Waivers

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

Waivers

General approach to waivers. Unlike its warranties but like its remedies, the Consumer Product Warranty and Liability Act (CPWALA) distinguishes between consumer buyers and business buyers regarding the extent of protection it gives against waivers/disclaimers/contracting-out.

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.

CPWALA text

2(3) This Act applies notwithstanding any agreement, notice, disclaimer, waiver, acknowledgement or other thing to the contrary.

24 Where there is a contract for the sale or supply of a consumer product, the parties cannot agree to exclude or restrict any warranty or remedy provided by this Act except as provided in sections 25 and 26.

25(1) Subject to subsection (4), where there is a contract for the sale or supply of a consumer product, the parties may agree to exclude or restrict any remedy provided by this Act for breach of an express warranty, but such agreement shall be ineffective to the extent that it is shown that it would not be fair or reasonable to allow reliance on such agreement.

25(2) Where the person alleging that an agreement referred to in subsection (1) is ineffective was himself unable to rely on a similar agreement made between him and another person in relation to the product because it was not fair or reasonable for him to rely on that agreement, then unless reliance on the agreement referred to in subsection (1) is shown to be fair and reasonable in the circumstances, that agreement is ineffective to the same extent that the similar agreement was ineffective.

25(3) In determining whether it would be fair or reasonable to allow reliance on an agreement to exclude or restrict any remedy provided by this Act for breach of an express warranty, regard shall be had to all the circumstances of the case.

25(4) Where there is a contract for the sale or supply of a consumer product by description, the parties cannot agree to exclude or restrict any remedy provided by this Act for breach of an express warranty that forms part of the description of the product.

25(5) For the purposes of subsection (4), a sale or supply of a consumer product shall not be prevented from being a sale or supply by description by reason only that the product is a specific product that is seen, examined, tested or selected by the buyer.

25(6) The right of any person claiming under section 23 is limited to the extent of any exclusion or restriction of remedy that the parties agreed to in the contract and that is effective under this section.

26 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 parties may agree to exclude or restrict any warranty or remedy provided by this Act but, except to the extent allowed by section 25, such agreement shall be ineffective with respect to any consumer loss for which the seller would be liable if no such agreement had been made.

Cases

Section 25

Section 26

Consumer buyers

What seller cannot do. Generally, the rights given by CPWALA will prevail over anything else to the contrary, including any contract, agreement, notice, waiver or disclaimer.

The seller cannot exclude or restrict

  • the express warranties
  • the implied warranties
  • the remedies for breach of the implied warranties.

What seller can do. The seller can provide different remedies for breach of some express warranties, but even this is subject to a fairness and reasonableness control.

Effect of ban against waiver of express warranties. The ban against waivers of express warranties does not mean that a supplier will be responsible for every statement, because the express warranties do not impose such responsibilities. Click here to go to the discussion of express warranties.

Parol evidence rule abolished. This is discussed in the Express Warranties section of this guide. Click here to go to that discussion.

Effect of ban against waiver of implied warranties. This is discussed in the Implied Warranties section of this guide. Click here to go to that discussion.

Remedies for breach of express warranties. The seller can exclude or restrict the remedies that CPWALA provides for breach of the express warranties, subject to three exceptions.

  1. The seller cannot exclude all remedies for breach of its express warranties, but would have to give some substitute remedy in place of the CPWALA remedies.
  2. In cases of "sale by description", there can be no modification of remedies for breach of an express warranty that forms part of the description.
  3. Any agreement to exclude or restrict a remedy is "ineffective to the extent that it is shown that it would not be fair or reasonable to allow reliance on such agreement."

Attempts to exclude all remedies. Attempts to exclude all remedies for breach of the seller's express warranties would be ineffective because there cannot be an express warranty without some remedy for its breach.

Sale by description. "Sales by description" and "description" are dealt with by the case law on section 14 of the Sale of Goods Act.

Clarification re "specific" goods and self-service stores. CPWALA clarifies some confusion in the case law by making it clear that goods may be sold by description even if they are "specific" goods seen, examined and selected by the buyer.

Attempts to avoid fairness & reasonableness control. A supplier cannot avoid the fairness and reasonableness controls by manipulating the form in which it makes its express warranty.

CPWALA text

6 Any express warranty given by the seller to the buyer to repair, replace, make a refund or do anything else if the product is defective, breaks down, malfunctions or fails to meet his specifications shall be deemed to include an express warranty that the product is not defective or will not break down, malfunction or fail to meet his specifications, as the case may be, during the term of the express warranty.

Rationale for section 6. The rationale for section 6 was stated as follows in the First Report of the Consumer Protection Project:

". . . [W]e were very much bothered by the fact that a simple prohibition of limitation of remedies for breach of the express terms would operate very haphazardly. This is because remedies depend on the form in which a promise is made, and promises may be made in different forms. In this respect promises pose a difficulty that implied terms and representations of fact do not.

For example, a seller who guaranteed that the goods were in perfect condition but went on to purport to limit his liability to fifty per cent of the cost of repairing any defects would be unsuccessful in his purported limitation, and would be liable for the full cost of repairs and other consequential damages caused by the goods being defective. But a seller could achieve the limitation he desired by recasting the form in which he makes his guarantee so that, instead of making a promise that the goods are in perfect condition, he promises that if they are not in perfect condition then he will pay fifty per cent of the cost of repairing any defects. By making his promise in this form, the seller would not run afoul of the rule prohibiting the limitation of remedies and yet would be successful in limiting his liability to fifty per cent of the repair cost and consequential damages arising only from breach of the obligation to pay fifty per cent of the repair costs.

The result would be that the 'smart' seller who used the right formula could effectively limit his liability, while the unsuspecting seller who used the wrong formula would fail in his attempt at limitation, even though in substance both of them were out to accomplish the very same thing, limited liability. It would be wrong to say 'I promise X but I limit my liability to Y,' but it would be all right to say 'If X does not occur then I will do Y.'

After reflection, however, we have concluded that it is possible for the consumer protection legislation to avoid these haphazard results and achieve uniform standards by enacting an appropriate deeming provision. The legislation could deem any promise that the seller makes if the goods fail to meet the specifications set forth in his promise to be a promise that the goods will meet the specifications set forth in the promise. The door would thus be closed to limiting the remedies that the law would otherwise provide by manipulation of the form in which the promise is made, and all sellers would be treated on an equal basis." [pages 180-182]

Business buyers

General rule. CPWALA generally allows business buyers to waive their CPWALA rights.

Major exception. A waiver is ineffective for a business buyer's loss to the extent that it represents liability for a non-business loss. This exception is made pursuant to CPWALA's policy to trace ultimate responsibility for consumer protection back to the source of the problem, rather than stop at the dealer's doorstep.

Exception to exception. This exception is subject to section 25.

Who are business buyers? This is discussed in the Remedies section of this guide. Click here to go to that discussion.

"Business" includes professions & government. This is discussed in the Remedies section of this guide. Click here to go to that discussion.

Part business & part personal. This is discussed in the Remedies section of this guide. Click here to go to that discussion.

Case law

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."