Duplessis.SG.Chapter 23.doc

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Department
Management and Organizational Studies
Course Code
Management and Organizational Studies 2275A/B
Professor
Henry Meredith

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CHAPTE23SALE&MARKETITHE CONTRPRODU, &PROMOTION C HAPTER 23 S ALES & M ARKETING : T HE C ONTRACT , P RODUCT , & P ROMOTION Objectives After studying this chapter, you should have an understanding of: • the scope of marketing law • the rights and obligations in a contract of sale • the legal obligations associated with the product component of marketing • the legal obligations associated with the promotion component of marketing Learning Outcomes • Understand how the marketing campaign is subject to marketing law (page 585) • Understand the terms in every sale of goods contract that are implied under the Sale of Goods Act (page 586) • Understand the implications of the distinction between a breach of an implied condition and a breach of an implied warranty (page 587-588) • Understand the voluntary and prescribed rules relating to product design and manufacture (page 596) • Understand the purpose and requirements of the Consumer Packaging and Labelling Act (page 598) • Understand the power of the Competition Bureau to sanction misleading advertising (page 602-603) • Understand which selling practices are prohibited and which are controlled (page 606) Chapter Summary Compliance with the relevant laws coincides, for the most part, with good marketing practice. Providing reliable and safe products and ensuring that consumers are accurately and fully informed goes a long way toward achieving the key feature of effective marketing policy – meeting customer expectations. Inevitably, however, some market participants disregard these basic principles and attempt to profit at the customers’ expense. If there were no regulations in place, such practices would clearly place “good” producers at a distinct disadvantage. Legislation is therefore intended to ensure fair competition. All sellers must be aware of the implied conditions and warranties of the Sale of Goods Acts and other consumer protection legislation. The rules for establishing when title to goods shifts are set out in the Sale of Goods Acts unless otherwise provided by cSellers require knowledge of the meaning of a series of standard terms used in shipping of goods, such as c.i.f. and f.o.b. Two parts of the marketing mix that are affected by the law are product and 115 PART7:SALES AND MARKETING promotion. Regulation relating to the product component addresses the product (or service) itself and its packaging and labelling. The producer must be familiar with voluntary and statutory guidelines for product design and standards. Products labelling regulation is important where the customer cannot see the goods, and there are explicit requirements for disclosure. In promoting goods, and there are explicit requirements for disclosure. In promoting goods, the most important regulation is the false and misleading advertising provision of the Competition Act. More specific legislative provisions also apply – for example: to tests, testimonials and performance claims. Finally, close attention will be paid to any practices that induce purchases through unfair or improper means. Study Outline Use this outline to prepare a complete set of notes for this chapter. Marketing Law – page 585 _______________________________________________________________________ _______________________________________________________________________ Contract of Sale – page 586 _____________________________________________________________________ _____________________________________________________________________ Sale of Goods Act________________________________________________________ Breach of condition___________________________________________________ Breach of warranty____________________________________________________ Consumer Protection Legislation_____________________________________________ Transfer of title _______________________________________________________ Delivery of goods _____________________________________________________ Bill of lading ______________________________________________________ c.i.f. _____________________________________________________________ f.o.b. _____________________________________________________________ c.o.d. _____________________________________________________________ The Product – page 596 _______________________________________________________________________ _______________________________________________________________________ Product design and manufacture_____________________________________________ _______________________________________________________________________ Canadian Standards Association__________________________________________ Product attributes/characteristics_____________________________________________ _______________________________________________________________________ _______________________________________________________________________ Contracts for the international sale of goods_________________________________ Copyright © 2011 by Nelson Education Ltd. CHAPTE23:SALES& MARKETI:THE CONTRA,PRODUC, &PROMOTION _______________________________________________________________________ Product packaging and labelling_____________________________________________ _______________________________________________________________________ Labelling of prepackaged goods__________________________________________ Consumer Packaging and Labelling Act (CPLA)__________________________ _______________________________________________________________________ Product warnings___________________________________________________ _______________________________________________________________________ Promotion – page 601 _______________________________________________________________________ Industry standards and legislation____________________________________________ _______________________________________________________________________ Misleading advertising_____________________________________________________ Competition Act_______________________________________________________ Investigation of complaints______________________________________________ Civil or fast track processes______________________________________________ Defences ___________________________________________________________ Due diligence______________________________________________________ Performance claims_______________________________________________________ _______________________________________________________________________ Tests and testimonials_____________________________________________________ _______________________________________________________________________ Warranty and service promises______________________________________________ Promotion through selling practices__________________________________________ Bait and switch________________________________________________________ Unfair practices_______________________________________________________ Contests _______________________________________________________________________ SELF-ASSESSMENT Key Terms Briefly define each term in the space provided. Marketing law – page 586 _______________________________________________________________________ _______________________________________________________________________ 117 PART7:SALES AND MARKETING _______________________________________________________________________ Caveat emptor – page 586 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Unascertained goods – page 592 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Specific goods – page 592 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Damages for non-acceptance – page 594 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Action for price – page 594 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Stoppage in transit – page 595 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ f.o.b. – page 595 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ c.i.f. – page 595 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Bill of lading – page 595 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ c.o.d. – page 596 _______________________________________________________________________ Copyright © 2011 by Nelson Education Ltd. CHAPTE23:SALE& MARKETI:THE CONTR,PRODUC, &PROMOTION _______________________________________________________________________ _______________________________________________________________________ False or misleading advertising – page 603 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Due diligence – page 604 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Bait and switch – page 606 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Unfair practices – page 607 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Matching Match the correct letter of the most appropriate term in the space provided before each sentence. Please note that you will use only 10 of the terms so you must choose the best term available to match with its description. A Bait and switch B Action for price C Caveat emptor D Bill of lading E Damages for non-acceptance F Specific goods G Consumer Packaging and Labelling Act (CPLA) H Convention on the International Sale of Goods (CISG) I Due diligence J False or misleading advertising K Marketing law L Stoppage in transit M Unascertained goods N c.i.f. O Unfair practices P c.o.d. 1. ____ The seller’s claim when title to the goods has shifted to the buyer. 2. ____ Let the buyer beware. 119 PART7:SALES AND MARKETING 3. ____ Goods that are identified and agreed on at the time a contract of sale is made. 4. ____ The right of a seller to demand that goods be returned by a shipper to the seller, provided the buyer is insolvent. 5. ____ Goods not yet set aside and identifiable as the subject of the contract at the time the contract is formed. 6. ____ A shipping document that serves as a contract between the seller and the carrier. 7. ____ Promotional statements that either are false or have the ability to mislead a consumer as to their truth. 8. ____ Damages to which a seller is entitled if a buyer refuses to accept goods prior to the title shifting. 9. ____ A defence based on a reasonable belief in the truth of a false statement. 10. ____ A product is advertised at a low price to attract customers, but customers are encouraged to buy a more expensive product. Questions Write a short, point-form answer for each question in the space provided. To assist you in understanding the chapter, it is recommended that you also use additional paper to write a full and complete essay answer for each question. 1. What are the general purposes of government regulation in the marketing field? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 2. What is the impact of the Sale of Goods Act? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 3. Does the Sale of Goods Act include both goods and services? Explain. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 4. What conditions and warranties are implied in all sales transactions? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Copyright © 2011 by Nelson Education Ltd. CHAPTE23:SALES& MARKETIN:THE CONTRA,PRODUC, &PROMOTION 5. Why is it important to distinguish between breach of a condition and breach of a warranty? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 6. In addition to implying terms, what else does the sale of goods legislation do? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 7. Identify the limitations of sale of goods legislation. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 8. What is at the heart of transfer of title issues? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 9. What is the best way to deal with transfer of title issues? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 10. What is the purpose of the Convention on the International Sale of Goods (CISG)? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 11. Why do provincial Sale of Goods Acts set out a series of rules that determine when title changes in the absence of terms in a contract? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 121 PART7:SALES AND MARKETING 12. What are damages for nonacceptance in a shipping context? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 13. What is a bill of lading? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 14. What is the significance of the c.i.f. contractual term? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 15. How are title issues in shipping dealt with in the international context? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 16. What is the significance of the c.i.f. contractual term? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 17. What is the significance of the f.o.b. contractual term? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 18. Why should businesses be familiar with voluntary guidelines for producers? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 19. Give an example of an industry specific piece of packaging and labelling legislation. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 20. What are the general purposes of the Consumer Packaging and Labelling Act (CPLA)? Copyright © 2011 by Nelson Education Ltd. CHAPTE23:SALE& MARKETIN:THE CONTRA,PRODUC, &PROMOTION _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 21. How should hazardous products be labelled? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 22. What is false or misleading advertising and what defences are available? _______________________________________________________________________ _______________________________________________________________________ __________________________
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