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Management and Organizational Studies 2275A/B Lecture Notes - Consumer Protection, Marketing Mix, Caveat Emptor

Management and Organizational Studies
Course Code
MOS 2275A/B
Philip King

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Chapter 23: Sales and Marketing- The Contract, Product, and Promotion
What is Marketing Law?
Marketing Law: fundamental laws affecting marketing process are common law principles; also regulated by
federal, provincial, and municipal government
- Main objectives are: to protect consumers from physical harm, foster fair competition, protect
consumers from unfair selling practices
- If international company, marketing practices are subject to laws and regulations of other countries as
- Marketing law concerns four P’s of marketing mix: product, price, place, promotion
- Traditional business law topics fall under marketing function of business include contract of sale and
legislation relating to competition and consumer protection
Contract of Sale
Terms Relating to Product
- When customers make purchase, have expectations about product’s attributes and characteristics
- Foundation of common law concerning product is caveat emptor meaning “buyer beware”; this requires
prospective purchasers to make appropriate investigations before buying
- If purchaser wants product to exhibit certain characteristics, must be contained in contract
- Because this can product unfair results, judges began to create principles to provide measure of
protection for purchaser of goods
Sale of Goods Legislation in Canada
- Specialized branch of contract law: governed by legislation but where legislation not relevant then
common law rules
- Applies only to sale of goods (personal property in tangible, portable form) as well as items attached to
land that can be severed
- Implies terms into contract for sale of goods, classifies them, and provides remedies to purchaser based
on how breached term has been classified
- Unless parties expressly agree to contrary or otherwise able to exclude operation of Sale of Goods Act, a
number of terms automatically implied into contract
- In addition to implying terms, legislation classified them as either conditions or warrantees
o Conditions: essential to purpose of contract
o Warrantees: minor or collateral terms
Conditions seller has right to sell goods
- Goods will be reasonably fit for intended purpose where buyer makes it known what intended purpose
of goods will be (express or implied), to show he is relying on skill/judgement of seller (not necessary
when goods used for ordinary purpose)
- Goods will be of merchantable quality, where goods are bought by description (reliance by buyer on
some description by seller, and may be reliance even when buyer has seen or inspected goods)
- Where goods sold by sample, goods will correspond to sample and buyer will have reasonable
opportunity to compare goods with sample
- Where goods sold by description, goods will correspond with description
Warrantees buyer will have and enjoy quiet possession of goods, generally means third parties will not claim
rights against them
- Goods are free from liens and encumbrances in favour of third parties that were not declared or known
to buyer at time contract was made
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