copyright © 2004 by nelson, a division of thomson canada limited. 23-1 canadian business and the...

23-1Copyright © 2004 by Nelson, a division of Thomson Canada Limited.

CANADIAN BUSINESS CANADIAN BUSINESS

AND THE LAWAND THE LAWSecond EditionSecond Edition

byby

Dorothy Duplessis

Steven Enman

Shannon O’Byrne

Sally Gunz

Presentation prepared by Presentation prepared by

Allan Elliott, Southern Alberta Institute of TechnologyAllan Elliott, Southern Alberta Institute of Technology


CHAPTER TWENTY-THREE CHAPTER TWENTY-THREE SALES AND MARKETING: THE SALES AND MARKETING: THE

CONTRACT, PRODUCT, AND CONTRACT, PRODUCT, AND PROMOTIONPROMOTION

OBJECTIVES: The scope of marketing law The rights and obligations in a contract of

sale The legal obligations associated with the

product component of marketing The legal obligations associated with the

promotion component of marketing


MARKETING PRACTICES: MARKETING PRACTICES: PRODUCT AND PROMOTIONPRODUCT AND PROMOTION

OBJECTIVES OF MARKETING LAW to protect consumers from physical harm to foster fair competition to protect consumers from unfair selling

practices

MARKETING LAW▪ all areas of law that influence and direct the

creation, distribution, promotion, and pricing of goods, services, or ideas


CONTRACT OF SALECONTRACT OF SALE

TERMS RELATING TO THE CONTRACT caveat emptor – let the buyer beware or the buyer

take care sale of goods legislation provides a measure of

protection for the purchaser of goods


LEGISLATIONLEGISLATION

SALE OF GOODS ACT establishes minimum standards for many

goods and services where it is considered to be in the public interest to reduce the risk of harm

implies terms into a contract for the sale of goods

classifies them and provides remedies to the purchaser on how the breach is classified


CLASSIFICATION OF TERMSCLASSIFICATION OF TERMS

TERMS ARE EITHER conditions – an essential or important term

under sale of goods legislation

OR warranties – a term that is not classified as

a condition under sale of goods legislation


CONDITIONS AND WARRANTIESCONDITIONS AND WARRANTIESSOME CONDITIONS AND WARRANTIESIMPLIED INTO ALL SALES TRANSACTIONS

CONDITIONS: the condition that the seller has the right to sell

the goods the condition that the goods are equivalent to

their description the condition that the goods will be reasonably

fit for the intended purpose


CONDITIONS AND WARRANTIESCONDITIONS AND WARRANTIES

IMPLIED WARRANTIES: that the buyer will have and enjoy quiet

possession of the goods (third parties will not claim rights against them)

that the goods are free from liens and encumbrances in favour of third parties that were not declared or known to the buyer at the time the contract was made


SALE OF GOODS ACTSALE OF GOODS ACT

REMEDIES breach of implied condition – may give the

innocent party the right not only to sue for damages, but also to reject the goods and treat the contract as ended

breach of implied warranty – legislation permits the buyer to maintain an action for damages or ask the court to reduce the purchase price but the buyer must continue with the contract


SALE OF GOODS SALE OF GOODS

TRANSFER OF TITLE Sale of Goods Act sets out a series of rules

that determine when title changes in the absence of terms in a contract

specific goods – goods that are identified and agreed on at the time a contract of sale is made

unascertained goods – goods not yet set aside and identifiable as the subject of the contract at the time the contract was formed


SALE OF GOODSSALE OF GOODS

REMEDIES damages for nonacceptance – damages to

which a seller is entitled if a buyer refuses to accept goods prior to title shifting

action for the price – the obligation of buyers of goods, once title to goods has passed, to pay the seller the full price of the goods

bill of lading – a shipping document that serves as a contract between the seller and the carrier

Continued...


SALE OF GOODSSALE OF GOODS

REMEDIES stoppage in transitu - the right of a seller to

demand that goods be returned by a shipper at the seller’s expense even after title has transferred, provided the purchaser is insolvent


CONTRACTUAL SHIPPING TERMSCONTRACTUAL SHIPPING TERMS

c.i.f. - cost, insurance, and freight seller is responsible for arranging the

insurance and shipping

f.o.b. - free on board the buyer specified the type of transportation

to be used, and the seller arranges and delivers the goods to that shipper

c.o.d. - cash on delivery the purchaser is obliged to pay for the goods

on delivery


SALE OF GOODS ACTSALE OF GOODS ACT

LIMITATIONS generally only applies to goods, not land or

services requires privity of contract permits contracting out of the implied

terms does not address pre-contractual

representations made by the vendor


THE PRODUCTTHE PRODUCT

BASIC PRINCIPLES anything a business sells goods, services, or ideas

DESIGN AND MANUFACTURE• governments impose minimum standards

for many goods and services through legislation

• governments also impose standards for product design and patent protection


PRODUCT PACKAGING AND PRODUCT PACKAGING AND LABELLINGLABELLING

LABELLING OF PREPACKAGED GOODS minimum labelling requirements set out in

Consumer Packaging and Labelling Act (CPLA)

product warnings Hazardous Products Act provides at least 23

categories of “restricted” products that must be labelled in a specific manner or meet certain standards to be legally sold in Canada


PROMOTIONPROMOTION

INDUSTRY STANDARDS AND LEGISLATION

Advertising Standards Canada (ASC) provides a detailed code of industry guidelines

ASC provides the mechanism for public complaints concerning violations of the code, as well as business-to-business complaints


PROMOTIONPROMOTION

FALSE OR MISLEADING ADVERTISING promotional statements that either are false

or have the ability to mislead a consumer as to their truth

Competition Act defines false or misleading advertising


COMPETITION ACTCOMPETITION ACT

UNDER THE COMPETITION ACT prohibited offences – offences under the

competition act that are criminal in nature reviewable matters – offences under the

Competition Act that are assessed according to a civil burden of proof and resolved by voluntary agreement or by order of the competition tribunal



INVESTIGATION OF COMPLAINT consumers might complain either to the

Competition Bureau or to ASC or CBCS, the industry associations

civil track – the process by which the Competition Bureau may order a promoter to desist from engaging in false or misleading advertising



DEFENCES the best defence is that the elements of the

offence have not been proven due diligence – a defence based on having a

reasonable belief in the truth of the statements made or adopting reasonable steps to avoid the utterance of false or misleading statements



PERFORMANCE CLAIMS statements about the performance of a

product or a service may fall within the general provisions of misleading advertising

it is reviewable conduct under the Competition Act to make a representation about a quality of a product that is not based on an “adequate and proper test”


TESTS AND TESTIMONIALSTESTS AND TESTIMONIALS

TESTS Competition Act requires that the tests be

carried out prior to the promotion

TESTIMONIALS testimonials will be acceptable provided

they are accurately stated and reasonably current, and provided the persons in the testimonials have actually used or evaluated the product


WARRANTY AND SERVICES WARRANTY AND SERVICES PROMISESPROMISES

PROMISES must meet the same standard for

truthfulness as set out in false and misleading advertising provisions

provincial statutes also bind the advertiser to the promises made in the promotion


PROMOTION THROUGH SELLING PROMOTION THROUGH SELLING PRACTICESPRACTICES

BAIT AND SWITCH advertising a product at a very low price to

attract customers, then encouraging them to accept another product that is usually more expensive

UNFAIR PRACTICES illegal business practices that exploit the

unequal bargaining position of consumers


PROMOTION THROUGH SELLING PROMOTION THROUGH SELLING PRACTICESPRACTICES

CONTESTS highly regulated form of promotion may be indictable offences under the

criminal code or may be reviewable under the Competition Act

Criminal Code prohibits competitions that require participants to buy goods or services in order to participate

Competition Act provisions focus on disclosure

copyright © 2004 by nelson, a division of thomson canada limited. 23-1 canadian business and the...

Documents

purchaser of goods

pricing of goods

legislation sale of

care sale of goods legislation

contract of sale terms

warranties implied warranties

marketing practices

scope of marketing law