Question 1

Bob,owner of a pizza business,went with his wife to pick out a new family car.Since they already knew the make and model they wanted,it did not take long before the contract was signed by the wife for a new 2012 Oldsmobile.While the paperwork was being done,Bob had been talking with another salesperson about the used cars on the lot,telling him that he needed a mechanically sound car but not a new car for his business.The salesperson showed him one that he said was in good shape and would give several years of service.Bob made a very low offer that the salesperson accepted,much to Bob's surprise.The contract Bob signed,like his wife's,contained a clause exempting the seller,B & S Motors,from liability for breach of any warranties,including any implied warranties under the Sale of Goods Act.A few weeks after the sale,the wife and daughter were injured in an accident caused by the faulty steering mechanism of the new car.Furthermore,the used car was not in good shape and lasted weeks,not years.Given these facts,which of the following is true?

Accepted Answer

A)  An exemption clause is always effective in exempting the seller from liability. 
B)  The wife could not succeed in an action against B & S Motors, because there is an exemption clause in the contract of sale. 
C)  The daughter could sue B & S Motors for breach of contract. 
D)  The daughter could sue B & S Motors for negligence. 
E)  If legislation in the province prohibits a seller from overriding the requirement that goods be fit and of merchantable quality in consumer transactions, the wife may win for breach of contract.

Question 2

Which one of the following statements is false with respect to who bears the risk of loss in a sale-of-goods contract?

Accepted Answer

A)  The risk of loss may depend on who holds title. 
B)  The parties can contradict the provisions of the Sale of Goods Act on this question. 
C)  When unascertained or future goods are involved, the risk transfers once a reasonable time has passed. 
D)  The risk of specific goods may pass upon formation of the contract. 
E)  Where repairs have to be done before delivery, the risk passes when the repairs are made and notice given.

Question 3

Colson went to Logan Drugs and bought some light bulbs for the hallways of his new apartment building.A tenant asked for one and Colson gave him one but told him he was responsible for getting his own from now on.The bulb,manufactured by Burnaby Brite,Ltd.and sold to Logan Drugs by Dandy Distributors Ltd.,was defective,improperly made.It exploded and set some curtains on fire.The tenant's apartment suffered $6000 damage and he had to move out.He couldn't live there while repairs were being undertaken and had no choice but to find another place,as it would take three weeks to get the apartment liveable again.Given these facts,which of the following is false?

Accepted Answer

A)  The tenant could sue Logan Drugs for breach of contract or negligence because his loss was caused by the defective light bulb. 
B)  Logan Drugs had not really caused the damage, but it could still be sued by Colson for breach of contract. 
C)  Logan Drugs cannot sue the manufacturer for breach of contract even though the manufacturer was at fault. 
D)  Logan Drugs could sue Dandy Distributors for breach of contract, although it was not at fault for the damage. 
E)  The manufacturer could be sued in contract by Dandy Distributors, but could be sued by others only for the tort of negligence.

Question 4

When the holder of a negotiable instrument signs his name in the form of an endorsement before passing it on to a subsequent holder,what risk does he take?

Accepted Answer

The answer of When the holder of a negotiable instrument...

Question 5

Sarah,who had just celebrated her twenty-first birthday,was distraught over the fact that her tuition had recently gone up.She did not qualify for any further student funding,so she had no alternative but to borrow money from FastCash Loans.Without getting legal advice,she signed a contract in which she agreed to pay back the money along with interest.Because Sarah was a student,and therefore a high-risk client,the interest clause was to be calculated at the rate of 80 percent per year.Sarah failed to pay back all of the funds,and FastCash Loans sued her.What argument might she successfully raise to limit the amount of her obligation?

Accepted Answer

A)  The Interest Act provides that in any contract where interest is payable, interest must be stated as an monthly rate. 
B)  Because the interest rate was over 60 percent, the interest provision was contrary to the Criminal Code. 
C)  Under the Student Finance Act, it is unlawful to charge interest to a student. 
D)  Because Sarah did not receive independent legal advice, the loan agreement is void. 
E)  Because Sarah is a student, she lacked capacity to agree to the terms of the contract.

Question 6

Jones walked into Sam's TV shop and said,pointing to a particular television,"I'll take that one." They wrote up the deal,and Jones was to return the next day to pay for it and pick it up.Explain who bears the risk in the meantime.

Accepted Answer

The answer of Jones walked into Sam's TV shop and...

Question 7

A bill of exchange is an order by one person to another to pay money to a third.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a statement of facts to which the Sale of Goods Act would apply?

Accepted Answer

A)  "Waiter, there is a dead fly in my spaghetti." 
B)  "I asked for a trim! You've cut off five inches!!!" 
C)  "I brought in five shirts to be laundered and you are returning only four to me!" 
D)  "I agreed to give you a dozen old campaign buttons for that original signature of the prime minister, but received the signature of the governor general." 
E)  "Today is the closing date and I am willing to tender the full price in cash, namely $70 000, for the farm, and you are now telling me that you have no intention of closing."

Question 9

What is a cooling-off period?

Accepted Answer

The answer of What is a cooling-off period?...

Question 10

Which of the following statements is correct with respect to a contract for the purchase of goods?

Accepted Answer

A)  Where a breach of a condition is involved, the obligation of the victim of the breach is ended and that person need not perform her side of the agreement. 
B)  Where a breach of a condition is involved, the contract is still in force and the victim of the breach must still perform her side of the agreement. 
C)  Where a breach of a warranty is involved, the obligation of the victim of the breach is ended and that person need not perform her side of the agreement. 
D)  The purpose of the inclusion of a warranty in a sale of goods contract is to force the seller of those goods to repair the goods if they are defective. 
E)  The purchaser has a claim against the manufacturer only if the goods purchased are defective.

Question 11

The principles of freedom of contract and caveat emptor have been completely done away with by the Sale of Goods Act.

Accepted Answer

A) True 
 B)False

Question 12

Discuss the consumer protection legislation in place in your province in terms of its effectiveness and purpose.

Accepted Answer

The answer of Discuss the consumer protection legislation in place...

Question 13

Uncle Isaac has had some difficulty in a sale-of-goods contract and wants to know if there are any mistakes in the information he has received with regard to the remedies for breach of such a contract.Indicate the true statement.

Accepted Answer

A)  Once the seller of the goods has given up possession of them to the buyer, he has lost his right to sue. 
B)  A court will award a remedy, only if there was a breach of warranty. 
C)  An unpaid seller who has possession of the goods has a lien on those goods-i.e., he can hold the goods. 
D)  The Sale of Goods Act excludes the possibility of the equitable remedy of specific performance. 
E)  If there has been a breach of contract, the purchaser is only entitled to tort remedies.

Question 14

Explain the importance of the provisions of the Sale of Goods Act relating to fitness and quality of the goods.

Accepted Answer

The answer of Explain the importance of the provisions of...

Question 15

Which of the following is not controlled by consumer protection legislation?

Accepted Answer

A)  false advertising 
B)  the investigation of complaints 
C)  unconscionable transactions 
D)  business transactions 
E)  unequal bargaining power that is abusive

Question 16

In what way does the Interest Act affect contracts under which interest is payable?

Accepted Answer

The answer of In what way does the Interest Act...

Question 17

Distinguish between a sale and an agreement to sell.

Accepted Answer

The answer of Distinguish between a sale and an agreement...

Question 18

What is referral selling?

Accepted Answer

The answer of What is referral selling?...

Question 19

If you buy a toaster from a second-hand dealer of small appliances,which of the following is true?

Accepted Answer

A)  The Sale of Goods Act does not apply. 
B)  Title to the toaster would pass at the time the buyer would pick it up the next day. 
C)  The Sale of Goods Act prohibits the seller from exempting himself from liability in the event that the toaster is not fit for purpose. 
D)  There is an implied term of the contract that the seller has good title-i.e., the right to sell it. 
E)  The risk of loss depends on who has possession of the toaster.

Question 20

With F.O.B.contracts,title and risk always transfer at the seller's place of business.

Accepted Answer

A) True 
 B)False

Exam 15: Sales and Consumer Protection

Which one of the following statements is false with respect to who bears the risk of loss in a sale-of-goods contract?

When the holder of a negotiable instrument signs his name in the form of an endorsement before passing it on to a subsequent holder,what risk does he take?

Jones walked into Sam's TV shop and said,pointing to a particular television,"I'll take that one." They wrote up the deal,and Jones was to return the next day to pay for it and pick it up.Explain who bears the risk in the meantime.

A bill of exchange is an order by one person to another to pay money to a third.

Which of the following is a statement of facts to which the Sale of Goods Act would apply?

What is a cooling-off period?

Which of the following statements is correct with respect to a contract for the purchase of goods?

The principles of freedom of contract and caveat emptor have been completely done away with by the Sale of Goods Act.

Discuss the consumer protection legislation in place in your province in terms of its effectiveness and purpose.

Uncle Isaac has had some difficulty in a sale-of-goods contract and wants to know if there are any mistakes in the information he has received with regard to the remedies for breach of such a contract.Indicate the true statement.

Explain the importance of the provisions of the Sale of Goods Act relating to fitness and quality of the goods.

Which of the following is not controlled by consumer protection legislation?

In what way does the Interest Act affect contracts under which interest is payable?

Distinguish between a sale and an agreement to sell.

What is referral selling?

If you buy a toaster from a second-hand dealer of small appliances,which of the following is true?

With F.O.B.contracts,title and risk always transfer at the seller's place of business.