Business Guide
This page was last modified on August 9, 2000. There are no plans to update it further.
This website was created by Karl Dore, the principal architect of the Consumer Product Warranty and Liability Act. It is intended to provide information on the legislation, not to give or offer individual legal advice. For further assistance contact New Brunswick's Consumer Affairs Branch or one of the Rentalsman Offices.
This page was last modified on August 9, 2000.
Table of Contents
Introduction
New Brunswick's Consumer Product Warranty and Liability Act (CPWALA) gives consumers extensive protection against suppliers for goods that fall short of reasonable expectations.
The legislation also gives suppliers extensive protection against their own suppliers. Its policy is not to stop at the dealer's doorstep but to stream the legal responsibility right back to the source of the problem. It appears that New Brunswick has gone further than any other jurisdiction in the protection it gives suppliers against their own suppliers.
The Consumer Guide section of this web site deals with the supplier's responsibilities to the consumer.
This Business Guide deals with the supplier's rights against its own and other suppliers in the distribution chain. In many cases the supplier has the same rights as the consumer does under CPWALA, and for these cases this Guide has links to take the reader to the appropriate section of the Consumer Guide.
Transactions Covered
For the transactions covered by CPWALA, please click on this link which will take you to the appropriate section of the Consumer Guide.
Note re private sellers. Not only does CPWALA not apply to the private seller, but it prevents a dealer who buys goods from a private seller (normally used goods, e.g. a consumer's trade-in car) from taking an indemnity from that private seller for any liability that the dealer incurs to its own buyer when it resells those goods. The rationale for this was given in one of the law reform Reports leading up to the legislation: "Not only is the dealer in a better position to handle the risks of unknown defects vis-a-vis the consumer buyer, he is also in a better position to handle these vis-a-vis his consumer seller."
Exceptions: title defects and fraud. This provision does not protect the private seller against claims for title defects or for fraud.
Warranties
Warranties apply in favour of business buyers. The same kinds of warranties apply throughout the chain of distribution. In fact, all the CPWALA warranties, express and implied, apply in favour of all buyers, so that, for example, a dealer gets the same kinds of warranties from its supplier as the consumer gets from the dealer. Suppose, for example, that a retailer buys goods from a wholesaler and then sells them to a consumer. It turns out that the goods are completely useless because of faulty manufacture, but this is not discovered until they reach the consumer. The retailer is responsible to the consumer for the faulty goods, and the wholesaler is responsible to the retailer. The wholesaler in turn has rights against its own supplier, and so on back to the manufacturer.
For the CPWALA warranties, please click on this link which will take you to the appropriate section of the Consumer Guide.
Extra-provincial suppliers. Those who deal with suppliers who do not carry on business in New Brunswick are advised to consult their lawyer for advice regarding the applicability of New Brunswick law to their contracts.
CPWALA's special remedies do not apply in favour of business buyers. CPWALA gives consumers special extended rejection and refund remedies for breach of warranty. These special remedies do not apply in favour of business buyers. Instead, rejection/refund remedies for business buyers are governed by the Sale of Goods Act and general contract law.
Who is a business buyer for the purposes of CPWALA?
Anyone who makes, or holds himself or herself out as making, the contract in the course of a business.
"Business" for this purpose is defined to include a "profession" and "the activities of any government department or agency, of any municipality or agency thereof, and of any Crown corporation."
Part business & part pleasure. A buyer purchasing partly for business and partly for pleasure, but primarily for pleasure, is not treated as buying for business.
General approach to waivers. Unlike CPWALA warranties but like CPWALA remedies, protection against waivers/disclaimers/contracting-out of CPWALA differs depending on whether the buyer is a consumer buyer or a business buyer.
CPWALA gives consumers much more protection against waivers than it gives business buyers.
Generally speaking
- consumer buyers cannot contract out of CPWALA's protection
- business buyers can contract out of CPWALA's protection.
For example, when a restaurant buys a delivery car, the legislation allows the restaurant to contract out of warranty protection. Business parties are generally free to make whatever contract they wish in their dealings with each other.
Major exception. Pursuant to its policy to impose ultimate responsibility for consumer protection on the supplier who caused the problem in the first place, rather than simply stopping at the dealer's doorstep, CPWALA gives the dealer-buyer various non-excludable recourse rights all the way back to the supplier who was the source of the problem.
For example, in Sirois v. Centennial Pontiac Buick GMC Ltd. and General Motors of Canada Ltd. the manufacturer of a defective car sold it to its dealer, who then resold it to a consumer. The New Brunswick Court of Appeal held that the dealer was entitled to full indemnity from the manufacturer for the liability that the dealer incurred to the consumer, regardless of any waiver agreement between the dealer and the manufacturer.
per Justice Patrick Ryan (for the court):
"Without question, the consumer was entitled to rescind and receive her damages from Centennial Pontiac under s. 15 of the Act. But can the dealer recoup from the next in line, in this case, the manufacturer? The result hinges upon the definition of 'consumer loss' under s. 1(1) of the Consumer Product Warranty and Liability Act:
'consumer loss' means
(a) a loss that a person does not suffer in a business capacity; or
(b) a loss that a person suffers in a business capacity to the extent that it consists of liability that he or another person incurs for a loss that is not suffered in a business capacity;'
The consumer loss sustained by the original buyer falls under subs. (a) and the loss sustained by the dealer falls under subs. (b).
U.N.B. Law School Dean Karl J. Dore, Q.C., when he was Director of Consumer and Corporate Affairs for New Brunswick, gave an illustration of the vertical pass-it-on effect of a consumer loss in an article in (1982), 31 U.N.B.L.J. 161, at 172:
'A supplier can contract out of the Act's warranties or remedies vis-à-vis a business buyer (i.e. one who buys or holds himself out as buying in the course of a business). There is, however, one major exception. An agreement to contract out 'shall be ineffective with respect to any consumer loss for which the seller would be liable if no such agreement had been made'. 'Consumer loss' has been defined to include 'a loss that a person suffers in a business capacity to the extent that it consists of liability that he or another person incurs for a loss that is not suffered in a business capacity.'
'The exception is demonstrated in the following hypothetical. Suppose that a manufacturer sells chocolates to a wholesaler. The chocolates are inedible because of faulty manufacture, but no one knows this. The contract between the manufacturer and the wholesaler purports to contract out of the Act. The wholesaler sells the chocolates to a retailer and he also purports to contract out of the Act. The retailer in turn sells the chocolates to a consumer, who discovers that they are inedible. The retailer would be liable to the consumer, of course, regardless of any disclaimer. The retailer in turn could obtain indemnification from the wholesaler. The wholesaler's disclaimer would be ineffective because the retailer's claim would fall within the definition of 'consumer loss'. The wholesaler in turn could obtain indemnification from the manufacturer. The manufacturer's disclaimer would be ineffective because the wholesaler's claim would also fall within the definition of 'consumer loss'.
'In giving the dealer non-excludable recourse rights against his own supplier, the Act adopts a policy to impose ultimate responsibility for consumer protection on the one who caused the problem in the first place, rather than stopping at the dealer's doorstep.'
Holding a similar view, Ivan F. Ivankovich, then Associate Professor, Department of Industrial and Legal Relations, University of Alberta in (1983), 32 U.N.B.L.J. 123, at p. 139 wrote:
'By a combination of the definition of 'consumer loss' and the inability of superordinate suppliers to contract out of liability to subordinate suppliers for these losses, the Act enables subordinate suppliers in the distribution chain, as a general rule, to be fully indemnified.'
Based upon the definition of 'consumer loss' and its application to the facts found by the trial Judge, his decision on the question of indemnity to Centennial Pontiac is correct."