Deck 16: Sale of Goods

Question 1

Colin had been having trouble with wild animals. He asked the salesman at Hardware Sales what kind of motion detection light would be best to install in his pump house. According to the Sale of Goods Act, Colin should expect a light that

A) uses skill and labor for installation, therefore is not protected by the Act.
B) is reasonably fit for the purpose.
C) would not be restricted by the usual exemption clauses.
D) will need careful installation for the product to be warranteed.
E) meets his description.

Answer 1

B

Question 2

Sometimes sellers will ship products to buyers on approval. A buyer may signify that he has accepted the goods by doing all of the following EXCEPT

A) selling the goods to his neighbour who pays more than the purchase price.
B) allowing the 10- day approval date to expire.
C) placing them in storage and forgetting about them.
D) waiting for the expiration of a reasonable time.
E) all of the above are considered acceptances.

Answer 2

E

Question 3

The terms in a contract of sale relating to delivery are mainly concerned with the

A) specific conditions of place, time, and quantity.
B) implied warranties concerning the physical condition and acceptance of goods.
C) specific warranties of quantity, time, and place.
D) implied conditions under the Sales of Goods Act.
E) physical condition of the goods.

Answer 3

A

Question 4

The Sale of Goods Act deals with the sale of goods by sample and/or description. Which of the following statements is CORRECT?

A) It is an implied condition that goods by description alone be of merchantable quality.
B) It is an implied warranty that the goods sold by sample alone be of merchantable quality.
C) If goods are sold by sample only there is an implied condition that the buyer must have a reasonable opportunity of comparing the bulk to the sample.
D) If goods are sold by sample and description, it is a breach of implied warranty if the goods do not correspond with both the sample and the description.
E) If goods are sold by sample, there is an implied term of suitability.

Question 5

In any type of contract or quotation, goods stipulated as ready for delivery and clearly identifiable are

A) C.I.F. (cost, insurance, freight).
B) ascertained goods.
C) C.O.D. (cash on delivery).
D) subject to the five rules of title transfer.
E) F.O.B. (free on board).

Question 6

Brandy bargains with Keller Inc. to purchase a lot of land in downtown Chilliwack. This transaction is NOT subject to

A) contract law.
B) land law.
C) property law.
D) Sale of Goods Act.
E) none of the above.

Question 7

"The sole warranty between the seller and buyer is the warranty set out in this contract." This written statement is an example of

A) a condition of merchantability.
B) a statement of suitability.
C) a bill of lading.
D) a condition of fitness.
E) an exemption or disclaimer clause.

Question 8

With regard to the Sale of Goods Act, one of the following is TRUE.

A) Unlike contracts containing promises of future conduct, an agreement to sell is a binding contract.
B) The Sale of Goods Act applies to both sales and agreements to sell.
C) Money need not form part of the transaction; a straight barter of goods where no money changes hands is considered a sale within the statute.
D) An agreement to sell may not be formed when the goods are nonexistent.
E) The Sale of Goods Act includes the sale of items whose final value is attributable mainly to the skill and labour that have gone into their preparation at the request of the buyer.

Question 9

The definition of "chattels" includes all but one of the following:

A) animals.
B) goods which derive their value intrinsically.
C) pieces of land.
D) buildings.
E) furniture.

Question 10

International Shippers Corp. wants your advice on the legal implications of international trade. Business has been developing in parts of the Middle East where it's sometimes hard to collect from customers. You advise International Shippers that they should

A) retain a lien on the goods.
B) ensure all of their shipments are covered by an order bill of lading.
C) ensure all of their shipments are covered by a straight bill of lading.
D) first clear each contract through the State Department.
E) ensure all of their shipments are C.O.D.

Question 11

When goods are sold by sample as well as description, which of the following statements is CORRECT?

A) The description must be in expressed terms, otherwise we go by the sample.
B) The bulk of the goods must correspond with the sample only.
C) The goods must be of merchantable quality.
D) The goods must correspond to the description and the bulk must correspond with the sample.
E) If the goods all correspond with the description, the bulk need not correspond with the sample.

Question 12

Under the Sale of Goods Act, the seller of stolen goods can be sued by their recipient (the buyer) for breach of

A) an implied condition.
B) a warranty.
C) a guarantee.
D) a duty.
E) an express condition.

Question 13

When a buyer relies on a catalogue and a sample in placing an order, the Sale of Goods Act implies:

A) warranty of fitness.
B) condition of merchantability.
C) warranty of suitability.
D) condition that the goods will correspond with the description.
E) condition of fitness.

Question 14

If not expressly agreed by the parties in their contract, the risk of loss of goods falls upon

A) the purchaser because of the implied condition regarding transfer of title.
B) the vendor, if the goods are in transit to the purchaser F.O.B. the vendor's warehouse.
C) the purchaser, if the goods are in transit on a C.O.D. basis.
D) the vendor, if the goods are in his possession because he must weigh or measure them for the purpose of ascertaining price.
E) the vendor, if the goods are in his possession for any reason.

Question 15

All of the following are characteristics of a straight bill of lading with the EXCEPTION of the following statement:

A) A consignee may obtain possession of goods at the point of destination without surrendering such a bill to the carrier.
B) It may be evidence of title.
C) It is a contract between the shipper and the carrier to transport the goods to a stated destination.
D) It is a receipt issued and signed by the carrier, acknowledging that specified goods have been delivered to him for shipment.
E) The shipment is consigned directly to a designated party.

Question 16

Amos has purchased a discontinued radio clock from the local discount electronics outlet. Upon arriving home, he notices that the timer was not functional. He wonders if he could legally demand his money back and consults you. You tell him that

A) he should first consult the bill of sale for any exemption clauses.
B) there is an implied conditions that the goods will be of "merchantable quality".
C) title has not passed until the seller has "put item into a deliverable state".
D) since the item was discontinued, all sales are final, and the store does not need to return his money.
E) sellers are strictly liable for what they sell, so simply bring it back for a refund.

Question 17

Caveat emptor is a worthwhile argument for the seller when

A) the goods are not in existence.
B) the seller does not have title.
C) the goods are not specific.
D) the seller has made some misrepresentation.
E) it is under the scope of Sales of Goods Act.

Question 18

In the sale of goods,

A) the buyer has title when goods are paid for.
B) the seller has title until delivery.
C) the change in possession and a transfer of title are the same thing.
D) passing of title and passing of ownership are separate concepts.
E) ownership and possession are separate concepts.

Question 19

Caveat Emptor means "let the buyer beware" and functions to limit the liability of sellers. However, it is not a rigid rule. An example of a seller NOT being able to use this defence would be if

A) the buyer had every opportunity to inspect the goods.
B) the seller made no misrepresentation concerning the goods.
C) the seller appeared to be knowledgeable about the product.
D) the seller has made misrepresentations about the goods.
E) the goods are in existence and are specific items that may be inspected by the buyer.

Question 20

Which of the following would be governed by the Sale of Goods Act?

A) a contract to purchase and sell developed urban land
B) a contract for the repayment of a $2000 loan
C) a contract to paint a portrait of the children of a family
D) a contract for the sale of a horse
E) a contract for building a house

Question 21

Jas commissions Alice to paint his portrait at a price of $5000. Jas is not satisfied with the result, which appears to depict a gorilla rather than Jas. Jas has a claim against Alice for breach of the implied term as to suitability for purpose and correspondence with description under the Sale of Goods Act.

Question 22

Which of the following is a remedy of the seller under the Sale of Goods Act?

A) wrongful withholding or disposition
B) order bill of lading
C) chattel title
D) caveat emptor
E) resale

Question 23

Under the Sale of Goods, when a person possesses goods, he is also the owner of the goods.

Question 24

A sale is the same as an Agreement to Sell.

Question 25

Stoppage in Transitu allows

A) an insolvent buyer to postpone purchases.
B) the carrier to be sued for damages should a delay in transit occur.
C) the buyer to pass title to anyone he feels appropriate after stoppage in transitu has occurred.
D) a seller to stop a transportation company in an emergency.
E) a seller who may have neither title to goods nor possession of them to exercise control over the goods.

Question 26

The implied terms in the Sale of Goods Act apply to:

A) sale of a painting in an art gallery
B) sale of a house
C) sale of stocks and bonds
D) construction contracts
E) none of the above

Question 27

Of the following, which is NOT a common law remedy available to the buyer?

A) rescission
B) damages for breach of contract
C) specific performance
D) retention of deposit
E) damages in tort

Question 28

The Carlsons were preparing for a four- day family reunion in their home starting on June 19th. On June 15th they ordered a large new dining room table from Levitts Furniture to accommodate the expected relatives. Levitts promised delivery (out of their local warehouse) three different mornings during the week, but each time they gave feeble reasons why they couldn't do it. On the afternoon of June 18th, the Carlsons phoned Levitts, canceled their order, and demanded their money back. What is the Carsons' legal remedy?

A) tort damages for wrongful disposition of goods
B) specific performance because of the uniqueness of the situation
C) damages for breach of warranty
D) rescission for breach of condition
E) remedies under Consumer Protection Legislation

Question 29

The Sale of Goods Act applies to provision of services.

Question 30

A lien is a right of a person to take and retain possession of another's property against the claim of the owner.

Question 31

A sanction intended to compel acceptance upon delivery of goods is called a

A) deposit.
B) stoppage in transitu.
C) partial payment.
D) lien.
E) guarantee.

Question 32

Lummi Wholesale ordered 16 cases of canned codfish from King Cannery Inc. Since Lummi's account with King Cannery was overdue, King wouldn't release the 16 cases of cod unless they received "cash in hand" at the pick- up. Does King Cannery have a right to demand payment before the customer picks up their order?

A) Yes, because the contract didn't stipulate credit terms.
B) Yes, since the customer is perhaps insolvent.
C) No, because a lien is not permitted where title has passed to the buyer.
D) No, because the terms of credit have not expired.
E) No, because past experience has been on an open account basis.

Question 33

While in the shopping mall, Mabel special ordered a $29.95 video from VistaVideo. She was asked to place a $10 deposit on the order because it was "store policy". A little while later, before leaving the mall, Mabel changed her mind about ordering the video because "she needed the $10 for something else". VistaVideo refused to return the money. Is Mabel entitled to get the $10 back?

A) No, since the $10 was a deposit.
B) Yes, because it is liquidated damages.
C) Yes, since as of yet no costs were accrued in ordering the video.
D) Yes, because the $10 was intended to be part payment.
E) No, because the $10 was not a genuine estimate of the probable loss resulting from a breach.

Question 34

If in respect of a contract for the sale of goods there is a breach of warranty, the remedy available pursuant to the Sale of Goods Act is

A) repudiation of the contract but not damages.
B) damages or repudiation of contract.
C) damages but not repudiation of the contract.
D) damages and repudiation of the contract.
E) rescission of the contract.

Question 35

The implied term as to suitability for purpose under the Sale of Goods Act does not apply in a contract for sale of a specified article under its patent or other trade name. A contract for sale under "patent or other trade name" means:

A) one in which the seller or manufacturer has a patent on the goods.
B) goods on which there is a manufacturer's warranty
C) goods that have a reputation in the market place
D) goods that are labeled with a brand name
E) none of the above.

Question 36

John asks Peter to paint his home. Peter tells John he will need to purchase certain supplies including paint and brushes. The work that Peter will be doing, including the purchase of supplies is governed by the Sale of Goods Act.

Question 37

Under contract of sale law, which of the following is NOT a remedy available to the seller?

A) specific performance
B) retention of deposit
C) stop
D) resale
E) lien

Question 38

Jack is a sales agent. He takes delivery of motor vehicles and sells them from his dealership. When Jack makes a sale the property in the goods passes between Jack and the buyer.

Question 39

An agreement to sell is one in which the seller agrees and transfers property to the buyer.

Question 40

Which of the following is NOT a remedy of the buyer?

A) specific performance
B) rescission of contract
C) action for the price
D) sue for breach of contract
E) sue for damages in tort

Question 41

Amanda sold goods at a flea market. She displayed her goods on a large table and marked the price with a label on each item. Dalton chose a piece of china from Amanda's table and paid her the labelled price of $59. Two days later he returned and demanded his money back based on the fact that the piece of china was not "Royal Crown" but "Crowne Royale". Does Amanda have to return his money? What principle of law governs in this case?

Question 42

Don Mills wished to purchase an automobile. He saw a 1994 Mustang advertised for sale in the local newspaper. Don talked to the owner, Mary Smyth, and advised her that he didn't know much about cars but needed a reliable, comfortable car for long distance travel. Mary confirmed that she found her Mustang comfortable and it was probably what Don needed. Don then examined the car and purchased it from Mary for
$5,000. They both signed a short contract which contained a clause stating that the car was sold "as is and with no warranties whatsoever".
a. If Don found that the car was uncomfortable and not suitable for long distance highway travel, what action, if any, could he bring against Mary and what would be the likely outcome?
b. If, the day after Don purchased the car, the transmission failed and the engine seized up, what action could Don take against Mary? What remedies could he claim and what defences would Mary likely raise?
c. If Don discovered that the Mustang was encumbered by a chattel mortgage which was not disclosed by Mary, what remedies would be available to Don? Give the legal basis for your answer.

Question 43

What is the difference between a contract for sale of goods and a consignment contract?

Question 44

One of the remedies of a seller is to maintain a lien on the goods. When does the right to a lien end?

Question 45

The vendor's remedy of lien only exists in certain circumstances. List three circumstances in which a contract of sale creates a right of lien for the seller.

Question 46

Herman agreed to sell his entire model railway to Dixie Grant for $1700. Dixie signed an agreement which stated that the goods were available for pickup on September 1st and that she paid a deposit of $500. Dixie refused to pick up the goods on September 1st and Herman shortly thereafter sold the goods to a third party for $1,650. What right does Dixie have to the recovery of her deposit?

Question 47

Describe four common law remedies a buyer may have against a seller of goods.

Question 48

Is there any difference between unascertained goods and future goods? Explain.

Question 49

Distinguish between a sale and an agreement to sell.

Question 50

What is a Bill of Lading and what is its purpose?

Question 51

Hugo agreed to purchase all the oil contained in a tank for $1 per litre. He paid a deposit of
$400 and agreed to participate in measuring the quantity contained by the tank. While Hugo and the owner of the tank were walking towards the tank with the measuring equipment the tank burst and the oil was totally lost. The owner's records indicated there were 962 litres in the tank. Who had title to the spilled oil?

Question 52

Albert sells collectibles. He received a telephone call from Penelope White who was looking for cranberry glass. Albert advised her that he had several sets of cranberry glass. After describing them to her over the phone, she agreed to purchase them. He shipped them to Penelope and when they arrived she refused to accept them. What remedies, if any, is Albert entitled to?

Question 53

Jack viewed a 1995 Mustang on the lot of Tim's Quality Autos Ltd. (Tim's). Jack approached Tim's and enquired about purchasing a vehicle. On January 5th, Jack signed a purchase agreement with Tim's to purchase the vehicle.
a. Tim's was required to fix the lock on the driver's door before delivering the vehicle to Jack. They then did fix the lock and notified Jack the car was ready. However, just prior to Jack's picking up the vehicle it was mysteriously damaged. Who is responsible to fix the damages as between Tim's and Jack?
b. If the agreed upon purchase price for the vehicle was $9,000 and Jack paid a $5,000 deposit when the agreement was signed and thereafter discovered that the vehicle was encumbered with a $6,000 chattel mortgage, what courses of action are available to Jack and what is the best one?

Question 54

What type of a sale of goods is subject to an implied condition that the goods shall be of merchantable quality and under what circumstances is that implied condition avoided by the seller?

Question 55

Paper Products Ltd. sold paper to Lillian to use in brochures she was producing for a client. Before making the contract, Paper Products Ltd. showed Lillian a sample of the paper it was going to sell her, and Lillian approved of the choice. The paper provided to Lillian matched the sample she had been shown. One month after she bought the paper, Lillian found that it had yellowed that it was useless for the brochures. Paper Products Ltd. is not liable to Lillian for breach of an implied term under the Sale of Goods Act because Lillian approved a sample of the paper she bought.

Question 56

Bill sells his motor vehicle to Jack for $2000. No mention is made about encumbrances registered against the vehicle. Jack discovers two weeks after the sale that the car is encumbered by a chattel mortgage to a financial institution with $1750 owing. What recourse does Jack have by virtue of the Sale of Goods Act and what remedy is he entitled to? If Bill did not own the vehicle when he sold it to Jack would your answer be different?

Question 57

If an unpaid vendor exercises his right to a lien or stoppage in transitu what must he do with the goods and is he entitled to any other remedy?

Question 58

Star Implement Ltd. sells farm machinery in Weyburn, Saskatchewan. Bill Hogshead of Rosetown purchased a tractor from Star for $27,500. He paid $900 down with the balance to be paid when the tractor was ready for shipment. Star Implement heard of a large truck heading to Rosetown with empty space large enough to accommodate the tractor. So wanting to be of good service (and before any additional payment was made), Star hurried up and placed the tractor on the truck. But when they phoned Bill to tell him the tractor was on its way, his wife answered and advised that Bill had gone to Regina to initiate bankruptcy proceedings. What remedies does Star Implement have in respect to the contract of sale?

Question 59

William Cheshire delivered an order of lighting fixtures to Bright Lighting Ltd. along with an invoice for $1,200. The invoice specified that payment was due in 10 days. William was not paid and now wishes to recover his goods. Discuss his rights and remedies as against Bright Lighting Ltd.

Question 60

Slater ordered a load of gravel to be delivered to his future home building site. When it arrived he tried to explain to the driver that he had forgotten his cheque book but would gladly send the money. The truck driver refused to dump the load because he was instructed to get "payment on delivery". Was the driver legally right in not dumping the load of gravel?

Question 61

Donald visited the premises owned by Mary's Hay Farm Ltd. and viewed a stack of more than 4,000 bales of hay. He agreed to purchase 800 bales for $2.00 per bale. He paid the $1,600 and advised that he was going to get his truck and would return in about three hours. When Donald returned three hours later he noticed that there was a smoldering pile of debris where the stack of bales had previously been. The entire stack had been destroyed. Who is entitled to the $1,600? Give the legal basis for your answer. What additional fact do you need to know in order to confirm your answer?

Question 62

Shannon Smith sold her 1993 Toyota to Doris Night on February 3, 1998. On the contract of sale, which both signed, she put the words "as is". Doris had test driven the car with Shannon present on February 1, and had commented on a rattle in the front- end and some noises in the transmission. Shannon replied to those inquiries as follows: "I think the rattle is from a loose heater cable and I know there are no transmission problems." On February 5, 1994 Doris telephoned Shannon and advised her that the car was inoperable because the transmission had seized up and Doris wanted to know what Shannon was going to do about it. That evening in the bar Shannon told her friends the above and they had the following comments and advice:
a. Don't pay any attention to Doris, caveat emptor applies.
b. Since the car has been delivered the contract is discharged by performance.
c. Since you allowed Doris to examine the car and test drive it the transmission failure is solely Doris' problem.
d. You shouldn't have said anything about the transmission but because you did you must fix the car or take it back and refund the purchase price.Shannon does not know what to do and asks for your advice. Comment on each of the (a) to (d) above with respect to the legal basis for each comment and its accuracy. Express your opinion of the liability (if any) of Shannon.

Question 63

Discuss the difference between title to goods, ownership, and possession of goods, using a consignment agreement to illustrate your point.

Question 64

John and Jane entered into an agreement for the sale and purchase of an ornate oak table. The purchase price was $450. The contract was silent as to the time for payment. John, the vendor, insisted that the $450 be paid to him before he would deliver the table. Jane insisted that the table be delivered to her before she paid the $450. Who has taken the correct position? Give the legal basis for your answer.

Question 65

ABC Ltd. enters into a contract on the sale of a filing cabinet which was located in their Halifax warehouse. If the filing cabinet was destroyed while being transported from Halifax to the purchaser's business premises in Moncton, who would bear the loss if the terms of the contract were:
a. F.O.B. Halifax
b. C.O.D.
c. C.I.F. Moncton

Question 66

Janice Stone wanted to go rock climbing and needed some rope. She went to Bill's Hardware Store, told the salesman that she wanted some rope, and described to him what she was going to use it for. The salesman recommended a polypropylene rope and on the basis of this recommendation Janice bought the rope. Janice used the rope for rock climbing and was injured when the rope broke. She subsequently learned that polypropylene rope is unsuitable for rock climbing as it wears wherever it is bent and is hence subject to breakage.
a. Janice sued Bill's Hardware Store. What must she prove to be successful and what are her chances of success?
b. If Janice brought in a sample of polypropylene rope and asked specifically for that type of rope would the result be different than (a) above?

Question 67

Brent Cook owns and operates a farm supply store selling feed and hardware for the farm.
a. Mary Martin wants to buy a type of mink feed which must be ordered from Regina. Brent has a sample which he shows Mary. What rights does Mary have before she is bound to accept the feed when it arrives at Brent's store and under what circumstances can she reject the goods?
b. Donald Jones enters the store and buys 50 feet of marine rope used primarily by water skiers. The rope breaks while being used by Donald to raise bales of hay from a truck to the hay loft of Donald's barn. The bales fell onto the truck, damaging it and injuring Donald who is sitting in the cab. Donald sues Brent on the basis of breach of implied condition of fitness for the rope. What must Donald establish in order to be successful? What defences does Brent have? What is the likely outcome?