Québec's Product Liability Laws And Artificial Intelligence: A Whole New World? (Bulletin 2 Of 2)

• Published date: 21 June 2023
• Subject Matter: Consumer Protection, Technology, Product Liability & Safety, New Technology
• Law Firm: Fasken
• Author: Mr Nicolas-Karl Perrault and Noah Boudreau

Legal Warranties of Quality

Pursuant to the Civil Code of Québec (CCQ)¹, the seller is bound to warrant the buyer that the property and its accessories are, at the time of the sale, free of latent defects which render it unfit for the use for which it was intended or which so diminish its usefulness that the buyer would not have bought it or paid so high a price if he/she had been aware of them. In a sale by a professional seller, a defect is presumed to have existed at the time of the sale if the property malfunctions or deteriorates prematurely in comparison with identical property or property of the same type.²

Considering the applicable presumptions, which often lighten the burden of proof on purchasers, and the generality of the terms used in the CCQ as to the scope of the warranty against latent defects, the application of these principles to incidents involving AI systems is likely to raise a number of contentious issues, particularly with respect to causation, the nature of the uses for which the AI system was intended, and what may be considered improper use by the purchaser, which may exonerate the seller from liability in whole or in part.

While these issues are not unique to AI systems, the specific characteristics of AI systems, including their ability to learn and act autonomously and sometimes unpredictably, are likely to raise new evidentiary and legal issues. For instance, if purchasers attempting to claim damages for a latent defect related to the malfunction of an AI system wish to invoke the presumptions provided for by the CCQ, they will have to prove that the incident was caused by a malfunction of the AI and that that defect manifested itself prematurely. In all likelihood, meeting these criteria in relation to complex AI systems will require specific and detailed expert evidence. This will be especially true if the courts start applying product liability principles to software with built-in AI.

The legal warranty of quality is evaluated in relation to the use for which the property was intended. Unless the seller is aware of the buyer's particular intended use, the courts consider the "normal" use of the property. This will surely raise questions for goods incorporating complex AI systems that enable them to perform various tasks based on what is asked of them by users and the data provided to them. For example, what would be the "normal" use of a software application like ChatGPT? In general, it will be necessary to review the contractual documents, including the terms and conditions of purchase or service, to understand the applicable representations and limitations of the AI system's features, including its level of autonomy, terms of use, and appropriate maintenance requirements.

Presumed Knowledge of Latent Defects and Development Risks

While sellers of AI...