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ACTG 2P40 (8)
Chapter 14

ACTG 2P40 Chapter 14.docx

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Brock University
Tommy Wall

ACTG Chapter 14 Sale of Goods The Sale of Goods Act: History:  In the 1700s there were lots of disputes dealing with sale of goods so the British Parliament simplified the rules by passing a statute called the Sales of Goods Act, Canadian provinces soon followed with similar acts  The SGA did not try to change the law, it more accurately detailed the law  Codified: Existing common law rules passed in statute form  The SGA does apply to consumers but most provinces have other legislation addressing the specific needs of the consumer. Contracts of Sale:  Sale: A contract whereby the seller agrees to transfer property or goods to the buyer for a money consideration, called a price. It states that money must change hands, the statute will not deal with barters  Agreement to Sell: The transfer is deferred until a future, either a specific date or until a specific requirement is met  Consignment: Transfer of possession of goods from one business to another for the purpose of offering a sale  Goods: For the SGA to apply the subject matter must be a good, i.e. any personal property other than money  Chattels: Tangible personal property  Ownership: When one has a legal entitlement to property  Possession: When one simply has a good or property with them, but do not legally own it Terms:  Caveat Emptor: Buyer Beware o The buyer must investigate the purchase of suffer the consequences, it is a good general guideline but not a specific law o It applies where the goods are items that may be inspected by the buyer, where the seller has not made any misrepresentations about them  Statutory Protection for the buyer: o Condition: an essential term in the contract, a breach may relieve the other party of performance o Warranty: A non-essential term that does not relieve the injured party from performance o Seller’s Title: When one is offering to sell goods, he or she implies she has the right (ownership) to do so, a warranty that the buyer will have and enjoy possession of the goods and an implied warranty that the goods will be free from any charge or embrace by a third party, not declared to the buyer during the contract o Description: circumstances about the good: there is implied condition that the goods will correspond with the descriptions o Suitability and Quality: Two exceptions to the general rule that the buyer must exercise care to the suitability and quality of goods 1. Where the buyer expressly or by implication tells the seller that the buyer relies on the sellers skill or judgment and the goods are products that is the sellers business to supply 2. Where the goods are described by a seller who deals with those goods, there is an implied condition that the goods will be of sellable quality. But if the buyer inspects the goods, the that implication is disregarded o Implied Term of fitness: it is implied that the goods are a type that is suitable for the purpose which they are bought. This does not apply when an article is sold under its trade name( Get definition from prof) o Implied Term of merchantable quality: It is implied that the goods are in reasonable condition and free form defects that would make them unsuitable for use o Implied term that goods correspond with sample: When there is a sample of the good, any sold good would be of the same type and quality, the buyer will have reasonable time to compare the item and sample, and the good will be free from any defects not shown in the sample  Exemption Clauses: Sellers may include in standard form contracts a term relieving them of any liability imposed by the implied terms. Although the prospective buyer may refuse to enter into the contract, they are powerless to change the terms. The courts have limited the power of how much sellers can excuse their actions from the law  Payments: Most contracts of sale set out time of payment, but in some it is implied. When no time is given the courts presume that payment and delivery of the good are concurrent. Not paying on time is considered a warranty, but sometimes it is stated in the contract that if payment is not made on time, the seller regains ownership of the property.  Delivery: The terms to do with delivery are mainly three kinds: Quantity, time of delivery and place. The quantity delivered is a condition, if the quantity promised is significantly different than the quantity delivered. The time is also a condition, to a reasonable degree; if the delivery is significantly late the buyer can rescind the contract. The place of delivery can be decided on by the parties but it is usually at the buyers request, and it is also a condition  Risk of Loss: The buyer and seller should express when the risk of loss transfer form one party to another, if it is not, then it becomes necessary to imply a term by the courts. In the case of FOB shipping, the goods are implied to remain at the risk of the seller until delivery Title to Goods:  Nemo Dat Quod Non Habet: No one can give what he does not have, meaning one cannot sell what one does not own  Effect of Agency: When a business ships goods to an agent to sell, the consignment is to give the appearance of ownership to the agent in the eyes of others. Statutes allow the ag
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