Statutory Claims Against Manufacturers

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When a dissatisfied consumer sues a manufacturer in Ontario, the unhappy consumer will frequently rely upon the Sale of Goods Act and the Consumer Protection Act, 2002.  However, neither statute applies if the consumer did not purchase the goods directly from the manufacturer.  In many cases, consumers are purchasing from retailers, not the original manufacturer.  I have defended many cases where there have actually been four degrees of separation between the plaintiff and the manufacturer.  For example, a homeowner hires a custom home builder, who in turn hires a sub-contractor to install a roof, who then purchases shingles from a local hardware store that is supplied by the shingle manufacturer. 

The shingle manufacturer had no dealings with the ultimate consumer and the consumer did not enter into a contract of purchase and sale directly with the manufacturer.  In this type of situation, the statutory claims and protections available to consumers through the Sale of Goods Act and the Consumer Protection Act, 2002 do not apply according to some court decisions interpreting those statutes, such as Singer v. Schering-Plough Canada Inc., 2010 ONSC 42 (CanLII).

Notably, a consumer who does not purchase directly from a manufacturer is not left without any remedy.  If the manufacturer offered an express warranty to the ultimate user of its goods, the warranty will provide the consumer with certain rights and remedies, even if the consumer never read the warranty or had knowledge of it until after a problem was discovered.  The other avenue of recourse is a lawsuit based on negligence.  There are various tort claims that such a consumer may assert, including but not limited to the failure to provide adequate warnings, negligent product design and negligent construction.  

It must be noted that the foregoing analysis applies solely to a situation where a consumer chooses to commence a claim solely against the manufacturer with whom it does not have a contract.  Another option for the consumer is to sue the retailer for supplying defective goods.  If a retailer is sued, the retailer may bring its supplier into the lawsuit to point the finger of blame (if there is anyone at fault) away from itself.  If the supplier is not the manufacturer, then the supplier may also bring the person who sourced the product into the lawsuit until the chain eventually leads back to the manufacturer.  This can make a lawsuit more cumbersome and expensive with several parties at the table rather than just two, however, it can be inevitable as each party in the supply chain may have had some influence on the ultimate product and/or made independent representations about the product.

In summary, while a manufacturer may be able to escape claims based on the Sale of Goods Act and the Consumer Protection Act, 2002 if the manufacturer did not deal directly with the consumer, these statutes may be applicable if every party in the supply chain is included in the lawsuit. 

Topics:  Canada, Consumer Protection Act, Manufacturers, Retailers, Sale of Goods Act

Published In: General Business Updates, Consumer Protection Updates, Products Liability Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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