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Chapter 23

MCS 3040 Chapter Notes - Chapter 23: The Seller, Canadian Broadcast Standards Council, Consumer Protection

Marketing and Consumer Studies
Course Code
MCS 3040
Joseph Radocchia

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Chapter 23
Sales & Marketing: The Contract, Product, & Promotion
What is Marketing Law?
Marketing practices just like other business aspects, are directly influenced by laws & regulations
Marketing laws are regulated by all 3 levels of government : federal, provincial & municipal
Main objectives of the law are to
Protect consumers from physical harm
Foster fair competition
Protect consumers from unfair selling practices
Objectives give rise to laws regulating a lot of conditions & warranties
If a business sells products internationally, they are subject to the laws & regulations of that country as
Marketing Law: The areas of the law that influence the creation, promotion, pricing & distribution of goods,
services or ideas (The 4 P’s)
Contract Law
There are several key aspects of the contract of sale that should be paid special attention to…
Terms relating to the product
When customers make a purchase they have expectations about the products attributes
Whether those expectations are protected from a legal perspective is a different matter
The foundation of the common law concerning the product is covered by the phrase “let the buyer
beware” or “let the buyer take care”
Common law requires buyers to be aware of what they’re purchasing, and to make appropriate
investigations before buying
If the buyer wants product to have certain characteristics the common law requires that
expectation in a contract or else buyer is left without remedy if there’s a problem
Sale of Goods Legislation in Canada
The law governing sale of goods is a specialized branch of contract law
Under the “sale of goods” legislation, “goods” generally means what it meant at common law:
personal property in its tangible, portable form as well as items attached to the land that can be severed
Unless the parties expressly agree to the contract or are otherwise able to exclude the operations of the
Sale of Goods Act, a number of terms are automatically implied into their contract
Legislation implies terms and also classifies them as either conditions or warranties
The seller has the right to sell the goods
The goods will be reasonably fit for the intended purpose where the buyer expressly or by implication,
makes it known what the intended purpose is
The goods will be of merchantable quality, where the goods are bought by description (reasonable
quality considering the price paid)
Where the goods are sold by sample, the goods will correspond to the sample that the buyer will have
a reasonable opportunity to compare the goods with the sample
Where the goods are sold by description, the goods will correspond with the description
That the buyer will have & enjoy quiet possession of the goods which means that usually 3rd parties
will not claim rights against them
Goods are free from liens and encumbrances in favor of 3rd parties that were not declared or known to
the buyer at the time to contract was made

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Classification of the relevant term of the contract is essential to determining the remedy that a curt is
entitled to give the disappointed buyer
Breach of a condition whether the sale of goods contract or not may give the innocent party the
right to not only claim damages but to reject the goods and treat contract as needed (right of
When a warranty is breached, the sale of goods legislation permits the buyer to maintain an action for
damages or ask the court to reduce the purchase price due to the breach
The buyer cant return the goods & is obligated to continue w/ contract
Limitations of Sale of Goods Legislation
The legislation…
Generally only applied to sale of goods, not land or services
Requires there to be privity of contract between customer and the offending party. Breach of
warranties by the manufacturer are not covered
Permits contracting out of the implied terms (buyer and seller can agree to the terms that wont apply)
Doesn't address pre-contractual representations made by the vendor
Consumer Protection Legislation
All provinces have supplemented the traditional Sale of Goods Act w/ legislation that effectively
prevents the express exclusion of implied conditions and warranties in consumer transactions
All provinces have enacted broader consumer protection legislation
The legislation also eliminated the sometimes artificial distinction between warranties & conditions by
implying warranties into protected transactions and providing specific remedies in the event of a
breach or implied warranty (remedies depend on seriousness of breach)
Greater protection is offered in this then sale of goods statues by way of ..
Stronger warranties w/ respect to the quality and fitness for purpose
A warranty of durability to ensure the goods are merchantable and fit for a reasonable amount of time
A warranty of reasonably acceptable quality of service
A provision that makes all representation designed to include a customer into a transaction, whether
written, oral or otherwise, into express warranties given by the seller to the buyer
Transfer of Title
Ownership entails control over the property but also involves the risk of loss from damage or
Transfer of title or ownership of goods from the seller to the buyer is fundamental to the sales
transaction and has an impact on a number of business controls especially the transfer of risk
The best way for parties to ensue clarity of who is the owner is to write the contract in a way that
specifies when an d how ownership moves from the buyer to the seller
If they fail to do so there are statutory provisions that resolve the issue
The provincial sale of goods act sets out a series of rules that determine when title changes in the absence of
terms of a contract
Specific Goods: Goods that are identified & agreed on at the time a contract of sale is made
Unascertained goods: Goods not yet set aside and identifiable as the subject of the contract at the time the
contract is formed
Rule #1
Where this 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 and it is immaterial whether the
time of payment or the time of delivery or both is postponed
Rule #2
Where there is a contract for the sale of specific goofs & the seller is bound to do something to the
goods for the purpose of putting them in a deliverable state, the property doesn’t pass until te thing is
done and the buyer has received notice
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