Chapter 23- Sales and Marketing-1.docx

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Chapter 23: Sales and Marketing: The contract, Product and Promotion
1
What is Marketing Law?
All three levels of government regulate marketing: federal, provincial and municipal.
The main objectives of these laws are
To protect consumers from physical harm
To foster fair competition
To protect consumers from unfair selling practices
These objectives give rise to laws regulating a multitude of issues including:
- Implied conditions and warranties for the sale of goods and services
- Product safety standards
- Disclosure on packaging
- Standards for honest promotion
- Anticompetitive practices
- Distribution of products
Marketing Law: All areas of law that influence and direct the creation, promotion,
pricing and distribution of goods and services, or ideas.
Contract of Sale
Terms Relating to the Product
The foundation of the common law concerning the product is contained in the Latin
phrase caveat emptor. The law requires prospective purchasers to take care of
themselves, to be aware of what they are purchasing, and to make appropriate
investigations before buying it. However the caveat emptor law produces unfair
results and therefore a protection for the purchaser of goods were provided.
Caveat Emptor: “Let the buyer beware” or “let the buyer take care”
Sale of Goods and Legislation in Canada
Sale of goods legislation applies only to the sale of goods. Under the legislation:
“goods” generally means what it meant at common law: personal property in its
tangible, portable form as well as items attached to land that can be severed.
The legislation classifies them as either conditions or warranties. Conditions are
terms that are important or essential to the purpose of the contract. Though
warranties are classically understood as being minor or collateral terms, they can
also be very important. Conditions and warranties are as follows:
Conditions: that the seller has the right to sell the goods
- That the goods will be reasonably fit for the intended purpose where the
buyer, expressly or by implication, makes it known what the intended
purpose of the goods will be in such a way as to show that he is relying on the
skill and judgment of the seller. Not that a buyer does not have to make his
intended purpose known when goods are used for their ordinary purposes.
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Chapter 23: Sales and Marketing: The contract, Product and Promotion
2
- That the goods will be of merchantable quality, where the goods are brought
by description. Merchantable quality means that the goods are of reasonable
quality considering the price paid. The essence of a sale by description is the
reliance by the buyer on some description by the seller and, accordingly,
there may be reliance even where the buyer has seen or inspected the goods.
- That, where the goods are sold by sample, the goods will correspond to the
sample and that the buyer will have reasonable opportunity to compare the
goods with the sample
- That, where goods are sold by description, the goods will correspond with
the description
Warranties: that the buyer will have and enjoy quiet possession of the goods, which
generally means that third parties will not claim rights against them
- That the goods are free from liens and encumbrances in favor of third parties
that were not declared or known to the buyer at the time the contract was
made
Examples: Someone orders a playground from a company after a company
representative tells them it is suitable for older children. The equipment comes
through and they realize it is only suitable for younger children. The company has
not violated a condition by the Sale of Goods Act, namely that the goods are suitable
for the purpose sold.
A homeowner purchases equipment and it breaks down within a year. The company
has violated the condition of merchantability implied by the Sale of Goods Act.
Limitations of Sale of Goods Legislation
While sale of goods legislation provides helpful inroads on the doctrine of caveat
emptor, it has limitations. For example the legislation:
Generally applies only to sale of goods, not land or services
Requires that there by privity of contract between the customer and
the “offending” party; breach of warranties by the manufacturer, for
example, are not covered
Permits contracting out of the implied terms (the buyer and seller can
agree that the terms will not apply)
Does not address pre-contractual representations made by the vendor
Transfer of Title
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 concerns
especially the transfer of risk. Consider these examples:
If a truckload of goods is destroyed by fire in mid-delivery, who owns them
and who bears the loss if they are destroyed?
If goods are to be paid for within 30 days of sale, does the 30 days begin upon
delivery of the goods or at some earlier point?
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