Product liability: Quebec laws may apply to you without you knowing it

03 June 2021

It may come as no surprise that laws in Quebec favour consumers, purchasers and victims in product liability claims. Therefore, manufacturers and professional sellers (such as distributors, wholesalers and retailers) will tend to look to a law outside Quebec to govern their relations. As the title of this article suggests, a manufacturer or professional seller may be held liable, or may even be sued in Quebec, even if a sales contract indicates that it is governed by the laws of a jurisdiction other than Quebec.



Firstly, the Civil Code of Quebec stipulates that a consumer residing in Quebec will be protected by the laws of Quebec, if said consumer ordered a given product while in Quebec and there was a specific offer or advertisement in Quebec, or if the order was received in Quebec, notwithstanding a different designation in the contract (Article 3117 CCQ).

In addition, the Civil Code provides that the claimant may choose that the laws in Quebec govern the liability of a manufacturer, whatever its source, if the manufacturer has its establishment in Quebec, or if the product was acquired in Quebec, notwithstanding a different designation in the contract (Article 3128 CCQ).

For example, a manufacturer has been found responsible for delays in delivering a part in virtue of the laws in Quebec, even though the vehicle was purchased and delivered in Ontario, since it had a place of business in Quebec and the complaints were treated in Quebec.

Furthermore, since the purchaser has a right of action against anyone in the supply chain, and they can be held solidarily (severally) liable towards the claimant, a manufacturer or professional seller that did not directly contract with the claimant may be a named defendant in a judicial action in Quebec – even if its contract did not provide that it was governed by the laws of Quebec.

Finally, manufacturers and professional sellers may be held responsible for damages for extra contractual (tort) liability in Quebec. For example, regarding a safety defect, if the "act or omission which occasioned the injury" or the injury occurred in Quebec (Article 3126 CCQ). Indeed, in these cases, there is no contract between the claimant and defendants, and therefore, no opportunity to determine the applicable law.

What's the big deal in La Belle Province?

Essentially, you need to be aware of the legal presumptions that favour purchasers and reverse the burden of proof on the manufacturers and professional sellers. In addition, as outlined above, the claimant can sue anyone in the supply chain up to the manufacturer, and defendants can be held solidarily (severally) responsible. Finally, if the laws of Quebec govern the sales contract, the limitation of liability clause may be held unenforceable as detailed hereinafter.

Statutory warranty of quality: legal presumptions

In line with the Civil Code of Quebec, the seller guarantees that the product is free of latent defects, and is therefore responsible for the repair or replacement of the product. If the seller was aware (or should have been aware) of a defect at the time of sale, it may also be responsible for consequential damages beyond the repair or replacement. The Civil Code and case law in Quebec enact legal presumptions against manufacturers and professional sellers, which are favourable to purchasers, consumers and end users.

The Civil Code provides that if a product malfunctions or deteriorates prematurely, there is a legal presumption that a defect existed at the time of sale. The Court of Appeal[1] further confirmed that there was also a presumption of causation, meaning that said presumed defect caused the alleged injuries. The legal presumption of an existing defect can be refuted, if the manufacturer or the professional seller demonstrates that the product was improperly used, or that the malfunction was due to a third party intervention.   

In addition, there is a legal presumption that the manufacturer and professional sellers should have been aware of the defect, which gives rise to claiming damages beyond the value of the product, including consequential damages. The legal presumption of awareness is more difficult to rebut, since the professional vendor has to demonstrate that it was not aware, and that a professional vendor in the same circumstances, acting reasonably, could not have been aware of the defect. The manufacturer has to demonstrate that it was not aware of the defect, and that it could not have discovered the defect even if it had taken every precaution that any buyer would expect from a reasonable seller in the same circumstances. Most often, these demonstrations require an expert report.

Limitation of liability clauses

The presumption of awareness not only gives rise to a claim in consequential damages, but it can also render the limitation of liability clause unenforceable. Indeed, Article 1733 of the Civil Code of Quebec provides that:

"1733. A seller may not exclude or limit his liability unless he has disclosed the defects of which he was aware or could not have been unaware and which affect the right of ownership or the quality of the property."

If and when manufacturers and sellers are deemed to have been aware of a defect, the limitation of liability clause is unenforceable unless they successfully rebut the legal presumption of awareness of the defect.

In conclusion, knowledge is paramount. Being aware of Quebec's specificities in product liability law will enable you to assess some of the primary risks involved in this process. There is a definite upside that both legal counsels of your business and business units associated with sales and customer service be made aware of. Obviously, this article only addresses a small portion of product liability law, and is not to be construed as a legal opinion. Seeking legal assistance from an experienced Gowling WLG lawyer in Quebec as soon as possible can better your chances of avoiding litigation and limiting risks.

 

[1] CNH Industrial Canada Ltd. v. Promutuel Verchères, société mutuelle d'assurances générales (2017 QCCA 154)


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