CONDITIONAL SALES

Although conditional sales contracts have long been recognized as valid under the common law, all of the Provinces, except Quebec where certain provisions of the Civil Code govern, have during recent decades enacted specific statutes under the title of "conditionalsales or lien-notes acts" for the purpose primarily of establishing safeguards for the protection of bona fide purchasers and mortgagees of the conditional vendee.

Various forms of conditional sales agreements are in use in Canada, such as lien notes, receipt notes, hire receipts, but the distinctive provision of all of them is that the seller reserves the ownership of the goods and delivers only qualified possession to the purchaser until the performance of certain conditions, usually the payment of the full price.

Such agreements are required by the statutes to be evidenced by a writing signed by the buyer, containing a description of the goods by which they may be readily and easily known and distinguished and stating the amount unpaid of the purchase price and the terms and conditions of the sale. It is also necessary that the agreement be executed prior to or at the time of delivery, except in British Columbia and Prince Edward Island within 10 days after delivery; subsequent execution would be invalid, and the proper form of security then would be the chattel mortgage. The statutes of several of the Provinces make it specifically obligatory that the seller supply the purchaser or hirer with a copy of the agreement at the time of execution or within 20 days thereafter, and they grant the buyer the right on summary application to obtain a court order for such delivery, but that is only good business practice which should always be followed. Every well-drawn conditional sales agreement should stipulate that on default the vendee shall be liable for any deficiency that may result on repossession and resale by the vendor, otherwise such deficiency cannot be recovered.

All the Provinces, except Quebec and Manitoba, require that the conditional vendor, with certain exceptions, must file the original or a true copy of the written contract within a definite time with certain designated offices, otherwise the agreement becomes invalid as against a subsequent purchaser or mortgagee in good faith and for valuable consideration.

The effect of noncompliance with statutory requirements is in some Provinces set out in considerable detail: as, for example, the British Columbia Act provides further that, unless the requirements of the act are complied with, the buyer shall be deemed the owner of the goods as against creditors of the buyer who, at the time of becoming creditors, had no notice of the provision (i. e., retention of ownership) and who subsequently obtained judgment, execution, or an attaching order, under which the goods, if the property of the

buyer, might have been seized and, for the purpose of enforcing the rights of such creditors but not otherwise, every such provision shall be void as against a creditor suing on behalf of himself and other creditors, and as against an assignee for the general benefit of creditors, and as against a trustee under the Bankruptcy Act of the Dominion, and as against a receiver of the estate and effects of the buyer, and as against a liquidator of a corporation under the Winding-Up Act of the Dominion, or under any statute of the Province in a compulsory winding-up proceeding, without regard to whether or not the creditor so suing had, at the time of becoming a creditor, notice of the provision or whether or not the assignee, trustee, receiver, or liquidator, at the time of his appointment, had notice of the provision.

A detailed comparison of the specific effects of nonregistration in each Province is unnecessary, as the importance of strict compliance with registration requirements is obvious.

Where the purchase price is in the form of lien notes, a copy of each such note must be filed, and where the statute requires these notes to be proved by affidavit, then one affidavit as to all the notes is generally sufficient. Each note, however, should contain a stipulation reserving to the seller or lender the right of property in the goods until payment in full of all the other notes, and such others terms as may be deemed desirable to include in the agreement.

Another statutory requirement existing in British Columbia, Ontario, New Brunswick, Nova Scotia, and Prince Edward Island is that the seller must furnish particulars of the amount still due and of the terms of payment within 5 days from the receipt of a request from a prospective purchaser of the goods or from an actual or intending creditor of the buyer, and in default the seller is made liable on summary conviction to a penalty not exceeding $50.

The courts have frequently held that under the common law, where goods are delivered to a trader, and the seller expressly or impliedly consents that the buyer may resell them in the ordinary course of his business, and such trader does so, the property in the goods passes to the purchaser. The acts of British Columbia, New Brunswick, Nova Scotia, Ontario, and Prince Edward Island specifically state that this principle applies notwithstanding that other provisions of the act have been complied with.

REGISTRATION REQUIREMENTS

In British Columbia and Prince Edward Island the agreement must be signed by the buyer or his agent at least within 10 days after delivery of the goods, and then the original or a true copy must be registered in the district where the buyer resides within 30 days after it has been signed in British Columbia and 20 days in Prince Edward Island; where the buyer resides in one district and the goods are delivered in another, a copy must be filed in both, or if he resides outside the Province, in the district of delivery. In case the buyer is a corporation of British Columbia, its residence for registration purposes is deemed to be the city of Victoria, and of Prince Edward Island in Charlottetown. In British Columbia,

where a conditional sale comprises no goods other than a motor vehicle (as defined by the act) a copy must be and need only be filed with the Commissioner of Provincial Police at Victoria, but if other goods are included the usual registration must likewise be made; the description in the instrument must include the engine number and the serial number of the motor vehicle.

In Ontario a true copy must be registered within 10 days after the execution of the contract in the office of the clerk of the county or district court where the purchaser resides at the time of sale or hiring, but contracts respecting manufactured goods, including pianos, organs, or other musical instruments which, at the time possession is delivered, bear the seller's or lender's name and address, printed, stamped, or engraved thereon, or plainly attached thereto, or household furniture, need not be registered.

In Nova Scotia and New Brunswick, the agreement must be signed. by the buyer prior to or at the time of delivery and registered within 20 days after it has been signed in the registration district where the buyer resides, or if he resides outside the Province, in the district where the goods are delivered, and if the place of residence and delivery are different, a copy must be filed in both districts. Where the buyer is a corporation in Nova Scotia, its residence for registration purposes is deemed to be the city of Halifax.

In Saskatchewan and Alberta, registration of every conditional sale of goods of the value of $15 or over must be made in the buyer's district of residence within 30 days from the time of actual delivery, accompanied by an affidavit of the seller or bailor or his agent stating that the written agreement annexed thereto truly sets forth the agreement entered into between the parties and that it was entered into bona fide and not for the purpose of protecting the goods against the creditors of the buyer or bailee. If the goods are delivered in a district other than that in which the buyer resides, registration must be made in both districts.

The Alberta act provides that a judge within the district within which any writing or affidavit is required to be registered, upon being satisfied that the omission to register within the prescribed time was accidental or due to inadvertence or impossibility in fact, may in his discretion order the omission to be rectified or may extend the time for registration, subject always to the rights of third persons accrued and subject further to such terms and conditions as he thinks fit to direct.

In the case of motor vehicles, the Saskatchewan act requires that registration be made in the office of the clerk for chattel mortgages in the registration district in Regina and also in the buyer's district of residence where that is other than Regina; such motor vehicle may not be removed from the Province without the written consent of the seller, a penalty not exceeding $100 applying to a violation.

In Alberta and Saskatchewan, registration is not necessary in the case of manufactured goods or chattels which at the time of the actual delivery have the manufacturer's or vendor's name painted, printed, or stamped thereon, or plainly attached thereto, by a plate or similar device, provided that such manufacturer or vendor (if the seller or bailor of such goods) keeps an office in the Province where inquiry may be made and information procured concerning the sale or bail

ment, and provided further that such vendor within 5 days after receiving a request in writing from any prospective purchaser of the goods or from an actual or intended creditor furnish him with a statement of amounts paid and those remaining unpaid; depositing a registered letter within the 5-day period is sufficient compliance.

Conditional sales in Manitoba are regulated by the Lien Notes Act, which provides that retention of ownership by the seller shall not be valid unless evidenced by a writing signed by the person taking possession of the chattel and that receipt notes, hire receipts, and orders for chattels, where the condition is such that possession passes without ownership, shall be only valid in the case of manufactured goods or chattels which, at the time the bailment is entered into, have the manufacturer's name or some other distinguishing name painted, printed, or stamped thereon, or otherwise plainly attached thereto. Registration of lien notes in any registry office or land title office is forbidden and there is therefore no provision in Manitoba for the registration of conditional sales agreements.

In Alberta and British Columbia it is necessary to file within 3 years from the original registration in the district where the goods are then situated a statement of the amounts due for principal and interest and all payments made on account thereof with an affidavit of bona fides; such a renewal statement is required for every subsequent 3-year period.

Provisions are contained in the statutes of several Provinces requiring registration in the new district upon the permanent removal of goods from one district to another. In Alberta a copy of the agreement and affidavit, certified to be a true copy by the clerk of the original district, must be filed in the registry district into which the goods are removed within 30 days after the seller has received notice of removal. In British Columbia, New Brunswick, and Nova Scotia the period is 20 days. Whether the removal is permanent or not, registration of a copy and affidavit is necessary within 60 days in Saskatchewan. In some Provinces penalties are imposed on buyers who fail to give advance notice of an intention to remove the goods. In Alberta, British Columbia, New Brunswick, Ontario, and Prince Edward Island, if the goods have been delivered outside the Province and then subsequently brought into it, registration must be made within 20 days after the removal has come to the knowledge of the buyer; the period in Nova Scotia is 30 days, and in Saskatchewan 3 weeks.

Discharge of conditional sales contracts may be registered in all the Provinces, with the exception of Manitoba and Quebec, where no provision is made for original registration, by paying the prescribed fee and filing a memorandum of satisfaction, accompanied by an affidavit of execution of an attesting witness. Upon performance of the conditions of sale and upon the written demand of the buyer, the seller is required to sign and deliver to the buyer a memorandum of satisfaction.

REPOSSESSION AND RESALE

The acts of British Columbia, New Brunswick, Nova Scotia, Ontario, and Prince Edward Island provide that when the seller retakes possession of the goods pursuant to any condition of the

contract, he must retain the goods for 20 days, during which period the buyer may redeem them by paying or tendering to the seller the balance of the contract price, together with the actual costs and expenses of taking and keeping possession. These five Provinces also require that where the purchase price of the goods exceeds $30, and the seller intends to look to the purchaser or hirer for any deficiency on a resale, the goods shall not be resold until after a notice in writing of the intention to sell has been given to the purchaser or hirer or his successor in interest. The statutes require that said notice set out the following details which should be strictly com plied with: A description of the goods; an itemized statement of balance due and actual repossession and maintenance costs; a demand that the amounts stated be paid on or before a date mentioned, in Ontario not less than 20 days from retaking possession, and in the other four Provinces not less than 5 days from the personal delivery of the notice or not less than 7 days from registered mail notice (such periods may be part of the 20 days' retention period); and a statement that unless payment of the amount stated is made within the time mentioned, the goods will be sold either at private sale or advertised and sold by public auction and that the seller intends to look to the buyer for any deficiency occasioned by such resale.

The Saskatchewan act also requires a 20 days' retention period for redemption by the buyer, and the time for giving notice of intention to sell is 8 days if served personally and 10 days from depositing a registered letter. In Saskatchewan there is an additional requirement that where the seller assigns his interest in the contract and agrees with the assignee to be liable for any sums due in default of payment by the buyer, the assignee upon retaking possession of the goods must give notice to the assignor within 48 hours thereafter, and the assignee may not sell without first giving notice to the assignor as in the case of the buyer. It should be noted that the Saskatchewan Limitations of Certain Civil Rights Act, 1933, provides that where goods to the value of over $100 are sold under a lien agreement, the vendor may not exercise the right to recover the unpaid balance or deficiency and he is restricted to his lien upon the chattel and his right of repossession and resale. This restriction does not apply to the sale of binders, the sale of land with chattels upon an entire satisfaction, or the sale of livestock, nor if the chattel is destroyed by the willful act or negligence of the purchaser or if for any other reason it appears inequitable to the court not to enforce the lien agreement.

In Alberta the seizure and removal of goods must be made only by the sheriff or a sheriff's officer, and the sale only after a judge's order in accordance with the Extra-Judicial Seizures Act.

In British Columbia, before a motor vehicle is sold at public auction, the seller may deliver a writing to the auctioneer placing a reserve price thereon, not exceeding the redemption amount (including repossession and maintenance costs) and, if no bid is received equal to or exceeding such price, may withdraw it from sale. Thereupon the seller may give written notice to the buyer setting out the amount equal to the reserve price plus the cost of the abortive sale, and stating that unless the amount is paid within 7 days from delivery of the notice or from the time it would be received in the