Deck 21: The Sale of Goods

Question 1

Wally visited the showroom of the MayDay Company, and verbally ordered an $800 refrigerator. The MayDay Company verbally accepted the order, and later (the next day) sent Wally a duplicate purchase order for the appliance, along with a request that he sign and return one copy. Wally did not sign the order, and when the appliance was delivered, refused to take delivery. MayDay sued Wally for breach of contract. If Wally had accepted delivery of the refrigerator, and a week later refused to pay, MayDay Company would not require a signed purchase order to enforce the contract.

Answer 1

True

Question 2

Semple agreed to purchase a quantity of bird feed for his canary from a local pet shop. The shopkeeper agreed to weigh the feed and have it in a package for Semple when he returned in one hour. The shopkeeper weighed the feed, and wrote the weight, price, and Semple's name on the package. Before Semple returned, the package was stolen from the shop. The title to the goods had not passed because the shopkeeper had not notified Semple that the goods were weighed, and in a deliverable state.

Answer 2

True

Question 3

Wally visited the showroom of the MayDay Company, and verbally ordered an $800 refrigerator. The MayDay Company verbally accepted the order, and later (the next day) sent Wally a duplicate purchase order for the appliance, along with a request that he sign and return one copy. Wally did not sign the order, and when the appliance was delivered, refused to take delivery. MayDay sued Wally for breach of contract. In its suit against Wally, the only remedy available to the MayDay Company would be specific performance of the contract.

Answer 3

False

Question 4

Flavia bought 4 kilos of onion seeds from Greene's Nurseries while she was waiting for Organic to load her truck with manure. The packages were labelled "Greene's Rose Red Onions." Unfortunately, the seeds were really "Greene's Marigold Yellow Onions," but Flavia could not tell that until they had grown, since the two kinds of seeds are identical to the naked eye. Rose Reds bring a much higher return because they are very popular with those who buy organically grown vegetables and who are willing to pay high prices for them.

A) The rule of caveat emptor applies here and there is nothing that Flavia can do.
B) Since the seeds did not correspond with their description, Flavia is entitled to and will claim damages, since there is no point in her treating the contract as being at an end.
C) Flavia is entitled to damages, but these cannot include her lost profits.
D) Since Flavia bought the seeds under their trade name, she is not entitled to the remedies under the Sale of Goods Act.
E) Since the seeds did not correspond with their description, Flavia is entitled to and will claim damages, since there is no point in her treating the contract as being at an end and Flavia is entitled to damages, but these cannot include her lost profits.

Question 5

Wally visited the showroom of the MayDay Company, and verbally ordered an $800 refrigerator. The MayDay Company verbally accepted the order, and later (the next day) sent Wally a duplicate purchase order for the appliance, along with a request that he sign and return one copy. Wally did not sign the order, and when the appliance was delivered, refused to take delivery. MayDay sued Wally for breach of contract. The purchase order sent by MayDay to Wally would defeat Wally's defence based upon the writing requirements in the Sale of Goods Act.

Question 6

Reuben, the market gardener had a reputation for growing the biggest potatoes in the district. Barb, a gourmet cook, pre-ordered 7 kilograms of potatoes at the market garden. Reuben said that he would weigh and package them and that Barb could return and pick them up when she had completed her shopping. She paid Reuben the $15 price before she left. While she was shopping, a truck, owned by Norbert, backed into Reuben's market garden stall, destroying 100% of his vegetables. Who owns the potatoes?

A) Reuben, title did not transfer until the goods were weighed and packaged.
B) Reuben, he had not yet given possession of the potatoes to Barb.
C) Reuben, the contract was unfulfilled.
D) Barb, she had already paid for the potatoes and Reuben was doing her a favour.
E) Norbert, he negligently destroyed the potatoes.

Question 7

Todd visited the showroom of the Bloom Company and orally ordered a $300 microwave. The Bloom Company verbally accepted the order, and later (the next day) sent Todd a duplicate purchase order for the appliance along with a request that he sign and return one copy. Todd did not sign the order, and when the appliance was delivered, refused to take delivery. Bloom sued Todd for breach of contract.

A) Todd could raise the Sale of Goods Act as a defence.
B) The purchase order sent by Bloom to Todd would defeat Todd's defence based upon the Sale of Goods Act.
C) If Todd accepted delivery of the microwave and a week later refused to pay, Bloom Company would not require a signed purchase order to enforce the contract.
D) In its suit against Todd the only remedy available to the Bloom Company would be specific performance of the contract.
E) Todd could raise the Sale of Goods Act as a defence and if Todd accepted delivery of the microwave and a week later refused to pay, Bloom Company would not require a signed purchase order to enforce the contract.

Question 8

PlastiCo. contracted to buy 45,000 litres of a chemical from Natural Chemicals Ltd. The chemical still had to be refined at the time the contract was made. Once it was refined, Natural had it pumped into 2,200-litre barrels, and loaded them onto a truck owned by Heavy Haulage Inc., a common carrier. The truck pulls out of Natural's yard, and it is struck by a falling boulder on the mountain road nearby and goes over the cliff. Almost all of the barrels are damaged, and the chemicals leak into the ground.

A) Since the loss of the chemicals was due to an act of God, the two parties will split the loss between them.
B) The loss will be Natural's since the barrels were not yet delivered to PlastiCo.
C) Since the chemical was unconditionally appropriated to the contract when it was loaded onto Heavy's truck, the loss is PlastiCo's.
D) Title to the chemicals was PlastiCo's from the moment the contract was formed and so PlastiCo. must bear the loss.
E) Since Natural had not yet notified PlastiCo. that the chemicals were being delivered, the risk of loss remains with the seller, Natural.

Question 9

Semple agreed to purchase a quantity of bird feed for his canary from a local pet shop. The shopkeeper agreed to weigh the feed and have it in a package for Semple when he returned in one hour. The shopkeeper weighed the feed, and wrote the weight, price, and Semple's name on the package. Before Semple returned, the package was stolen from the shop. The title to the goods had not passed, because Semple had not paid for them.

Question 10

Wally visited the showroom of the MayDay Company, and verbally ordered an $800 refrigerator. The MayDay Company verbally accepted the order, and later (the next day) sent Wally a duplicate purchase order for the appliance, along with a request that he sign and return one copy. Wally did not sign the order, and when the appliance was delivered, refused to take delivery. MayDay sued Wally for breach of contract. Wally could raise the requirement of writing in the Sale of Goods Act as a defence.

Question 11

Which of these is not a rule relating to the passing of title to goods?

A) If there is an 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, the time of delivery or both are postponed.
B) Where the seller must do something to the goods to put them in a deliverable state, title will not pass until the seller does whatever is necessary to put the goods in a deliverable state and notifies the buyer that the goods are now ready for delivery.
C) If there is a contract for the sale of specific goods in a deliverable state, but where the seller must weigh, measure, test, or do something to ascertain the price, the property in the goods does not pass until the act is done. Notice to the buyer is not required.
D) Where there is a contract for the sale of goods "on approval" or with return privileges the title will pass if the buyer, on receipt of the goods, does anything to signify his or her acceptance or approval of the goods, or the adoption of the contract.
E) As soon as the goods ordered by description are produced and in a deliverable state and are unconditionally appropriated to the contract, either by the seller or by the buyer, the property in the goods will pass.

Question 12

Semple agreed to purchase a quantity of bird feed for his canary from a local pet shop. The shopkeeper agreed to weigh the feed and have it in a package for Semple when he returned in one hour. The shopkeeper weighed the feed, and wrote the weight, price, and Semple's name on the package. Before Semple returned, the package was stolen from the shop. The title to the goods passed when the agreement was made, and the goods belonged to Semple when they were stolen.

Question 13

A toy store orders 500 stuffed pink pigs and receives 500 stuffed brown dogs. What remedy does it have against the supplier?

A) Rescission.
B) Repudiation.
C) Rectification.
D) Damages.
E) Specific Performance.

Question 14

Farmer Kate bought a truck load of processed goat manure at $1 per kilo from Organic Fertilizers Ltd. for use on her organic vegetable farm. She could not pay for it until it was ascertained how many kilos her truck would hold, so, while it was being put in her truck, she went to make some other purchases in the town. The owner of Organic wrote up the bill once the truck was full and left it at the counter with the clerk. Before Kate got back, the truck was hot-wired and stolen along with the manure. The truck was found the next day, but the manure was never seen again.

A) The loss is Kate's because title passed once the contract was formed.
B) The loss is Kate's because title passed once the manure was on her truck.
C) The loss is Kate's because title passed once the owner of Organic had established the price, since there was nothing left for him to do.
D) The loss is Organic's because title did not pass until Kate was notified that the manure had been weighed.
E) The loss is Organic's because, until Kate pays for the manure, title does not pass to her.

Question 15

PlastiCo. contracted to buy 45,000 litres of a chemical from Natural Chemicals Ltd. The chemical still had to be refined at the time the contract was made. Once it was refined, Natural had it pumped into 2,200-litre barrels, and loaded them onto a truck owned by Heavy Haulage Inc., a common carrier. Suppose PlastiCo. was not in bankruptcy but was only insolvent. Prior to its insolvency, it had realized that the chemical was going to be surplus for it and had sold its rights to the shipment to Tiny Co. and had instructed Heavy Haulage to deliver it to Tiny. By the time Natural contacts Heavy to stop the delivery in transitu, Heavy has already delivered the barrels to Tiny.

A) Although Tiny had no notice of the stoppage in transitu and it had bought the shipment in good faith for a reasonable price, nevertheless Tiny has no rights to the barrels since PlastiCo. would have had no rights to them, so Tiny cannot keep them unless it pays Natural. It can then recover the money it paid already to PlastiCo.
B) Since Tiny bought the rights to the barrels in good faith at their proper value, and PlastiCo. had no notice of the stoppage in transitu, Tiny has the right to keep them and Natural must look to PlastiCo. for payment of the purchase price.
C) Natural is entitled to place a lien on the barrels, preventing Tiny from using their contents until Natural is paid by PlastiCo.
D) Although Tiny had no notice of the stoppage in transitu and it had bought the shipment in good faith for a reasonable price, nevertheless Tiny has no rights to the barrels since PlastiCo would have had no rights to them, so Tiny cannot keep them unless it pays Natural. It can then recover the money it paid already to PlastiCo. and Natural is entitled to place a lien on the barrels, preventing Tiny from using their contents until Natural is paid by PlastiCo.
E) Since Tiny bought the rights to the barrels in good faith at their proper value, and PlastiCo. had no notice of the stoppage in transitu, Tiny has the right to keep them and Natural must look to PlastiCo. for payment of the purchase price and Natural is entitled to place a lien on the barrels, preventing Tiny from using their contents until Natural is paid by PlastiCo.

Question 16

Sandra visited her usual hair salon and had her long hair conditioned and styled. While there she told her hair stylist that she would like to purchase a shampoo and conditioner for her hair that would keep it moisturized and manageable at home. The stylist recommended several products and described the attributes of each one. Sandra chose Hair So Soft from among the recommended products, particularly because of its fruity perfume. When Sandra uses the products at home her hair became dry and brittle and began to fall out.

A) Sandra can repudiate the contract by returning the products for a return of her money.
B) Sandra is entitled only to claim damages for breach of contract.
C) The implied condition that the products will be reasonably fit for their intended use does not apply in this case.
D) Sandra examined the products before purchasing one, therefore caveat emptor applies.
E) Sandra can repudiate the contract by returning the products for a return of her money and the implied condition that the products will be reasonably fit for their intended use does not apply in this case.

Question 17

Jamie ordered a custom-made fireplace screen. The price was $500, and he gave the blacksmith, Vern, a $100 deposit. Vern built the screen and called Jamie advising him of its readiness for pickup. Jamie refused to pick up. What are Vern's damages?

A) Damages.
B) Retention of Deposit.
C) Resale.
D) Damages, Retention of Deposit and Resale.
E) Damages or Resale and Retention of Deposit.

Question 18

Terry pre-orders a DVD of this year's hit show: Cold Canadian Winter Hobbies online. He received a confirmation number. The $40 will be paid when it is delivered to his home. Is this an enforceable agreement pursuant to the Sale of Goods Act?

A) Yes, this contract does not have to be in writing.
B) Yes, this contract must be in writing and the electronic record constitutes writing.
C) No, the contract is still executory and therefore must be in writing.
D) No, Terry did not receive the goods, pay a deposit or give something of earnest to bind the contract. Therefore, it must be in writing.
E) No, the Sale of Goods Act does not apply to e-commerce.

Question 19

In Canada, a contract for the sale of goods valued at $1,000 would have to be in writing, unless

A) the buyer accepts part of the goods sold.
B) the buyer makes a part payment of the contract price.
C) the buyer gives something "in earnest" to bind the contract.
D) the contract takes place in British Columbia.
E) Any of these are exceptions are correct.

Question 20

PlastiCo. contracted to buy 45,000 litres of a chemical from Natural Chemicals Ltd. The chemical still had to be refined at the time the contract was made. Once it was refined, Natural had it pumped into 2,200-litre barrels, and loaded them onto a truck owned by Heavy Haulage Inc., a common carrier. Suppose PlastiCo. is petitioned into bankruptcy and Natural hears about this the day after Heavy Haulage picks up the barrels. Which of the following statements is true?

A) Since only the buyer may normally recover goods from a carrier, Natural cannot intercept the shipment and repossess it, so Natural may never receive payment for it if there are many creditors with a better claim to PlastiCo's assets.
B) If a buyer is bankrupt before delivery of goods, it cannot take title to them so title will remain with Natural and it can repossess them.
C) If Natural and PlastiCo. had inserted a clause into the contract which said that title would remain with Natural until the goods were paid for in full by PlastiCo., it would not be effective because it would conflict with the Sale of Goods Act.
D) None of the responses are true.
E) All of the responses are true.

Question 21

Denuta builds a house on Evan's property. Subsequently, much of the work is found to be substandard, and the municipal building inspector refuses to issue an occupancy permit to Evan. With Evan having relied on Denuta's skill and judgment, Denuta is in breach, under the Sale of Goods Act, of implied condition of fitness for use intended.

Question 22

Antonella is slow to pay the invoice on the computer printer delivered to her. Nothing is mentioned in the contract about payment except that it is due on receipt of the invoice. Antonella has breached a warranty.

Question 23

Sidu sells his expensive watch to Sylvester in return for Sylvester's almost new mountain bike. The watch stops working immediately and the jeweller tells Sylvester that it is not repairable. Under the Sale of Goods Act, Sylvester is entitled to the return of his bike provided he gives Sidu back the watch.

Question 24

A doctor ordered 20 boxes of tongue depressors by mail. The suppliers had them in stock and sent them off by return mail, but they were never delivered to the doctor's office although the parcel was correctly addressed. They were the property of the doctor when they were lost.

Question 25

"Title and the right of ownership have the same meaning in law," says Vivienne. She is right.

Question 26

You hear someone in your office talking about the necessity of "home-grown" laws to properly protect Canadians. "You can't just adopt another country's laws," your colleague says. "You have to tailor them carefully to the Canadian scene or they will not work." The Sale of Goods Act is a good example of what that person is talking about.

Question 27

While delivery of goods is a condition and payment is merely a warranty under the Sale of Goods Act, a seller is under no obligation to deliver goods unless payment has been made, or credit terms have been granted.

Question 28

Dom bought a new car, after looking it over carefully and taking it for a test drive. Due to a defect in the manufacture of the steel from which the back axle was made, the axle collapsed the next day when Dom was driving to work. He was unhurt but the car is a write-off. The loss is his since he had the opportunity to examine the car before buying.

Question 29

Baker agreed to purchase a set of books on display in Flack's Book Store. The price for the set was $300, and Baker gave Flack $150 to 'bind the bargain'. Flack delivered the books to Baker's home the next day, but Baker refused delivery, as he had found a similar set in another shop at a slightly lower price. Flack may retain the $150 and sue Baker for the remainder of the purchase price, if he is prepared at all times to deliver the goods to Baker.

Question 30

Ari telephones the stationery store to purchase an electric pencil sharpener for her office for $65. This contract for the sale of goods is unenforceable if Ari changes her mind because it is not in writing.

Question 31

"What does caveat emptor mean, Daddy?" said Shirley. Unwilling to admit he was not sure, Shirley's dad said, "It means let the seller beware." "That's not what this law book says" said Shirley, and she was right.

Question 32

Katz purchases a piano from LeBlanc's Music Store. Some weeks later a representative from a finance company approaches Katz and claims a secured interest in his piano. LeBlanc is in breach of implied warranty of quiet possession under the Sale of Goods Act.

Question 33

Baker agreed to purchase a set of books on display in Flack's Book Store. The price for the set was $300, and Baker gave Flack $150 to "bind the bargain." Flack delivered the books to Baker's home the next day, but Baker refused delivery, as he had found a similar set in another shop at a slightly lower price. Flack is entitled to keep Baker's $150, as it was a deposit.

Question 34

Since any Sale of Goods may give rise to a dispute, the Sale of Goods Act provides remedies to the parties involved in any given transaction and help to alleviate conflict. Remedies for the Buyer include, Liens, Action for Price, Damages and Resale. Remedies for the Seller include Rescission, Specific Performance and Damages.

Question 35

Domenic and Ben Ltd. has a standard form contract which contains a clause that says all warranties and conditions, implied or expressed, at common law, under statute or by custom, are excluded from the contract. The Sale of Goods Act allows them to do this.

Question 36

Sunnil agrees to sell the quilt she is making to Gianna when it is finished. This is not a contract for the sale of goods until the quilt is completed.

Question 37

Baker agreed to purchase a set of books on display in Flack's Book Store. The price for the set was $300, and Baker gave Flack $150 to 'bind the bargain'. Flack delivered the books to Baker's home the next day, but Baker refused delivery, as he had found a similar set in another shop at a slightly lower price. Baker is entitled to a return of his $150, because the title to the goods had not passed.

Question 38

Semple agreed to purchase a quantity of bird feed for his canary from a local pet shop. The shopkeeper agreed to weigh the feed and have it in a package for Semple when he returned in one hour. The shopkeeper weighed the feed, and wrote the weight, price, and Semple's name on the package. Before Semple returned, the package was stolen from the shop. The goods were unascertained goods, and title passed when they were unconditionally appropriated to Semple by the seller's act of writing Semple's name on the package.

Question 39

Baker agreed to purchase a set of books on display in Flack's Book Store. The price for the set was $300, and Baker gave Flack $150 to 'bind the bargain'. Flack delivered the books to Baker's home the next day, but Baker refused delivery, as he had found a similar set in another shop at a slightly lower price. Baker is obliged to take delivery, as the title passed when the contract was made.

Question 40

Business transactions have been a process which has evolved over centuries. With this evolution of business has come the need for a system to govern it and to provide protection for both parties to the transaction. The Sale of Goods Act is the result of that need for a piece of legislation, the Act governs all business transactions, for both monetary and non-monetary reward.

Question 41

Doug and Bonnie Jackson built an addition onto their house which they planned to cover with brick on the exterior. They went to the nearest brick manufacturer to get some advice and to select and order the bricks for their home. The manufacturer's sales representative showed them several styles and colours of brick. He recommended one particular type of brick which was available in several colours and which the Jacksons selected. Within a week the manufacturer had delivered the bricks to the Jackson's home. Bonnie then arranged for bricklayers to lay them.
After the first winter Doug and Bonnie noticed that the bricks were blistering and flaking and that small holes were appearing on the surface of the bricks. They immediately contacted the manufacturer who told them that this was a normal part of the weathering process and did not constitute a defect in the brick. The manufacturer refused to send someone to the Jackson's home to look at the bricks.
Doug then contacted an experienced mason to investigate the condition of the bricks. He told them that the bricks had been improperly fired so that they lacked the durability to withstand the temperature extremes of freezing and thawing. He told Doug and Bonnie that the bricks would have to be replaced immediately as they would not withstand one more winter. When the Jacksons confronted the manufacturer with this information, the manufacturer sent its own mason to inspect the brick. It then sent a letter to the Jacksons stating that its mason had found nothing fundamentally wrong with the bricks and that there was no need to replace them.
Doug and Bonnie decided to take legal action against the brick manufacturer. Discuss the arguments that will be raised by the parties and render a decision.
C.L.R.

Question 42

Andy orders a meal in a restaurant. The meal makes him ill with botulism poisoning. Can Andy sue for breach of contract or must he take the more difficult and complex route of suing in tort?
B.C. and Ontario suggests that the courts will hold that a restaurant meal is a sale of goods). If it is a sale of goods, then the Act will apply and Andy will be able to sue successfully in contract. If it is not, Andy would have to sue in tort for negligence.

Question 43

Mrs. Sydor took her car to National Automotive to have four new radial tires put on it. A copy of the order for tires of the appropriate size was sent down to the stock boy in the warehouse and he took down four tires, tied them together and taped the order to them, leaving them standing on the floor of the storage space to be picked up by the shipping person with her forklift. Workmen for the telephone company were digging a hole outside and ruptured a gas main which exploded, destroying the warehouse including the four tires. National Automotive says Mrs. Sydor must pay for them.
a. Identify the legislation which would clarify whether Mrs. Sydor is responsible for paying for the tires.
b. What do you think each party would argue in this case?
c. If the tires had been attached to the wheels of Mrs. Sydor's car which had been parked beside the service bay, and someone had then slashed the tires, would your answer change and why or why not?

Question 44

Donald is the owner of a recently closed gas station. John, a neighbouring filling station owner, agreed to buy the gasoline remaining in Donald's tanks. Donald tested the gasoline for the presence of water, which would destroy the gasoline, and found it to be "clean." He then called John informing him of the test results and quoted him a price. John reaffirmed his agreement to buy and arranges pickup of the gas two days later. During the intervening 18-hour period a large amount of rain fell and with the excess amount left on the ground, water drained into the tank and ruined the gas. Upon hearing this, John refused to buy, but Donald pointed out that the gas was already John's and insisted on payment.
a. Discuss how the rules of title transfer would help effect a resolution to this situation.
b. How would the outcome differ if Donald sold the gas by the litre and if the amount of gas in the tank was unknown and had to be measured, when John came to remove it?

Question 45

Sam Oakes runs a sole proprietorship known as "Oaks by Oakes." Sam is a man in his late fifties who for a number of years has produced turned oak spindles for staircases. A number of people had approached him to do oak baseboard and trim for custom homes, and he decided to enter this field as well.
Sam spoke to his friend George who produced this line of products in pine and asked him what to do about equipment. George told him Eric of "Eric's Tool Shop" had sold him a Model SS90 table router made by Carsoncraft Tools, as being "just the ticket for baseboard and trim."
Sam approached Eric, told him he had spoken with George "about the SS90," and told him that he was interested in making baseboard and trim. Eric said he remembered a sale to George a year ago and said "if you want to do up baseboard and trim, the 90 series is the best on the market. I hear George does about 5,000 linear feet a year. Would you do more?" Sam said no, that he would produce only about 4,000 linear feet of trim a year. "Then this will do you fine," said Eric. The shop phone rang, and while Eric was on the line, Sam wrote out a company cheque in the amount on the tag. Eric returned, and Sam handed him the cheque. Eric looked at the amount and pocketed it. He said, "I can deliver to you by the end of the month." "Done deal then," said Sam, and he left.
Sam immediately entered into a contract to produce oak trim over the course of the month to follow delivery of his router. The router was delivered on time, and Sam began work. The machine laboured through the wood, but progressively slowed. Suddenly, smoke poured out of the motor, and the machine quit working altogether.
Sam complained to Eric. Eric was astonished that Sam was using oak stock to make the baseboard and trim. "Nobody makes that anymore. I assumed when you said you spoke to George that you were going to use pine. The SS90 is for Soft Stock, if you were going to use hardwoods, you would need the HS90. I will go to bat for you and replace it with an HS machine and see if I can get credit from the manufacturer. HS machines are special order items though, and they cost more. If you pay the difference on it, I will put in the order. It should arrive within a couple of months."
Sam protested, "If I don't have the trim done in two weeks, my purchaser will sue me because the homes he is building won't be finished on time."
Eric: "Look, I'm being more than fair, you asked for that machine, and then you wrecked it. There's nothing more I can do. Do you want the HS or not?"
Advise the parties and render a decision.