Supplementary Notes re: Sale of Goods Act
These notes supplement the handout provided to you concerning the Ontario Sale of Goods Act (SGA).
(This handout also contained information concerning the Ontario Consumer Protection Act (CPA). You
should ensure that you review both this handout and the handout already distributed to you in
preparation for the Big Quiz (i.e., the final exam).
When does the SGA apply?
The SGA applies to the sale of goods (hence the name of the Act). Therefore, the SGA ONLY applies to:
o Transfer of title is contemplated either immediately or at some discernable point in the
o Tangible, moveable property.
o Eg., cars, trains, planes, crops (because they can be harvested off the land), pigs, books.
A sale of goods for money;
o Money includes cash, credit card, debit, or cheque: basically anything that allows the
seller to receive cash. The buyer may pay in part with cash and in part by trade of a
good or service.
and Sometimes, only if the contract is evidenced in writing.
The SGA does not apply:
To rentals and leases (because they are not sales).
To gifts (because they are not sales).
To loans (because they are not sales).
To any situation where the buyer is not intended to eventually obtain ownership (because a
“sale” involves the transfer of ownership).
The SGA does not apply:
To services (because they are not goods).
To “real property”, i.e., land and things “attached” to land, e.g., houses, barns, and fences
(because they are not considered “goods”).
To intangible property, e.g., trademarks, shares, debts, goodwill, and negotiable instruments
(because they are not “goods” within the meaning of the SGA, i.e., tangible, moveable
Miedema’s supplemental notes for SGA (2010) But what if something combines goods and services? Like a meal at a great restaurant? In that case,
the judge must determine what the essence of the contract is: was the heart of the contract a
performance of a service (not a good) or was it the transfer of property (a good)?!
The SGA does not apply:
To trades of goods or the trade of a service for a good (because there is not an exchange of
Note that the buyer does not have to pay entirely with cash. The SGA does apply if the buyer provides
some cash and trades another good or service in partial payment.
EXAMPLES re: Rules for transfer of title
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.
Unconditional sale: No conditions attached to the sale, therefore nothing left to be done by
Specific item: it makes a difference if there is a specific item involved as opposed to any one of
the inventory of the goods. In other words, the good has been set aside for your particular use
or something has been done to it to appropriate it to your use (it has been customized for you).
“This one”, not one of x number.
“Deliverable state”: the goods are in a condition that would require them to be accepted under
the terms of the contract.
You purchase a diamond ring and close the sale. Nothing is left to be done. But you don’t pick up the
goods right away. You leave the ring at the store. Title transfers immediately. If the ring is stolen from
the store overnight, you are SOL.
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 into a deliverable state, the property
does not pass until such thing is done and the buyer has notice thereof.
Miedema’s supplemental notes for SGA (2010) Example: You purchase goods, but some work to be done to the goods as per the terms of sale. Eg: you
purchase a car, but ask for a stereo to be added or upgrade to a better set of tires. In this case, title
passes once the stereo is added or the upgrade is completed and you (the buyer) are given notice that
the work is done by the seller.
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 with reference to the goods for
the purpose of ascertaining the price, the property does not pass until such act or thing is
done and the buyer has notice thereof.
In essence, where seller must measure, weigh, test or do some other thing with reference to the goods
for the purposes of ascertaining the price, then the title passes when the measurement/weight/test has
been completed and the buyer is notified. Examples might include the purchase of grain. The grain has
to be loaded into a truck and then weighed to determine the price (weight of truck after grain loaded
less weight of truck before the grain is loaded equals weight of the grain). Alternatively, purchaser buys
some gold coins, but the coins need to be weighed in order to determine their price. Again, title passes
when the weighing/measuring is done and the buyer has been notified of the price.
When the goods are delivered to the buyer on approval or “on sale or return” or similar terms, then
title passes when:
1. When the buyer signifies approval or does any other act that adopts the transaction (acts in a
way that signifies that the buyer has adopted the transactio