Supplementary Information on Implied Terms-F09.doc

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Supplementary Information on Implied Terms – Chapter 9
Professor M.J. Nicholson’s Class
The Sale of Goods Act Ontario
The Sale of Goods Act imposes on us (implied terms) some surprising rules
as to when property passes.
These default rules apply if the parties do not “contract out of them”
Many people are unaware of these rules.
In a sale of goods it is important to know the point at which ownership or title to
the good is transferred from the seller to the buyer.
This is important for risk management as the owner bears the risk and should have
insurance.
It is important to distinguish between title (ownership) and possession as they do
not always coincide.
The legislation is not intended to interfere with parties’ right to create contracts
with different terms.
It is very common that people do just that and opt out of these rules, ie make their
own provisions, for example where merchants state on their invoices or receipts
that title to the goods remains with the seller until the full price of the goods has
been received by the seller. The Consumer Protection Act prohibits this in the
case of consumer contracts – see below.
Ontario Consumer Protection Act,
1. “Consumer” means an individual acting for personal, family or household
purposes and does not include a person who is acting for business purposes
(CPA, s. 1)
2. The CPA stipulates that, for consumer agreements, attempts to vary or negate
oa condition [ see p.247] (such as that the goods must be of reasonably
acceptable, and therefore sellable, quality, or that the goods must fit the
purpose the purchaser told the seller that they needed the goods to fulfill,
or that the goods must match their description (e.g. in a catalogue or on a
menu) or the sample the purchaser saw) or
oa warranty [see p.247] (such as that the goods will be paid for on a
certain date) under the Sale of Goods Act,
will be void and of no effect.
3. Under the CPA, a consumer cannot opt out of their rights under the Sale of
Goods Act, so the seller cannot pressure them into doing so.
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