Implied Contractual Obligations of the Seller

The Act distinguishes between conditions, or essential terms, and warranties, or minor terms. Breach of a
condition allows the injured party to repudiate the contract and obtain release from any further obligations under
it. Breach of a warranty allows only the possibility of recovering damages.
The Act implies three types of terms: those regarding 1) the seller's title, 2) the nature of the goods, and 3)
delivery and payment.

Seller's Title

1. The seller has the right to sell the goods.

2. The buyer will enjoy quiet possession of the goods.
3. The goods will be free from unknown liens and encumbrances to any third party.

Nature of Goods

1. Goods sold by description will conform to that description.

2. Goods sold by sample will correspond with the sample in type and quality.
3. Goods will be of merchantable quality, that is, a reasonable person would buy them without a reduction in
price despite knowing of their imperfections. This applies only if the seller normally deals with those sorts of
goods. If the buyer has examined the goods, it does not cover defects that he or she should have noticed.
4. Goods must be fit for their intended use. This applies when the seller normally deals with those sorts of
goods. When the buyer makes known to the seller the particular purpose for which the goods are required and
relies on the seller's skill or judgment, the goods will be suitable for that purpose. This does not apply when the
buyer requests a product by its patent or trade name.

When it comes to quality and fitness for use, the buyer is, to a certain extent, subject to caveat emptor (“let the
buyer beware”). If he or she has had an opportunity to examine the goods, it is assumed that the buyer can and
should determine the quality and fitness for his or her purpose.

Delivery and Payment

1. Delivery and payment should occur concurrently.

2. Time of delivery is a condition, but payment is a warranty. Hence, while the buyer may be entitled to discharge
the contract if delivery is late, the seller will be entitled to sue for damages only if payment does not occur
promptly.
3. Delivery normally occurs at the seller’s place of business.
4. The goods delivered will conform to the contract.

Contracts may contain clauses that exempt the seller from certain implied terms. However, such clauses are
strictly interpreted against sellers and cannot be used to such an extent that the seller can default without penalty
or harm.
General Remedies under Sale of Goods Act

Remedy Application

Discharge Innocent party generally has the right to discharge the

contract if there was a breach of a condition.

Compensatory Damages Innocent party always has the right to claim

compensatory damages. This is normally the only
remedy for breach of a warranty. For breach of a
condition, innocent party may be entitled to both
damages and the right to discharge the contract.

Liquidated Damages The courts will enforce a contractual term for liquidated
damages. The most common application is that the
seller may be allowed to keep a deposit if the contract is
not performed.

Specific Performance In exceptional circumstances, the court may require the

guilty party to go through with the contractual promise
(e.g., unique goods such as a priceless painting).
Regulation of Business Conduct Towards Consumers

To reduce pressure selling, statutes provide a cooling-off period after door-to-door sales.
To discourage businesses from sending unsolicited goods to consumers, the recipient of such goods may use
them without becoming liable for their price.

To discourage sellers from creating standard-form contracts that provide self-help remedies in the event of
consumer default, statutes impose two constraints. First, once a buyer has paid a specified portion of the purchase
price, a seller loses the remedy of repossession. Second, there are limits on the circumstances in which a seller or
creditor can enforce an acceleration clause (whereby the unpaid balance of the price becomes payable as soon as
the buyer defaults).

As a result of concerns about fraudulent telemarking (use of telephone communications to promote a product or
business interest), the federal Competition Act made deceptive telemarketing a criminal offence. The rules require
agents to disclose the company’s name, purpose of the call, product and service being promoted, terms and
restrictions pertaining to product delivery, and other information.

The Telecommunications Act was amended in 2008 to establish a National Do Not Call List, which prevents
telephone solicitations to registrants except for charities, political parties, or businesses that have an existing
relationship with the registrant.
Businesses often assign consumer credit contracts to finance companies. Consequently, most consumer
protection acts state that the assignee of a consumer credit contract has no greater rights than the assignor and is
subject to the same obligations. This ensures that consumers do not end up owing money to a finance company
(who would otherwise be a holder in due course) with no opportunity to refuse to pay for defective goods or
being forced to waive their rights against an assignee in a cut-out clause.

Disclosure of the True Cost of Credit

There must be a detailed statement of the terms of credit in dollars and cents, the effective interest rate, and
charges for insurance or registration. Failure to comply will result in the consumer not being bound by the
contract. As discussed under Contract Law, the Ontario Consumer Protection Act, 2002 imposes high standards
of disclosure on specific industries including time-share, personal development, leasing, and motor vehicle repair
contracts

Regulation of Businesses by Licensing, Bonding, and Inspection

Licensing of businesses is another common way to protect consumers. Examples include inspection and licensing
of restaurants, registration of door-to-door sales persons and collection agencies, bonding, and registration of
travel firms.
 INTELLECTUAL PROPERTY

The Nature of Intellectual Property

Intellectual property is the product of mental activity, i.e., ideas or inventions, of which individuality or
originality is an essential feature.

Intellectual property is non-exclusive. Ideas cannot be possessed exclusively nor can a person prevent another
from coming up with the same idea or a similar one. Ideas are also non-rivalrous. My possession and enjoyment
of an idea does not diminish your ability to do the same.
In both common law and statutes, Canada has sought to balance the moral rights that creators have to reap the
rewards of their efforts with the social costs of protection and the inefficient use of resources resulting from
restrictions placed by intellectual property rights.

The main types of intellectual property are copyrights, trademarks, patents, and industrial Designs.

Copyrights

A copyright protects the manner in which ideas are expressed. Copyright law provides automatic protection as
long as the ideas are original to the creator/author, the work is in a fixed medium (something tangible), and the
author has some connection to Canada (the idea was created in Canada or created outside of Canada by a citizen
or ordinary resident or by a citizen/resident of a jurisdiction with which Canada has a treaty). However,
registration under the Copyright Act206 creates a presumption that copyright subsists in the work and that the
person registered is the owner.
The forms of expression protected by copyright are shown in Figure 6-64. The Copyright Act provides the
original creator with the sole right to produce or reproduce the work or a substantial part of it, the right to
perform or deliver the work in public, and the right to publish an unpublished work. In addition to these and other
more specific rights that can be assigned by the author or creator, there are moral rights that cannot be assigned
(but can be waived), chiefly the right to the integrity of the work and the right to prevent it from distortion and
misuse.

Figure : Forms of Expression Protected by Copyright

The general rule is that a copyright lasts until the end of the calendar year in which the author dies plus 50 years.
After that, the work protected becomes part of the public domain.
Trademarks

A trademark is a word, symbol, or design (or combination of these features) that is used to distinguish the wares
or services of one business from those of others in the marketplace. They include ordinary marks (e.g., Nike
“swoosh”), certification marks (e.g., CSA [Canadian Standards Association] approval on electrical appliances),
and distinguishing guises (Coke bottle).

Trademarks are protected at common law through the tort of passing off—misrepresentation of goods, services,
or a business so as to deceive the public into believing they are the goods, services, or business of another, thus
causing damage to that other person.
Registration of trademarks under the Trade-Marks Act207 protects a business for 15 years plus indefinite renewals.
Some of the advantages of registering a trademark are:

• Creates the presumption that the trademark is valid and distinctive and indeed owned by the owner.
• Secures an exclusive right to its use throughout Canada (versus the area where the owner does business and has
established a reputation).
• Provides the right to register the trademark in other countries.
• Provides protection against other types of infringement besides passing off:
o knock-offs (exact imitations);
o marks that will be confusing to consumers because of their similarity to the trademark;
o trademark depreciation, where someone uses the mark of another to depreciate that trademark’s goodwill; and
o imports by a distributor who is not an authorized distributor.

Patents

A patent is the right to stop others from making, using, or selling an invention or an improvement to an invention
for a period of up to 20 years from the date of filing a patent application. Unlike a copyright, a patent does not
exist automatically but must be granted by the appropriate government body. The proposed invention must be
demonstrated to be patentable subject matter (e.g., product, composition of that product, apparatus used to make a
product, or manufacturing process), novel, ingenious (or non-obvious), and useful.

Industrial Designs

Industrial designs are “features of shape, configuration, pattern, or ornament applied to a finished article to
improve its aesthetic appeal.Protection of industrial designs is dependent upon registration pursuant to the
Industrial Design Act (five years with a renewal), although there may be some protection under common law as a
trademark.

Remedies for Infringement of Intellectual Property Rights

Remedy Description

Damages Applied in the same manner as under tort law.

Account for Profits As an alternative to damages, requires a transfer

of profits when infringer has been unjustly
enriched.

Injunction Restrains the defendant from further infringement.