Sales of Goods Act (SGA): Statutory Interpretation 5

Commercial Transactions CANS

Problems with Contract Law for Consumers 5

S. 1 The Concept of “Goods” 5

Marshall v. Green 5

Friedkin v. Gliens (1908 Manitoba) 5

Carlson v. Duncan (1931 BC) 5

S. 1, 6: Distinguishing Sale of Goods from other Transactions 5

Sale of Goods or Contract for Labour and Materials? 6

Robinson v. Graves 6

Canada Bank Note v. Toronto Railway (1895) 6

G v. White Spot 6

Sale of Goods or Barter? 6

Messenger v. Greene 6

Sale of Goods or Lease or Hire-Purchase Agreement? 6

Lee v. Butler 7

Helby v. Mathews 7

Agency Contracts for Sale, Consignment Contracts 7

Weiner v. Harris 1910 7

Re: Stephanian’s Persian Carpets (1980) 7

S. 73: Common law, bills of sale and mortgages 7

S. 7: Capacity to buy and sell, and to enter into legal relationships 7

S. 8: Contract of sale: Formalities 8

S. 12: Ascertainment of price 8

S. 13: Valuation of Goods 8

Montana Mustard Seed Co v. Gates (1963) 8

S. 9 Categorization of Subject Matter: Goods are either Existing or Future 8

Re Wait 9

S. 10, 11: Perished Goods 9

Conditions vs. Warranties and Intermediate Terms 9

S. 15 Conditions Being Treated as Warranties 9

S. 16: Implied warranties and conditions 9

Leaf v. International Galleries 9

Hong Kong Fir Shipping v. Kawasaki (1962) 9

The Hansa Nord (1975) 10

Bunge v. Tradax (1981) 10

S. 69: Exclusion of Implied Terms and Conditions 10

Canadian Pacific Hotels v. Bank of Montreal 10

Exclusion and Limitation Clauses 10

Hunter v. Syncrude (1989) 11

S. 16 Implied Undertaking as to title, and implied warranty of quiet possession 11

S. 18 Implied conditions as to quality or fitness 11

Consumer Protection and the Contract of Sale: S. 20, 69, Acts, and common law 11

S. 20: No waiver of warranties or conditions 11

Business Practices and Consumer Protection Act 11

Stubbe et al v. PF Collier & Son Ltd. (1978) 12

Roa v. Bonanza Ventures (2002) 12

Consumer Protection Act 12

Levasseur v. Whitney Canada Inc. (2002) 12

The Common law and Consumer Protection 12

Gaertner v. Fiesta Dance Studios (1972 BCSC) 13

Tilden Rent-a-Car v. Clendenning (1978 Ont. CA) 13

Harry v. Kreutzinger (1978 BCCA) 13

The Passing of Property: Risk, Insolvency, and Rights of the Seller 13

Rules Governing the Passing of Property 14

S. 21 Goods must be ascertained 14

S. 22 Property passes according to intent of parties 14

S. 23 Intention of parties as to the passing of the property in the goods 14

Specific Goods 14

Kursell v. Timber Operators and Contractors (1927) 14

Unascertained Goods 14

Carlos Federspiel & Co. v. Charles Twigg & Co. (1957 QBD) 15

Caradoc Nurseries v. Marsh (1959 Ont. CA) 15

Sells v. Thomson (1914 BCCA) 15

Flynn v. Machin (D1) and Mahon (D2) (1974) 15

Risk and Frustration 15

S. 10: Goods that have perished 16

S. 11: Goods perishing before sale but after agreement to sell 16

S. 25: Risk passes with property 16

S. 23: Intention of the parties as to the passing of the property in the goods 16

Jerome v. Clements Motor Sales (1958 Ont. CA) 16

Ocean Tankers v. V/O Sovfracht (Suez Canal) 16

The Sellers’ Title Obligations 16

S. 16: Implied Undertaking as to Title 16

S. 20: No waiver of warranties or provisions 16

The Nature of the Right to Sell Goods 17

Rowland v. Divall 17

Butterworth v. Kingsway Motors (1954) 17

The Scope of S. 16(a) 17

Niblett v. Confectioners’ Materials Co. (1921) 17

J Barry Windsor v. Belgo Manufacturing (1976 BCCA) 18

Exclusion of the Implied Condition of the Right to Sell 18

Sloan v. Empire Motors 18

The Warranties of Quiet Possession and Freedom from Encumbrances 18

Microbeads v. Vinhurst Road Markings (1975) 18

The Seller’s Obligations as to Description and Quality 18

S. 17: Sale by Description 18

Frey v. Sarvajc (2000 SKQB) 18

Torpey v. Red Owl Stores (US 1955) 19

Sams v. Ezy-Way Foodliner 19

Hart-Parr Company v. Jones (1917 Sask. SC) 19

Varley v. Whipp (1900 QB) 19

Beale v. Taylor 19

Taylor v. Combined Buyers (1924 New Zealand) 19

S. 18: Implied conditions as to quality or fitness 20

Arcos Ltd. v. E.A. Ronaasen (1933) 20

Ashington Piggeries v. Christopher Hill (1971 HL) 20

Merchantability: The Implied Condition of Merchantable Quality 21

Bartlett v. Sidney Marcus 21

Henry Kendall v. William Lillico (Hardwick v. SAPPA) (1968 HL) 21

Brown v. Craiks (1970 HL) 21

IBM v. Shcherban (1925 Sask. CA) 21

Mash & Murrell v. Joseph Emanuel (1961) 21

Buckley v. Lever Bros (1953 Ont. HC) 22

S. 18(b) Effect of Inspection or Opportunity to Inspect 22

Thornett & Fehr v. Beers & Sons (1919) 22

Van Doren v. Perlman (1956 Nfld. SC) 22

S. 18(a) Implied Condition of Suitability for a Particular Purpose 22

Crowther v. Shannon Motor (1975 Sask. CA) 22

Marshall v. Ryan Motors (1922 Sask. CA) 23

Kendall v. Lillico (1968 HL) 23

Baldry v. Marshall (1925 CA) 23

Allergies and the Idiosyncratic User 23

Esborg v. Bailey Drug (1964) 23

Griffiths v. Peter Conway Ltd. (1939) 23

Ingham v. Emes (1955 CA) 24

S. 19 Sale By Sample 24

What is a “Sale By Sample”? 24

Cudahy Packaging Co. v. Narzisenfeld (1924 US CA) 24

The Function of the Sample: Reasonable Inspection 24

Steels & Busks v. Bleecker Bik & Co. (1956 QB) 24

Godley v. Perry 24

Delivery: Voluntary transfer of possession from one party to another 25

S. 31 Duties of seller and buyer 25

S. 32 Payment and delivery are concurrent conditions 25

S. 33 Rules as to delivery 25

S. 14 Stipulations as to time 25

Time of Delivery 25

Bowes v. Shand 25

Charles Rickards v. Oppenheim 25

Documentary Sales 25

Beaver Specialty v. Donald H. Bain (1973 SCC) 25

S. 34: Delivery of the Proper Quantity 25

In Re Moore & Co. and Landauer & Co. (1922 CA) 26

S. 35: Delivery by Installments 26

Maple Flock v. Universal Furniture Products (Wembley) (1934 CA) 26

Obligations of Suppliers and Manufacturers: The Privity Problem 26

Lyons v. Consumers Glass Co. (1981 BCSC) 26

Chabot v. Ford Motor co. (1982) 27

The Buyer’s Remedies 27

S. 15: Condition may be treated as warranty (Right to Reject Goods) 27

Loss of the Right to Reject Goods 27

Wojakowski v. Pembina Dodge Chrysler (1976 Manitoba QB) 27

S. 39: Loss of Right to Reject Goods because of Acceptance 27

Hardy v. Hillerns and Fowler 27

Rafuse Motors Ltd. v. Mardo Construction Ltd. 28

Barker v. Agius 28

Damages 28

The Measure of Damages 29

Wertheim v. Chicoutimi Pulp Co. (1911 HL) 29

Bowlay Logging v. Domtar (1978 BCSC) 29

Cullinane v. “Rema” Manufacturing Co. (1953) 29

Hadley v. Baxendale 29

Koufos v. Czarnikow (“The Heron II”) (1967 HL) 29

Parsons v. Uttley Ingham 30

Severability 30

Recovery of damages for loss of enjoyment 30

Wharton v. Tom Harris Chevrolet (2002 BCCA) 30

Compound Interest 30

Bank of America Canada v. Mutual Trust Co. (2002 SCC) 30

Damages for Non-Delivery and Late Delivery 31

Re Hall and Pim 31

Breach of Condition or Warranty of Quality 31

Ford Motor Co. v. Haley (1967 SCC) 31

Sunnyside Greenhouses v. Golden West Seeds (1972) 31

S. 55: Specific Performance 31

Re Wait (1926) 31

Sky Petroleum v. VIP Petroleum (1974) 31

Statutory Remedies 32

S. 75 Buyer’s lien (security interest) 32

Business Practices and Consumer Protection Act 32

S. 31: Buyer’s Obligations 32

Kay Corporation v. Dekeyser (1977 Ont. CA) 32

Letter of credit 32

Michael Doyle v. Bank of Montreal 32

United City Merchants Investments v. Royal Bank of Canada (1983 HL) 33

S. 42-51: Seller’s Rights and Remedies 33

S. 44 Unpaid seller’s lien 33

S. 43(1)(b) Unpaid seller’s rights 33

S. 51 The right of resale 33

Snagproof v. Brody 33

Ward v. Bignall 34

Personal Remedies: Price and Damages 34

S. 52 Action for Price 34

S. 53: Seller’s right to Damages for non-acceptance 34

Standard Radio v. Sports Central Enterprises 34

Colley v. Overseas Exporters 34

Stein Forbes v. County Tailoring Co. 35

Charter v. Sullivan (1957 English CA) 35

Victory Motors v. Bayda (1973 Sask. District Court) 35

Lazenby Garages v. Wright (1976 HL) 35

Sales of Goods Act (SGA): Statutory Interpretation

- Default set of rules when the contract doesn’t say otherwise

- Not always binding: parties may contract out of these rules

- Intended to re-state common law, not modify/replace it, resolve common disputes

- General principles of contract common law still apply

Problems with Contract Law for Consumers

- Standard form contracts: effects diminished by Consumer Protection Act

- Offer and acceptance, invitations to treat: doesn’t really work with how sales operate, especially with online shopping

- Exclusion clauses

- Privity: what happens if you buy something and later there’s a problem with the item – claim against retailer or manufacturer? What if the shop goes out of business? Buyer has no contract with the manufacturer…

S. 1 The Concept of “Goods”

- “Includes” chattel and crops that are agreed to be severed

“Goods” does not include:

- Money

- Things in Action or Money (intangible right), legal right to something

o Cheque, bills of exchange, stocks, shares, bonds, good will, debts (like mortgages, you can buy and sell a right to collect on a debt)

- Interest in land/property or lease

o Things that are permanently affixed to the land (like buildings), unless they are to be severed under sale of the land or upon contract of sale

o Crops, minerals, gravel

- Labour, services

Marshall v. Green

- If parties agree to sever and sell the trees, it’s a contract for sale of goods, not interest in land

- Industrial crops: produced by labour/industry, always contract for sale of goods

- Natural crops: not planted or cultivated, produce spontaneously, so need to determine if they’re “goods” – if harvested now, goods; if later, “land”

Friedkin v. Gliens (1908 Manitoba)

- Contract for sale of naturally growing grass

- Naturally occurring crop: if it’s growing and intended by parties to be treated like chattel (cut/severed), it’s sale of goods, SGA applies

Carlson v. Duncan (1931 BC)

- Contract for the right to access land, cut timber: interest in land or sale of goods?

- In order to consider trees “goods”, contract must take place within a reasonable time, then SGA applies

- If contract doesn’t require haste to remove trees, it’s contract for sale of land

S. 1, 6: Distinguishing Sale of Goods from other Transactions

S. 1: "sale"includes a bargain and sale as well as a sale and delivery

S. 6: Sale and agreement to sell

Sale is different from contract for labour/materials, transfer of possession, gift, barter, lease, consignment

S. 6 only applies if it’s a contract for sale of goods, intention to transfer property for a price (not barter, not trade in goods, not contract for labour or materials)

Sale of Goods or Contract for Labour and Materials?

- Look at true purpose or essence of transaction, what the parties subjectively intended, where the bulk of the $ is being spent

- Contract that’s primarily for labour and materials (vendor’s service) is not sale of goods, even if it involves goods that could be sold individually/separately

- Sale of goods over certain amount: need to show something (proof) to enforce it

Robinson v. Graves

- Look at contract as a whole: is passage ancillary to the main part of the contract?

- Test: if the materials were incidental/secondary to the exercise of skill, labour

- Contract for printed book: involved application of skill, not just supplies

- Dentist selling dentures: sale of goods

Canada Bank Note v. Toronto Railway (1895)

- D hired P to print bonds, which weren’t made properly

- Sale of goods: transfer X to buyer where buyer didn’t have title to before

- Doesn’t matter that bonds were custom made, not a generic product

- Analogy: lawyer draws up an agreement for contract: labour, not goods

G v. White Spot

- Diners at White Spot got sick from the food, wanted to rely on SGA s. 16-19

- Contract for sale of goods can also include service, as long as the essence or primary purpose is sale of goods (not services) as per the parties’ intentions

- Sale of goods: offer to sell finished product at a fixed price

Sale of Goods or Barter?

- A Barter is a contract of sale, but not covered by SGA b/c doesn’t satisfy s. 6 “money consideration” (so need to attach monetary value to what’s being traded)

- Both parties are buyers and sellers (2 sales happening here)

Messenger v. Greene

- Even if goods form part of the consideration, if the value is fixed in monetary terms and assigned a specific value, SGA applies

Sale of Goods or Lease or Hire-Purchase Agreement?

- Lease will end in transfer of property/title to lessee à conditional sale

- Lease is for total useful life of goods à sale

- Lease with option to purchase at end à depends

- Lease with obligation to purchase à sale (rent payments are mandatory, title passes at the end, or else there’s no useful life left in the goods, like computer)

Lee v. Butler

- When you pay rent towards the ultimate purchase, it’s contract for sale of goods b/c once you pay it all, you own it (but must have obligation to buy)

- Even if seller calls it a lease, can’t take goods back b/c “lease” is actually conditional sale under SGA s. 30

- Sale is different from lease and long-term agreement w/possible sale at the end

Helby v. Mathews

- Contract for sale: Not just the right or option to buy, but the obligation to buy

- Pay rent towards the option to purchase at the end: lease, b/c no obligation to purchase (even if all parties anticipated that renter will purchase at the end)