BUSINESS LAW
CHAPTER SIX:
FACILITATING BUSINESS, PROTECTING CONSUMERS,
AND SAFEGUARDING THE MARKETPLACE
CANADIAN BUSINESS LAW, 3 RD EDITION © EMOND MONTGOMERY PUBLICATIONS LIMITED
CHAPTER SIX:
LEARNING OUTCOMES
2
1.
Identify key federal and provincial statutes that have been created to
facilitate business, protect consumers, and safeguard the Canadian
marketplace
2.
Explain the effect of the sale of goods act on conditions and warranties,
transfer of title and remedies for breach of contract
3.
Discuss how the Electronic Commerce Act, 2000 clarifies the legal
status of electronic documents and the legal effect of electronic
communications
4.
Explain the scope of consumer’ rights under the Consumer Protection
Act, 2002, describe unfair business practices under the act, and comment on
the penalties imposed on businesses that engage in unfair business
practices
LEARNING OUTCOME
CONTINUATION
3
5.
Describe the roles played by the Food and Drugs Act, the
Hazardous Products act and the Canada Consumer Product Safety
act in protecting the safety of consumers
6.
Discuss how consumer’s access to adequate and accurate
information is protected by the federal Competition Act and the
Consumer Packaging and Labelling Act
7.
Examine the criminal and reviewable business practices
provisions of the federal Competition Act that safeguard the
competitive nature of the Canadian marketplace
MOVING BEYOND THE
COMMON LAW
4
Facilitating business
Clear criteria for contract formation facilitate contract formation because
the parties know the legal effect of their actions.
Baseline terms gives the weaker party at least a minimum levele of value
in the bargain, and can answers where parties have omitted key contractual terms
Protecting Consumers
Provincial consumer protection acts, federal product safety and labelling
acts, and the federal competition act each play a key role in protecting consumers
MOVING BEYOND THE
COMMON LAW
5
Safeguarding the marketplace
Our economy is based on a market-orientated
economic system that
relies on healthy competition
for its success
The federal Competition Act and the work of the
Competition Bureau
and the Competition Tribunal
safeguard the Canadian competitive
market place.
WHY IS KNOWLEDGE OF THESE LAW
IMPORTANT TO YOUR BUSINESS
1.
Sale of good law can assist commercial parties in
negotiating deals and resolving disputes
2.
Laws governing competition in the marketplace leave
room for innovation and initiative by new businesses
3.
By conforming to laws that protects consumers, you
contribute to the health of your business
4.
By conforming to laws that protect consumer health
and safety, you promote your business reputation as a good
citizen
6
FACILITATING BUSINESS
The Sale of Goods Act
- Establishes a presumptive baseline for key
contractual terms like the transfer of title, basic
contractual duties, and remedies for breach
- Applies automatically to all sales of goods
involving consumers and business-to-business sales
transactions
-
Applies only to tangible personal property
7
FACILITATING BUSINESS
DOES NOT apply to
1.
Goods that represent
monetary worth,
2.
Services
3.
Barter
8
FACILITATING BUSINESS
CONTINUATION
The sale of goods act implies into contracts several conditions and warranties
specifically designed to keep commercial dealings fair and honest
Implied conditions
1.
2.
are sold
3.
4.
the seller
5.
sold
The seller has the right to sell the goods
Any goods sold by description will match the description by which they
Any goods sold by description are of merchantable quality
The gods are fit for the purpose for which the buyer purchases them if
is aware of the buyer’s purpose
Any goods sold by sample will match the sample by which they are
9
FACILITATING BUSINESS
CONTINUATION
Implied Warranties
1.
That the buyer will enjoy quiet possession of the goods
2.
That the goods are free of encumbrances
3.
That if a time for delivery is not set out in the contract,
delivery will
be made within a reasonable time
4.
That the seller will be paid in accordance with the
terms of the
contract
5.
goods
That absent lawful excuse, the buyer will accept the
10
FACILITATING BUSINESS
CONTINUATION
Transferring the rights and responsibilities of
ownership
another
Anyone with title has ownership rights
Must pinpoint when title passes from one party to
If the parties fail to set out when title will pass in
their contract, the sale of goods act sets out default rules
that will apply
11
FACILITATING BUSINESS
CONTINUATION
There are 5 RULES, depending on the situation:
1.
Transfer of specific goods in deliverable state - title
passes when contract made
as long as goods are ready to
go
2.
Goods must be put in deliverable state - if goods must be
altered, seller has to
complete the job for title to pass
3.
Seller must do something ascertain price - if seller has to
figure out price, then title doesn’t pass until he does
12
FACILITATING BUSINESS
CONTINUATION
There are 5 RULES…cont’d
4. Goods on approval - property passes when the
buyer accepts, when the time runs out and buyer
hasn’t rejected, buyer keeps the goods
5.
Unascertained goods - goods must be set
aside and identified before title can pass
13
FACILITATING BUSINESS
CONTINUATION
Remedies
In addition to the common law remedies
available for breach of contract, the sale of goods
act sets out some additional remedies for buyers
and sellers.
14
FACILITATING BUSINESS
CONTINUATION
Remedies available to the buyer
In some situations, buyer may repudiate the
contract – has
the right to refuse payment for
goods, or if he has already paid, he can recover the
money from the seller
-
Damages
-
May buy elsewhere and sue for the difference
-
Specific performance (rarely used)
15
FACILITATING BUSINESS
CONTINUATION
Remedies available to the seller
In addition to the remedies above, the sale of
goods act creates special remedies including:
-
An action for the sale price
-
A seller’s lien
-
Stoppage in transit (rarely used)
16
FACILITATING BUSINESS
CONTINUATION
Electronic Commerce Act, 2000
Addresses the legal recognition of electronic documents and its effect
on legal requirements that certain documents be in writing in Ontario
-
Does not apply to
-
Wills and codicils
-
Trusts created by wills and codicils
-
Powers of attorney for an individual’s financial affairs or personal
care
-
Negotiable instruments
17
FACILITATING BUSINESS
CONTINUATION
Electronic Commerce Act, 2000, cont’d.
The act establishes that a document in
electronic form and accessible for subsequent
usage satisfies the legal requirement that a
document be “in writing”
-
Traditional contract law applies to internet
transactions
18
19
PROTECTING CONSUMERS
The Consumer Protection Act, 2002
- This act covers consumer transactions, including barter, but
EXCLUDES
- Professional services
- Transactions involving the purchase, sale or lease of most real
property
- This act gives consumers rights over and above those provided
in the sale of goods act and the common law of contract
- A fundamental principle of the act is CLARITY – clarity is
essential in all dealing with consumers
20
PROTECTING CONSUMERS
The Consumer Protection Act, 2002 – cont’d.
- The act sets out certain rights of consumers and
certain warranties that operate in favor of the
consumer that cannot be waived
- All services must be of acceptable quality
- Businesses must honour all estimates they make
to consumers for goods or services within a 10%
margin of error
- Negative-option marketing is illegal
21
PROTECTING CONSUMERS
CONTINUATION
The Consumer Protection Act, 2002
The act describes three types of UNFAIR PRATICES
1.
Making false, misleading or deceptive
representations
2.
Making unconscionable representations
3.
Pressuring consumers into renegotiating
the terms of a
transaction by holding on to their
goods
22
PROTECTING CONSUMERS
CONTINUATION
The Consumer Protection Act, 2002
Enforcement
Enforcement by consumer - as a victim of
an unfair
practice, consumer may rescind the
contract within one year by notice in writing,
and may seek
damages
23
PROTECTING CONSUMERS
CONTINUATION
The Consumer Protection Act, 2002
Rights/obligations for specific transactions
The act provides for rights and obligations concerning specific
consumer agreements
1.
Internet agreements
2.
Remote agreements
3.
Future performance agreements
4.
Direct agreements
5.
Personal development service agreements
24
PROTECTING CONSUMERS
CONTINUATION
The Consumer Protection Act, 2002
Collection and Debt Settlement Services Act
The act prohibits collection agencies from trying to collect
a debt without first informing the debtor in writing
The act prohibits collection agencies from harassing
debtors, their family or their friends
The act prohibits collection agencies from giving false or
misleading information to anyone
The act limits the times during which these agencies may
attempt to collect debts
25
PROTECTING CONSUMERS
CONTINUATION
CONSUMER SAFETY
The Food and Drugs Act
The act restricts the advertising, sale and importation of food,
drugs, cosmetics, and medical devices
-
The act prohibits misleading or deceptive advertising
-
The act establishes mandatory labelling standards
-
Health and diet related claims are strictly regulated
The act prohibits the sale of food, drugs or cosmetics that are
manufactured, stored or packaged in unsanitary conditions/food and
drugs that are otherwise adulterated or unfit for human consumption
26
PROTECTING CONSUMERS
CONTINUATION
CONSUMER SAFETY
Hazardous Products Act
Various categories of “restricted” products
must be labelled in a specific manner and meet
certain standards to be legally sold in Canada
-
Supplier must provide a safety data sheet
27
PROTECTING CONSUMERS
CONTINUATION
CONSUMER SAFETY
Canada Consumer Product Safety Act
Applies to most consumer products not
covered by the food and drugs act or other
legislation
The purpose of the Act is to protect
consumers from dangerous products
28
PROTECTING CONSUMERS
CONTINUATION
CONSUMER INFORMATION
Competition Act: Deceptive Marketing
This Act has a number of different purposes including to maintain and
encourage completion in the marketplace
This act prohibits businesses from making material false or
misleading representations
The main provisions deal with criminal and civil sanctions for
misleading representations and deceptive telemarketing
Also contains a number of individual criminal and civil provision
that deal with specific common deceptive marketing practices
29
PROTECTING CONSUMERS
CONTINUATION
CONSUMER INFORMATION
The Consumer Packaging and Labelling Act
Prepackaged consumer products must be labelled
accurately and
meaningfully so consumers can make
informed decisions
The act sets out what information must be provided on
labels and
where they must be places
30
PROTECTING CONSUMERS
CONTINUATION
CONSUMER INFORMATION
The Consumer Packaging and Labelling Act – cont’d.
Broadly prohibits advertising “any pre-packaged product that has applied
it it a label containing any false or misleading representation that relates to or
may be regarded as relating to that product”. This includes representations
concerning specific contents, quality, performance, origin, etc.
Act is enforced by inspectors who can be appointed under the
department of industry act, the food and drugs act, or the Canadian food
inspection agency act.
31
SAFEGUARDING THE
MARKETPLACE
How does the Competition Act help to safeguard the marketplace?
The Competition Act
- Facilitates market competition by restricting, monitoring, and
penalizing anit-competitive and dishonest conduct
- Aims to stimulate competitive conduct, and to eliminate misleading
advertising and abusive market schemes
- It gives the state the authority to take action against those who violate
its provision either by using the criminal law system or the civil law
system, including the competition bureau and the competition tribunal
32
SAFEGUARDING THE
MARKETPLACE
Remember:
-
This is federal legislation
-
It applies to both goods and services
33
SAFEGUARDING THE
MARKETPLACE
Competition Act
Restrictive trade practices
Three categories
1. Practices related to the nature of a business (e.g. Abuse of
dominant position, mergers)
2. Practices related to dealings with competitors (e.g.
conspiracy, bid rigging)
3. Practices related to dealing with customers (e.g. Reviewable
practices – such as refusal to deal, exclusive dealing, tied selling,
market restriction, and price maintenance – and criminal offences)
34
SAFEGUARDING THE
MARKETPLACE
Competition Act
Criminal offenses under the competition act
-
Conspiracy
-
Bid rigging
35
SAFEGUARDING THE
MARKETPLACE
Competition Act
Reviewable practices
- Refusal to deal
- Price maintenance
- Tied selling
- Market restriction
- Mergers
- Competitor collaboration
These are not automatically prohibited - only prohibited when the effect
is to harm competition
36
SAFEGUARDING THE
MARKETPLACE
Competition Act
Competition Bureau
-
Is responsible for the administration and enforcement of the act
-
Has lots of tools available including wiretapping, court ordered searches and seizures, examination of witness
-
May refer the matter to the A.G. for criminal prosecution
-
Also, remedies may be available for private citizens
37
SAFEGUARDING THE
MARKETPLACE
Competition Act
Competition Tribunal
-
Principal enforcement body under the
-
Deals mainly with reviewable practices
Act
38
SAFEGUARDING THE
MARKETPLACE
Competition Act
Whistle-blower protection:
The Competition Act provides protection to whistleblowers from retaliatory action by employers
NOW IT’S YOUR TURN 39
1.
Fitness for intended purpose is an
implied condition under the Sale of Goods Act
a.
True
b.
False
NOW IT’S YOUR TURN 40
2.
Bid-rigging can have a pro-competitive or
anti-competitive effect, depending on the
circumstances.
a.
True
b.
False
NOW IT’S YOUR TURN 41
3. Ashley purchased a used farm tractor for $9,500.00. She later
discovered that the previous owner’s bank had a lien on the tractor.
Under the Sales of Goods Act, this is most likely a breach of
_______________ , which would allow her the remedy of
__________________
a. Warranty/recession
b. Condition/recession
c. Warranty/damages
d. Condition/damages
NOW IT’S YOUR TURN 42
4.
The Consumer Protection Act, 2002 would not cover
a.
A professional manicure
b.
The two-month rental of a
c.
The purchase of a car
d.
The delivery of high-speed
service
summer cottage
cable internet
NOW IT’S YOUR TURN 43
ANSWER
4.
The Consumer Protection Act, 2002 would not cover
a.
A professional manicure
b.
The two-month rental of a summer cottage
c.
The purchase of a car
d.
The delivery of high-speed cable internet
service