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Management and Organizational Studies
Management and Organizational Studies 2275A/B
Philip King

Chap 23: Sales and Marketing – The Contract, Product, and Promotion Overview of Marketing Law  Three objectives 1) To protect consumers from physical harm 2) To foster fair competition 3) To protect consumers from unfair selling practice  Components:  Contract of sale  Federal and provincial legislations relating to consumer protection & competition  Define: All areas of law that influence and direct the creation, promotion, pricing, and distribution of gods, services, or ideas Contract of Sale - Business  The Common Law  Caveat Emptor – “let the buyer beware” or “let the buyer take care”  Requires prospective purchasers to take care of themselves, to be aware of what they are purchasing and to make appropriate investigations before buying  Purchaser’s expectations must be contained in the contract, otherwise cannot receive any remedy  Sale of Goods Legislation  Implied Terms: - The item sold is fit for the purpose sold - Merchantable – reasonable quality - Provide remedies to the buyer if these terms are breached  Conditions (terms are essential to the purpose of the contract) - 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 know what the intended purpose of the goods will be. The buyer does not have to make his intended purpose known when goods are used for their ordinary purpose - The goods will be of merchantable quality - Where the goods are sold by sample, the goods will correspond to the same and that they buyer will have a reasonable opportunity to compare the goods with the sample - Where goods are sold by description, the goods will correspond with the description  Warranties rd - Buyer can enjoy quiet possession of the goods – no 3 party clam rights against them - The goods are free from liens 留置权 and encumbrances 财产的抵押权 in favour of 3 parties that were not declared or known to the buyer at the time the contract was made - Delivery + payment within reasonable time Ex> 1 Situation: A buyer relied on one of PPC’s online advisors in order to purchase a equipment suitable for older children. When the shipment was received, the customer fond out the equipment could only provide entertainment for children under five Result: Sale of Goods Act Violation - PPC has violated a condition implied by the Sale of Goods Act, namely that the goods are suitable for the purpose sold Ex> 2 Situation: a homeowner purchased an expensive play set through PPC’s website. Within one year, the equipment was falling apart. Result: Sale of Goods Act Violation – since the play equip has been sold by description and is not of reasonable quality, PPC has violated the condition of merchantability implied by the Sale of Goods Act. Delivery of Goods  Bill of Lading  Define: a shipping document that serves as a contract between the seller and the carrier  Stoppage in transit: the right of a seller to demand that goods be returned by a shipper to the seller, provided the buyer is insolvent  Cost, Insurance, and Freight  C.i.f: the seller is responsible for arranging the insurance (in the buyer’s name) and shipping.  The purchase price include the cost of the goods, insurance, and shipping  PPC must arrange shipping, insurance, and provide all necessary documentation to the buyer, and transferred the goods to the shipper – the obligations are done  Free on Board  F.o.b: the buyer specifies the type of transportation to be used, and the seller arranges this and delivers the goods to that shipper  The buyer pays for shipping and insurance  Cash on Delivery  C.o.d: the buyer pay the shipper cash on delivery of goods Risk of Loss and Transfer of Title  Specific Goods: goods that are identified and agreed on at the time a contract of sale is made – Rule 1 – Rule 4  Unascertained Goods: goods not yet set aside and identifiable as the subject of the contract at the time the contract is formed – Rule 5  Rule 1:  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 time of delivery or both is postponed  Rule 2:  Where there is a contract for the sale of specific goods and the seller is bound to do sth to the goods for the purpose of putting them in a deliverable state, the property does not pass until the thing is done and the buyer has received notice. The title does not change until the goods have been put in a deliverable state and the buyer has been notified  Rule 3:  the contract is for sale of specific goods in a deliverable state but the seller is bound to do sth with reference to the goods for the purpose of ascertaining their price, the property does not pass until such act or thing is done and the buyer has received notice  Ruel 4:  Where the goods are delivered to the buyer on approval or on “sale or return” or other similar terms, the property passes to the buyer a. When she signifies her approval or acceptance to the seller or does any other act adopting the transaction, or b. If she retains the goods without giving notice of rejection. When a fixed time of return expires, or on expiration of a reasonable time (no fixed term)  Ruel 5:  A contract for the sale of unascertained - the goods of that description are in a deliverable state, the title will pass to the buyer only.  Example: XYZ places an order with PPC for 50 play sets. The operator of the forklift truck in the PPC warehouse accidentally drops some boxes that could have been sent to XYZ. Since the order is generic or unascertained (there is no way of knowing which boxes will be used to fill XYZ’s order), title changes only when the goods are unconditionally appropriated拨出 to the contract. Here, title has not shifted, as boxes for XYZ are still mixed in with general inventory If, the forklift had dropped XYZ’s order, XYZ would have title and incur the risk. Remedies  If the buyer commits breach by cancelling an order, the seller is entitled to damages for breach a) Condition 1: Title has not shifted to buyer, the seller still owns the goods - damages for non-acceptance - the seller has an obligation to mitigate the loss b) Condition 2: title has shifted, the buyer owns the goods - Action for the price - The buyer must pay the full amount of its obligations  Breach of ACondition - Right of Repudiation  Breach of a condition may give the innocent party the right not only to claim damages (return of payment) but also reject the goods and treat the contract as ended Ex> The building supply store that received play equip that was not suitable for the purpose sold (one of the conditions) is not obligated to accept further shipments from PPC. The customer can bring its contract with PCC to an end, return the equipment, and find another supplier  Breach of AWarranty  The buyer only can maintain an action for damages OR ask the court to reduce the purchase price  CANNOT return the goods and is OBLIGATED to continue with the contract and comply with any outstanding terms  If the buyer refuses to perform after breach of warranty – the buyer is in breach of contract Limitations of Sale of Goods Legislation  Limitations for the Doctrine of Caveat Emptor  Applies only to sales of goods, not land or services  Requires that there be 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 some or all of the terms will not apply)  Does not address pre-contractual representations made by the vendor Consumer Protection Legislation  The following legislations are only applied for Personal Use  Provinces have legislations regarding to UNFAIR practices  Targets customers with physical infirmity, ignorance, illiteracy, inability to understand the language or the agreement, or other similar factors and who are therefore unable to understand the serious nature of the agreement  Sells at a price that grossly exceeds the price at which similar goods or services  Engages in
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