Remedies

This page was last modified on January 19, 2005. 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 January 19, 2005.

Table of Contents

Application

Special remedies for consumers. Unlike the warranties under the Consumer Product Warranty and Liability Act (CPWALA), the remedies for breach of those warranties differ depending on whether the buyer is a consumer buyer or a business buyer.

CPWALA gives consumers special extended rejection and refund remedies for breach of warranty.

Normal remedies for business buyers. CPWALA's 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.

CPWALA text

13 Where...there is a contract for the sale or supply of a consumer product and the buyer makes or holds himself out as making the contract in the course of a business...the remedies in sections 14 to 22 for breach of a warranty provided by this Act do not apply, but the remedies that would normally be available under the law for breach of the warranty shall be deemed to be remedies provided by this Act.

Who are business buyers? Those who make, or hold themselves out as making, their contract in the course of a business.

"Business" includes professions & government. "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."

CPWALA text

1(1) "business" includes 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 personal. A buyer purchasing partly for business and partly for personal purposes, but primarily for personal, is not treated as buying for business.

CPWALA text

1(2) A buyer does not make a contract in the course of a business within the meaning of this Act if the contract is for the sale or supply of a product that he acquires primarily for use for personal, family or household purposes, notwithstanding that he also acquires the product for use in a business.

Normal remedies for services/labour contracts. CPWALA's special remedies do not apply to consumer products supplied under any contract for services or labour. Remedies for breach of these contracts are governed by general contract law.

CPWALA text

13 Where...there is a contract for services or for labour and materials and a consumer product is supplied along with the services or labour...the remedies in sections 14 to 22 for breach of a warranty provided by this Act do not apply, but the remedies that would normally be available under the law for breach of the warranty shall be deemed to be remedies provided by this Act.

The general approach

The balance struck by CPWALA between the parties' conflicting interests regarding remedies for breach is, on the one hand, to give sellers greater opportunities to cure their breaches than they have under general sales law and, on the other hand, to give consumers greater opportunities to reject the goods failing cure.

Seller's opportunity to cure

CPWALA text

14(1) Where the seller is in breach of a warranty provided by this Act, the buyer shall give him a reasonable opportunity to rectify the breach, unless

(a) the buyer is unable to do so, or is unable to do so without significant inconvenience; or

(b) the breach is a major breach.

14(2) Subject to subsection (3), where the seller has a right to rectify the breach pursuant to subsection (1) and requests the buyer to return the product, the buyer shall return the product to the seller or to any repair facility or service outlet that is operated or authorized by the seller, and the seller shall return the product to the buyer after he rectifies the breach, or may supply a replacement if he is entitled by law to do so.

14(3) The buyer is not bound to return the product if it cannot be returned without significant inconvenience to him because of its size, weight, method of attachment or installation, or because of the nature of the breach.

14(4) The seller is liable for all reasonable expenses that the buyer incurs under subsection (2).

Cases
(in reverse chronological order)

General rule -- buyer must give seller opportunity to cure. Normally, the consumer must give the seller a reasonable opportunity to cure the breach.

Exceptions. There are only two exceptions to the general rule:

  1. Where the consumer is unable to give the seller an opportunity to cure the breach, or would suffer significant inconvenience to do so.
  2. Where there is a major breach.

Onus of proof re exceptions. It would be for the consumer to show that one of the exceptions applies.

Major breach. CPWALA does not define "major" breach.

The early case law tended towards equating major breach with the common law's "fundamental breach" or one that "goes to the root of the contract." In Gauvin and LeBlanc v. Dryden Motors Limited, Justice Meldrum said: "For the purposes of this action I treat 'major breach' as 'going to the root of the contract'." Gauvin involved a used car, falsely represented as being a demonstrator, that had a host of serious problems rendering it "totally unfit" for its intended purpose. There was a major breach no matter what the test.

As Justice Jones said in LeBlanc v. Brett (Lorne) Chev Olds Ltd., "certainly a fundamental breach of contract would amount to a major breach." LeBlanc involved another car with a misrepresented history, and although the breach was much less serious than the breaches in Gauvin, it was sufficiently serious for Justice Jones to characterize it as fundamental, and accordingly major.

But any notion that a breach must be fundamental in order to be major was strongly challenged, early on, by Professor Ivankovich in his articles. Professor Ivankovich's views on Justice Meldrum's "comment" were noted by Justice William Creaghan in Medjuck & Budovitch Ltd. v. Young.

More recently, in Beaulieu v. Leisure Time Sales, another case where the breaches were sufficiently serious to qualify as major under any test, Justice Paul Creaghan commented:

"The question of the right to rescind a contract on the basis of the breach of a warranty of fitness, whether it be found to be a fundamental breach at common law or a major breach as provided by statute, must in the final analysis be a question of fact that will turn on the circumstances of each case. The concept of a breach that 'goes to the root' of the contract is helpful in either case to characterize a situation that should give rise to rescision [sic] as a remedy.

Each case must be judged on its own facts and there must be some element of reasonable objectivity applied. Business efficacy requires that a court should exercise caution in granting the remedy and it should be allowed only where the subject matter of the contract is clearly unfit for the purpose intended.

However, this does not mean that the test should be 'totally unfit' or 'irreparable' as such a measure would, in my view, establish too high a criteria such that the right to rescision [sic] for fundamental or major breach would be available only in rare instances."

In Sirois v. Centennial Pontiac Buick GMC Ltd. and General Motors of Canada Ltd., the New Brunswick Court of Appeal took no issue with this explanation of major breach by Justice John Turnbull:

"The term 'major breach' is not a technical term or one that can be precisely defined at law. It connotes something less than a fundamental breach, and I believe the intent of the phrase is a breach that would lead an ordinary person to say, under all of the circumstances, 'that's very serious'."

It appears, then, that a breach need not be "fundamental" in order to be "major."

Non-major breach. Audet v. Central Motors Ltd. is the clearest case to date of a non-major breach. A used-car buyer refused the seller an opportunity to make a warranty repair, and instead rejected the car and sued for a full refund of the purchase price. The repair turned out to be a very minor problem costing a mere $2.50 to fix. Not surprisingly, the action was dismissed.

Returning goods for repair. Normally, the consumer is responsible for returning the goods for repair, but the supplier is responsible for the consumer's expenses. However, the consumer is not responsible for returning the goods if this would be a significant inconvenience (e.g. because of their size or weight).

Repair by someone else. If the seller does not fix the breach within a reasonable time, the consumer can get someone else to fix it, and in that case the seller is responsible for the damages (e.g. the reasonable cost of repairs). [See, for example, Doiron v. Bayside Chrysler Dodge Ltd. (1999), 210 N.B.R.(2d) 201 (N.B. Queen's Bench), and the next section on damages.]

Of course, the consumer can skip the seller altogether and go right away to someone else to fix the problem if

  • it is a major breach; or
  • the consumer is unable to let the seller fix it, or would suffer significant inconvenience to let the seller fix it.

Damages

CPWALA text

15 Where the seller is in breach of a warranty provided by this Act, the buyer may recover damages for any loss that he has suffered because of the breach and that was reasonably foreseeable at the time of the contract as liable to result from the breach.

Cases
(in reverse chronological order)

Causation & mitigation. These were major issues in Lanteigne v. Foulem & Blanchard Ltée.

In Johnson v. Maritime Water Treatment Ltd. (1999), Temp. Cite: [1999] N.B.R.(2d) TBEd. DE.059 (N.B. Queen's Bench), the buyers were held entitled to refuse the seller's offer of an air heat pump to replace a water heat pump when it was discovered that a water heat pump would not work with the buyers' well. The buyers had not bargained for an air pump, said the court, and an air pump was less efficient, which was the reason for the buyers wanting a water pump in the first place.

Foreseeability. In Parker v. New Brunswick Power Corp. the supplier admitted that its hot water tank did not meet section 12's durability warranty, and that it caused more than $16,000 in damages when it failed and water escaped. The defence was that the damages were not reasonably foreseeable because they would not have occurred had the tank been installed in accordance with manufacturer's instructions.

The Court of Appeal agreed that the installation instructions were relevant to foreseeability. However, the court found that in this case the supplier had acquiesced in the customer's installation method. It knew or ought to have known that the great majority (more than 90%) of customers in the customer's area were not following the manufacturer's instructions. In fact, the supplier itself did not follow those instructions when it installed the replacement for the defective tank. Thus in this case the damages were foreseeable.



Examples of other consequential losses.

Transportation costs

Loss of time

Loss of use of goods

General damages

Dealer entitled to full indemnity from manufacturer for consumer's judgment against it.

Rejection rights

Law Reform Report recommendations & rationale. The First Report of the Consumer Protection Project recommended major reform for consumer remedies.

"The first change that should be made is to abolish the distinction between conditions and warranties. A consumer buyer of goods should have initial rejection rights for the breach of any term of the contract of sale. This has been the law in the United States for many years. And it has been recommended for Ontario by the Ontario Law Reform Commission. At the same time the seller should be given a reasonable opportunity to rectify his breach, including a breach of the title obligation, unless it is a major breach or, of course, an irremediable breach.

The question of when the buyer should lose his rejection rights is more difficult. The very least that should be done is to abolish the passing of property test and to make section 33 of the Sale of Goods Act subject to section 32, as has been done in England and South Australia. But in our opinion the changes should go further, for the present guidelines as to what constitutes acceptance, even after the above changes are made, contain a fair degree of uncertainty which, of course, operates against the consumer. There is much to be said for selecting a definite time period during which the consumer can reject for any breach discovered within that period, provided he exercises his rejection right within a reasonable time after he discovers the breach. The setting of any fixed time limit is bound to be arbitrary to some extent. But we believe it has many more advantages than disadvantages.

We recommend that the consumer should be able to reject for any breach discovered within sixty days of delivery of the goods, provided that he exercises his rejection right within a reasonable time after discovery of the breach. After the sixty day period has expired the consumer should be entitled to reject only in the case of a major breach.

These recommendations, while giving valuable remedies to the consumer, at the same time should not be unduly harsh on the seller. In the first place, except in cases of irremediable or major breaches, it has been recommended above that the seller should be given a reasonable opportunity to rectify the breach. In the second place, therefore, the only "hard cases" should be those where the goods are rejected for minor irremediable breaches after some use by the consumer. A contrary rule, however, can produce hard cases for consumers. It is better that hard cases be suffered by the seller since he is the party in breach. In the third place, as outlined below, we propose to give the seller a right to recover for benefits derived by the consumer from use of the goods. The restriction of rejection rights to cases of major breach after the sixty day period has expired is in recognition of the seller's interests in not being subjected to such a drastic remedy indefinitely unless the buyer's interests clearly require it, as they do in the case of major breaches.

Rejection rights, of course, are an option given to the buyer. He does not have to exercise them. If he does exercise them he should be entitled to recover from the seller any payments he has made on the purchase price and/or other reasonably foreseeable damages.

The seller, on the other hand, should receive some protection for his restitution interests. First, of course, he should be able to get his goods back. Second, subject to what is said below, he should be entitled to recover or set off from the refund of the purchase price payments, as the case may be, the value of the net benefit derived by the buyer through use of the goods. The burden of proof as to what the value of the benefit is should be on the seller. Third, in cases where the goods have been damaged beyond the deterioration necessarily caused by their contemplated use and for reasons not attributable to the seller's breach, the seller should be entitled to compensation for the difference between the value of the goods as they are and the value they would have had but for that damage." [pages 126-130]

Recommendations adopted in CPWALA. As recommended, CPWALA does abandon the warranty/condition/complex-term approach.

While CPWALA does use "warranty" nomenclature, it uses "warranty" in its broad sense meaning, simply as a promissory term of the contract, rather than its narrow sense meaning of a term that is less important than a condition.

CPWALA text

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

Rejection/rescission may be available to the consumer for any breach of any CPWALA warranty.

When rejection remedy available. Subject to the limitations set out below, under CPWALA the consumer can choose the rejection/rescission remedy in any of these cases:

  1. For any breach that the seller has not rectified after being given a reasonable opportunity to do so, the consumer can reject the goods.
  2. For a major breach, the consumer can reject the goods immediately without first giving the seller any opportunity to rectify.
  3. For a non-major breach for which the consumer cannot give the seller an opportunity to rectify, or cannot do so without significant inconvenience, the consumer can reject the goods immediately without first giving the seller any opportunity to rectify.

Time limits. For major breaches, the consumer must elect to reject within a reasonable time after he or she discovers the breach, or ought to have discovered it, whichever time comes earlier.

For non-major breaches, the consumer must discover the breach within sixty days of delivery, and elect to reject within a reasonable time after she or he discovers the breach.

Election to reject does not take effect until the seller has notice.

Return of goods. The only other limitation on rejection is that the consumer must be able to give back the goods free from any right against them in favour of a third party.

This limitation is subject to exceptions, the major one being that the consumer's grant of a security interest in the goods to a third party (e.g. bank) is not a bar to rejection if the amount owing by the consumer to the third party is less than any refund due back from the supplier to the consumer.

The rationale for this exception is that the security interest can be discharged with the money due from the supplier to the consumer, and to this end the Act allows the supplier to pay off the third party with that money. The third party is not entitled to any prepayment penalty in such a case.

CPWALA text

16(1) Where the seller is in breach of a warranty provided by this Act and does not rectify the breach pursuant to any opportunity that the buyer gives him under section 14 or otherwise, the buyer may reject the product if he does so within a reasonable time after he discovers the breach and he discovers the breach not later than sixty days after delivery of the product.

16(2) Notwithstanding that the buyer discovers the breach later than sixty days after delivery of the product, where the breach is a major breach the buyer may reject the product if he does so within a reasonable time after he ought to have discovered the breach.

16(3) The buyer's rejection is not effective until the seller knows or ought to know that the buyer does not accept the product.

20(1) The buyer may reject the product under section 16 notwithstanding that he has granted a security interest in the product to a third person, unless the principal amount outstanding on the loan secured by the security interest exceeds any amount that the buyer is entitled to recover from the seller under section 17.

20(2) Where the buyer has granted a security interest in the product to a third person and has rejected the product pursuant to section 16, the buyer or the seller may at any time pay that person all or any of

(a) the principal amount then outstanding on the loan secured by that person's security interest, and

(b) the portion of the cost of borrowing that has accrued and is unpaid up to the time of such payment,

and the buyer's total liability to that person in respect of the cost of borrowing shall be limited to the portion of the cost of borrowing that has accrued up to the time of repayment of the loan, notwithstanding paragraph 17(b) of the Cost of Credit Disclosure Act.

20(3) The buyer is liable to the seller for any payments on principal that the seller makes pursuant to paragraph (2)(a), and the seller may treat such payments as a refund of payments to the buyer for the purposes of sections 17 and 18.

20(4) In this section "cost of borrowing" has the same meaning as it has in the Cost of Credit Disclosure Act.
980, c.12, s.5.

21(1) Where the buyer cannot give back the product to the seller free from any right, other than a security interest, against it in favour of a third person, the buyer cannot reject the product under section 16.

21(2) Subsection (1) does not apply

(a) where the third person's right against the product existed prior to the supply of the product by the seller and was not attributable to anything the buyer did or failed to do; or

(b) where the third person is claiming from or under the seller.
1980, c.12, s.6.

Cases
(in reverse chronological order)

Consumer's rights upon rejection. Upon rejection, the consumer is released from the contract and is entitled to:

  • a refund of any money paid to the supplier
  • the return of any trade-in (or its monetary value at the time it was given)
  • reimbursement for any payments made on a credit contract
  • reimbursement for credit costs reasonably incurred, and
  • compensation for any other reasonably foreseeable financial losses or damages caused by the breach of warranty.

For example, in Johnson v. Maritime Water Treatment Ltd. (1999), Temp. Cite: [1999] N.B.R.(2d) TBEd. DE.059 (N.B. Queen's Bench) the buyer of a heat pump, upon rightful rejection, was held entitled to recover its full purchase price including installation and sales taxes ($8,395.00) and interest thereon ($1,942.00), plus all expenditures wasted on account of the breach (materials and repair costs totalling $1,700.00).

Supplier's rights upon rejection. The supplier, in turn, is entitled to:

  • return of the goods
  • reasonable compensation for any benefits received by the consumer from use of the goods
  • compensation for any damage to the goods (except, of course, damage due to the supplier's breach)

Consumer can retain possession until refund. The consumer may retain possession of the goods as security until the supplier makes all the required refunds.

Disputes over amount of refund. Special provision is made to help resolve disputes that may arise where the supplier claims the right to deduct from the refund an amount for benefits, damage or deterioration. The supplier may deduct any amount that is not in dispute, pay the amount in dispute into court, and pay the balance to the consumer. If the supplier does this, it is entitled to get the goods back. If the supplier does not bring an action to realize its claim within fifteen days of payment into court, the money is to be paid out to the consumer.

Consumer's duty to take care of goods. After rejection, the consumer must take reasonable care of the goods and, subject to her or his lien rights, allow the supplier to take them back. In fact the supplier can require the consumer to return the product, unless this would cause significant inconvenience. The supplier is liable for the cost of return.

CPWALA text

17(1) Subject to subsections (2) and (3), where the buyer rejects the product pursuant to section 16, he is released from his obligations under the contract and may recover from the seller any payments that he has made on the price and damages for any other loss that he has suffered because of the breach and that was reasonably foreseeable at the time of the contract as liable to result from the breach.17(2) The seller may deduct from the refund of any payments on the price or recover from the buyer, or both, an amount that is equitable in the circumstances for the benefit, if any, that the buyer derived from use of the product.17(3) Where before rejection the product has deteriorated to a state beyond that attributable to reasonable wear and tear for the period of time that the product was used by the buyer, or has been damaged by causes that are not attributable to the seller's breach, the seller may deduct from the refund of any payments on the price or recover from the buyer, or both, an amount for compensation for the difference between the value of the product as it is and the value that it would have but for that deterioration or damage.
1980, c.12, s.4.18(1) Where the buyer rejects the product pursuant to section 16, he is entitled to retain possession of the product until the seller refunds all payments that have been made on the price or complies with subsection (2) or (3).18(2) Where the seller claims a right under subsection 17(2) or (3) to deduct an amount from a refund of payments on the price, and the buyer does not dispute his claim in whole or in part, the seller may deduct that amount and pay the balance to the buyer.18(3) Where the seller claims a right under subsection 17(2) or (3) to deduct an amount from a refund of payments on the price, and the buyer disputes his claim in whole or in part, the seller may

(a) deduct any amount that is not in dispute,

(b) deposit the amount in dispute with a court and give the receipt for the deposit or a copy thereof to the buyer, and

(c) pay the balance to the buyer.

18(4) Where the seller deposits money under subsection (3) and brings an action to realize his claim within fifteen days after making the deposit, the money shall be paid out at the direction of the judge of the court in which the action is brought.18(5) Where the seller deposits money under subsection (3) and does not bring an action to realize his claim within fifteen days after making the deposit, the money shall be paid out to the buyer.18(6) In this section "court" means a court in which an action referred to in subsection (4) may be brought.19(1) For the purposes of sections 17 and 18, payments on the price shall be deemed to include

(a) any finance charges or other credit costs that the buyer has reasonably incurred in relation to the product, whether paid to the seller or to another person; and

(b) any consideration that the buyer gives to the seller, whether or not it is money.

19(2) Where the buyer gives consideration other than money, in whole or in part, the seller or the buyer may elect to treat it as if it were money, the amount of which shall be deemed to be the monetary value of such consideration at the time it was given.22(1) Subject to section 18, where the buyer rejects the product pursuant to section 16 he shall allow the seller to take it back.22(2) Subject to section 18, if the seller requests the buyer to return the product, the buyer shall return it to the seller or to any repair facility or service outlet that is operated or authorized by the seller, unless it cannot be returned without significant inconvenience to him because of its size, weight, method of attachment or installation, or because of the nature of the breach.22(3) The seller is liable for all reasonable expenses that the buyer incurs under subsection (2).

22(4) The buyer shall take reasonable care of the product until he complies with subsection (1) or (2).

Cases
(in reverse chronological order)