A product liability claim allows a consumer to bring a legal action against vendors, retailers and/or the manufacturers of a product purchased by the consumer. The reasons for the claim can vary, including but not limited to claim for losses arising from design defects, manufacture defects, and marketing defects. The losses arising from these type of defects are often categorized in two ways: 1) injuries from the product and 2) economic losses from the product.
The product liability lawyers and litigation lawyers at Walker Law can assist you with your product liability matters. To help you understand how product liability laws are being interpreted in the product liability context, we explain two important legal principles recently reaffirmed by the Ontario Superior Court.
In the recent case of OCHC v. Sloan Valve Company, 2024 ONSC 1493, Justice Corthorn upheld two important principles with respect to product liability claims that must be kept in mind when considering bringing a claim:
- A buyer must be a party to a contract in order to rely on implied warranties (i.e. an unwritten assurance about a product) and implied conditions (i.e. an unwritten essential part of a contract) under the Sale of Goods Act, R.S.O. 1990, c. S.1 (the “Sale of Goods Act”);[1] and
- A buyer must demonstrate actual damage or a real and substantial danger to person or property for a negligence claim to be viable in the context of product liability.[2]
In OCHC v. Sloan Valve Company, the Defendants, Sloane Valve Company (“Sloane”) and Wolseley Canada Inc. (“Wolseley”) brought a motion (i.e. a request to the court) to strike the Plaintiff, Ottawa Community Housing Corporation’s (the “OCHC”) claim (i.e. remove a portion / portions of the lawsuit). Sloane was the designer and manufacturer of the product, which was an energy conserving system. Wolsely was the successful bidder for the contract with OCHC for the sale and supply of the energy conserving system.[3]
In deciding the motion, the Court looked at Section 15 of the Sale of Goods Act (implied conditions as to quality or fitness) which, in summary, provides as follows:
- Where the buyer makes known to the seller the purpose for which the product is required, showing the seller that the buyer is relying on the seller’s skill or judgment, and the goods are in the course of the seller’s business (whether manufacturer or not), there is an implied condition that the goods will be reasonably fit for such purpose; and
- Where the goods are bought by description from a seller, there is an implied condition that the goods will be of “merchantable quality” (i.e. capable of being used for any one or more purpose)[4].
The Buyer Must Be Party to the Contract
The OCHC claim stated that amongst other things, the Defendant, Sloan, which was involved in the design and manufacturing of the system, made representations in respect to its effectiveness directly to OCHC.[5]
The Court concluded that it was “plain and obvious” that the claim against Sloan pursuant to the Sale of Goods Act, had no reasonable prospect of success.[6] The Court stated in its reasoning that the buyer / Plaintiff, the OCHC must be party to the contract with Sloan, in order to bring a claim against it, pursuant to s. 15 of the Sale of Goods Act. In other words, Sloan must have sold the product directly to OCHC in order to sue for damages as a result of an alleged breach of an implied warranty.[7] In this case, the contract for the supply and sale of the system was entered into by OCHC with Wolsely, not Sloan.[8] The Court held that there would need to be a “monumental change” to the legal doctrine of privity (i.e. a legal principle that one must be party to a contract in order to make a claim under the contract) and that a claim against Sloan would therefore not be successful.[9]
Actual Damage or a Real and Substantial Danger to Person or Property
OCHC claimed in excess of $7,670,000 for economic losses it allegedly faced as a result the Defendants negligence with respect to the energy conserving system.
The Court decided that the lawsuit has no reasonable prospect of success.[10] The Court reiterated that there is no cause of action in negligence regarding “shoddy goods” which are “non-dangerous” and that meeting the legal test to establish that a product is a “dangerous good” is a high threshold.[11] Specifically, the manufacturer or seller of a product, which is not alleged to be dangerous, and presents no risk of harm, does not owe the purchaser or user of that product a duty of care such that the purchaser / user has a claim in negligence to recover damages for economic loss.[12]
What does this mean for you, as a consumer?
The affirmation of the two key principles will affect product liability law and the manufacturing industry immensely given that “buyers” of a product will need to closely assess whether they are party to a contract with a manufacturer prior to brining a claim against a manufacturer under section 15 of the Sale of Goods Act.
Furthermore, when considering the damages which you may be entitled to as a result of negligence, it is important to consider whether a product can meet the legal test of “dangerous goods” and determine whether the manufacturer or seller of a product owes you, the purchaser, a duty of care.
A review of your product issues with a product liability lawyer at Walker Law can be a proactive step in product liability claims. If you or someone you know is considering how this decision may affect you as a consumer, please contact the product liability lawyers at Walker Law.
[1] Paragraph 47 of OCHC v. Sloan Valve Company, 2024 ONSC 1493, (“OCHC v. Sloan Valve Company”)
[2] Paragraph 56 of OCHC v. Sloan Valve Company
[3] Paragraph 3 of OCHC v. Sloan Valve Company
[4] Section 15 of the Sale of Goods Act, R.S.O. 1990, c. S.1
[5] Paragraph 40-42 of OCHC v. Sloan Valve Company
[6] Paragraph 35 of OCHC v. Sloan Valve Company
[7] Paragraph 56 of OCHC v. Sloan Valve Company
[8] Paragraph 72 of OCHC v. Sloan Valve Company
[9] Paragraph 77 of OCHC v. Sloan Valve Company
[10] Paragraph 88 of the OCHC v. Sloan Valve Company
[11] Paragraph 91-92 of OCHC v. Sloan Valve Company
[12] Paragraph 112 of OCHC v. Sloan Valve Company
Tags: Product Liability, Commercial Litigation Law, Negligence Liability & Regulation