Product liability

How BC law treats it

Canada has no strict product liability statute. A person injured by a product must usually prove negligence: that the manufacturer owed a duty of care (Donoghue v Stevenson, [1932] AC 562), failed to take reasonable care in design, manufacture or warnings, and caused a loss that was not too remote (Mustapha v Culligan of Canada Ltd, 2008 SCC 27). The duty to warn is continuing. In Hollis v Dow Corning Corp, [1995] 4 SCR 634, the Supreme Court held that a manufacturer must warn of dangers it knows or ought to know about, with warnings as specific as the risk requires, and that the duty continues after sale as new risks emerge. Buyers have contract claims as well. Section 18 of the Sale of Goods Act, RSBC 1996, c 410 implies conditions that goods are reasonably fit for a purpose the buyer made known and are of merchantable quality. Liability for breach of these conditions does not depend on fault, but runs only between the parties to the sale, so distributors and retailers often pass claims back up the chain through their supply contracts. Where several parties contribute to a loss, the Negligence Act, RSBC 1996, c 333 apportions liability by degree of fault. Claims must generally be started within two years of discovery under the Limitation Act, SBC 2012, c 13. Separately, the federal Canada Consumer Product Safety Act, SC 2010, c 21 regulates consumer products and allows Health Canada to order recalls.

What it means for your business

Manufacturers, importers and distributors carry product risk whether or not they designed the product. The real allocation of that risk happens in supply and distribution agreements: warranties, indemnities, limitation of liability clauses, recall cost sharing and insurance requirements. A BC distributor that buys from an offshore manufacturer with no Canadian assets may end up absorbing the full cost of a claim. Clear warnings, quality records and product liability insurance reduce exposure, and recall planning matters for consumer goods. Example: A Richmond importer sells space heaters that overheat and damage a customer's warehouse. The customer sues the importer for breach of the implied condition of merchantable quality and in negligence, and the importer looks to the indemnity in its supply agreement with the overseas manufacturer.

Risks and common mistakes

Assuming a seller is only liable if it was negligent, when Sale of Goods Act conditions do not depend on fault. Buying from a foreign manufacturer without an indemnity, insurance requirement or Canadian recourse. Treating warnings as a one time task rather than updating them when new risks become known. Relying on a disclaimer of implied conditions in a consumer sale, where such disclaimers may be unenforceable. Ignoring federal reporting and recall obligations for consumer products.