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29 Cards in this Set

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1. Describe the types of contracts to which the Sale of Goods Act applies. (Pg. 296)
a. The Sale of Goods Act applies to contracts whose subject matter is goods, not services. It applies to both contracts of sale and agreements to sell.
2. Describe the difference between a contract of sale and an agreement to sell. (Pg. 296-7)
a. In a sale, ownership of (title to) goods passes from the seller to the buyer at the moment the contract is made. In an agreement to sell, the transfer of title to the buyer is deferred until a future date. That date may be specified of indefinite.
3. Describe the difference between a contract of sale and a consignment. To which does the Sale of Goods Act apply? (Pg. 296-7)
a. A consignment does not amount tot a transfer of title. It deals with a change in possession. It is an agreement to ship goods from one business to another for the purpose of sale. In a sale, title to (ownership of) goods passes from seller to buyer when the contract is made. The Sale of Goods Act applies to sales, not consignments.
4. What are goods? (Pg. 297)
a. Goods are personal property, other than money and choses in action. Goods are chattels, tangible personal property.
5. Explain the difference between title and possession. (Pg. 298-99)
a. An owner of goods has title to them. An owner has the right to complete enjoyment, disposal and use of the goods. Possession can be in the hands of someone other than the owner. A person who has dominion and control over the goods, but is not the owner, is said to have possession of them.
6. What does Caveat Emptor mean? (Pg. 299)
a. Caveat Emptor means “let the buyer beware” – that is, the risk is with the buyer.
7. Distinguish a condition from a warranty, as terms are used in the Sale of Goods Act. (Pg. 299)
a. The Act uses the word “condition” to mean an essential term of contract. A “warranty” is used to refer to a minor, non-essential term.
8. Why is it important to distinguish between a condition and a warranty? (Pg. 299)
a. The importance of the distinction is that breach of a condition allows the injured party to repudiate the contract and relieves him/her from any further duty to perform under the contract. Breach of warrant may allow the injured party to recover damages but it does not relieve him/her from performing his/her side of the bargain.
9. The Sale of Goods Act implies what terms concerning a seller’s ownership of goods? (Pg. 300)
a. The Sale of Goods Act implies that: the seller has the right to sell the goods; the buyer will have and enjoy quiet possession of the goods; and the goods will be free from charges and encumbrances in favour of any third party, not declared or known to the buyer before or at the time the contract was made.
10. Describe the impact of the Sale of Goods Act on the suitability and quality of goods. (Pg. 301-3)
a. The common-law provision as to suitability and quality of goods is caveat emptor, buyer beware. Under the Sale of Goods Act, however, where the buyer makes known to the seller the particular purpose fro which the goods are required and relies on the seller’s skill or judgement, there is an implied condition that the goods will be reasonably fit for such a purpose. As well, where the goods are bought by description from a seller who deals in that kind of goods, there is an implied condition that the goods will be of merchantable quality. If the buyer examines the goods, the condition does not extend to defect, which the examination ought to have revealed.
11. Explain the meaning and impact of s.53 of the Sale of Goods Act. (Pg. 304)
a. Section 53 enables a seller to exclude or modify the terms implied by the Sale of Goods Act by express agreement or by course dealing between the parties.
12. Describe the limitations on a seller’s ability to exempt herself from liability under the Sale of Goods Act. (Pg. 304-5)
a. Exemption clauses are very strictly construed against the seller in order to limit his/her ability to exempt himself/herself from the Act. Moreover, the clause may not so completely exempt the seller from liability that he/she may default with impunity.
13. When must a party pay for goods that he/she has purchased? (Pg. 306)
a. Where the contract stipulates a time for payment, the buyer must pay at that time. If a time for payment is implied from the terms of the contract and the particular circumstances, the buyer must pay then. Where the contract is silent about when and how the buyer is to pay, the courts assume that delivery and payment are to be made at the same time.
14. Describe three terms relating to delivery that should be included in a contract of sale. (Pg. 306)
a. When drafting a contract relating to delivery, you should specify the quantity to be delivered, the time of delivery and the place of delivery.
15. If no time for delivery is specified in the contract, what term will the courts imply? (Pg. 306)
a. If no time for delivery is specified, the courts will imply that the goods were to be delivered within a reasonable time taking into account all the circumstances. What amounts to a reasonable time varies according to the place of delivery.
16. If the seller delivers a greater quantity of goods than the buyer ordered, what choices does the buyer have? (Pg. 306)
a. A term specifying the quantity to be delivered is a condition. If the term is broken, that is, if the seller delivers a substantially different quantity, the buyer is free to reject the goods. His/her right to do so exists whether a greater or lesser quantity than promised is delivered.
17. When does the risk of loss pass from the seller to the buyer in a contract? (Pg. 306-7)
a. Risk of loss passes at the time stipulated in the contract. Where a contract is silent about the risk of loss, normally the owner bears any loss that is sustained to the goods.
b. Under both FOB and CIF contracts, the risk of loss usually remains with the seller until he/she has delivered the goods to the carrier. In contrast, under a COD contract, the risk of loss remains with the seller until he/she has delivered them to the buyer. If there is no agreement on when the risk of loss transfers, then the risk follows the title to the goods.
18. What is a “bill of lading”? (Pg. 310-11)
a. A bill of lading is a document signed by a carrier acknowledging that specified goods have been delivered to it for shipment.
19. What three purposes do bills of lading serve? (Pg. 310-11)
a. First, they act as a receipt from the carrier. Second, they provide evidence of the terms of the contract between the shipper and carrier. Finally, the bill of lading may itself be evidence of title to (ownership of) the goods.
20. What is a lien? (Pg. 311)
a. A lien is a right of a person in possession of property to retain that property against the claim of the owner. It is the right of a seller to withhold goods from a buyer until he/she is paid.
21. When is it available to a seller of goods? (Pg. 311)
a. In order for a seller to have a right of lien, he/she must have possession of the goods. Once he/she loses possession, he/she loses the right to the lien. However, even with possession of the goods, he/she may not have a lien. The right to a lien exists only if: i) the contract makes no stipulation that the buyer is to have credit so payment is required upon delivery; ii) the goods have been sold on credit, the term of credit has expired without payment being made and the seller still possesses the goods; or iii) the buyer becomes insolvent before the seller has delivered the goods. Insolvency must be proven. It is insufficient to prove that the buyer is merely financially precarious.
22. Describe the right of “stoppage in transit” and when it is available to an unpaid seller. (Pg. 312)
a. If a seller gives goods to a carrier for the purpose of delivering them to a buyer but during the course of the delivery notifies the carrier that he/she wishes the goods to be returned to him/her and not delivered to the buyer, he/she has stopped the goods in transit.
b. This remedy is available if a buyer becomes insolvent after an unpaid seller has delivered goods to a carrier. It is not available to the seller once the goods are in the possession of the buyer.
23. When is there a right of repossession? (Pg. 312)
a. The right to repossession occurs only where a seller has delivered goods to a buyer and the buyer, before having paid in full for the goods, becomes bankrupt or insolvent. The seller may make a written demand for the return of the goods. The demand must be presented within 30 days of the delivery date and applies only to goods that were delivered in relations to the buyer’s business, not consumer goods.
24. Describe a seller’s right of resale. (Pg. 312)
a. After exercising the right of lien or stoppage in transit, a seller may resell the goods. He/she must first give notice of the intended resale to the buyer.
b. An unpaid seller also obtains the right to resell goods whenever a buyer refuses to accept goods delivered according to the terms of the contract.
25. When does a seller sue for damages for non-acceptance? For the contract price of the goods? (Pg. 312-13)
a. A seller has the right to receive the full contract price when title in the goods has passed to the buyer. In such a situation, a seller would sue for the contract price.
b. Where title as not passed to the buyer, a seller would sue for damages of non-acceptance. The amount of the damages depends on whether the seller could resell the goods. If he/she could, damages are the value of lost profits. If he/she could not, damages are the excess of the contract price over resale price.
26. Why is it important to distinguish a deposit from a down payment? (Pg. 314)
a. A deposit is a sum of money paid, by the buyer to the seller, to compel performance of the contract. The purpose of a down payment is not to compel the seller to perform, but to constitute a part payment of the contract price. If the contract falls through, the party with a deposit (the seller) is entitled to keep it. If it is a down payment, he/she usually has to return the money less any claims he/she may have for damages.
27. How does the Sale of Goods Act affect a seller’s liability for breach of contract? (Pg. 314-16)
a. A common law, a breach of a very important term of contract entitles the injured party to repudiate the contract and his/her obligations under it. The Sale of Goods Act prevents repudiation when complete delivery is made and the buyer has indicated intent to keep the goods.
28. What is the difference between wrongful detention and conversation of goods? (Pg. 316)
a. When title to goods has passed to a buyer and the seller refuses to deliver, the seller is guilty of wrongful detention. If the seller not only fails to deliver but also transfers the goods to someone else, he/she is liable for conversion.
29. What remedies does a buyer have if a sale of goods goes wrong? (Pg. 316-317)
a. A buyer may get damages, rescission or specific performances for breach of contract of sale. Damages are a sum of money that compensates the buyer for the seller’s breach. Rescission restores the parties to their original position. This releases the parties from further obligations under the contract and returns whatever goods or money one has given to the other. Specific performance requires the seller to deliver the specified goods to the buyer.