Deck 15: Sales and Consumer Protection

Question 1

To which one of the following contracts would the Sale of Goods Act apply?

A) A contract with a dentist to have a tooth filled
B) A contract for the purchase of a farm
C) A contract by which two computer programs were swapped for two others
D) A contract for a table where title to the table will not pass to the buyer until some future date
E) A contract for the assignment of a company's accounts receivable

Answer 1

D

Question 2

Four students assigned to examine the operations of Mr. Triffle's restaurant supply company found that the business worked in an inefficient manner. On the students' recommendation, Triffle went to Computerheaven Ltd. and explained to the salesperson the needs of the company. Computerheaven sold the company an Olivetti computer system for $18,000. The system was in operation less than one hour when it malfunctioned and injured one of Triffle's employees. The malfunction was not the fault of the seller or the buyer, but of the manufacturer. Which one of the following actions arise from these facts?

A) Triffle's company vs. the manufacturer for frustration.
B) Triffle's company vs. Computerheaven for breach of a warranty because the system was not of merchantable quality
C) Triffle's employee vs. Computerheaven for negligence.
D) Triffle's employee vs. Triffle Company for breach of condition.
E) Triffle's company vs. Computerheaven for breach of a condition because the system was not fit for purpose

Answer 2

E

Question 3

With respect to the breach of a sale-of-goods contract, consider the following statements. Which of these is false?

A) Whether a seller can sue for the price or damages depends upon whether or not title has passed.
B) The Sale of Goods Act excludes the possibility of the various equitable remedies such as specific performance.
C) Where a buyer has continued to push a breaching seller for performance, he could lose the right to discharge the contract in the event of a breach of a condition.
D) Before a court will award a remedy, generally it will decide whether the breach was of a condition or a warranty.
E) Even after the seller has given possession of the goods to the buyer, he may be able to get them back under the provisions of the Bankruptcy and Insolvency Act.

Answer 3

B

Question 4

Uncle Isaac has had some difficulty in a sale-of-goods contract and wants to know if there are any mistakes in the information he has received with regard to the remedies for breach of such a contract. Indicate the true statement.

A) A court will award a remedy, only if there was a breach of warranty.
B) An unpaid seller who has possession of the goods has a lien on those goods; i.e., he can hold the goods.
C) Once the seller of the goods has given up possession of them to the buyer, he has lost his right to sue.
D) If there has been a breach of contract, the purchaser is only entitled to tort remedies.
E) The Sale of Goods Act excludes the possibility of the equitable remedy of specific performance.

Question 5

Which of the following contracts would be covered by the Sale of Goods Act?

A) A contract for the sale of a famous painting
B) The trade of a car for a boat involving no money
C) The sale of corporate shares
D) A contract for medical services with a doctor
E) The purchase of a house

Question 6

To which one of the following would the Sale of Goods Act apply?

A) A contract for future goods when title will pass in the future.
B) A contract for the sale of intangible property
C) A haircut at the local hairstylist
D) A contract for the purchase of a house
E) A contract for the sale of a ranch

Question 7

Which of the following statements is correct with respect to a contract for the purchase of goods?

A) The purchaser has a claim against the manufacturer only if the goods purchased are defective.
B) Where a breach of a warranty is involved, the obligation of the victim of the breach is ended and that person need not perform her side of the agreement.
C) Where a breach of a condition is involved, the obligation of the victim of the breach is ended and that person need not perform her side of the agreement.
D) The purpose of the inclusion of a warranty in a sale of goods contract is to force the seller of those goods to repair the goods if they are defective.
E) Where a breach of a condition is involved, the contract is still in force and the victim of the breach must still perform her side of the agreement.

Question 8

Bob and Barb went into Logan Drugs, a self-service drug store. She bought some packaged cookies and he bought some Tilox, a cleaning solvent for tile that he hoped would remove greasy dirt from a painted kitchen chair. Because Bob wanted to work on the chair, Barb set their son, Keith, at the kitchen table with some cookies so he could watch without being in the way. After he had two cookies, Barb noticed that there were worms in the cookies. She took Keith and the cookies (made in Vancouver) to the doctor. While they were away, Bob learned too late that the Tilox did take off the grease but also the paint. The directions advised against using the product on wood or painted surfaces. On these facts, which of the following is true?

A) Bob's purpose for buying the cleaning solvent was implied although not express.
B) Keith (represented by a parent) would have an action against the makers of the cookies in tort law.
C) Barb could not sue Logan drugs for breach of contract for the wormy cookies.
D) Bob has a cause of action against Logan Drugs because it is a dealer in cleaning products and this Tilox was not fit for his purpose.
E) Logan Drugs has no right to sue the makers of the cookies under the Sale of Goods Act.

Question 9

If you buy a toaster from a second-hand dealer of small appliances, which of the following is true?

A) The risk of loss depends on who has possession of the toaster.
B) Title to the toaster would pass at the time the buyer would pick it up the next day.
C) The Sale of Goods Act does not apply.
D) The Sale of Goods Act prohibits the seller from exempting himself from liability in the event that the toaster is not fit for purpose.
E) There is an implied term of the contract that the seller has good title, i.e., the right to sell it.

Question 10

To which one of the following would the Sale of Goods Act not apply?

A) A contract for the sale of a ranch
B) A contract for the purchase of a car
C) A contract for future goods when title will pass in the future.
D) A contract for the sale of tangible personal property
E) A meal in a restaurant

Question 11

With respect to a sale of goods, which one of the following statements is false?

A) In a retail sale of new goods, the seller can always exclude liability for breach of all implied terms in the Sale of Goods Act by a carefully drawn exemption clause.
B) A seller who has been given a cheque that "bounces" (dishonoured for insufficient funds) in payment for goods that he still possesses has a choice of rights against the goods themselves and an action for breach of contract against the buyer.
C) In commercial transactions, a buyer of goods has the protection of the "fit for purpose" provision, but legislation enables the seller to exempt himself from liability.
D) The Sale of Goods Act provides terms that will be taken to be part of a contract for goods even though the parties failed to mention anything about such matters.
E) The Sale of Goods Act permits commercial parties to exclude the Act if they mutually want to.

Question 12

Slipstream bought a new lawnmower for mowing his own yard at home from Mulcher Mowers Ltd., a lawn and garden tools dealer in Vancouver. Unfortunately, while there were no major defects with the machine, a number of small things kept going wrong: the blade kept going out of adjustment, the starter rope broke twice, a wheel fell off, the handle loosened and wobbled, and the machine stalled in heavy grass. During the summer, Slipstream had it repaired six times. These small annoyances continued and finally, in disgust, he returned the mower to Mulcher. However, Mulcher's manager (a university graduate) pointed out to Slipstream that their contract contained a very extensive exemption clause excluding "all conditions or warranties, express or implied, statutory or otherwise," and refused to accept the mower back or to return Slipstream's money. Slipstream commenced legal action. Which of the following statements best describes Slipstream's legal situation?

A) In a sale of new goods by a dealer to a private consumer for his own use, legislation prohibits the seller from excluding these basic warranties with respect to fitness and quality.
B) All such exclusion clauses are void.
C) Such clauses are always effective just as long as the two parties have agreed to their inclusion in the contract.
D) Such clauses are only effective when there is a breach of the fundamental term of the contract, which is likely not the case here because the defects were all minor.
E) The Sale of Goods Act prohibits the use of such exclusion clauses generally.

Question 13

For the purpose of building a playhouse for his sons, Andy went to Lumberlore Ltd. and bought, with his charge card and without talking to a salesperson, the following things: a drill, lumber, and a six-foot step ladder. While working on the project, Andy noted that the drill worked but it was not powerful enough to drill into the 4x4 inch posts the playhouse needed for support. When he went toward the house to get his car keys, he found his wife unconscious. She had used the ladder to take some leaves out of the gutter, and it buckled under her weight because of its faulty design. Which of the following is true?

A) The sale of the items he bought are not covered by the Sale of Goods Act because he used his charge card.
B) Title for the goods passed to Andy at the time of contract but that does not preclude him from his remedies.
C) Andy would have no cause action against Lumberlore Ltd. for breach of a condition
D) Andy would have an action against the seller for breach of a condition of the contract for the drill because it wasn't fit for his purpose.
E) Andy's wife would have no cause of action against the manufacturer of the ladder in tort.

Question 14

Which of the following statements accurately state the law with respect to consumer transactions?

A) A deceptive or unconscionable supplier does not lose his right to carry on business in the province.
B) Where the court decides that a transaction was unconscionable, that transaction is unenforceable by the buyer.
C) Where a consumer has been subject to a deceptive or unconscionable act or practice, he may recover damages and an order of rescission.
D) In all consumer transactions, there is a cooling-off period of seven days in which the consumer can call off the deal.
E) Where a supplier engages in a deceptive or unconscionable act, he is neither subject to fines nor jail.

Question 15

Which of the following is true with regard to the implied terms of the Sale of Goods Act?

A) The Act provides that the goods must be of "merchantable quality," and that means that the goods must be without flaw.
B) If a buyer places an order for silk after seeing a sample of it, the order delivered must be delivered within 10 days.
C) When you buy a car, and the contract speaks only of the car and the price, you are entitled to receive good title, to acquire quiet possession and a car free from any encumbrances (i.e., a claim by a bank).
D) The Act does not provide that the goods must be fit for purpose.
E) If you ordered a lamp from a catalogue but it did not match the description when you got it, the seller is in breach of a warranty of the contract.

Question 16

Which one of the following statements is false with respect to who bears the risk of loss in a sale-of-goods contract?

A) When unascertained or future goods are involved, the risk transfers once a reasonable time has passed.
B) The risk of loss may depend on who holds title.
C) The parties can contradict the provisions of the Sale of Goods Act on this question.
D) Where repairs have to be done before delivery, the risk passes when the repairs are made and notice given.
E) The risk of specific goods may pass upon formation of the contract.

Question 17

With respect to a sale of goods, which one of the following statements is true?

A) If the parties do not agree otherwise, the time of payment is 30 days after the time of delivery.
B) A seller who has been given a cheque that "bounces" (dishonoured for insufficient funds), in payment for goods that he still possesses, has rights against the goods themselves as well as an action for breach of contract against the buyer.
C) Legislation allows a seller to override the requirement that goods supplied be fit and of merchantable quality in consumer transactions.
D) The Sale of Goods Act also applies to the purchase of real estate and of bonds.
E) If the parties do not agree otherwise, the risk of loss stays with the seller until delivery.

Question 18

With respect to a sale of goods, which one of the following statements is true?

A) The Sale of Goods Act provides terms that are not to be part of a contract for goods even if the parties failed to mention anything about such matters.
B) In a retail sale of new goods, the seller can always exclude liability for breach of all implied terms in the Sale of Goods Act by a carefully drawn exemption clause.
C) The Sale of Goods Act does not allow the use of exemption, exculpatory or limitation clauses.
D) A seller who has been given a cheque that "bounces" (dishonoured for insufficient funds) in payment for goods that he still possesses has a choice of rights against the goods themselves and an action for breach of contract against the buyer.
E) In private personal transactions, a buyer of goods has the protection of the "fit for purpose" provision.

Question 19

Which of the following statements is correct with respect to the Sale of Goods Act?

A) The parties are restricted to contract out of any of the terms of the Sale of Goods Act.
B) Some of the terms of the Sale of Goods Act are implied in the contract of sale.
C) The Sale of Goods Act does apply to the assignment of a contractual claim.
D) The Sale of Goods Act does apply to the sale of land.
E) The terms included in the Sale of Goods Act override the terms agreed upon by the parties to such a sale of goods.

Question 20

In which of the following will the title to the goods pass to the buyer at the time of contract?

A) While at the Bay, Preston decides to buy the style of sofa he sees on display. He pays by cash and the store arranges to have one sent from its warehouse directly to Preston's home.
B) Mary picks out a leather briefcase and leaves it with the seller so that initials can be engraved on it. She pays by cheque.
C) Williams contracts for the desk he selected at Antiques Unlimited, and he arranges to have it delivered to his office tomorrow and to be paid for in one month.
D) Mrs. Jones calls the Bay and asks them to send out the blanket advertised on p. 3 of its flyer. The Bay agrees and takes her credit card number.
E) ABC Co. buys all the chemicals contained in a drum marked "A" but the price has to be ascertained by measuring the number of litres in the drum.

Question 21

The following events occurred before the goods or parts of the goods were destroyed by fire. In which case would the buyer suffer the loss?

A) Jaspers contracted for four standard-sized cupboards for the kitchen. The boards had been cut, but they had not been assembled.
B) Heinz contracted for all the corn in silo A. The seller still had to weigh the corn to determine the price.
C) McGrady ordered a chainsaw advertised in the Sears catalogue.
D) Manchesco chose which of the chairs he wanted and contracted for it, but he had agreed to pay and pick it up the next day.
E) Justin contracted for a piano that had to be tuned before it was in a deliverable state. It was tuned, but Justin had not been notified that it was ready.

Question 22

With respect to a sale of goods, which one of the following statements is false?

A) A seller who has been given a cheque that "bounces" (dishonoured for insufficient funds), in payment for goods that he still possesses, has rights against the goods themselves as well as an action for breach of contract against the buyer.
B) If the parties do not agree otherwise, the time of payment is the time of delivery.
C) Legislation in most provinces will not allow a seller to override the requirement that goods supplied be fit and of merchantable quality in consumer transactions.
D) If the parties do not agree otherwise, the risk of loss stays with the seller until delivery.
E) The Sale of Goods Act does not apply to the purchase of real estate or of bonds.

Question 23

For the purpose of building a playhouse for his sons, Andy went to Lumberlore Ltd. and bought, with his charge card and without talking to a salesperson, the following things: a drill, lumber, and a six-foot step ladder. While working on the project, Andy noted that the drill worked but it was not powerful enough to drill into the 4x4 inch posts the playhouse needed for support. When he went toward the house to get his car keys, he found his wife unconscious. She had used the ladder to take some leaves out of the gutter, and it buckled under her weight because of its faulty design. Which of the following is false?

A) Andy's wife would have an action against the manufacturer of the ladder in tort.
B) Title for the goods passed to Andy at the time of contract but that does not preclude him from his remedies.
C) The sale of the items he bought is covered by the Sale of Goods Act although he used his charge card.
D) Andy would have an action against the seller for breach of a condition of the contract for the drill because it wasn't fit for his purpose.
E) Andy would have an action against Lumberlore, Ltd. for breach of a condition of the contract for the ladder because it wasn't of "merchantable quality."

Question 24

In which of the following would the title pass to the buyer only when the goods were "unconditionally appropriated" with assent?

A) Mark chose a guitar advertised in the catalogue of Guitars Galore Ltd., called the store, and after some discussion on its features and price, ordered it.
B) Jenny wanted amplifier A for her guitar, but the store only had amplifier B. She decided to take it because she wanted one right away.
C) Homer chose a guitar that was ready and he agreed to buy it. They had agreed that he could pay for it next month and pick it up when he paid.
D) Jethro chose the guitar and paid for it, but it had to be strung before it was ready.
E) After some discussion with the owner of Guitars Galore Ltd. as to which of the guitars there were best for a beginner, Bob bought a guitar for his son "on approval" and took it with him.

Question 25

With regard to a contract for the sale and purchase of goods, which of the following is false?

A) The Act provides a number of implied terms that may be added to the contract if the parties failed to mention those particular matters.
B) Title to the goods may pass to the buyer at the time of contract.
C) The buyer of used goods has the protection of the implied terms of the Sale of Goods Act, but the Act does not automatically void an exemption clause in a contract for the sale of used goods.
D) Contracts for the sale of goods valued at more than $2 must be in writing in order to be enforceable.
E) To guard against loss, a buyer of costly goods should have his insurance in place by the time that title passes to him, because the person with title generally bears the loss.

Question 26

Colson went to Logon Drugs and bought some light bulbs for the hallways of his new apartment building. A tenant asked for one and Colson gave him one but told him he was responsible for getting his own from now on. The bulb, manufactured by Burnaby Brite, Ltd. and sold to Logon Drugs by Dandy Distributors Ltd., was defective, improperly made. It exploded and set some curtains on fire. The tenant's apartment suffered $6,000 damage; he had to move out. He couldn't live there while repairs were being undertaken and had no choice but to find another place, as it would take three weeks to get the apartment liveable again. On these facts, which of the following is false?

A) Logon Drugs cannot sue the manufacturer for breach of contract even though the manufacturer was at fault.
B) The manufacturer could be sued in contract by Dandy Distributors, but could be sued by others only for the tort of negligence.
C) Logon Drugs could sue Dandy Distributors for breach of contract, although it was not at fault for the damage.
D) The tenant could sue Logon Drugs for breach of contract or negligence because his loss was caused by the defective light bulb.
E) Logon Drugs had not really caused the damage, but it could still be sued by Colson for breach of contract.

Question 27

Which of the following complaints would lead to a successful action under the Sale of Goods Act?

A) "What do you mean that you are not going through with the contract to sell me that lot? I have workers ready to start construction one week after the closing date!"
B) "I hired you to tutor me for my chemistry exam, not to tell me your personal problems week after week!"
C) "I left the car here with orders to adjust the front lights; I did not order a wheel alignment and I don't want to pay for it!"
D) "I paid $1000 for government bonds, but you have sent me shares in a private company that I never heard of!"
E) "I paid a lot of money for this car and this is the third time I've had it back in the first week. Something is seriously wrong with it."

Question 28

John bought a car for $5,000. Shortly afterwards, a bailiff acting for an unpaid chattel mortgagee who had properly registered his claim in time seized the car. In which of the following circumstances will John be least likely to recover what he is owed?

A) If John forgot to check the registry for liens or encumbrances
B) If the seller told John that the car was free and clear of any encumbrances even though John didn't ask
C) If the seller can no longer be located.
D) If the seller told John that the car was free and clear of any encumbrances after John asked
E) If neither John nor the seller said anything about whether the car was free and clear of encumbrances

Question 29

To which of the following transactions would the Sale of Goods Act apply?

A) A contract for a house
B) A contract with a warehouseman to store a Chevrolet car
C) A contract for a haircut
D) A contract for a boat
E) A contract to get a dress mended and cleaned

Question 30

The British Columbia Business Institute (BCBI), because of its vast purchasing power, arranged a special plan through which its students could purchase new computers at a greatly discounted price. BCBI took orders from a number of students, along with a deposit as an indication of good faith, and then bought that number of computers from A. Pwee Ltd., the manufacturer. When the students came to BCBI with the balance of the purchase price, a specific machine was selected and sold to them by a serial number, and it was then theirs to take away. By Friday afternoon of delivery week, all but three students had picked up their machines. Jackson had stopped by and completed the purchase arrangements, and a particular machine was identified by number as his. But because he was going out of town for the weekend, he arranged to pick it up on Monday. The two others, Pollock and Kline, had not yet showed up. Unfortunately, some time on the weekend, despite due care by BCBI, thieves smashed into the storeroom and stole the final three computers. Identify the true statement about liability for this loss (presuming the thieves cannot be caught).

A) Jackson will be liable for the loss but Pollock and Kline will not.
B) BCBI will be liable to Jackson but not to Pollock and Kline.
C) No one will be liable for the loss because this was a crime and not the fault of any of them.
D) BCBI will be liable for the entire loss because none of the three students had taken actual delivery.
E) The three students will be liable entirely for the losses.

Question 31

Which of the following complaints would lead to a successful action under the Sale of Goods Act?

A) "I hired you to wait tables, not to stand around doing stand-up comedy routines."
B) "Waiter, there's a spider in my sandwich."
C) "I left the car here with orders to adjust the front lights; I did not order a tune-up!"
D) "I paid $1000 for government bonds, but you have sent me shares in a private company that I never heard of!"
E) "You are not going to honour our contract for the land?! I planned to build on that lot in the spring!"

Question 32

Gregory went to Collegiate Sports Ltd. with his dad, who asked for some shoes for Gregory suitable for playing squash. Gregory was given a pair of running shoes suitable only for jogging. His dad paid by cash. That evening, wearing the new shoes while playing squash, Gregory broke his ankle. In the ensuing lawsuit, the statement of claim cited the provisions of the Sale of Goods Act. Which of the following is true if it were proven that the shoes were inappropriate and the cause of the injury?

A) Gregory's father would be the proper plaintiff in this action and could win on the claim that the goods were not fit for purpose.
B) Only Gregory can sue since he was the only one hurt.
C) Gregory could win for breach of contract because he made known the purpose for which he wanted the shoes to a shoe dealer.
D) This is a "buyer beware" situation and there would be no remedy for anyone.
E) This is not a sale of goods situation because Gregory's father paid by cash.

Question 33

Which one of the following statements accurately describes the legal relationship between the principle of caveat emptor ("buyer beware") and the effect on a sale-of-goods contract of the Sale of Goods Act?

A) Because caveat emptor applies to the quality of goods, the buyer's only protection is to examine them carefully and only accept them if he finds them to his liking.
B) The buyer must be particularly careful to make it an express term of the contract that he get good title to the goods.
C) The Act provides a number of implied contractual terms to supplement those expressed in the contract, and these implied terms override the principle of caveat emptor.
D) The sale of goods provisions with respect to fitness and quality always override a different stated intention in a contract for the sale of goods.
E) When there is a conflict between the principle of caveat emptor and the provisions of the Act, the principle prevails over the Act.

Question 34

The following events occurred before the goods or parts of the goods were lost or destroyed. In which case would the buyer suffer the loss?

A) Jaspers contracted for four standard-sized cupboards for the kitchen. The boards had been cut, but they had not been assembled.
B) Al picked out and contracted for a particular computer, and an additional component had to be installed before it was in deliverable state. It was installed, but Al had not been notified that it was ready.
C) George ordered a Pentium computer system with 4 megabytes of RAM and a 105 megabyte hard drive advertised by Kicks Computers.
D) Yates chose which of the desks he wanted and contracted for it, but he had agreed to pay and pick it up the next day.
E) Heinz contracted for all the corn in Silo A. The seller still had to weight the corn to determine the price.

Question 35

Which of the following is a statement of facts to which the Sale of Goods Act would apply?

A) "I agreed to give you a dozen old campaign buttons for that original signature of the Prime Minister, but received the signature of the Governor General."
B) "I brought in five shirts to be laundered and you are returning only four to me!"
C) "Waiter, there is a dead fly in my spaghetti."
D) "I ask for a trim! You've cut off 5 inches!!!"
E) "Today is the closing date and I am willing to tender the full price in cash, namely $70,000, for the farm, and you are now telling me that you have no intention of closing."

Question 36

Tina's Gourmet Catering Ltd. (hereinafter referred to as "Tina's") makes several types of fresh salads, which they package in sealed containers and sell to various retail outlets. Grandma Wright, shopping with her daughter Jane, bought one of Tina's salads at the delicatessen at Superdeal Grocers Ltd. (Superdeal). Jane and her mom drove to Jane's and Jane served the salad to her family for lunch. The salad was contaminated through Tina's carelessness and caused Jane's family to be very sick; father missed work and the kids missed school for a week. Neither Jane nor her mother were sick because neither had sat down with the others for lunch. On these facts, which of the following actions would most likely be successful?

A) Kids v. Tina's for negligence
B) Jane v. Tina's for negligence
C) Father v. Superdeal for negligence
D) Father v. Superdeal for breach of contract
E) Grandma v. Superdeal for negligence

Question 37

O'Neil bought a new car from a Chevrolet dealer for family use. The contract he signed contained the following clause: "The parties hereto expressly agree that the dealer is not liable for any breach of condition or warranty, express or implied." He also bought a used car radio from the dealer for his old car, which he was keeping. The contract for the radio was not in writing. The car did not run properly; O'Neil had it back in the shop seven times in three weeks. It was finally determined that the problem was due to a faulty transmission. Unfortunately, the car radio didn't work either. On these facts, which of the following is true?

A) The contract for the radio is not covered by the Sale of Goods Act because the radio was not new.
B) The exemption clause does not apply to either because both involve fundamental breaches of contract.
C) O'Neil has an action for breach of contract against the dealer, because the exemption clause does not defeat the dealer's obligation to deliver a properly performing car (fit for use) in a consumer transaction.
D) The contract for the radio is not covered by the Sale of Goods Act because the contract was not in writing.
E) The exemption clause in the contract for the car would succeed in defeating an action by O'Neil against the dealer for breach of contract.

Question 38

To which one of the following contracts would the Sale of Goods Act apply?

A) A contract with an artist to have a portrait painted
B) A contract for the sale and purchase of a farm
C) A contract in which the seller sells a computer, and ownership will transfer to the buyer at a specified future time
D) A contract in which one party gives an antique pin in exchange for the other party giving an antique cigar box
E) A contract for the assignment of a company's "accounts receivable"

Question 39

Bob, owner of a pizza business, went with his wife to pick out a new family car. Since they already knew the make and model they wanted, it did not take long before the contract was signed by the wife for a new 2012 Oldsmobile. While the paperwork was being done, Bob had been talking with another salesman about the used cars on the lot, telling him that he needed a mechanically sound car but not a new car for his business. The salesman showed him one that he said was in good shape and would give several years of service. Bob made a very low offer that the salesman accepted, much to Bob's surprise. The contract Bob signed, like his wife's, contained a clause exempting the seller, B & S Motors, from liability for breach of any warranties, including any implied warranties under the Sale of Goods Act. A few weeks after the sale, the wife and daughter were injured in an accident caused by the faulty steering mechanism of the new car. Furthermore, the used car was not in good shape and lasted weeks, not years. On these facts, which of the following is true?

A) The daughter could sue B & S Motors for breach of contract.
B) An exemption clause is always effective in exempting the seller from liability.
C) The wife could not succeed in an action against B & S Motors, because there is an exemption clause in the contract of sale.
D) The daughter could sue B & S Motors for negligence.
E) If legislation in the province prohibits a seller from overriding the requirement that goods be fit and of merchantable quality in consumer transactions, the wife may win for breach of contract.

Question 40

To which of the following transactions would the Sale of Goods Act apply?

A) The sale of a puppy to be given as a present by the buyer
B) The oral lease of an apartment for less than two years
C) A heart transplant operation
D) The sale of an office building
E) The sale of shares in a corporation

Question 41

Tahmineh was very upset to find herself short of cash, after her roommate had moved out without paying her share of the month's expenses. Tahmineh had no choice but to borrow money from QuickMoney Loans. Without getting legal advice, she signed a contract in which she agreed to pay back the money along with interest. The interest clause provided that interest was to be calculated at the rate of 2 percent per month. Tahmineh failed to pay back all of the funds and QuickMoney Loans sued her. What argument might she successfully raise to limit the amount of her obligation?

A) Because the actual interest rate was over 1 percent per month, the interest provision was contrary to the Criminal Code.
B) Because Tahmineh did not receive independent legal advice, the loan agreement is void.
C) Because Tahmineh was upset over her roommate moving out, she lacked capacity to agree to the terms of the contract.
D) It is unlawful to charge interest to a person in a vulnerable state.
E) The Interest Act provides that in any contract where interest is payable, interest must be stated as an annual rate.

Question 42

A type of sales practice in which the purchaser supplies a seller with a list of friends or acquaintances and receives a benefit when sales are made to those people is known as

A) one-off marketing.
B) direct sales.
C) consumer sales.
D) preferred selling.
E) referral selling.

Question 43

Which of the following is not federal legislation?

A) Motor Vehicle Safety Act
B) Competition Act
C) Hazardous Products Act
D) Sale of Goods Act
E) Food and Drug Act

Question 44

Which of the following is false with regard to the implied terms of the Sale of Goods Act?

A) When you buy a car, and the contract speaks only of the car and the price, you are entitled to receive good title, to acquire quiet possession and a car free from any encumbrances (i.e., a claim by a bank).
B) If you ordered a lamp from a catalogue but it did not match the description when you got it, the seller is in breach of a condition of the contract.
C) If a buyer places an order for silk after seeing a sample of it, the order delivered must match the sample.
D) The Act provides that the goods must be of "merchantable quality," and that means that the goods must be without flaw.
E) The Act provides that the goods must be fit for purpose, but to have that protection, the buyer must be dealing with a seller who deals in goods of that kind.

Question 45

Which of the following is a statement of facts to which the Sale of Goods Act would apply?

A) "Excuse me, there is a mouse in this beer bottle."
B) "Today is the closing date and I am willing to tender the full price in cash, namely $50,000, for the house and you are now telling me that you have no intention of closing."
C) "I brought in five shirts to be laundered and you are returning only four to me!"
D) "I agreed to give you a dozen old campaign buttons for that original signature of the Prime Minister, but received the signature of the Governor General."
E) "I ask for a trim! You've cut off 2 inches!!!"

Question 46

Read the following statements with regard to the parties involved with negotiable instruments and indicate which is false.

A) The person who signs and issues the cheque is the drawer. The person who is owed the money and receives the cheque is the drawee.
B) A person who signs a draft is a drawer; the party commanded to pay is the drawee.
C) The payee of a negotiable instrument can negotiate the instrument to a holder who will be remote in relation to the drawer.
D) The person who signs a promissory note is the maker of the note, and unlike a cheque, the note will not include a drawee.
E) An acceptor of a draft will become liable to the payee for the amount of the draft.

Question 47

Rick has just been told that he will have to undergo a second operation because the results of the first operation are not as expected. In the first operation, a small device was inserted near his damaged knee to stimulate bone growth with electrical impulses. The device was not working. The operation was performed by Dr. Jones, who is employed by St. Everybody's hospital. There is evidence that the device itself is faulty. The hospital had purchased the device from Medisci Ltd., which had purchased it directly from the manufacturer, Electrobo Ltd. The operation is not covered by the medical plan, and it will cost Rick $5,000. Rick is very upset and wants to sue for damages. Which of the following is correct with respect to who Rick could sue and why?

A) Rick can sue Medisci Ltd. for breach of contract.
B) Rick can successfully sue the doctor for negligence.
C) Rick can't sue anyone. There are no guaranties in surgery.
D) Rick can sue Electrobo for both negligence and breach of contract.
E) Rick can sue Electrobo for negligence.

Question 48

Sarah, who had just celebrated her 21st birthday, was distraught over the fact that her tuition had recently gone up. She did not qualify for any further student funding, so she had no alternative but to borrow money from FastCash Loans. Without getting legal advice, she signed a contract in which she agreed to pay back the money along with interest. Because Sarah was a student, and therefore a high-risk client, the interest clause was to be calculated at the rate of 80 percent per year. Sarah failed to pay back all of the funds and FastCash Loans sued her. What argument might she successfully raise to limit the amount of her obligation?

A) Because Sarah did not receive independent legal advice, the loan agreement is void.
B) Because the interest rate was over 60 percent, the interest provision was contrary to the Criminal Code.
C) The Interest Act provides that in any contract where interest is payable, interest must be stated as an monthly rate.
D) Under the Student Finance Act, it is unlawful to charge interest to a student.
E) Because Sarah is a student, she lacked capacity to agree to the terms of the contract.

Question 49

Prebushewski v. Dodge City Auto (1984) Ltd. involved an action under the Consumer Protection Act. The issue that went to the Supreme Court of Canada was the award of $25,000 in exemplary damages. What did the Supreme Court of Canada hold?

A) The award of exemplary damages was set aside, as it contradicted the overriding principle of caveat emptor.
B) The threshold set by the Consumer Protection Act was unjustifiably low, so the Court severed those provisions from the legislation.
C) The Consumer Protection Act did not apply, because the issue involved the sale of goods.
D) The award of exemplary damages was unwarranted, given that no one had been injured.
E) As long as Chrysler's conduct was voluntary, intentional, and deliberate, this was sufficient to justify an award of exemplary damages.

Question 50

Which of the following is not controlled by consumer protection legislation?

A) Unequal bargaining power that is abusive
B) Business transactions
C) Unconscionable transactions
D) The investigation of complaints
E) False advertising

Question 51

In Hunter Engineering Co. v. Syncrude Canada Ltd., the Supreme Court of Canada had to determine whether an exemption clause overrode the operation of the Sale of Goods Act. What did the Court determine?

A) An exemption clause that is inconsistent with the Sales of Goods Act is illegal and therefore void.
B) Parties cannot contract out of the Sale of Goods Act.
C) Except in cases involving a sale of goods, the presence of an exemption clause will protect a party from any misconduct.
D) An exemption clause is effective in all cases except when dealing with a fundamental breach.
E) Even in the face of a fundamental breach, it is possible for parties to exempt themselves from liability.

Question 52

Vanderhoort contacted Prinz to buy a new furnace that burned both wood and oil. Prinz, who bought the furnace directly from the manufacturer, also installed it. The furnace was defective; it malfunctioned and caused a fire that destroyed the house of the buyer and the belongings of a visitor. Which of the following accurately sets out the legal position of the parties?

A) The damages to be claimed from the seller are limited to the total charged for the sale and installation.
B) The visitor could sue both seller and the manufacturer.
C) Vanderhoort could sue only seller.
D) If the reason for the fire was a defect caused at the factory, Vanderhoort could only sue the manufacturer for negligence.
E) If Vanderhoort successfully sued the seller, the seller could then sue the manufacturer.

Question 53

Which of the following is a statement of facts to which the Sale of Goods Act would apply?

A) "There's a small dead insect in my soup!"
B) "We hired you as a bartender, not to join the guests and teach them Texas line dancing!"
C) "I paid you to tune the car, but it obviously wasn't done!"
D) "Pursuant to the contract, the buyer of the house tendered $50,000 on the closing date, but the seller had changed his mind."
E) "The deal was this: Fred was to assign to Paul Fred's accounts receivable, and Paul would pay him $5000 cash, but Fred did not honour his promise."

Question 54

Mr. Olde died. Mrs. Olde was treated by a psychiatrist who advised her that part of her difficulty was her trying to make financial decisions that had previously been made by her husband. Upon his advice, she contracted with him to examine her financial situation and to give her a letter advising her, in detail, what steps she should take with regard to twenty or so pressing business decisions. His fee would be $2,000. As agreed, he attended her home one evening and examined all the financial records. She issued a cheque payable to him for $2,000; the cheque was drawn on the Bank of Montreal, Austin Street branch. As promised, his letter of advice was delivered on the following day--a one-paragraph letter in which all he advised was that she transfer the two income-producing properties into his name so that he could "take care of things for you." Mrs. Olde attended her bank immediately to stop payment on the cheque. Before she did, however, the psychiatrist had endorsed it over to his bank, the Royal Bank at Cambie and 16th Avenue. On these facts, which one of the following is true?

A) If Mrs. Olde can prove undue influence was used by the psychiatrist, she will not have to pay the holder of the cheque.
B) Because the parties deal with different banks, Mrs. Olde would not have to pay the holder of the cheque because she can successfully argue breach of contract.
C) The psychiatrist is the "acceptor" of the cheque.
D) Mrs. Olde will have to pay the holder of the cheque because it is a holder in due course.
E) Mrs. Olde is the "drawee" of the cheque.

Question 55

The Bankruptcy and Insolvency Act allows a supplier of goods to recover those goods even after they are delivered to the purchaser if

A) within 30 days of delivery, the debtor has become insolvent, provided the debtor or trustee still has them.
B) within 7 days of delivery, the debtor has become bankrupt or a receiver has been appointed, even if the goods have been transferred to a third party.
C) within 30 days of delivery, the debtor has become bankrupt or a receiver has been appointed, provided the debtor or trustee still has them.
D) within 6 months of delivery, the debtor has become bankrupt or a receiver has been appointed, provided the debtor or trustee still has them.
E) within 6 months of delivery, the debtor has become insolvent, provided the debtor or trustee still has them.

Question 56

In Dansway International Transport Ltd. v. Lesway and Sons Ltd., the relevant contract did not state that time was important nor did it specify a time for performance. What did the Court find?

A) Because the parties did not include a provision as to time, the agreement was voidable at the option of either party, pursuant to the Sale of Goods Act.
B) Because the parties did not include a provision as to time, the agreement was void for a lack of the essential element of consensus.
C) Because the parties did not include a provision as to time, the Court could not invent one for them.
D) There was an implied term that performance had to be within a reasonable time, which would always be equal to one calendar month.
E) There was an implied term that performance had to be within a reasonable time, which would depend on the circumstances.

Question 57

If the contract doesn't say who bears the loss if an item is lost or stolen, the Sale of Goods Act says risk goes with title. If the contract doesn't say when the title will pass, the Sale of Goods Act implies when it will pass. In which of the following will the statute imply that title will pass to the buyer at the time of the contract?

A) While at Sears, Preston decides to buy the style of sofa he sees on display. He pays cash and the store arranges to have one like it, covered in the material he selects, delivered directly to him from the factory.
B) Maureen contracts for Ms. Roberts' next year's pumpkin crop.
C) Azar goes into a store specializing in old woodworking tools. He chooses a $1000 tooling machine. The contract provides that it would be delivered to his workshop the next morning and he would pay for it in one month.
D) George calls a store and asks them to deliver the table advertised in its catalogue. The store agrees, takes his credit card number, and promises to deliver it on Friday.
E) Agro Ltd. buys all the chemicals contained in the container marked "A" but the price has to be ascertained by measuring the number of litres in the container.

Question 58

Alf bought a car from Mr. Wojchu for $10,000. Shortly afterwards, a bailiff, acting for an unpaid conditional seller, seized the car. The conditional seller had properly registered his claim in time. Alf wants to sue Mr. Wojchu. Which of the following correctly sets out his legal position?

A) Alf loses. It was his obligation to search the title and he failed to.
B) Wojchu loses. Risk follows title.
C) Alf loses. Caveat emptor applies.
D) Alf wins. Goods are not of merchantable quality.
E) Alf wins. Mr. Wojchu has failed to deliver good title.

Question 59

Which of the following is false with respect to the law of negotiable instruments?

A) A bill of exchange involves 3 parties.
B) The Bills of Exchange Act is federal legislation.
C) A holder in due course is in a better position than he would be as the receiver of contractual rights through assignment.
D) Negotiable instruments are controlled by provincial legislation.
E) The Bills of Exchange Act governs the area of negotiable instruments.

Question 60

Which of the following is false with regard to a "holder in due course"?

A) A person cannot be a holder in due course if he knew the instrument had been obtained by the payee by fraud.
B) A holder in due course is the same as the "drawee" or "acceptor."
C) A person cannot be a holder in due course if he acquired the instrument in bad faith; e.g., he tricked the person into giving him the cheque.
D) A holder in due course is in a better position to be paid by the drawer or maker of the instrument than is an immediate holder, because there are fewer defences against his claim for payment.
E) A holder in due course cannot be an immediate party.

Question 61

The protection of consumers is solely a provincial responsibility.

Question 62

Some jurisdictions allow civil suits against abusive debt collectors.

Question 63

The sale of goods anticipates the transfer of possession but not necessarily property rights from the seller to the purchaser.

Question 64

When a contract of purchase is entered into with regard to specific goods that are to be delivered some time in the future, title always transfers at the point of delivery.

Question 65

The principles of freedom of contract and caveat emptor have been completely done away with by the Sale of Goods Act.

Question 66

Quiet possession of the goods means that the goods must be of merchantable quality and free from any inherent defect.

Question 67

There is a cooling off period in all consumer sales transactions where the purchaser of goods has a period of time in which to change his mind.

Question 68

With F.O.B. contracts, title and risk always transfer at the seller's place of business.

Question 69

Which of the following is not a federal statute with a consumer protection aspect?

A) Consumer Package and Labelling Act
B) Competition Act
C) Trade Secrets Act
D) Precious Metals Marketing Act
E) Textile Labelling Act
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

Question 70

When goods are traded for other goods, the Sale of Goods Act does not apply.

Question 71

Unconscionable transactions statutes apply to any transaction where the price paid is not fair or reasonable.

Question 72

Privity of contract does not apply to consumer transactions.

Question 73

An agreement to sell involves a contract to sell goods where the actual title will transfer sometime in the future.

Question 74

The general rule is that risk follows title.

Question 75

Risk refers to potential loss due to the destruction or damage of the goods.

Question 76

A warranty under the Sale of Goods Act is a condition the breach of which will allow the victim of the breach to refuse to go through with their side of the agreement.

Question 77

The transfer of the title and possession of the goods in exchange for money must be intended or anticipated for the Sale of Goods Act to apply.

Question 78

The Sale of Goods Act applies to both goods and services.

Question 79

Consumer protection legislation falls exclusively under federal jurisdiction.

Question 80

The purpose of the federal Competition Act is to prevent competition among retailers.