Chapter 13: Special Contracts: Sale of Goods
THE SALE OF GOODS ACT
The Canadian economy was traditionally based on tangible goods; however, recently the
situation has started to change. We are beginning to depend on more intangible things, like
information and services.
Nevertheless, the sales of goods remain vitally important:
i.As individual consumers, we will always need to buy things like food and clothing.
ii. Many businesses in this country continue to deal primarily in goods, either buying or selling
iii.Eve those businesses that do focus on info occasionally find it necessary to participate in the
sale of goods.
B/c sales of goods contracts are so significant; they are governed by a special statute, the Sale of
Goods Act. Interestingly, that statute was initially introduced as a codification.
Business people did not want to spend time or money in court. They want clear &
comprehensive laws that allow them to quickly deal w/ potential problems & get on with the
job of making money.
Thus, the British Parliament transferred, or codified, the judge-made rules into Sales of
Goods Act in 1893. Since then, all common law jurisdictions in CA have adopted virtually
Judges wanted to provide default rules that would apply if the parties did not deal with
particular issues themselves, where goods can be bought and sold quickly b/c the parties do not
have to negotiate and agree on a long list of terms. – The act does much of the work for them.
B/c the Act provides default rules, a contract may include terms that the parties did not even
If you are buying or selling goods you should know the rights & obligations that the statutes
implies and if you are unwilling to accept those rights & obligations, you should walk away from
the deal or persuade the other party to adopt different terms.
A SALE OF GOODS
The Sale of Goods Act only applies to a sale of goods.
oSale of Goods: is a contract whereby the seller transfers or agrees to transfer the property in goods to a
buyer for a money consideration called the price.
Note for points:
i. The Act applies only to a sale.
oThe terms cover two situations: sales and agreement to sell.
oSale: occurs if the buyer obtains ownership in the goods as soon as the contract is created.
oAgreement to Sell: occurs if the buyer does not obtain ownership of the goods until some
time after the contract is created. E.g. a buyer agrees to purchase a car that has not yet been
oA sale of goods does not occur if the buyer is not intended to eventually obtain ownership.
E.g. if goods are leased, gifts, or it goods are provided as security for a loans.
ii. The Act applies only to a sale of goods.
oGoods are tangible things that can be moved. It doesn't include land or things that have
already been attached to land, e.g. houses and fences – not moveable.
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