Management and Organizational Studies 2275A/B Lecture Notes - Lecture 3: Caveat Emptor, Intangible Property, Personal Property
SALE OF GOODS ACT: applies to every SALE of GOODS. Not to services, intangibles, real property, gifts,
leases, or licenses.
• Goods: tangible, personal property. (act applies to only and particularly this)
• Not applied to real estate, land and buildings, trade marks, patents, shares, insurance, accounts
receivables as they are real or intangible property
• This act works in addition to underline sales contract; it adds another layer on top of sales
contract
• Sale: transaction in which property is transferred in exchanged for money, 2 conditions: a
transfer of property, and it must be for money. Leases, Licenses, loans, gifts, bailments, any
thig that does’t iole oe does’t out i it
e.g. guy goes in restaurant, ordered a meal, it was contaminated, he as sik, sues ad agues that it’s a
eah of sales of goods at, its iplied oditios, ust poe it’s a sale of good, estauat sas it’s a
service as we work for you, court says it partly both, primarily he is buying food so its contract of sales of
goods
e.g. women commissioned a painting from an artist, very particular painting, expensive, wants it to have
etai featues, atist paits it fo he, ut pait aks afte a hile, she sas it’s a eah agai of sale
of goods at, he sas it’s a otat fo seies, eleets fo oth eist, it’s a good as it’s a paitig ut
its getting painted per he euieets, so poisio of good as osideed iidetal so at did’t
apply here
Sale of goods acts is a law; it is a statute that governs the rights of buyers and sellers.
• People who finance those transactions, they are lenders
• All the subjects i.e. debtor, creditor etc. are related so they come under commercial law.
• Sale and goods are terms that are important, very broad as this act applies from chocolate to
airplane
• came from contract law as well as being a specialized area of contract law, here courts
intervene to protect certain interests
Caveat emptor: let the buyer beware o let the buyer take care
Why more protection for buyers?
• quite unfair to put risk in one side of transaction
• overall goal of business law involves protecting them, as they will withdraw from market if
they are exploited so they need that protection
• this balance is modified by courts and these techniques are used:
✓ Various terms are implied in a sale of goods contract (these are not in contract), goods must match
a description, that they must be free from defects, if these are breached then contract is breached
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1893 sale of goods act co-defined and formalized this law.
• These are provincial, identical to 1893 statute, Canadian sale of goods act has never been
modified so its obsolete
• Consumer protection legislation is one of the major things that improved
The Sale of Goods Act:
• Implies terms into sales contracts (conditions and warranties)
➢ 2 kinds of terms exist: implied and expressed
➢ 2 kinds of implied terms: conditions and warranties
➢ Difference: the remedies
• Conditions allow to terminate the contract and sue for damages
• Warranties allow only to sue for damages, they can not walk away from a contract
Conditions go to the essence of the contract, more crucial**
• Helps determine when title passes from seller to buyer
• Provides remedies for breaches
Implied conditions:
• Seller has right to sell: aazo, uig fo soeoe that does’t o it, the tell thei
manufacturer client to ship it to you as you place the order, its not the breach of this term, they still
have the right to sell their products
• Goods ust match description: e.g. color varies
• Goods ust match sample
• Merchantable quality: no defects
• Reasonably suitable for intended purpose: Dent in the back of tv, its not a merchantable quality but it
does’t ifluee the t pupose, so its still easoal suitale,
Surfboard that siks, does’t ok, its eah of these tes. But if you want to buy it to make it a table,
things fall off it, can you take it back? No, because you are not using it for its ordinary purpose. But
when you were buying a surfboard, you told the person selling that you are wanting it for unusual
purpose, they make a recommendation, so they are accountable now, you can take it back unlike when
ou did’t tell this to the shop keepe
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Implied warranties:
• No encumbrances: An encumbrance is a right to, interest in, or legal liability on real property that
does not prohibit passing title to the property but that diminishes its value
• Delivery within a reasonable time
• Payment within a reasonable time
Risk follows title. title transfers because of intention* The Sale of Goods Act helps determine when
title passes from seller to buyer.
• If you want to know who bears risk, see who has title.
• Trucks and lorries and ships involved in shipping, goods destroyed in between. Who's responsible?
Who ever owns the goods its responsible for them. Go to the contract, if you can tell when the title
is intended to transfer from buyers to sellers like it says that goods are yours when they are put in
oat, the that’s he they are yours
• Title is always transferred, only then sale exist, sale involves transfer of title and exchange of goods
to happen
Shipping terms:
Bill of lading: shipping document that serves as a contract
Stoppage in transit: right of seller to have his goods back if buyer becomes insolvent, shipper must
return them
C.i.f. (cost, insurance and freight): contractual term, seller responsible for insurance and shipping here
f.o.b. (free on board): contractual term, buyer specifies transportation, seller arranges it, delivery of
goods doe o uer’s epese
c.o.d. (cash on delivery): contractual
specific goods: at the time of contract of sale, these goods exist + are identifiable
unascertained goods: not yet set aside + identifiable
future goods: not in existence at time of contract
damages for non-acceptance: buyer refuse to accept goods prior to passing of the title so seller
becomes entitled to damages
atio for the prie: seller’s lai he uer reahed otrat he title as passed to hi alread
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Document Summary
Sale of goods act: applies to every sale of goods. Caveat emptor: (cid:862)let the buyer beware(cid:863) o(cid:396) (cid:862)let the buyer take care(cid:863) Various terms are implied in a sale of goods contract (these are not in contract), goods must match a description, that they must be free from defects, if these are breached then contract is breached. The sale of goods act: implies terms into sales contracts (conditions and warranties) 2 kinds of terms exist: implied and expressed. 2 kinds of implied terms: conditions and warranties. Difference: the remedies: conditions allow to terminate the contract and sue for damages, warranties allow only to sue for damages, they can not walk away from a contract. Conditions go to the essence of the contract, more crucial*: helps determine when title passes from seller to buyer, provides remedies for breaches. No, because you are not using it for its ordinary purpose.