Manufacturers' Defences To Product Liability Claims

• Published date: 17 June 2021
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Product Liability & Safety, Personal Injury, Professional Negligence
• Law Firm: Cox & Palmer
• Author: Mr Andrew Sowerby and Kelcie N. White

Introduction

Product liability law is the name placed on a combination of several branches of the law, including contract, tort, government regulation, damages, and insurance. It is based on the theory that consumers rely on producers and sellers to ensure products are safe for use. This leads to a wide range of claims, issues and parties. The defendants could be any party in the distribution chain, including the manufacturer, distributor, importer, or retailer. While some available defences to product liability claims are common to all potential defendants, certain defences are unique to manufacturers. Manufacturers should be aware of the many possible defences to product liability claims.

Defending claims under the Sale of Goods Act

Product liability claims are frequently grounded in provincial sale of goods legislation, such as Nova Scotia's Sale of Goods Act, (the "SOGA"). The SOGA implies certain warranties into contracts for sale, including warranties that the product is fit for its intended purpose and of merchantable quality. If faced with a claim under the SOGA, the absence of a direct contractual relationship with the consumer may provide a manufacturer with a defence.

Courts across the country have recognized that a direct contractual relationship is an essential component of a sale of goods claim. The Ontario Court of Appeal's decision in Arora v. Whirlpool Canada LP is a recent example. ¹ The plaintiffs in Arora sought to certify their action as a class proceeding, alleging that the defendant manufacturer was negligent in the design and manufacture of a washing machine. Their claim was based, in part, on the warranty of fitness for purpose implied by Ontario's Sale of Goods Act. The motion judge determined this aspect of the plaintiff's claim had no reasonable prospect of success. The Ontario Court of Appeal upheld this ruling, stating that "the fact that [the defendant] did not sell the machines directly to consumers is critical to the viability of the appellants' implied warranty claim ... their remedy under the SOGA is against the seller, and in this case [the defendant] was not the seller".² The Nova Scotia Small Claims Court has echoed this principle on several occasions.³

A manufacturer may be able to defend a sale of goods claim on the basis that it was not the seller, even if it actively participated in pre-sale negotiations. In the decision of the Ontario Superior Court of Justice in Haliburton Forest & Wildlife Reserve Ltd. v. Toromont Industries Ltd.,⁴ the plaintiff operated a forestry business. It purchased two pieces of forestry equipment from the defendant seller. The equipment had been manufactured by a third company. Although the plaintiff purchased the forestry equipment from the seller, the manufacturer did...