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Canada (161,538)
MGSC30H3 (57)
Jeff Rybak (14)

Legal Environment - Lecture 011

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Management (MGS)
Jeff Rybak

SPECIAL CONTRACTS: SALE OF GOODS 1 April 2014 (Chapter 13, p. 312-328) THE SALE OF GOODS ACT SALE OF G OODS is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price. The Act applies only to: • S ALE occurs if the buyer obtains ownership of the goods as soon as the contract is created. AGREEMENT TO SELL occurs if the buyer does not obtain ownership of the goods until sometime after the contract is created • Goods are tangible (physical) things that can be moved (IE: Cars, crops). It does not include land, things that have already been attached to land (IE: Fences, houses), or anything not tangible (IE: Trademarks, shares) • Money is the only form buyer provides consideration for. It does not apply for trade goods (IE: Car for boat) • Evidenced in Writing. It only applies in some jurisdiction and only if price is over a specific amount. Also, lack of writing does not mean that a contract is invalid, but that court will not enforce it. Rule does not apply if buyer accepts parts of the good, pays part of the price, or provides something in earnest (gives something valuable) PASSING OF PROPERTY PROPERTY PASSES is when the ownership or title in goods is transferred from the seller to the buyer. At that point, property stops belonging to seller and starts belonging to buyer. There is difference between property and possession. Passing of property may affect remedies available if a contract is breached or if one party becomes bankrupt. Risk passes with property unless the parties otherwise ISKeis any loss or damage that may occur to the good (party who bears the risk suffers the loss). Passing of property default rules: 1. An unconditional contract for the sale of specific goods that are already in a deliverable state  At the time of contract, even if delivery and payment occur later 2. Contract for specified goods that require seller to do something to put goods into a deliverable state  When seller has done that thing and buyer has been notified 3. A contract for specified goods that requires the seller to do something to the goods (IE: Weight, measure, test) in order to determine the price  When seller has done that thing and buyer has been notified 4. Delivery of goods “on sale or return”  When buyer has signified approval or adopted the transaction or retained the goods beyond a reasonable time 5. A contract for unascertained or future goods by description  When goods of that description, that are in a deliverable state, are unconditionally appropriated to the contract by one party with the other party’s assent The act merely provides default rules. Parties are entitled to override the Act and adopt other rules for passing of property and risk. Even if property has passed to buyer, risk is still on the seller if that party creates a loss by improperly delaying delivery. TERMS IN CONTRACTS OF SALE Sale of Good Act implies terms in addition to rules that determine the passing of property: • Terms regarding seller’s title to sell o Condition that seller either has right to sell goods or have right to do so when time comes to pass property o Person who does not actually own goods cannot transfer ownership to you (may end up paying for nothing or committing tort) o Seller actually has title to sell and only person who has an interest in goods • Terms regarding nature of goods themselves o Goods sold by description must match that description  Identity of goods rather than quality  (IE: Stereo that holds 6 CD’s must hold 6 CD’s but does not matter if volume not what you hoped) o Goods sold by sample must correspond with the sample  S AMPLE BY S AMPLE is when the parties agree to deal in goods that match a particular specimen • If you bought by description and sample, store is required to deliver goods that correspond to both description and sample • Store must deliver goods the same quality as the sample (IE: Discharge contract if good did not perform as quickly or accurately in demo) • Store must give reasonable opportunity to compare • Goods must be free from defect that would make them un- merchantable and could not have been discovered by a reasonable examination (not have to take goods apart or complicated testing) o Goods must be of merchantable quality  C AVEAT EMPTOR means let the buyer beware  If buyer made specific promises, cannot complain if you are disappointed by goods you bought. Law expects you to be responsible for yourself, inspect goods yourself  Goods are of a merchantable quality if they are purchased by description from someone who normally deals in those sorts of goods. 4 comments: • M ERCHANTABLE is if a reasonable person would buy them without a reduction in price despite knowin
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