5,109
edits
Difference between revisions of "Contracts for Sale of Goods (11:III)"
Jump to navigation
Jump to search
Contracts for Sale of Goods (11:III) (view source)
Revision as of 18:12, 20 September 2019
, 18:12, 20 September 2019no edit summary
| Line 11: | Line 11: | ||
If a statement is not a term, it will be either a representation or a puff. A representation is a material statement of fact made to induce the other party to enter the contract. A puff is vague sales talk not meant to have any legal effect. For example, a statement that, “This is a wonderful car,” would be a puff. | If a statement is not a term, it will be either a representation or a puff. A representation is a material statement of fact made to induce the other party to enter the contract. A puff is vague sales talk not meant to have any legal effect. For example, a statement that, “This is a wonderful car,” would be a puff. | ||
If a statement is a term of the contract, it can be a condition, warranty, or innominate term. A well-drafted contract will characterize particular terms as | If a statement is a term of the contract, it can be a condition, warranty, or innominate term. A well-drafted contract will characterize particular terms as conditions or warranties, though the wording used in the contract will not always be determinative. The difference between the three types of terms is as follows (''Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd'', [1962] 2 QB 26, [1962] 1 All ER 474 at para 49): | ||
=== 1. Condition === | === 1. Condition === | ||
A condition is a term that is so essential to the agreement that its breach is considered to be a substantial failure to perform the contract. | A condition is a term that is so essential to the agreement that its breach is considered to be a substantial failure to perform the contract. A breach of a condition is said to go to the root of the contract. In other words, the breach is such that it deprives the innocent party of “substantially the whole benefit” of the contract. Breach of condition entitles the buyer to terminate any further obligations under the contract and sue for damages. The aggrieved party, if aware of the impending breach, could accept the repudiation of the other party and terminate the contract, ending all future obligations except for the damages that stem from non-performance. Or, the aggrieved party could not accept the repudiation, and may wait for the future breach to occur before pursuing damages (e.g., if he or she thinks that there is still a chance that the contract will be performed). | ||
=== 2. Warranty === | === 2. Warranty === | ||
A warranty is a term of the contract that is not so essential. A warranty must be performed, but its breach is not considered to go to the root of the contract. This meaning of warranty should not be confused with other uses of the word such as in “one-year maintenance warranty”. When a warranty is breached, | A warranty is a term of the contract that is not so essential. A warranty must be performed, but its breach is not considered to go to the root of the contract. This meaning of warranty should not be confused with other uses of the word such as in “one-year maintenance warranty”. When a warranty is breached, the innocent party must continue to perform its own obligations under the contract but can sue for damages. | ||
=== 3. Innominate Terms === | === 3. Innominate Terms === | ||
Innominate terms arise out of the common law, but unlike conditions and warranties, they are not mentioned in the ''SGA''. An innominate term is one that may | Innominate terms arise out of the common law, but unlike conditions and warranties, they are not mentioned in the ''SGA''. An innominate term is one that may be treated as either a condition or a warranty, depending on how severe the consequences of a breach turn out to be. Whether an innominate term is a condition or a warranty is for a judge to decide. | ||
Note that for certain terms the ''SGA'' specifies whether they are conditions or warranties. The SGA also implies some terms as conditions or warranties even if they are not expressly included in the contract (see Section C below). | |||
== B. Determining if the Sale of Goods Act Governs the Contract == | == B. Determining if the Sale of Goods Act Governs the Contract == | ||
| Line 31: | Line 33: | ||
=== 1. Goods === | === 1. Goods === | ||
Goods include all personal chattels, other than “things in action” (e.g. cheques, insurance policies, money). Things attached to real property, which the | Goods include all personal chattels, other than “things in action” (e.g. cheques, insurance policies, money). Things attached to real property, which the parties agree to sever before sale, or under the contract of sale, are included (s 1). Note that registration in the Land Title Office may be advisable to avoid possible characterization of the goods as real property or fixtures, so that the ''SGA'' may apply to the transaction. | ||
According to ss 1 and 9, the ''SGA'' covers '''existing''' and '''future goods'''. Future goods are goods to be manufactured or acquired by the seller after the making of the contract of sale. | According to ss 1 and 9, the ''SGA'' covers '''existing''' and '''future goods'''. Future goods are goods to be manufactured or acquired by the seller after the making of the contract of sale. | ||