Consumer rights Reforming statutory implied conditions and warranties

Canada

Relevant legislation

There is separate legislation in each province of Canada regarding supply of goods and services to consumers. As an example, the relevant law in the common law province of Ontario — which typifies the approach taken in other common law provinces and territories — is discussed below. The only notable difference is the civil law system in Quebec. Québécois law recognises concepts of ‘latent’ or ‘hidden’ defects rather than distinguishing between ‘warranties’ and ‘conditions’. Quebec also imposes, on a professional seller, a presumption the defect was known by the seller at the time of the sale.³²¹

Implied conditions and warranties under the SGA

By virtue of the Ontario Sale of Goods Act RSO 1990 Chapter S1 (Ontario SGA) and the Consumer Protection Act SO 2002 Chapter 30 (Ontario CPA), the following warranties are implied into consumer contracts:

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  implied condition that the seller has the right to sell;
  
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  implied warranty that the buyer will have quiet enjoyment of the goods and that goods will be free from encumbrance;
  
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  implied condition that the goods will correspond to description;
  
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  implied conditions as to quality or fitness. This condition will not apply unless:
  
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    the buyer expressly or impliedly makes known to the seller a particular purpose for the goods;
    
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    the buyer indicates they are relying on the skill or judgment of the seller;
    
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    the goods are normally supplied in the course of the seller’s business; and
    
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  implied condition that goods will correspond to sample and the buyer will have a reasonable opportunity to compare the bulk with the sample.
  

Scope of the CPA

The Ontario CPA applies in respect of all consumer transactions.

Under section 1 of the Ontario CPA:

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  ‘consumer’ is defined as an individual acting for personal, family or household purposes and expressly does not include a person who is acting for business purposes;
  
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  a ‘consumer transaction’ means any act or instance of conducting business or other dealings with a consumer, including a consumer agreement; and
  
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  a ‘consumer agreement’ is an agreement between a supplier and consumer in which the supplier agrees to supply goods or services for payment.
  

Implied warranties under the CPA

Under subsection 9(1) of the Ontario CPA, the supplier is deemed to warrant that the services supplied under a consumer agreement are ‘of reasonably acceptable quality’.

Implied warranties set out in the Ontario SGA are incorporated with respect to goods by subsection 9(2). Subsection 9(3) stipulates that clauses in any consumer contract attempting to negate or vary any implied condition are invalid.

Remedies under the SGA

Under the Ontario SGA, the remedy available to the buyer depends on whether the seller has breached an implied condition or warranty.

Where an implied condition is breached, as with the common law in Australia, the consumer may elect to affirm the contract and seek damages or treat the contract as at an end. Rescission is available in the case of a material misrepresentation.

Under subsection 12(3) of the Ontario SGA, breach of a condition is to be treated as breach of warranty where the buyer has accepted the goods or the property in the goods has passed to the buyer. In that case, the buyer cannot reject the goods and treat the contract as repudiated, unless there is a term of the contract, express or implied, to that effect.

Under section 51 of the Ontario SGA, where there is a breach of warranty by the seller, the buyer is entitled to recover the breach of warranty in diminution or extinction of the price or maintain an action for damages for breach of warranty.

Damages are limited under subsection 51(2) to those flowing directly or naturally from the ordinary course of events from the breach of warranty. In the case of breach of warranty as to quality, under subsection 51(3), damages are limited to the difference between the value of the goods at the time of delivery to the buyer and the value they would have had, had they answered to the warranty. This limitation is rebuttable by evidence to the contrary.

Under subsection 51(4), a buyer can maintain an action for further damages in addition to any action for diminution or extinction of price.

Remedies under the Ontario CPA

Remedies with respect to sale of goods under the Ontario CPA are similar to those set out in the Ontario SGA. With respect to services, unless the breach of warranty is a major one, the vendor must be given a reasonable opportunity to rectify the breach. In addition to the Ontario SGA, where the consumer has purchased a faulty product, the consumer must return the product to the seller or to a repair facility, at the vendor’s request.³²²

In addition, subsection 10(1) of the Ontario CPA provides that any estimate of charges in a consumer agreement must not be exceeded by 10 per cent, otherwise the consumer can demand that the supplier provide the goods or services at the estimated price (see subsection 10(2)). The consumer and supplier can agree to amend the estimate by subsequent agreement.

Under section 11 of the Ontario CPA, any ambiguities in interpretation of the consumer agreement are to be resolved to the benefit of the consumer.

South Africa

Relevant legislation

The South African Department of Trade and Industry initiated a review of the consumer legislative framework that culminated in the publication of the Draft Green Paper on the Consumer Policy Framework 09/04 (Green Paper) in 2004.

After extensive consultation, the Consumer Protection Bill was developed and introduced into the parliament with the objective to:

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  promote a fair, accessible and sustainable marketplace for consumer products and services, responsible consumer behaviour, and a consistent enforcement framework relating to consumer transactions and agreements;
  
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  prohibit certain unfair marketing and business practices; and
  
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  provide for improved standards of consumer information, harmonisation of laws relating to consumer transactions and agreements, and the establishment of the National Consumer Commission.
  

The Consumer Protection Act 2008 (South African CPA) was assented to on 29 April 2009. Among other things, it provides for some ‘fundamental consumer rights’.