Show Notes:

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Lecture Slides:

Welcome to YouCounsel.

In today’s lecture we will talk about product liability in Canada. We will cover some of the basic concepts in this area of law. We are all consumers who use products on a daily basis and sometimes those products cause harm or injury to us or someone else.  So this area of law is important in the sense that it talks about liability arising from those defective products.

We begin with our usual disclaimer that this lecture is not legal advice.  If you have any specific questions regarding your issues you should contact a lawyer or paralegal or the Law Society of Ontario for a referral.

Product liability deals with an injury caused by a product.  Who may be liable for that injury and the damages arising from that defective product?  A common example that we see in the news often is a manufacturer’s liability for cars. If some of the components or parts of the car are defective and they may cause injury to the passengers or other people, then a liability may arise against the car manufacturer.  We see these often play out in our news.  Another common example could be pharmaceutical companies liability for creating and selling drugs that may be harmful to the people who have consumed those drugs. 

What is the underlying theory of liability? There are 3 areas (3 parts) from which this liability may arise.

1. One is called Breach of a contractual warranty;
2.  Second is a breach of a statutory warranty; and
3. Third kind of liability comes from tort and this will be considered tort based liability.

1. Breach of contractual warranty as you can imagine arises from the sale contract In our day-to-day purchases, when we buy a product, we get a receipt. It has in the fine print what kind of warranty is attached to that product—whether it’s a computer; whether it is a washing machine; or any other item we purchase—there may be a manufacturer’s warranty that may be attached to it. If that particular warranty is breached then the liability may arise on the basis of a breach of contractual warranty.

 Second thing that is part of the contractual warranty is collateral contracts. These are not part of the main sales contract but these are written documents—it could be e-mails or text messages between the purchaser and the seller which may contain some warranties—which may be considered part of the contractual warranty and so they may arise from collateral contracts. 

There may be some oral discussions between the seller and the purchaser.  In those discussions the seller may have presented some warranties to the purchaser and those may be, in appropriate circumstances, considered contractual warranties.  

Another group of contractual warranties are implied common law warranties.  These are warranties that are basically “read into” the contract; they are not in writing in the contract but they’re implied—so they are read into the contract by the judges when they are reviewing the contract and deciding on product liability. Generally there are 2 kinds of implied common law warranties. One, that the court will read into the contract that the product will be reasonably safe for its use.  Second, product will be reasonably fit for the purposes for which it is required.  Those are—you can say commonsense contractual obligations that the court will find in a sales contract and these will be considered implied contractual warranties.  Even though these are not written in the contract they will be read into the contract.

2. By breach of a statutory warranty: A lot of implied contractual warranties have now been codified into statutes. Most Canadian provinces have legislation that deal in some way with product liability and they have codified the implied common law warranties into the statutes. Any breach of those statutory warranties may also lead to liability. Examples of this legislation are Sale of Goods legislation that are in various provinces; Consumer Protection legislation that are also active in various provinces. These legislations may have specific warranties that attach to products that are covered in those legislations.

3. Third area where liability commonly arises is tort based claim. If you know anything about torts from our previous lectures.  One area of tort is intentional tort.  This area of law is uncommon.  An example of that could be fraudulent misrepresentation by the seller; by the manufacturer or by the distributor about a product—that may lead to a fraud—that may lead to liability from an intentional tort.  The most common tort that is used is the tort of negligence.  To prove negligence the plaintiff must show (a) that the defendant owed “a duty of care” to the plaintiff with respect to the product. This duty of care is found almost in every single case where there is a manufacturer of a product and a consumer of a product.  The second element that the plaintiff has to show is (b) that the product was defective or unreasonably dangerous—that the defendant or the manufacturer or the party that is being sued failed to meet the applicable standard of care and the defect caused or contributed to the plaintiff’s damages.  This is called the causation  In other words, you could say that but for that defect the plaintiff would not have suffered those damages. It’s also called the “but for” test. The causation must be proved and the plaintiff’s damages were reasonably foreseeable.

These are the elements to prove negligence in every case in product liability that the plaintiff must show.

Who are the parties that could be held liable for product liability? The law has actually made it quite broad for all kinds of parties to be held liable for a defective product. Obviously the manufacturers; it could also be importers; wholesalers; distributors; retailers; repairers; installers inspectors; certifiers and product owners.  All of these parties could be held liable for a defective product and an injury caused by that defect.

What kind of damages could be awarded?  All kinds of damages could be awarded. The most common and the easiest example could be cost of repair. If your product is defective and you had to spend money to repair that product you would be entitled to recover the cost of repair. If the product cannot be repaired, you may be entitled to the loss of value of the product.

You may also be entitled to the loss arising from the breach of warranty. An example of this could be, let’s say, you have a truck that you use on a commercial basis to earn your livelihood.  There was some problem with the truck’s engine—which was a breach of the warranty of manufacturer.  Because of that breach you are not able to earn your living for the next 5 days because it took that long to repair that truck. 

Then you may be entitled to claim damages for the loss of income for those 5 days because this loss arose from that the defect of that product.  Also physical damages that could be caused to other property can be compensated. Personal damages; personal injury; loss of limb or other personal damages which are considered pecuniary losses can be claimed. Also non-pecuniary losses such as pain and suffering, loss of enjoyment of life, etc.,- these  can also be claimed. 

In certain circumstances the court may award punitive damages against the defendant for a defective product.

The take away from this lecture is that product liability is an important area of law it affects almost every one of us and it is important to have a basic knowledge of this area of law so we can protect our rights appropriately.

Thank-you.