Sales of Goods Contract
Decide which of the following contracts are sale of goods contracts under the Sale of Goods Act and explain your answer.
- A contract to purchase business premises for a price of $150,000. It is a sale of goods contract because the premises (‘goods’) are to be transferred for $150,000 (monetary consideration).
- A contract between a retailer and an accountant in which the retailer agrees to supply $1000 worth of paper products in return for accounting services. Not a sale of goods contract as there is no direct exchange of the monetary consideration though it is equated to the paper products.
- A contract to purchase 1000 shares in Nortel Inc. for a price of $7,500. It is a sale of goods contract with the shares (‘goods’) are to be transferred (ownership by Nortel Inc.) for $7,500 (monetary consideration).
- A contract to purchase 300 board games from a wholesaler for a price of $6,000. A sale of goods contract with the wholesaler (seller) agrees to transfer (as the owner) 300 board games (‘goods’) to the buyer for $6,000 (monetary consideration)
- A contract to paint a business premises which includes both labour and paint (worth $600) for a price of $2,000. A contract of sale of goods with the painting (a service) is to be offered for a price of $2,000 (monetary consideration).
In each of the following, decide who bears the loss and provide a reason for your answer.
- During the fall furniture sale at the Bay, Mike buys a bedroom suite that is a floor model. There are several scratches on the furniture and the Bay agrees to have it refinished and delivered to Mike on Wednesday. Mike pays for the furniture with a cheque post-dated for Wednesday. During the weekend, after the furniture has been refinished, the furniture along with the warehouse is destroyed in a fire started by an arsonist. The Bay Company would eventually bear the burden of compensating Mike for not holding their end of the bargain. However until the arson has been investigated Mike has no legal remedy or course of action but to await the compensation from the seller.
- During the same sale, Joan also purchased some furniture which was displayed on the floor. She also paid with a post-dated cheque and delivery was to be on Wednesday. Her furniture was also destroyed in the fire. She is also to be compensated but upon completion of the arson investigation and probably apprehension of the suspect.
- One of the buyers for the Bay contacted Pearl Importing to purchase oriental carpets for the fall sale. This buyer agreed to purchase all the oriental carpets Pearl had in their warehouse at a price of $150 each. Pearl, at the time, did not know how many oriental carpets were in stock but were to advise the buyer as soon as an inventory had been taken. Before the carpets could be counted, a sewer backup caused the flooding of the warehouse and severe damage to the carpets. The contract is void in that no consideration or transfer of ownership had taken place prior to the accident. Therefore there is no contract; due to the destroyed carpets being the subject of the contract.
- The Bay also contracted with a local furniture manufacturer for some custom made bunk beds for the furniture sale. At the time, there were none in stock and it would take two weeks to manufacture the number ordered. The beds were completed yesterday and loaded into the manufacturer’s truck for delivery. On the way to the Bay warehouse, the truck was in an accident that resulted in a fire that destroyed the beds. This is also a case where the contract is void. Ownership could have been transferred had the delivery been made; but the accident renders the contract null and void.
Explain which of the implied conditions or warranties related to goods sold have been broken in the following situations and describe the legal rights of the consumer.
- Bill purchased some used manufacturing equipment from Sharp. Unknown to Bill, the equipment had been used as collateral for a bank loan and was subject to a mortgage in favor of the Royal Bank. The Bank is now demanding payment from Bill.
The general rule is that a buyer cannot acquire a better title than that of the seller. An exception occurs where Bill, who takes in good faith and for value without notice, will acquire good title and will, therefore, be able to resist the claims of the Royal Bank. However, these are narrow exceptions and that, on the whole, the courts have had greater regard for the general rule
- Jane wanted to buy some paint for the outside of her house. She went to the Home Depot and asked a salesperson what kind of paint she should use. The salesperson recommended a particular type which Jane purchased. Jane used the paint and it is now blistering and peeling since it was not intended for exterior use. It is going to cost Jane a $1500 to have the paint removed and her house repainted.
Intention of the parties as to the passing of the property in the goods; the salesperson sells by description of the paint that Jane needs for external use. The property in the goods passes to the buyer when goods of that description and unconditionally appropriated to the contract. Home Depot through their agent salesperson is liable to Jane’s cost of repair.
- Delia purchased a flannel blanket through a mail order catalogue. When Delia washed the blanket following the instructions, the dye ran since it had not been properly applied by the manufacturer. The blanket was ruined as well some clothing she washed at the same time.
This is a breach of implied conditions as to quality or fitness; where Delia relied on the seller’s skill and judgment that the flannel blanket was reasonably fit for Dalia’s intended purpose. She has the option of demanding compensation or rescinding the contract.
- Jim is in the fashion design business. A sewing machine salesperson called on him to demonstrate a new product. Jim was impressed with the demonstration and ordered five of the machines. When they were delivered and unpacked, Jim noticed that they were the cheaper home model and not the industrial model used in the demonstration.
This is a breach of condition of deliverable goods. The passing the property in the sewing machines occurs when the buyer ensures the machines are in the condition he had tested them. Jim’s option is rescission or demanding delivery of the industrial model machines.
- Paul ordered a new power saw through a hardware website on the internet. The picture of the product on the website showed a particular style of saw and the website described several accessories that came with the saw. When the saw was delivered it was a different style and did not include all the accessories mentioned.
This is a sale by description; the sale being by sample on the internet, as well as by description, the bulk of the goods should correspond with the sample. Paul reserved the option of demanding damages or rescission of the contract.
PART 2: INTELLECTUAL PROPERTY
This part of the assignment comes from Unit IV, Module 2
- Identify the type of intellectual property that would be applicable to each of the following and explain why?
- A television or radio commercial – A copyright as it is designed to prevent the unauthorized use by others of a work that is the original form in which the idea or information (commercial) has been expressed by the creator.
- The distinctive shape of a perfume bottle – Registered designs protects your design from being used without your permission.
- A newspaper advertisement – A copyright as it is meant to prevent the unauthorized use by others of a work that is the original form in which the idea or information (advertisement) has been expressed by the creator.
- A man-made oil eating organism – Plant Breeder’s Rights varieties may only be produced for sale, imported, exported or conditioned with the authority of the owner.
- The shape and color of a business logo – a registered trade mark gives you the exclusive legal right to use, license or sell your goods or services
- Would you be able to obtain ownership rights in the following under intellectual property law? If you cannot, explain why. If you can, what would you have to do? Length of Response:
- A patent is legally enforceable and gives you the exclusive right to commercially exploit the invention for the life of the patent
- A copyright can be acquired as it is designed to prevent the unauthorized use by others of a work that is the original form in which the idea or information has been expressed by the creator.
- A registered trade mark gives you the exclusive legal right to use, license or sell your goods or services
- A registered design is to be acquired to ensure that no other individual copies or uses the design of the doghouse for personal or commercial purposes.
PART 3: E-COMMERCE
- E-commerce is already leading to the reshaping of customer and supplier relationships, the streamlining of business processes and, in some cases, even the restructuring of whole industries. Above feats have been achieved through; providing information on company and its goods or services, taking orders, receiving payment, delivery, after sales service, identifying new inventory suppliers, ordering and payment of inventory purchasing, communication with customers or suppliers, internal communication between employees, document and design exchange with customers or suppliers, external information search, advertising and recruitment.
- Cybersquatting has been defined as registering, trafficking in, or using a domain name with bad faith and intent to profit from the goodwill of a trademark belonging to someone else.
- These regulations apply to contracts for goods and services to a consumer where the contract is made exclusively by means of distance communication including electronic mail. In other words, these regulations concern transactions carried out at distance, by post, telephone and email. The legal recognition and enforceability can be achieved especially for contracts that need writing and signature requirements. However, according to the Department of Trade and Industry (DTI) Guidance, the Government believes that the great majority of statutory references, that is where a writing or signature is required, are already capable of being fulfilled by electronic communications, Paul (2000).
Business.gov.au, intellectual property (2009), http://www.business.gov.au/Business+Entry Point/Business+ Topics/Intellectual+property/Plant+Breeders+Rights.htm
Hishan Tahat, (2005), factors affecting E-commerce contract law, university of Aberdeen, www.bileta.ac.uk/Document%20Library/1/Factors%20Affecting%20E- %20commerce%20Contract%20Law.pdf
Paul Przemyslaw Polanski (2000), A New Approach to Regulating Internet Commerce: Custom as a Source of Electronic Commerce law, 9 Electronic Communication Law Review 2000, pp. 165-205
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Sale of Goods Act [RSBC 1996] Chapter 410, http://www.bclaws.ca/Recon/document/freeside/– %20s%20/sale%20of%20goods%20act%20%20rsbc%201996%20%20c.%20410/00_964 10_01.xml#section28
Sale of Goods Act (1979), From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Sale_of_Goods_Act_1979
Yale Braunstein, Fall (2003),Types of Intellectual Property