CMLW 2201 Saint Mary’s University Commerical Law Business Essay

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Commercial Law
CMLW 2201.2 Winter 2020
Dr Bruce Anderson
Instructions.
There are 15 questions.
* Please create a word document and include your name, A number, and whether you are
in the 11:30 or 4:00 class.
You can submit your answers (just your answers; I don’t need the questions) as a Word
document or PDF via Dropbox on Brightspace, or email them to me:
bruce.anderson@smuca
1. Alex plays for Saint Mary’s varsity basketball team. She broke her leg when a player
on the other basketball team crashed into her leg when Alex was taking a jump shot.
Alex’s lawyer assessed Alex’s damages as $10,000 for lost income, $1,000 for
physiotherapy, and $2,500 for pain and suffering.
But when the judge told Alex that she “voluntarily assumed the risk of getting
injured” she didn’t know what that meant. Please explain to Alex what that means and
how it effects her total damages calculated to be $13,500.
For full points you must say she gets nothing/$0 damages + that she knew there
was a risk of being injured and engaged in the sport anyway.
2. Because of the coronavirus pandemic Saint Mary’s University emailed all the
professors and staff and told them that they were not allowed to go into their offices and
any buildings on the SMU campus until further notice. However, Professor Wade used
his access card to enter the back door of the Sobey Building to go to his office to get
some papers. Campus Security saw him on a video camera. They went to his office and
took him by the arm and removed him from the building.
What intentional tort did Professor Wade commit? Explain your answer.
Trespass to land. On the property without permission or consent withdrawn.
3. Dr Oz hosts a weekly television show devoted to giving advice about healthy living.
On one show he told his television viewers that the real secret to a good life was to eat
two spiders every day for one week each year. When Kim who watched the show ate her
first spider she had an allergic reaction and could not work for one week. She sued Dr Oz
for giving negligent advice and not warning her of the dangers of eating spiders.
The judge who heard the case dismissed it saying that there was not sufficient
proximity between Dr Oz and Kim and therefore Dr Oz did not owe Kim a duty of care.
Explain why the judge would say this.
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Not a good enough connection between Kim and Dr Oz because he is not his
patient, was not giving advice directly to her. He doesn’t know her medical history,
simply part of a TV audience etc. (For full points you have to answer because…)
4. Billy Schnare, a partner of Accurate Accounting, LLP specializes in tax accounting.
Zero Industries Ltd hired him to give them advice on how to reduce their taxes.
Zero Industries followed Billy Schnare’s advice. Later that year they received a letter
from the Canada Revenue Agency (the government agency responsible for taxation in
Canada) stating that their tax avoidance scheme was illegal, that they had to pay an
additional $200,000 in taxes, a $25,000 penalty for tax evasion, and 15% interest on the
$200,000 amount they owed.
Zero Industries Ltd is thinking about suing Billy Schnare for negligence. They
want to know whether Billy Schnare breached the standard of care? Did he? Why/Why
not?
Did he do what a reasonable accountant would do? No. A reasonable accountant
would give advice that was illegal. (For full points you have to state the test and apply it
to the situation.)
5. What type of situations are punitive damages awarded for in a tort case?
Where the person committed a tort and does something really bad/knew the
situation was dangerous and did nothing, etc. and the judge wants to punish the offender
and/or deter others.
6. Michael Crosby’s dream was to be a chef. The first thing he did when he graduated
from the Community College was to register his new catering business as a sole
proprietorship. His first job was to prepare all the food for a birthday party. Unfortunately
he left the cold meats out in the hot sun. Everyone at the party got food poisoning and
each person was unable to work for three days. Michael was confident he would not have
to pay any damages for negligence out of his own savings because his business was
registered as a sole proprietorship. Is he correct? Why/Why not?
He is personally liable for all things because he is a Sole Proprietor.
7. Susan and Billy registered as partners in a house building business. Susan thought they
needed a new truck for moving building materials. Without consulting Billy about
purchasing a truck for the business Susan bought a new truck and paid for it with a
cheque drawn on their partnership bank account. Billy was furious he was not consulted
and told Susan she should pay for the truck with her own money.
Susan told Billy they were partners and that she (Susan) had the legal right to buy
the truck using the partnership’s money. Is Susan correct? Why/Why not?
She can do this without his permission. She can act as an agent for the
partnership. And the truck is for the business. She did not breach any fiduciary duty.
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8. Three people formed, and registered, a limited partnership (LP) to carry on a fish
selling business (Two General Partners, One Limited Partner). The name of the limited
partner was part of the registration documents. To celebrate the end of their first year in
business, they went on a hunting trip together. The truck in which the three were
travelling crashed on the way to their destination. There was only one survivor who was
the limited partner.
A creditor who had not been paid by the business obtained a court order stating
that the LP must repay the creditor $30,000. Upon hearing of the death of the two general
partners, the creditor wanted to recover the $30,000 from the surviving limited partner’s
personal assets.
Is the creditor correct? Will the creditor be successful? Why/Why not?
Limited partner won’t have to pay. It was registered, Name of limited partner was
registered. etc.
9. What is the key difference between the voting rights of owners of common shares of a
company and the voting rights of owners of membership shares of a cooperative?
Common share: 1 vote per share. A person can own more than one share
Membership Share: 1 vote per member. A person can only have one membership share.
10. How do the shares of a cooperative help foster and promote the aims, principles, and
values of cooperatives?
For instance, Everyone/each member has one vote so this promotes equity democracy.
(Simply stating the values of a coop does not explain how the shares promote those
values.)
11. Both a corporation and a cooperative are said to be a legal person, having a separate
legal existence. Explain what that means.
They can do anything a person can do…buy land, hire employees, make contracts,
and so on.
A company is a separate entity distinct from its shareholders, employees,
directors, officers.
12. Andre worked as President for East Coast Fish & Shellfish Exporters Ltd. who sold
fish and shellfish throughout the world. He thought there was an excellent business
opportunity to export seafood to Spain, and a chance to make some extra money for
himself. So one evening at home Andre bought 1,000 pounds of lobsters over the
telephone with his own money and made all the arrangements to have them exported.
When the Board of Directors of East Coast Fish & Seafood Exporters Ltd. heard of the
sale they immediately terminated Andre’s employment. Andre believed that he did not do
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anything wrong because he used his own money and bought and sold the lobster on his
own time.
Would the Board of Directors of East Coast Fish Exporters Ltd. be justified in
ending Andre’s employment? Why/why not?
Yes, breach of his fiduciary duty to the company. Conflict of interest. He is competing
against the company he runs.
13. El Paso Inc hired Goldman Sachs Corp to advise it whether to split into two
companies or to sell the company (El Paso Inc) to Kinder Morgan Corp.
Goldman Sachs Corp owns 20 per cent of the shares of Kinder Morgan Corp
(worth about US$4 billion) and has two seats on its board.
What is the problem with this situation? How would you recommend it be solved?
Conflict of Interest – Goldman Sachs is hired by El Paso to give it good advice. But
Goldman Sachs has a fiduciary duty to act in the best interests of Kinder Morgan. So its
advice could be biased. Get someone else to advise El Paso.
14. Wally and Barry are equal shareholders of Walbar Ltd, and both are officers and
directors of Walbar Ltd, which operates a pool hall. There are several pool tables in the
establishment, but one table in particular is not used very often by patrons. Wally decided
to take it home and set it up in his basement. When Barry objected, Wally replied, “Look,
it’s my company too. Because I own half the pool tables I have a legal right to take the
pool table home if I want to.”
Is Wally correct? Can he take the pool table home? Does he own one-half (0.5) of
the pool tables? Why/why not?
The company owns half the tables. Not him. He cannot simply take the table home.
15. Typecast LP. is comprised of Live Magazine Inc which is the general partner, and
several limited partners including Mahnaz.
Mahnaz is also the sole shareholder and president of Live Magazine Inc. In his
capacity as President of Live Magazine Inc, Mahnaz is the manager of Typecast LP.
On behalf of Typecast LP Mahnaz signed a contract with Clear Graphics Ltd to
provide printing services worth $50,000 to Clear Graphics Ltd.
Clear Graphics Ltd paid Typecast LP $50,000 but Typecast LP did not do any of
the work they promised. Clear Graphics Ltd got a court order saying that Typecast LP
must pay $50,000 to them (Clear Graphics Ltd).
Unfortunately, Clear Graphics Ltd discovered that neither Typecast LP nor its
general partner Live Magazine Inc has any assests.
Can Clear Graphics recover the $50,000 from Mahnaz? Why/why not?
Simple Superficial Answer for full points:
As a limited partner. No because of limited liability of limited partners.
As a shareholder. No because of limited liability of limited partners.
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This actually is a tricky question – What complicates this situation is that as a limited
partner he is acting like a general partner managing the LP. So perhaps that negates his
protection as a limited partner. Also he is the sole shareholder of a company that seems
to be doing something fraudulent and relying on limited liablity as a shareholder to
protect himself from liability. The courts will not protect sole shareholders of companies
if that is the case.
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Answers to ‘Review Questions on Sale of Goods’
From my typed sheet of 22 questions:
1. Shares, debts, patents, services, land and buildings
2. Read Sale of Goods Act (SOG) s. 4(1)
3. When a text or oral statement describes an object and/or when an image of an object is
used to represent the object that was sold. Read S. 16.
4. The buyer looks at a sample of what they want to buy and then purchases the same
type of goods, but not the particular goods they looked at or inspected. Read SOG s.
18.
5. Generally speaking, it means that the goods are defective in some way. The test is
whether a reasonable person would pay that amount of money for those goods. Read
SOG s. 17(b).
6. Crudely speaking it means that the buyer makes known to the seller the purpose they
want to use the goods for, and relies on the sellers advice. Read SOG s. 17(a).
7. “Contracting out of the Sale of Goods Act” is another way to say that the seller and
buyer stated in the sales contract that the Sale of Goods Act does not apply to this
particular sale.
8. To protect consumers from being taken advantage by unscrupulous sellers.
9. No. CPA s. 28.
10. Look at the ‘Power point’ sheet on Brightspace and then read the section.
11. Look at the ‘Power point’ sheet and then read the section.
12. Look at the ‘Power point’ sheet and then read the section.
13. Look at the ‘Power point’ sheet and then read the section.
14. Yes. Section CPA s. 26(5).
15. Yes. Read CPA s. 26(3)(i).
16. Yes. Read CPA s. 26(3)(j).
17. to Question 20 – These questions are related to when property in the goods (ownership
of the goods) is transferred from the seller to the buyer. We didn’t do this topic so you
are not responsible for these questions.
21. Read s. 50 and s. 51 of the Sale of Goods Act on page 8. The seller can sue the buyer
for the price of the goods. And can sue for damages if the buyer refuses to accept the
goods. Recall what you know about remoteness in contract law from the first part of the
course in s. 51(2).
22. Read SOG s. 52. The buyer can sue the seller for damages. Read s. 53 – The buyer can
sue the seller for specific performance.
Answers to Review Questions
1. Yes. So that buyers and sellers know where they stand if the contract is breached. It
also enables them to plan and to reduce their risk.
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2. You should try and figure this out. For clues look at the textbook and the Introductory
paragraphs to the Sale of Goods on Brightspace.
3. Already answered above.
4. Goods are physical objects. They are not shares, etc. Services are not covered by the
SOG, but they are by the CPA.
5. Read s. 7(1) of the SOG on page 3.
6. As you know from doing the Brightspace questions it applies to goods, sales, bus to
bus sales or bus to consumer sales, and it applies unless the parties say it does not.
7. You are not responsible for this topic.
8. You are not responsible for this topic.
9. In a sale the seller transfers the property to the buyer for a price. In an agreement to
sell, the seller agrees to transfer the property to the buyer for a price. A sale or return
is when the buyer has possession of the property only (the property has not been
transferred from the seller to the buyer). The person in possession of the property can
either say they want to buy it or return it.
10. You are not responsible for this topic.
11. Sections 16, 18, 17(a), 17(b) all say there is a breach of an implied condition, for
instance if the goods do not match the description. Breach of warranties are covered
in s. 54(1) of the SOG on page 9. Read it. And recall what you know about conditions
and warranties from the first part of the course.
12. See s. 16 and s. 17(b) for the answer.
13. Buyer beware! To keep alert if you are the buyer, so you don’t get ‘ripped off ‘by the
seller. No.
14. If a reasonable person would buy them for that particular price. Yes. When you buy
something that is defective and you pay a price that would be equivalent to a similar
object that was not defective.
15. Read s. 17(a) and divide up the clauses.
3. Muskoka Fuels
Does the SOG cover this sale?
Sale? Yes, “Five months later the purchaser…”
Goods? Yes, Fuel storage tank
Bus to Bus or Bus to Consumer? Bus to Bus: Hassan Steel Fabricators Ltd to Muskoka
Fuels Ltd.
Did the parties agree the SOG does not apply to this sale? No
What type of sale is it?
By description? There is a contract stating the type of tank. So yes.
Do the goods match the description? They seem to. So no breach of s. 16.
By sample? No
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Fit for its intended purpose?
Hassan Steel Ltd would argue that The contract only states the type of tank. No clear and
obvious evidence Muskoka told them what they needed the tank for, and relied on Hassan
Steel’s advice.
Muskoka would argue that Hassan Steel designed the tank so they relied on their
knowledge and skill.
Conclusion. Not clear who has the better argument but I think Hassan Steel’s is stronger.
Merchantable Quality? Read SOG s. 17 (b). Analyse this issue for yourself/Apply this
section to the case. Read each clause in the section and apply them clause-by-clause to our
case.
Conclusion: Muskoka has the stronger argument. The tank is not of merchantable quality.
6. Auric Bond is about the transfer of property from the seller to the buyer. You are not
responsible for this topic.
9. Syncrude Canada
First Contract: Does the SOG cover this situation?
Sale? Yes, “the parties contract’.. “following purchase”.
Goods? Yes, Mining gear box designed by Hunter Engineering Ltd
Bus to bus? Or Bus to consumer? Yes, bus to bus. Hunter Engineering Ltd to Syncrude
Did the parties agree that the SOG does not apply to this sale?
“an express warranty” stating that the device was free from defects. … was said to be
effective for only 12 months following purchase.
They did not say that the SOG does not apply.
Conclusion: So Syncrude can use the SOG here.
What type of sale?
Syncrude can use SOG s. 17(b). You can apply that section to the situation here.
Hunter Ltd is likely liable.
Second Contract: Does the SOG cover this situation?
Sale? Yes
Goods? Extraction gearbox. Yes.
Bus to Bus? Allis Chalmers Ltd to Syncrude
Did the parties agree the SOG does not apply to this sale?
“express warranty to be free from defects for a 12 month period + this is “the only
warranty.. and no other warranty, conditions, statutory, or otherwise shall be implied.”
This is the typical way to say the SOG does not apply to this sale.
So Syncrude cannot use the SOG to help them with this contract.
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Part Six: Special Types of Contracts: Sale of Goods
Introduction and Answers to Questions
Aims
The aims of this part of the course are to give you a dose of the law regarding sales
contracts, and how to read and apply the NS Sale of Goods Act and the NS Consumer
Protection Act to legal problems. You can do this at your own pace. There will be no
videos. You can email me if you have questions.
Your job for this week – March 30 to April 3 – is to work through the answers
to the questions below.
Our class ends next Tuesday, April 7. I will upload my answers to the Review
Questions on the Sale of Goods that I would normally do that day in due course.
History
In the latter part of the 1800s in England various problems relating to the sale of goods
emerged. For instance, somebody might buy something that looked good when they
bought it but it broke soon after it was purchased. One person might go to court and
win a breach of contract case, but a person with a similar problem might not be
successful. Also, when a sale was made the seller might store the goods, but they
might be burned in a fire or stolen and the problem was who was responsible for the
loss of the goods – the buyer who “owned” the goods or the seller. Some judges said
the seller; other judges said the buyer should bear the loss. So, a well-known lawyer by
the name of Chalmers was asked to come up with some rules regarding the sale of
goods, so that sellers and buyers would know where what to expect and how to
manage any risks, and how to resolve disputes. In 1899 the Sale of Goods Act was
passed by Parliament in England. It was later exported to Canada, a British colony, and
is more or less the same today throughout the Canadian provinces and territories.
The other legislation we are going to use is the Nova Scotia Consumer
Protection Act. In the 1960s and 1970s in Canada it was considered time to protect
consumers from sellers who might take advantage of them due to consumers’ lack of
knowledge or inability to adequately assess the quality of what they were buying, and
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the fact that sellers could create sales contracts stating that the Sale of Goods Act does
not apply to particular sales. So, Consumer Protection Acts were passed by Canadian
provinces and territories. Sellers are not permitted to state in a sales contract that the
Consumer Protection Act does not apply to a particular sale. You will also see that
many of the sections in the Sale of Goods Act and the Consumer Protection Act are
identical.
You will find this legislation on the Brightspace module called the ‘Sale of Goods
Act and Consumer Protection Act’. The Sale of Goods runs from page 3-9. The
Consumer Protection Act runs from pages 10-13.
How to apply these acts
Take the case where the buyer is delivered something that does not match the
description of the goods in the contract, or the goods delivered are poor quality. There
are two steps.
Step One: Does the act cover this situation?
Step Two: What type of sale is it?
Take a look at the hand-written version of what I call the ‘Sale of Goods Powerpoint’
on Brightspace. I want to explain that page.
Beginning with the left column – NS Sale of Goods Act. Does the act cover the
situation? Here I am focused on the Sale of Goods Act.
Step One:
You begin with the question Does the Sale of Goods Act cover the situation? To
answer that question you ask an answer the following questions.
Is there a sale in this situation?
You see that the Sale of Goods Act covers sales, where the property/ownership of the
goods is transferred from the seller to the buyer. The Act does not cover leases. Read s.
4(1) on page 3 of the module called Sale of Goods and Consumer Protection Act.
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And it does not cover trades because there is no money consideration called a price.
Read s. 4(1) again.
Is the problem in the situation about goods?
The Sale of Goods Act cover goods, which are things/objects, not the other things
listed and not land and houses/condos.
Did the seller and buyer agree that the Sale of Goods Act does not apply to this sale?
A seller can state in the sales contract that the Sale of Goods Act does not apply to this
particular sale. For instance, if the goods are damaged and being sold at a low price the
seller and buyer might agree to this. That way the buyer cannot later say the goods
were damaged and wants their money back.
Is the particular sale from one business to another business, or from a business to a
consumer?
The Sale of Goods Act covers both sales from one business to another, and sales from
a business to a consumer. It does not cover a sale of my car to you, for instance, a
private sale.
Conclusion: Depending on your answers you conclude that the Sale of Goods Act
covers the situation, or it does not cover it.
Step Two: If the Sale of Goods Act (SOG) covers the situation you ask: What type of
sale is it?
Is this a sale by description?
A sale by description is when there is a text in a contract, or a text in a catalogue or
online describing the goods, or a photograph of goods.
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The idea is that the goods you receive must match their description and if they do not
then it is considered to be a breach of a condition of the contract. And as you know the
innocent party can repudiate the contract and sue for their money back.
Read s. 16 of the Sale of Goods Act on page 4 of the legislation module.
Is this a sale by sample?
For instance, you look at one tree on display and say I would like to buy 50 others just
like it. That is a sale by sample; the sample is the one tree on display.
Here the idea is that the goods must be the same quality as the sample and if they do
not it is a breach of a condition.
Read s. 18, including the subsections on inspecting the bulk of the goods.
Is this the type of sale where the goods do not fit their intended purpose?
Imagine you go in a store and ask for, and rely on, the advice of the salesperson when
you buy something, but when you get home the thing you bought is unsuitable for the
purpose you told the seller you wanted it to do.
Read s. 17(a).
I will break it down into questions:
*Did the buyer, expressly or by implication, make know to the seller the purpose for
which the goods are required?
*Did the buyer show they relied on the seller’s skill or judgment?
*Are the goods ordinarily sold by the business?
*It does not matter whether the business made the goods.
*There is an implied condition that the goods shall be reasonable fit for the intended
purpose outlined by the buyer. If they were not, then the condition is breached.
Are the goods of merchantable quality?
Imagine buying something that falls apart or does not work soon after you buy it.
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The test whether or not the goods are of merchantable quality is whether a reasonable
person would pay that amount of money for them. If a reasonable person would not
then it is a breach of a condition.
Read s 17(b).
To summarize, first you determine whether the sale of goods cover the situation. If it
does, you next determine what type of sale occurred to see if there is a remedy.
The Nova Scotia Consumer Protection Act (CPA)
You will find this Act on the Brightspace module called the ‘Sale of Goods Act and
Consumer Protection Act’. (The Sale of Goods run from page 3-9). The Consumer
Protection Act runs from pages 10-13.
Now we will examine the column on the right-hand side of the handwritten
‘Powerpoint slide’.
To determine whether the Consumer Protection Act can help a consumer there are also
two steps (same steps as for the Sale of Goods above):
Step One: Does the Nova Scotia Consumer Protection Act cover the situation? and
Step Two: What type of sale occurred in the situation?
Let’s look at Step One:
Does the Nova Scotia Consumer Protection Act cover the situation?
Read s. 26(1)(a) (b) (c) (d) on page 11 of the Handout right now.
So the relevant questions are:
*Is there a sale here?
*Are goods being sold in this situation? Notice that goods and services are covered in
the Consumer Protection Act.
*Unlike the Sale of Goods Act, when a business sells something to a consumer they
cannot state that the Consumer Protection Act does not apply to this sale. Read s. 28
on page 12.
*Is this sale from a business to a consumer? If not, the Consumer Protection Act does
not apply to the situation.
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If the NS Consumer Protection Act covers the situation you go to step two.
Step Two: What type of sale is it?
Is this a sale by description?
Read s. 26(3)(d) of the NS Consumer Protection Act on page 11.
If the goods do not match their description then it is a breach of a condition.
Now read s 16 of the Sale of Goods Act
Is this a sale by sample?
Read s. 26(3)(g) of the NS Consumer Protection Act on page 12.
If the goods do not match the sample then it is a breach of a condition.
Now read s 18 of the Sale of Goods Act.
Is this the type of sale where the goods do not fit their intended purpose?
Read s. 26(3)(e) of the NS Consumer Protection Act on page 12.
If the goods do not fit their intended purpose then it is a breach of a condition.
Now read s 17(a) of the Sale of Goods Act.
Are the goods sold of merchantable quality?
Read s. 26(3)(f) and (h) of the NS Consumer Protection Act on page 12.
If the goods are not of merchantable quality, then it is a breach of a condition.
Now read s 17(b) of the Sale of Goods Act.
(No doubt you noticed the similarity between the types of sales and their
consequences, namely a breach of a condition, in both the Sale of Goods Act and the
Consumer Protection Act.)
The Consumer Protection Act has additional protections for consumers that the Sale of
Goods Act does not have.
Read s. 26(3)(i)
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Read s. 26(3)(j)
Read s. 26(5)
Answers to Questions
The intention here is for you to work through the questions and figure out how to use
the legislation. You might be driven crazy at first, but once you master it you will be
very satisfied. Stick with it. And make sure you read the legislation and think about the
questions you are asking and why you are asking them.
The questions are on Brightspace and called Questions on Sale of Goods and
Consumer Protection Act.
In order to do them you will also need to be able to read the Sale of Goods Act and
Consumer Protection Act module on Brightspace. The Sale of Goods run from page 39. The Consumer Protection Act runs from pages 10-13.
It would help if you had the Sale of Goods Powerpoint from Brightspace at your ready
also so you can follow the sequence in which I ask and answer the questions.
When I do these questions I have all these things in my hand so I can go from one to
the other to the other.
1. Louise Yang question.
Begin with Step One: “Does the Sale of Goods Act (SOG) cover this situation?
Is there a sale?
Yes. Louise Yang bought…
Is there a sale of goods?
Champion stock sperm. Is that goods? Read the ter Neuzen case above. All Louise
bought was sperm. No service was provided to her. So I would say we are dealing with
goods here.
Did the parties say the SOG does not apply to this sale?
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No.
Is this a sale from a business to a business? Or a business to consumer sale?
Louise Yang is a dog breeder. So she has a business.
Nick Shep is also a dog breeder. So he has a business too.
So, yes this is a business to business sale. (And we also know that the Consumer
Protection Act does not apply because it only applies to sales from a business to a
consumer.)
We can conclude that the SOG covers the situation in Question 1.
Step Two: What type of sale is it?
Is it a sale by description?
“Champion stock sperm”. So it is a sale by description.
Read s. 16
Do the goods match the description? They seem to, yes.
So there is no remedy for Louise here.
Is this a sale by sample?
No.
Check s. 18.
Is this the type of sale where the goods do not fit their intended purpose?
No, because there is no evidence that Louise told him what she wanted and relied on
his skill and judgment.
Read s. 17(a)
Are the goods sold of merchantable quality?
No. The sperm was infected with a virus…
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No reasonable person would pay for sperm that was infected with a virus and was
infertile.
Read s. 17(b)
There is a breach of a condition of the contract and Louise can repudiate the contract
and sue for damages.
2. Car lease arrangements
Step One: Does the SOG cover the situation?
Is this a sale?
It is a lease. Check s. 4(1). Property does not pass from the seller to the buyer in a
lease. The business, not the person leasing the car, still ‘owns’ the car.
So the SOG does not cover this type of situation. But is would when the business sold
the car.
3. FabFoods Ltd.
Step One: Does the SOG cover the situation?
Sale?
Yes. FabFoods “purchased” a large order….
Goods?
Yes. Large order of jam
Parties agreed the SOG did not apply to this situation?
No.
Business to Business sale? Or Business to Consumer sale?
Bus to bus sale. The distributor is a business. FabFoods is a business.
Conclusion: The SOG covers this situation.
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Step Two: What type of sale is it?
Sale by description?
Yes. “large order of jam from a distributor’s catalogue”.
Do the goods match the description?
Read s. 16. They seem to match. Hence no breach of an implied condition.
Sale by sample?
No.
Goods not fit for their intended purpose?
No. Read 17 (a). S. 17(a) does not apply here. Note that the section is not simply that
“the goods are not fit for their intended purpose”; the buyer must show they are relying
on the skill and judgment of the seller.
Are the goods of merchantable quality?
No. the labels are discoloured. Read s. 17(b). No reasonable grocer would buy jam
with discoloured labels.
a) Yes the analysis above shows that the SOG applies to this situation. It is a sale
by description so 17(b) applies. There is an implied condition that the goods are
of merchantable quality.
b) No. The SOG does not say anything about discounts.
c) No. And it does not matter. Read 17 (b) “whether he be the manufacturer or
not…”
5. Lars Larson
Step One: Does the SOG cover this situation?
Sale?
Yes. “He purchased a …
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Goods?
Yes. “a large quantity of strong metal clothesline wire”
Parties agreed the SOG did not apply to this situation?
No.
Bus to bus sale? Or Bus to Consumer sale?
Bus to bus sale. Hardware store is the seller and Lars Larsson is a farmer.
Conclusion: The SOG covers this situation.
Step Two: What type of sale is it?
Sale by description?
No. There is no evidence of a description here. But if the wire had a name the goods
would match the description.
Sale by sample?
No.
Are the goods fit for their intended purpose?
Read s. 17(a).
Break it down into questions:
*Did the buyer, expressly or by implication, make know to the seller the purpose for
which the goods are required?
No.
*Did the buyer show they relied on the seller’s skill or judgment?
No.
*Are the goods ordinarily sold by the business?
Yes.
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*It does not matter whether the business made the goods.
Conclusion. All the requirements of s. 17(a) are not satisfied. So Lars cannot use 17 (a)
to get his money back.
a) Hence here is no implied term of fitness for use in the agreement.
Merchantable quality?
There is no evidence the wire was defective. So 17 (b) does not apply.
Conclusion: Lars cannot get his money back.
6. Elsa Petherham
Step One: Does the SOG cover the situation?
Sale?
Yes. “she purchased…”
Goods?
Yes. “a packaging machine”
Did the parties agree that the SOG does not apply to this situation?
No.
Bus to bus sale or Bus to consumer sale?
Bus to Bus sale. Machine sellers to plant owner purchaser.
Conclusion: The SOG covers this situation.
Step Two: What type of sale is it?
You could go through the types of sale: by description, by sample, but as you can see
this question is about fitness for use so I will focus on answering question a).
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Are the goods fit for their intended purpose?
Read s. 17(a) slowly and carefully.
Break it down into questions:
*Did the buyer, expressly or by implication, make know to the seller the purpose for
which the goods are required?
Yes. She said what she needed the machine to do.
*Did the buyer show they relied on the seller’s skill or judgment?
Yes. She bought the machine because of what the salesman told her.
*Are the goods ordinarily sold by the business?
Yes.
*It does not matter whether the business made the goods.
Here the seller is the manufacturer.
Conclusion. All the requirements of s. 17(a) are satisfied. So Elsa can use 17 (a) to get
his money back.
a) So, yes, here there is an implied term of fitness for use in the contract of sale,
and it is breached.
7. Raj Gamba
Step One: Does the SOG cover the situation?
I will leave it to you to answer the following questions:
Sale?
Goods?
Did the parties agree that the SOG does not apply to this situation?
Bus to Bus sale or Bus to Consumer sale?
Conclusion:
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Step Two: You can run through this step.
Let’s answer the questions.
a) Looks like a sale by sample – he examined the stock in the fall and made an
order delivered in the spring. S. 18 (1) applies -read that section. I did not read
anything that looks like a description in the question.
b) 17 (b). The implied term of merchantability would arguably be breached.
c) Read s. 18 (2) (a) and (c). *You should explain why they arguably are
breached.
8. Anand Singh
Let’s assume this is a private sale, from one person to another.
Step One: Does the SOG apply?
Sale?
Yes. Anand “bought..”
Goods?
Yes. a used car.
Did the parties agree that the SOG does not apply to this situation?
Yes. Anand bought the car “as is” which means that the SOG would not apply to this
situation.
Bus to Bus sale or Bus to Consumer sale?
Neither. This is a sale from one person to another person.
Conclusion: The SOG does not apply to this situation because it is neither a bus to bus
sale or a business to consumer sale.
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If the SOG does not apply Does the Consumer Protection Act (CPA) apply to this
situation?
Step One:
Sale? Yes
Goods? Yes
Did the parties agree that the CPA does not apply to this situation? They might have
tried but the CPA does not let sellers and buyers do that. See CPA s. 28.
Is this a business to consumer sale? No. The seller is not a business.
Conclusion: The CPA does not cover this situation.
Now let’s assume the seller is in the business of selling second hand cars. Consider
the Sale of Goods Act.
Step One: Does the SOG cover this situation?
Sale?
Yes. Anand “bought..”
Goods?
Yes. a used car.
Did the parties agree that the SOG does not apply to this situation?
Yes. Anand bought the car “as is” which means that the SOG would not apply to this
situation.
Bus to Bus sale or Bus to Consumer sale?
Business to consumer sale
Conclusion: The SOG does not apply to this situation because the seller and buyer
agreed that the car was sold “as is” which means that the SOG does not apply.
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Can Anand use the Consumer Protection Act (CPA) to get his money back?
Step One:
Sale? Yes
Goods? Yes
Can the parties agree that the CPA does not apply? No, see s. 28 of the CPA. The
CPA always applies to bus to consumer sales.
Bus to consumer sale? Yes. Read s 26(1) of the CPA on page 11.
Conclusion: The CPA covers the situation.
Step Two: What type of sale?
By description.
Yes, sold “as is”. But there is no evidence that the goods do not match the description.
By sample.
This is not a sale by sample
Fit for their intended purpose or use?
No evidence of buying relying on seller’s advice.
Is the car of merchantable quality?
See s. 26 (3) (f) on page 12. Read it phrase by phrase.
Are the goods bought by description? Yes
Does the seller deal in goods of that description? Yes.
Then there is a condition that the goods shall be of merchantable quality.
The test is whether a reasonable person would pay that amount of money for goods of
that quality. No one would buy a car that would break after a week.
There is no evidence he examined the car.
So the goods are not of merchantable quality. He can return the car and get his money
back.
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Answer to a): As we analyzed above, NO.
b) He could have not agreed to the “as is” clause. Or he could have bought it from
a used car dealer.
9. Adolph Gostoni
You can do Step One and Step Two yourself.
a) S. 17(a) of the Sale of Goods Act (SOG)
b) That he did not buy the goods “under their patent or trade name”…as “there is
no implied condition as to their fitness for any purpose”. In other words, if you
buy the goods under their patent or trade name 17(a) does not apply. Also see
CPA s. 26(3)(e).
10. Julie Vanderhoof
Answer to a):
Step One: Does the Sale of Goods (SOG) cover this situation?
Sale? Yes. Jule “bought”.
Goods? Used car. Yes.
Did Ed McMotors and Julie agree that the SOG would not apply to this sale?
Yes. “all conditions, warranties, and liabilities implied by statute, common law or
other-wise are hereby excluded.” This means that the SOG does not apply to this sale.
Bus to Consumer sale? Yes. EdMcMotors Ltd for Julie’s personal use. S. 26(1).
Conclusion: Because of the clause in the contract the Sale of Goods Act (SOG) does
not cover this situation.
Let’s turn to the Consumer Protection Act.
Step One: Does the Consumer Protection Act cover this situation?
Sale? Yes. Jule “bought”.
Goods? Used car. Yes.
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Did Ed McMotors and Julie agree that the CPA would not apply to this sale?
They sales contract stated that “all conditions, warranties, and liabilities implied by
statute, common law or other-wise are hereby excluded.” But the CPA makes this
clause null and void and of no effect because of s. 28 of the CPA. Read that section
again.
Bus to Consumer sale? Yes
Conclusion: The CPA covers this situation.
Step Two: What type of sale is it?
Is it a sale by description?
Yes. “described as a six cylinder Mustang”
Does the description match the goods?
No. It is a four cylinder.
Read CPA s. 26(3) (d).
Hence there is a breach of a condition that the goods match the description. Julie can
get her remedy – repudiate the contract and sue for damages.
Answer to Question b): No, the SOG applies to both new and unused goods.
(But see s. 26 (3) (i) of the Consumer Protection Act on page12. And while you
are at it read s. 26 (3) (j) for another protection for consumers.