Express Warranties

This page was last modified on August 24, 2000. There are no plans to update it further.

The Legal Guide includes scope/coverage of legislation, express warranties, implied warranties, privity & products liability, remedies and waivers. Also included are the full text of the legislation, cases (indexed by name, section of Act considered, product, judge & date), law review articles, background law reform reports, top 10 list and table of contents.

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 24, 2000.

Table of Contents

Suppliers' Responsibilities
(Guarantees/Warranties)

Terminology. "Warranty" is the shorthand label used in CPWALA to describe the supplier's contractual responsibilities (or guarantees) regarding the quality or fitness of the goods.

CPWALA text
1(1) "warranty" means a term of the contract that is a promise.

There are two kinds of warranties:

  1. So-called express warranties, which are based on what the supplier says about the goods.
  2. So-called implied warranties, which don't depend simply on what the supplier says, but are based on the consumer's reasonable expectations about the goods in all the circumstances.

The supplier may be responsible under an implied warranty even if nothing at all is said about the goods.

Express Warranties

Substantial changes made. CPWALA has made substantial changes to general contract warranty law. In determining the supplier's responsibilities for what it promises or says about the goods, CPWALA has abandoned the traditional intention test as the basis for legal responsibility, and substituted a reasonable reliance test. For consumer products, CPWALA does away with the legal category "mere representation," whether innocent, negligent or fraudulent, and instead makes all operative representations into contractual warranties.

CPWALA also abolishes the parol evidence rule.

Rationale for changes. Under general contract law, whether a seller's statements are contractual warranties depends on the intention of the parties, objectively ascertained. This intention may be difficult to ascertain in the case of a statement which is made not in the form of a promise, but of a statement of fact, e.g. "it's this year's model."

The distinction between warranty and "mere representation" is not the only complication, however. Even for a mere representation, the common law may give some limited protection to the buyer, the extent of which may vary depending on whether the representation is made innocently, negligently or fraudulently. This can become extremely complicated, as demonstrated in this extract from one of the law reform Reports leading up to CPWALA:

If the representation is held to be a term of the contract, the seller is burdened with the most strict duty, accuracy, and the buyer is extended the greatest protection, protection for his expectation interest.

If, however, the representation is held not to be a term of the contract but rather a "mere representation," the situation is much more complicated, both in terms of the duties imposed on the seller and the interests of the buyer that receive protection. The seller is always required to be honest, is sometimes required to be careful, and is sometimes required to be accurate. The buyer sometimes receives protection for his restitution interest, sometimes receives protection for his reliance interest, and never receives protection for his expectation interest. Specifically, for a dishonest representation the law protects the buyer's restitution and reliance interests; in those cases where the law requires the seller to be careful it also protects the buyer's restitution and reliance interests; and in those cases where the law requires the seller to be accurate it protects only the buyer's restitution interest. Perhaps the latter point needs elaboration, since it is not traditional to speak of imposing a duty of accuracy in the case of a mere innocent representation. However, the effect of rescission is to protect the buyer's restitution interest, and since rescission is available for a mere innocent representation, it follows that in those cases where rescission is available the buyer's restitution interest is protected. However, since rescission is not always available, it is necessary to say that it is only sometimes that the law imposes a duty of accuracy.

We believe that the present law is unnecessarily uncertain, complex, and artificial, at least as far as consumer transactions are concerned, and that it fails to give adequate protection to the consumer.
First Report of the Consumer Protection Project, Consumer Guarantees in the Sale or Supply of Goods (1974), at 42-44.

The Report went on to recommend that the consumer protection laws should elevate all operative representations into contractual terms.

We favour the . . . approach . . . whereby all operative representations would be treated as terms of the contract. Under this approach, a seller who makes a representation of fact to induce a sale, and which does in fact induce it, would be strictly liable to the consumer for the accuracy of the representation; if the representation was inaccurate, the consumer would be entitled to receive protection for his expectation interest.

Our reasoning is as follows. A seller makes representations to influence the consumer's decision on whether to buy and, if so, at the price requested. The consumer, if he does rely on the representation, pays his price on the basis that the representation is true. For example, other things being equal, a seller can get more money for a 1973 model car than he can get for a 1972 model car. If the seller states that a particular car is a 1973 model, when in fact it is a 1972 model, and the consumer relies on this statement, the consumer will pay more than he would if the true facts were known. The fact that the seller honestly believed that he was speaking the truth, and that he took care in making his statement, does not change one iota the fact that although the seller set his price on the basis of the representation, and the buyer paid his price on the basis of the representation, the buyer does not receive what he paid the seller for, a 1973 model. We believe the business advantages derived from representations should be accompanied with full legal responsibility for their accuracy. (pages 47-48)

This recommendation was implemented in CPWALA.

CPWALA text

4(1) In every contract for the sale or supply of a consumer product the following statements are express warranties given by the seller to the buyer:

(a) any oral statement in relation to the product that the seller makes to the buyer, unless the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller's statement;

(b) any written statement in relation to the product that the seller makes to the buyer, whether or not the buyer relies on the statement, unless the circumstances show that it would be unreasonable for him to rely on the statement; and

(c) any statement in relation to the product, however made, that the seller makes to the public or a portion thereof, whether or not the buyer relies on the statement, unless the circumstances show that it would be unreasonable for the buyer to rely on the statement.

4(4) In this section

(b) "statement" means a promise or representation of fact or intention that is made before or at the time of the contract.

Cases
(in reverse chronological order)

Reasonable reliance test

Regardless of whether the statement is

  • a promise
  • a representation of fact, or
  • a representation of intention

and regardless of whether it is made

  • orally
  • in writing, or
  • by advertising

under CPWALA that statement will be an express warranty if the consumer reasonably relies upon it in making the purchase.

For example, if a used-appliance dealer represents an appliance as this year's model, and the consumer buys it relying on that statement, there is an express warranty that the appliance is this year's model.

Oral statements. In the case of a statement made orally one-on-one, actual reliance on that statement is necessary in order for it to be a warranty.

Written statements & advertised statements. In the case of a statement made in writing or in advertising, all that is necessary is that the statement be one that would be considered material by a reasonable buyer, and it is not necessary that the actual buyer rely upon it. (So, for example, the consumer will get the benefit of a written guarantee on the label of the product even though he or she does not read it before making the purchase.)

Express warranties include

  • any written or advertised statement that would be material to a reasonable buyer in deciding whether, or on what terms, to buy the goods (regardless of whether the actual buyer relies upon that statement in making the purchase)
  • any oral statement that would be material to a reasonable buyer and is actually material to the consumer in making the purchase.

Express warranties do not include

  • any statement, however made, that would not be taken seriously by a reasonable person
  • any statement, however made, that would not be considered material by a reasonable person
  • any oral, one-on-one statement that is not relied upon by the consumer.

Burden of proof re materiality & reliance. It is up to the buyer to prove that a statement was made. It will then be presumed that the statement was material unless the supplier proves otherwise.

The burden of proof issue was discussed in Slater and others v. Finning Ltd, [1997] A.C. 473 (House of Lords). That case concerned the interpretation of section 14(3) the English Sale of Goods Act, the relevant parts of which read as follows:

"Where...the buyer...makes known...to the seller...any particular purpose for which the goods are being bought, there is an implied condition that the goods...are reasonably fit for that purpose...except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller..."

The House of Lords held that under this section the burden of proof regarding reliance is on the seller. Lord Steyn remarked:

"Under section 14(3), in a case where the buyer made known his purpose, there is prima facie an implied condition of fitness which the seller can defeat only by proof that the buyer did not rely, or that it was unreasonable for him to rely, on the skill or judgment of the seller."

Opinions. Section 4 applies only to promises and representations of fact or intention.

CPWALA text
4(4) In this section

(b) "statement" means a promise or representation of fact or intention that is made before or at the time of the contract.

Originally, section 4 covered representations of opinion as well. The First Report of the Consumer Protection Project had recommended their inclusion on this rationale:

An unscrupulous seller might attempt to avoid our proposals by stating in the form of an opinion what he hopes the consumer will take as a fact. To prevent this possible evasion, we recommend that the law should apply the same test to opinions given by the seller as that recommended for promises and representations of fact made by the seller. If the seller states his opinion that the goods have certain qualities (or whatever), then it should be a statutory term of the contract that the goods will have these qualities, unless the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller's opinion. This proposal, while preventing the evasion of the intent of our recommendations through the form in which a statement is made, would not in our opinion operate unfairly against sellers. There still would be room under this test to make a distinction between genuine opinion, which is understood by the parties as not giving rise to responsibility, and that which is taken as reliable: promises, representations, or opinions in form only, meant to induce reliance. (pages 53-54)

However, opinions were removed from the section 4 list in an amendment enacted in 1980, following this recommendation made by Mr. Fred Beairsto:

An oral expression of opinion should not be considered to be an express warranty. Section 4(4)b should be amended to remove reference to the word opinion. It is common for buyers to seek the opinions of store clerks and small businessmen simply to get a second opinion and with the hope and expectation that the clerk having dealt with the product might have a more valuable opinion than one's own. Generally speaking, the public is quite happy to take these opinions without a legal liability being attached and I believe to attach a legal significance to the opinion is to do a disservice to both the buyer and the seller in restricting what would otherwise be a free and spontaneous exchange of views.
Report to the Honourable Rodman E. Logan, Q.C. on the Consumer Product Warranty and Liability Act, by Fred Beairsto, June 1979, at p. 11.

Opinion as fact. Even a representation that is stated clearly as an opinion includes at least one implied representation of fact -- that the speaker in fact holds that opinion.

In some cases there may be a further implied representation of fact -- that the speaker knows facts to justify her or his opinion.

"It is often fallaciously assumed that a statement of opinion cannot involve the statement of fact...if the facts are not equally known to both sides, then a statement of opinion by the one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion."
Smith v. Land and House Property Corporation (1884), 28 Ch. D. 7, at 15, per Bowen L.J.

Opinion regarding suitability of goods for buyer's purpose. A seller who states an opinion regarding the fitness of the goods for the buyer's purpose may be liable under section 11 of CPWALA.

CPWALA text
11 Where before the contract is made the buyer expressly or by implication makes known to the seller any particular purpose for which the product is to be used, there is an implied warranty given by the seller to the buyer that the product is reasonably fit for that purpose, whether or not that is a purpose for which such a product is normally used, unless the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller's skill or judgment.

Parol evidence rule abolished. Oral warranties can prevail even over a written contract which does not mention them or, indeed, which denies them.

CPWALA text
5 Where there is a written contract, oral and other extrinsic evidence is admissible in any court to establish an express warranty notwithstanding that it adds to, varies or contradicts the written contract.

Suppliers cannot avoid responsibility for their oral promises by disclaimers buried in the fine print of their written contracts. If a supplier wants to take back a statement, it must do so clearly (and of course before the contract is made).

Of course, as a practical matter, consumers are still well advised to get promises in writing, because this makes it so much easier to prove what was said in case of dispute.

As explained above, once the consumer proves that the supplier made an oral statement, the onus then shifts to the seller to prove either that the consumer did not rely on that statement, or that the consumer was unreasonable in relying on that statement.

Case law. In Gillespie v. MacDonald Pontiac Buick GMC Ltd. (1986), 71 N.B.R. (2d) 1 (N.B. Court of Appeal), a used car dealer was held to its oral promise to repair an oil leak in the car notwithstanding the written contract which purported to deny any responsibility for repairs.

Salesperson's statements. The supplier is responsible for any statement that its salesperson makes when acting within the scope of his or her actual, usual or apparent authority. The onus is on the supplier to prove that the salesperson was acting outside the scope of his or her actual, usual or apparent authority.

CPWALA text
4(2) The seller shall be deemed to have made any statement

(a) made by his agent or employee, unless he proves that the agent or employee was not acting within the scope of his actual, usual or apparent authority;

Cases
(in reverse chronological order)

Statements on signs, labels, packaging, etc. As was stated in the First Report of the Consumer Protection Project (pp. 55-56), in many cases, especially in self-service stores, statements on packaging, labels, and the like are all that the consumer has to go on. CPWALA makes the supplier responsible for such statements even though it was the manufacturer or some other distributor who actually put those statements on the packaging or labelling, or in the documentation accompanying the goods.

The supplier in turn has recourse rights against her or his own supplier, and the consumer has rights against that supplier as well. See below.

CPWALA text
4(2) The seller shall be deemed to have made any statement

(b) made in writing on the product or its container or in a label, tag, sign or document attached to, in close proximity to, or accompanying the product, unless he proves that the statement was made by another person who was not a distributor of the product and that he neither knew nor ought to have known that the statement was made.

The purpose of the final part of section 4(2)(b) is to exempt the supplier from responsibility for labelling, etc. done by someone else without the supplier's knowledge, e.g. a tag switch done by another shopper.

Where statement appears to be supplier's. If a statement has been made in circumstances where it appears to have been made by the supplier, e.g. a statement made in a newspaper advertisement bearing the supplier's name, but the supplier disputes that it made the statement in question, the burden of proof is on the supplier to prove that it is not its statement.

CPWALA text
4(3) Where a statement was made in a manner or circumstances that it appears that the statement was made by the seller, it shall be presumed that the statement was made by the seller unless he proves that it was not his statement.

4(4) In this section

(a) "makes" includes causes to be made;