- Some contractual terms are implied by statutes.
- Sales of Good Act where all common law jurisdictions in Canada have the same legislation and whereas
the other jurisdictions have consumer protection laws.
- Parties signing contracts opt out of the default rules that the Sales of Goods Act provides.
- The CPA requires that for consumer agreements, attempts to negate a condition or warranty under the
Sales of Goods Act will be void and of no effect.
- The SGA applies to sales of goods for money, not land or intangibles.
- Its always important to know at which point the property was transferred from the seller to the buyer.
RISK MANAGEMENT: Owners should have insurance; theres a difference between property and
- The SGA has several rules as to when property passes:
1. 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, even if DELIVERY OR PAYMENT IS
2. When 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 been NOTIFIED.
3. Where there is a contract for sale of specific goods in a deliverable state but the seller is bound to
weigh, or do another act in order to state the price, the property does not pass until such act is done
and the buyer has been NOTIFIED.
4. When goods are delivered to the buyer or approval or on sale or return, the property pases to the
buyer when the buyer signifies approval acceptance or adopts the transaction or retains the goods
beyond a reasonable time.
5. Where there is a contract for the sale of future goods by description, the property in the goods passes
to the buyer when goods of that description in a deliverable state, are unconditionally appropriated to
the contract by one party with the other partys assent.
- It is very uncommon for merchants to opt out of these rules by stating that title to the goods remains
with the seller until the full price of the goods has been received by the seller.
- Other important implied terms under the SGA are:
1. Sellers title to sell the goods:
- The act implies a condition that the seller has the right to sell the goods
- The act implies a warranty that the buy we receive clear title.
2. Nature of the goods:
- Goods sold by the description will meet the description
- Goods sold by sample will correspond to the specimen
- Goods will be of merchantable quality
- Goods will be fit for the intended purpose.
3. Delivery and Payment: - Unless otherwise agreed, delivery and payment should occur at the same time.
- Time of delivery is a condition. Condition meaning if the innocent party would be substantially
deprived of the expected benefit of the contract if a breach occurred. Since the customer was deprived
of what he originally asked for, he should not be required to uphold his end of the bargain.
- Time of payment is a warranty. Warranty meaning if the innocent party would not be substantially
deprived of the expected benefit of the contract if a breach occurred. Since the customer received his
big truck and not the van, although not clean, he must upheld his end of the bargain.
- Implied condition that seller will deliver goods that conform to the contract.
The Ontario Consumer Protection Act, 2002 (CPA)
- consumer means an individual acting for personal, family or household purposes and does not include
a person who is acting for business purposes (s. 1)
- consumer agreement means an agreement between a supplier and a consumer in which the supplier
agrees to supply goods or services for payments. (s.1)
- this Act applies in respect of all customer transactions if the consumer or the person engaging in the
transaction with the consumer is located in Ontario when the transaction takes place (s.2).
- Section 9 of the Act states: (1) The supplier is deemed to warrant that the services supplied under a
consumer agreement are of a reasonably acceptable quality. (2) The implied conditions and warranties
applying to the sale of goods by virtue of the SGA are deemed to apply with necessary modification to
goods that are leased or traded or otherwise supplied under a consumer agreement. (3) Any term or
acknowledgement, whether part of the consumer agreement, that purports to negate or vary any
implied condition or warranty under the SGA or any deemed condition or warranty under this Act is
The result of the provisions is that a consumer CANNOT opt out of his or her rights under the SGA. That
is the goods must be of reasonably acceptable quality. Chapter 7:
A contract is an agreement that creates rights and obligations that can be enforced in law which
is involved in the mutual exchange of value. We were able to get into that agreement because
we had a meeting of the minds. Rights and obligations usually lie quietly beneath the surface
while the future unfolds as the parties expected.
Ex: When I buy a book from the bookseller, he offers me a money back guarantee if anything
happened to the book. Most of the times, booksellers wont need to refund anyones money,
because the book isnt going to fall apart. Many rights within contracts arent actually put in
action because everyone expects what they signed up for. In the case that it isnt, guarantees
Most of the problems in court that do arise are avoidable because these problems occur when
people dont think of the legal consequence of their actions. If they did, court could be avoided.
Quid pro quo: something for something.
Tort Vs Contract summary:
Source of Privity Compensatory Risk
obligation damages Management
Tort Imposed by law Enforceable Place the plaintiff - may take a
regardless of any as if the tort did person by
agreement not occur surprise
between the - may require
parties more than a
person is able to
Contract Voluntarily Enforceable only Place the plaintiff - always possible
created by the by or against a as if contract to know the
parties party to the performed obligations in
- and to limit
them to promises
that can be
II. Objectives: 10 objectives.
1. Identify the three essential elements of most contracts:
The parties must have an intention to create legal relations
They must reach a mutual agreement through the process of offer and acceptance.
They must enter into a bargain by each giving consideration.
Intention to create legal relations: o The intention to create legal relations arises if a reasonable person would believe that the parties
intended to create a legally enforceable agreement.
o The judge would ask what would a reasonable person think, not what the two parties involved in the
o Negligent misrepresentation is very similar but there are minor differences.
2. Outline the situations in which people generally do or do not have an intention to create legal
o Social and family agreements are not necessarily contracts. A father is not liable for promising to get
his daughter a car but never did but there was no intent to create legal relations. Courts normally
presume that an intention to create legal relations exists in commercial context only, not between
family and friends. However there are some exceptions; a son may be able to persuade a judge that
his mom promised to pay his tuition under contractual obligations.
Offer and Acceptance: Offer:
3. Distinguish between an offer and an invitation to treat:
o An offer is an indication of a willingness to enter a contract on certain terms.
o An offeror is a party who offers to enter into a contract.
o An offeree is a party who receives an offer to enter a contract.
o Suppose you offered to sell cars on a website you would have to put first come first serve basis
for example in order to not be bound to unmanageable number of contracts.
o A statement is not an offer unless it is communicated and received as an offer.
o Deals on napkins are considered contracts; they dont have to be in any particular form.
o When you buy a cheese burger and a milkshake, you offer to enter a contract for the purchase of
the meal. When you enter a barber shop, you offer to sit silently in a chair and get a trim; the
The life of an offer:
4. 5 reasons contracts may cease to exist:
Revocation: occurs if the party who made the offer withdraws it.