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Homework answers / question archive / Carleton University - BUSI 2601 Chapter 23 Sales and Marketing:  The Contract, Product, and Promotion     MULTIPLE CHOICE              1

Carleton University - BUSI 2601 Chapter 23 Sales and Marketing:  The Contract, Product, and Promotion     MULTIPLE CHOICE              1


Carleton University - BUSI 2601

Chapter 23 Sales and Marketing:  The Contract, Product, and Promotion





           1. Which of the following arises from the objectives of the fundamental laws governing the marketing process?

  1. the need to protect consumers from physical harm
  2. the regulation of product safety standards
  3. general legal concerns
  4. the need to foster fair competition




           2. What influences and directs, among other things, the creation of goods, services, or ideas? a. federal and provincial legislation

  1. intellectual property law
  2. consumer demand
  3. marketing law




           3. What is the role placed by law on the purchaser of a product with respect to securing the entitlement to a common law remedy?

  1. to facilitate the transfer of ownership of goods
  2. to be aware of federal and provincial regulations
  3. to ensure product expectations are contractual
  4. to report incidents of unfair selling practices




           4. Which of the following strongly supported the creation of principles set out in a specialized branch of contract law intended to provide a measure of protection for the purchaser of goods? a. the need for modern law concerning the sale of goods and services

  1. historic legislation titled the Sale of Goods Act, enacted in England in 1893
  2. the civil code set of exceptions to the doctrine of caveat emptor
  3. unfair results of the strict application of the doctrine of caveat emptor




           5. Why would a bag of soil taken from a parcel of land, rather than the parcel of land itself, be subject to the Sale of Goods Act? a. because of merchantability

  1. because of express contract terms
  2. because of portability
  3. because of fitness for sale




           6. Which of the following would be essential to determining a remedy with respect to the breach of a term under the sale of goods legislation? a. product safety classification

  1. the classification of the term
  2. anticompetitive practices
  3. disclosure on packaging




           7. Which of the following is recognized as a term that cannot be easily classified under the Sale of Goods Act?

  1. implied term
  2. innominate term
  3. condition
  4. warranty




           8. Which of the following terms would be supported classically as being collateral but important with respect to sale of goods legislation? a. warranty

  1. innominate term
  2. implied term
  3. condition




           9. Why would a buyer be relieved of the implied statutory requirement to make its intended purpose of purchasing goods known to the seller of those goods? a. The goods will be used in their ordinary purpose.

  1. The buyer is reliant on the inspection of goods.
  2. The goods will be bought by description.
  3. The seller’s goods are being sold by description




 10. Which of the following supports the essence of a sale by description?

  1. the buyer’s enjoyment of quiet possession of the goods
  2. the buyer’s reliance on the seller’s description
  3. the buyer’s reliance on the judgment of the seller
  4. the buyer’s opportunity to compare goods with a sample




 11. What is meant by the term “merchantable quality”?

  1. a reasonable quality, considering the description of the goods
  2. the value declared or known to the buyer at the time
  3. the value of goods corresponds with their description
  4. the price paid determines the reasonableness of quality




 12. Marta went to the local office supply store to buy a few packages of grey linen bond paper. The clerk showed Marta laminated covered samples but refused to let her open the wrapped packages for comparison purposes. She made the purchase but was asked by her office manager to return the paper because it was too thin. According to the Sale of Goods Act, why will the merchant likely have to accept the return of the product?

  1. The seller refused the opportunity to compare goods with a sample.
  2. The buyer relied on the description of goods by the seller.
  3. The buyer made the intended use known at the time of purchase.
  4. Goods sold by description must correspond to the description.




 13. EcoDesign Inc. (Eco) purchased 200 weeping caragana trees for spring planting from Abbot

Garden Centre Ltd. Two weeks later, planting was complete and payment forwarded to Abbot. Two months later, Eco was served with a claim issued by Misty Tree Farms Ltd., alleging non-payment for the goods by Abbot Garden Centre and naming Eco as a third party to the claim. How was the Sale of Goods Act violated in this instance? a. breach of contract

  1. breach of innominate term
  2. breach of implied term
  3. breach of implied warranty




 14. Alison advised the sales manager at SpudsRUs Ltd. that she had rejected the shipment of potatoes received from Spuds that morning. As this was the second consecutive shipment from Spuds contaminated with blight, Alison also advised Spuds she was cancelling the contract. Why is Alison able to do so?

  1. because of the breach of innominate term
  2. because of the right of repudiation
  3. because of the breach of warranty
  4. because of the doctrine of caveat emptor




 15. A court hearing an action for damages has ordered that the plaintiff is entitled to a price reduction due to breach of contract pertaining to the sale of goods. What is the most likely reason for the court’s decision?

  1. breach of a condition expressed in a contract for the sale of goods
  2. breach of an innominate term of a contract for sale of goods
  3. breach of warranty under sale of goods legislation
  4. breach of a condition under sale of goods legislation




 16. In the case of Chalmers Suspensions International Ltd. v. B&B Automation Equipment Inc.,

2008 CanLII 15767 (ON S.C.), the court determined, among other things, that the plaintiff’s rejection of equipment and its claim for return of payments was justified. Which of the following most likely formed the basis for the court’s finding?

  1. the defendant’s awareness of the plaintiff’s past and present reliance on its expertise
  2. the defendant’s complete knowledge of the plaintiff’s intended purpose for the machine
  3. the breach of an implied warranty under sale of goods legislation
  4. the breach of an implied condition that went to the root of the contract




 17. Which of the following is considered to be a valid limitation of sale of goods legislation?

  1. imposition of a strict warranty of durability for a reasonable period of time
  2. failure to permit contracting out of implied terms
  3. failure to address pre-contractual terms
  4. imposition of stronger warranties relating to quality and fitness for purpose




 18. Which of the following prohibits the defence of privity of contract?

  1. provincial sale of goods legislation
  2. federal and provincial consumer protection legislation
  3. provincial consumer protection legislation
  4. federal, provincial, and municipal sale of goods legislation




 19. Which of the following would most strongly influence the remedies available to a consumer under consumer protection legislation?

  1. the reasonable foreseeability of damages
  2. the seriousness of the breach of implied warranty
  3. the onus on the party at fault to act quickly
  4. the onus on the party at fault to correct the breach




 20. Which of the following is relevant to a determination of what is reasonable with respect to the nature, intended purpose, and price paid for goods under consumer protection legislation? a. warranty of quality and fitness

  1. seller’s express warranties
  2. warranty of durability
  3. warranty of acceptable quality




 21. What is the name given to goods that are identified and agreed on at the time a contract of sale is made?

  1. specific goods
  2. appropriated goods
  3. ascertained goods
  4. specified goods




 22. Which of the following would be considered immaterial with respect to the series of rules contained in the provincial sale of goods legislation that determine when title transfers? a. under Rule 2, whether the contract for specific goods is unconditional

  1. under Rule 5, whether goods are sold on approval or on “sale or return”
  2. under Rule 3, the putting of goods into a deliverable state
  3. under Rule 1, the postponement of time of payment or delivery




 23. EcoGreen Garden Centre Inc. will pay $2400 for the two tons of organic fertilizer it ordered for delivery in March. The fertilizer is to be packaged in 20 kilogram bags and then packed onto two separate one-ton pallets for shipment. What rule under sale of goods legislation will dictate when title to the goods passes to EcoGreen? a. Rule 1

  1. Rule 2
  2. Rule 3
  3. Rule 4




 24. Ariafyn Equestrian Farm ordered a maximum of $1200 worth of oats for delivery by October 30 from Mike, a local farmer. On October 12, Mike stopped at the grain elevator scales to weigh the truckload of oats, which indicated Ariafyn would owe $1293 for the load. Mike was inside the office obtaining the certificate of weight when a passing train derailed, sending a rail car colliding into Mike’s truck. Which party will have the right to sue the railway company for the loss of the oats?

  1. Ariafyn; risk transfers with the appropriation of unascertained goods
  2. Mike; the buyer must be notified once the price is ascertained
  3. Ariafyn; the goods are weighed and the price has been ascertained
  4. Mike; Ariafyn must signal its adoption of the transaction




 25. With respect to the Sale of Goods Act, which of the following would be most influenced by a buyer’s express assent given before or after appropriation of the goods is made? a. Rule 2, approval and acceptance

  1. Rule 5, unascertained goods
  2. Rule 3, compliance with the agreement
  3. Rule 1, specific goods




 26. With which of the following is the determination of the normal measure of damages for non-acceptance synonymous under the sale of goods legislation? a. the seller’s obligation to mitigate

  1. the seller’s action for price
  2. the buyer’s action for price
  3. the buyer’s duty to mitigate




 27. What is the legal term for an unpaid seller’s right to claim under sale of goods legislation in circumstances where the title to goods has transferred to the buyer? a. account for profits

  1. breach of contract
  2. action for price
  3. stoppage in transit




 28. What is the term for a contract between a buyer and seller for the sale of goods that, among other things, establishes evidence of goods being transferred? a. f.o.b. contract

  1. certificate of insurance
  2. bill of lading
  3. c.i.f. contract




 29. Which of the following would strongly influence a seller’s ability to exercise its right to stoppage in transit with respect to the sale of goods? a. the goods have not been delivered to the carrier

  1. the goods remain undelivered, and the buyer has become insolvent
  2. the buyer of the goods has become insolvent
  3. the seller is unable to arrange for insurance for the goods




 30. D.A.D. Enterprises Inc. (DAD) is located in Whitehorse. It has entered into a contract for the purchase of goods from Finnigan Fishing Rods & Reels Ltd. In accordance with the terms of the contract, Finnigan must, among other things, arrange shipping. What type of arrangement exists between these parties? a. p.p.d. Whitehorse

  1. c.i.f. Whitehorse
  2. c.o.d. Whitehorse
  3. f.o.b. Whitehorse




 31. SolarPrime Energy Converters Inc. has delivered a shipment of solar power converters to The Bonivista, the ship nominated by the buyer, scheduled to sail for Holland later in the day. What type of arrangement has been made between the parties involved in the sale of these goods?

  1. f.o.b. Amsterdam
  2. Incoterm 2000 f.o.b. Amsterdam
  3. Incoterm 2000 c.i.f. Amsterdam
  4. c.i.f. Amsterdam




 32. Which of the following is the source of an adopted mandatory measure of the standard of care for tort liability with respect to products?

  1. Consumer Packaging and Labelling Act
  2. Canadian Code of Advertising Standards
  3. Sale of Goods Act
  4. Canadian Standards Association




 33. Recently there was a nationwide recall of children’s hockey sticks imported into Canada because the sticks were coated with lead paint. Which of the following most likely provided the authority for the recall of this product?

  1. It falls under the inherently dangerous product ban under the Hazardous Products Act.
  2. Inherently dangerous products are banned under consumer protection legislation.
  3. Lead paint is a banned substance under the Dangerous Goods Act.
  4. Lead paint and other dangerous products are banned by consumer protection laws.




 34. From what source is the labelling and packaging legislation that applies to alcohol, milk, and margarine products derived? a. trademark law

  1. federal legislatures
  2. municipal lawmakers
  3. provincial legislatures




 35. Which of the following would be most influenced by the intent of the Consumer Packaging and Labelling Act (CPLA) with respect to consumers? a. generic description and manufacturer’s identity

  1. net quality and importer’s identity
  2. comparability of price and quantity of goods
  3. elimination of misleading product information




 36. Which of the following remains as both a valid concern to consumers and a valid criticism of the product warnings required under the Hazardous Products Act?

  1. There is a shift to pre-market review from the continuous assessment of therapeutic product risks.
  2. The market is poorly regulated, if at all, by manufacturers and importers of products.
  3. New offences for communicating false or reckless information as truth are being created.
  4. Health care institutions are being forced to report adverse reactions to therapeutic products.




 37. Bill C-52 proposed a new system designed to regulate consumer products posing dangers to human health and safety, but with the calling of an election in 2008, the bill failed to be brought into law. Under the ensuing minority government, the bill was re-introduced as Bill C-6. If Bill C-6 is eventually passed and implemented, which of the following is a valid criterion that may be used to measure the effectiveness of the new regulations? a. How did business convince the government to limit regulation to Bill C-6?

  1. Will global trade growth make the problems more challenging?
  2. How effective can the law be at addressing such widespread problems?
  3. Will government devote adequate resources to enforcement?




 38. Which of the following is the most important source of standards promoting public confidence in business products and services?

  1. mandatory standards of the Canadian Broadcast Standards Council
  2. mandatory standards of the Competitions Act, R.S.C. 1985, c. C-34
  3. voluntary standards of Advertising Standards Canada
  4. voluntary standards of the Canadian Association of Broadcasters




 39. Why was the civil track process under the Competition Act introduced in 1999?

  1. to make it easier to secure criminal convictions when infringements have occurred
  2. to allow any Competition Bureau order considered appropriate regarding misleading advertising
  3. to facilitate the prompt issuance of Competition Bureau orders to stop misleading activities
  4. to prevent the imposition of criminal charges when minor infringements have occurred




 40. What advertising and collaborative guidelines were created by the Competition Bureau and Canadian Standards Association to specifically advise on the need for, among other things, clarity, accuracy, and the substantiation of advertising claims?

  1. Environmental Claims: A Guide for Industry and Advertisers
  2. Consumer Packaging and Labelling Guide
  3. Canadian Standards Association: A Guide to the Textile Labelling Act
  4. Canadian Standards Association: A Guide to the Precious Metals Marketing Act



 41. How are promotional statements that are alleged to be either false or misleading to consumers assessed with respect to ascertaining their truth?

  1. with Consumer Packaging and Labelling Act regulations
  2. with an objective test to judge falsity
  3. by definition under the federal Competition Act
  4. with Canadian Standards Association guidelines




 42. Which of the following should a legal risk manager insist upon with respect to advertising performance claims about a new product the company is promoting?

  1. keeping improper practices secret
  2. implementing a cynical marketing strategy to cover a lack of due diligence
  3. establishing a justification through scientific evidence
  4. speedily retracting false statements




 43. What is the term for advertising a product at a very low price when you have an insufficient supply to meet expected demand? a. falsity of advertising

  1. bait and switch
  2. unfair practices
  3. misleading advertising






           1. The transfer of ownership of goods and the principles relating to delivery of the goods are among the key aspects of the contract of sale that are the focus of marketing laws.



           2. The Latin phrase caveat emptor forms the foundation of common law’s expectation of purchasers to be aware of what they are purchasing and to make appropriate investigations before buying.



           3. A number of terms are automatically implied by the Sale of Goods Act into the contracts of parties, even though they may have expressly agreed to exclude the operation of this legislation with regard to their transaction.


           4. A warranty is implied under sale of goods legislation that requires the seller to have the right to sell the goods.



           5. A customer who has made its purpose for a particular product known to the seller will be deemed to have relied on the advice of the seller in selecting a product fit for that purpose.



           6. Classification of the relevant term of the contract for sale of goods is essential to determining whether the goods sold by description actually correspond with the description.



           7. When a condition in a sale of goods contract is breached, the sale of goods legislation permits the buyer to ask the court to reduce the purchase price due to the breach.



           8. The concept of protecting the consumer implicitly assumes that the commercial purchaser is better able to take care of itself and does not require any kind of safeguards.



           9. Unfair trade practices are considered by consumer protection legislation to involve false, misleading, and unconscionable representations made during any of the various forms of transactions for consumer products.



 10. Unascertained goods must be identified and agreed on at the time a contract is made.



 11. Goods not yet set aside and identifiable as the subject of the contract are to be specifically ascertained at the time the contract is formed.



 12. The rules contained in the sale of goods legislation that determine when title to goods shifts also affect the seller’s right to claim damages for non-acceptance.



 13. Tinsel X-Mas Trees received 200 trees from Misty Tree Farms Ltd. for sale during the holiday season. Tinsel paid a deposit of $500, and Misty granted payment terms of 30 days from the date of delivery. Should Tinsel sell all of the trees but neglect to remit payment within the 30 days, Misty will be entitled to claim an action for the price.



 14. Once goods are delivered to a carrier under a c.i.f. contract, the seller typically submits the bill of lading and certificate of insurance to the buyer in exchange for payment of the price of the goods.



 15. In a free on board contract, the seller specifies the type of transportation to be used.



 16. False or misleading advertising involves illegal business practices that exploit the unequal bargaining position of consumers.



 17. Due diligence is a defence based on adopting reasonable steps to avoid the violation of a legal duty.



 18. The best defence to allegations of misleading advertising is that the elements of the offence have not yet been proven.



 19. A specific provision of the Competition Act directed to performance claims considers a representation about the quality of a product that fails to be based on an adequate and proper test to be reviewable conduct.



 20. Unfair practices typically involve promotional statements that either are false or have the ability to mislead the consumer as to their truth.





            1. Briefly discuss how the Sale of Goods Act enacted in 1893 protected buyers historically.



            2. Identify the warranties that are implied in sales transactions by the Sale of Goods Act.



            3. Briefly discuss the right of repudiation with respect to the sale of goods.



           4. With respect to the sale of goods legislation, briefly discuss the remedies for breach of warranty.



           5. In the case of Chalmers Suspensions International Ltd. v. B&B Automation Equipment Inc., 2008 CanLII 15767 (ON S.C), the court was asked to answer the following:  

  1. Was there a condition implied in the contract that the robotic machine be suitable for the purpose specified by Chalmers?  
  2. If so, was the condition breached?   i           If the condition was breached, what was Chalmers’ remedy?


How did the court respond, and why?



            6. Briefly discuss the role of a bill of lading.



           7. Identify and briefly discuss packaging laws and their impact on a business’s packaging and promotion of its product.




           8. Provinces have legislated to address selling practices that generally can be described as unfair. Explain the context under which unfairness typically arises, and list unfair practices affected by this legislation.



            9. Discuss regulation relating to the product component of the marketing mix.



 10. Identify and briefly explain the circumstances where product labelling regulation is considered important, as well as the most important regulation relating to the promotion of goods. Include a brief discussion of more specific legislative provisions that also apply to the promotion of goods.



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