Chapter 15: Sales and Consumer Protection

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

Chapter 15 Sales and Consumer ProtectionWednesday November 30 2011451 PMSale of GoodsSale of Goods Act Sale of Goods Act implies terms into contractSales of Goods Act is essentially a codification by the British Parliament of the case law in place in 19th centuryPrimary purpose of the Act is to imply the terms that the parties to sale of goods transactions often leave out Ex Parties may fail to specify date of payment or time of delivery Act will imply the missing terms in contractThe Act provides only missing terms and so the stated intention of the parties will override the provisions of the Act Not restricted to retail and consumer transactions rather applies to all situations where goods are boughtsold Ex Even significant commercial transactions involving large machinery such as railway locomotives Normal contract rules apply to sale of goods transactions except where overridden by the Sale of Goods Act Offer and acceptance as well as consideration capacity legality and intention must be present for contract to be formed Also rules with mistake misrepresentation privity and breach apply to contract Goods and Services Act ONLY applies to contracts with GOODStangible itemsgoods does not include real estate but does include crops growing on land Building and building materials are subject to the Sale of Goods Act until they become attached to the land They are then treated as part of the real property and are not subject to the ActContracts for intangibles such as services or negotiable instruments stocksbonds are NOT covered by ActTransactions involving both gs are problemative main component of the transaction is the service provided Ex Artist paints a portrait and sells it sale of goods act does not apply but if client were to resell portrait act would apply Transfer of GoodsAct applies only when its demonstrated that the goods were transferred When goods are used to secure a loan with no intention that they actually be transferred Act will not apply even though a bill of salewritten agreement which conveys title from seller to buyer may have been used to create the credit relationshipWhen goods used as security actually do change hands as in a conditional sale Act will apply Monetary ConsiderationAct will only apply if the sale involves actual payment of money Act will NOT apply to traded goods barteringRequirement of WritingSome provinces required evidence in writing Ontario is not required Part performance when some goods accepted by buyer will likewise make the contract enforceable Giving something anything of value will also make the contract binding Title and Risk Agreement to sellwhen title property interest in goods does not transfer immediately upond the sale agreements being concluded The Act also applies to this future transfer of goodsDetermining who has title at any time is important under the Act because whoever has the title baers the risk of damage or destruction to the goods unless parties agreed otherwise 4 methods used to override this provision of the ActCIF contracts cost insurance and freightdoesnt matter when title transfers because one of the parties has 1been designated as being responsible for paying the costs involved in the shipping of those goods as well as arranging insurance in the process assuming the risk if anything goes wrong FOBcontracts free on boardwith FOB contracts parties have agreed that the seller will bear risk until a 2specified point in the transport process Ex If GOB loading dock at sellers place of business buyer assumes risk at that point COD contracts cash on deliveryentitles the seller to maintain the proprietary rights or title as well as control 3over the possession of those goods until they are delivered to the buyers premises and paid for Risk stays with seller until delivery at specified location Bills of ladingused by seller to maintain control over the goods during shipment 4Document given by the transporter carrier of goods to the shipper as a form of receiptSeller can maintain control and risk with respect to those goods by naming itself as the party entitled toChapter 15 and 16 Page 1
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