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Questions and Answers
What principle suggests that buyers should be cautious in their purchasing decisions?
Which of the following is NOT an implied term under the Sale of Goods Act?
At what point does the title to specific goods pass to the buyer when the seller is required to take action to make them deliverable?
Which of the following describes a responsibility of the seller under a Cost, Insurance, and Freight contract?
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What does consumer protection law primarily aim to achieve?
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Which of the following is an example of an unfair trade practice?
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What term refers to marketing practices that mislead consumers about a product's characteristics?
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In the context of direct marketing, who initiates the contact with the prospective purchaser?
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Which of the following is a common misconception that may lead to misunderstanding buyer's title during sales?
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Which potential issue can arise from online sales that may affect consumer protection?
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Which act prohibits false or misleading representations on product labels?
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What is a requirement vendors must fulfill upon cancellation of a contract?
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What is considered a violation under the Competition Act in terms of pricing?
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What is a critical difference between multi-level marketing and pyramid schemes?
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What must be included in a mandatory label according to the Consumer Packaging and Labelling Act?
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What is false sale or bargaining price representation classified as?
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Which of the following is considered bait and switch advertising?
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Which practice is NOT prohibited under deceptive telemarketing laws?
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Which of the following constitutes an illegal advertising practice?
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Which is a scenario falling under deceptive prize notices?
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Under the Competition Act, what practice is classified as abuse of dominant position?
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Why is it important for vendors to provide cancellation, return, and exchange policies?
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What describes the process of 'tied selling'?
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Study Notes
Laws for Sale and Marketing of Goods
- Purpose: Protect parties involved in goods transactions, consumers from harm, and promote fair markets.
- Encompasses: Contracts, caveat emptor, legislation, shipping, transfer of ownership, and remedies for breach.
Caveat Emptor
- “Buyer Beware,” but now mitigated by legislation.
- Sale of Goods Act (1893): Implied terms and remedies for contracts.
Sale of Goods Act (1893)
- Contains implied terms (conditions and warranties) for contracts:
- Conditions: Seller's right to sell, goods fitting intended purpose, merchantable quality, correspondence with samples/descriptions.
- Warranties: Buyer's quiet possession, goods free from liens, payment within reasonable time, delivery within reasonable time.
- These conditions and warranties can be excluded in some business transactions with agreement.
- Applies to goods sold, not necessarily to services.
Shipping
- Bill of lading: Contract between seller and carrier; shipping document.
- Cost, insurance, and freight (CIF) contract: Seller responsible for insurance and shipping, included in price.
- Free on board (FOB) contract: Buyer decides shipping.
- Cash on delivery (COD) contract: Payment upon delivery.
Transfer of Title
- Risk follows title, not necessarily at delivery or payment.
- Specified in contract or default rules apply:
- Specific goods in deliverable state: Title transfers on contract creation.
- Specific goods requiring seller actions: Title transfers after seller completes actions and buyer is notified.
- Specific goods requiring seller action for price: Similar to previous point, title transfers after action and notification.
- Delivery on approval: Title transfers on buyer's approval or retention beyond reasonable time without rejection.
- Unascertained or future goods: Title transfers when buyer is notified of readiness.
Remedies
- Compensation depends on whether title transferred.
- For buyer refusal: Seller entitled to damages for non-acceptance.
- Buyer must pay full price if title transferred (action for the price).
Consumer Protection Law
- Consumers have less advantages than businesses.
- Protection for: provision of services, unfair trade practices, specific transactions, credit agreements, safety standards, labelling, packaging, remedies, and enforcement.
Unfair Practices
- Targeting vulnerable customers unable to understand agreements.
- Selling at grossly excessive prices compared to similar goods/services.
- Using manipulative marketing to pressure customers.
- Persuading customers to buy when unable to pay in full.
- Including unfair terms and conditions.
False/Misleading Claims
- Goods endorsed/sponsored when they're not.
- Claiming features, characteristics, or qualities goods don't have.
- Selling used goods as new.
- Falsely promising timely delivery or performance.
- Claiming a service or part is required when it's not.
- Misrepresenting special prices.
- Using exaggeration, innuendo, or ambiguity.
Direct Marketing
- Seller initiates contact with prospective purchaser.
Online Sales
- Fastest growing retail sector in Canada.
- Concerns: Refund options if website disappears, jurisdiction, and information privacy.
- Required disclosures:
- Vendor name, address, contact information.
- Description of goods and services.
- Itemized list and price of items or services.
- Additional charges description.
- Delivery arrangements.
- Cancellation, return, exchange policies.
- Vendor must provide contract copy within reasonable time and opportunity to decline.
- Vendor responsible for return shipping costs.
- Purchaser can cancel if above not met, expecting a full refund.
Labeling & Packaging
- Consumer Packaging and Labelling Act (CPLA):
- Prohibits false/misleading representations on packaging.
- Mandates label information (contents, weight, etc.).
- Regulates sizing, shape, and safe handling instructions.
Product Safety
- Consumer Product Safety Act (CPSA): Ensures product safety.
Product Design & Manufacture
- Patents to protect inventions and product designs.
- Canadian Standards Association (CSA): Voluntary guidelines.
- Motor Vehicle Safety Act: Regulates automotive safety.
Advertising Standards
- Advertising Standards Canada (ASC): Regulates advertising.
- Canadian Broadcast Standards Council (CBSC): Regulates broadcast advertising.
Competition Law
- Promotes fair, competitive, and efficient marketplace.
- Strengthens businesses' global competitiveness.
- Enables small and medium-sized businesses to compete.
- Benefits consumers with competitive prices, choices, and information.
- Competition Act: Provides criminal and civil enforcement.
Mergers, Acquisitions, and Takeovers
- Subject to review by the commissioner to prevent competition limitations.
False/Misleading Claims (Federal Law)
- Broad definition encompassing intentional and unintentional claims.
- Criminal or civil offenses, requiring "material" misleading.
- Deceptive telemarketing: Criminal offense including:
- False representations.
- Conditional prize delivery requiring advanced payment.
- Offering free gifts to induce purchases.
- Demanding advanced payment with grossly excessive prices.
- False sale or bargaining prices: Reviewable for misleading consumers on "ordinary" prices:
- Volume test: Significant sales at regular price within a reasonable period.
- Time test: Regular price offered in good faith for a substantial period.
- Sale above advertised price: Civil offense.
- Drip pricing: Only part of the price is advertised; civil offense.
- Double ticketing: Must sell at the lower of two prices; criminal offense.
- Test and testimonials: Must be accurate and current.
- Comparative advertising: Comparing to competitors is allowed unless claims are false.
- Performance claims: Must be based on adequate testing; reviewable if not.
- Bait and switch: Low price advertising with insufficient supply, directing to more expensive products; reviewable.
- Deceptive prize notices: Criminal offense.
- Notifying a person of a prize win while demanding payment before receiving it.
Pricing Conspiracies
- Price fixing: Conspiring with competitors to control prices; criminal or civil offenses, depending on the type of conduct.
- Bid rigging: Suppliers conspire to fix bids in a manner beneficial to their interests; criminal and civil offenses.
- Abuse of dominant position: Reviewable if engaging in competition-limiting behavior; includes:
- Price discrimination: Different prices for different consumers.
- Predatory pricing: Low prices to drive out competition.
- Price maintenance: Attempting to raise retail prices.
- Price discrimination: Different prices for different consumers.
Restrictive Distribution Practices
- Avoid controlling distribution schemes in ways that hinder competition.
- Full disclosure of terms and conditions at each selling stage is recommended.
- Exclusive dealing: Requiring buyers not to purchase from competitors.
- Tied selling: Requiring buyers to purchase other products as well.
- Refusal to deal: Refusing to sell on terms offered to others.
Multi-Level Marketing
- Product distribution structure with multiple levels of distributorships and commissions.
- Distinguish from pyramid schemes, which are illegal.
Promotional Contests
- Operating a lottery is a criminal offense.
- Skill testing questions or entering with no purchase necessary can avoid lottery classification.
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Description
This quiz covers the key laws associated with the sale and marketing of goods, including the Sale of Goods Act (1893) and the concept of caveat emptor. It explores the rights and responsibilities of buyers and sellers in transactions, focusing on implied terms and remedies for breach of contract. Test your knowledge on these essential legal principles governing trade.
