Sale of Goods Act (implied conditions)

When a buyer purchases equipment, vehicles or inventory as part of a small-business deal, the purchase agreement may say little about title or quality. A provincial Sale of Goods Act can fill that gap by treating some terms as part of the contract. This entry covers Ontario, British Columbia and Alberta only; check the rules where you are. See buying equipment and inventory without the corporation.

What Ontario’s Act implies

Section 13 says that, unless the circumstances of the contract show a different intention, the seller has a right to sell the goods, the buyer is to have quiet possession, and the goods are free from any charge or encumbrance not declared or known to the buyer. Section 14 adds that goods sold by description must correspond with it. Section 15 says there is no implied warranty or condition as to quality or fitness except as it lists, such as reasonable fitness where the buyer makes the purpose known, relies on the seller’s skill or judgment, and the goods are of a kind the seller supplies in the course of its business. Merchantable quality is implied where goods are bought by description from a seller who deals in such goods, but not for defects the buyer’s examination ought to have revealed.

What to check or ask

• Whether the agreement excludes or varies the implied terms; Ontario’s s.53 allows that by express agreement, course of dealing or usage
• Whether a lender holds security over the goods, since the implied warranty concerns undeclared charges (see lien searches)
• British Columbia’s Sale of Goods Act, s.18, also lists a condition that goods be durable for a reasonable period, and s.69 lets implied terms be varied, limited by s.20 for some retail sales; Alberta’s Act has its own provisions on title and quality