purpose of ascertaining their price, the property does not pass until
such act or thing is done and the buyer has received notice.
Rule 4: Where goods are delivered to the buyer on approval or on “sale or
return” or other similar terms, the property passes to the buyer
owhen he or she signifies approval or acceptance, or
oIf he or she does not signify approval or acceptance to the seller but
retains the goods without giving notice of rejection.
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