copyright © 2004 by nelson, a division of thomson canada limited. 23-1 canadian business and the...
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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
23-2Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
23-3Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
23-4Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
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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
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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
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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
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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
23-9Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
23-10Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
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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...
23-12Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
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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
23-14Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
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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
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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
23-17Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
23-18Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
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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
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COMPETITION ACTCOMPETITION ACT
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
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COMPETITION ACTCOMPETITION ACT
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
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COMPETITION ACTCOMPETITION ACT
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”
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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
23-24Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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
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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
23-26Copyright © 2004 by Nelson, a division of Thomson Canada Limited.
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