The Superior Court of Québec, presided by Justice Geneviève Marcotte, rendered an interesting judgment on the topic of the shared liability between purchasers and manufacturers in the case of De Luxe Produits de papier inc. c. Technical Adhesives Ltd, (De Luxe c. Technical).
De Luxe, a specialist in food packaging, had hired Technical to develop and manufacture an adhesive for its food packaging needs. De Luxe sued Technical for damages caused by having to recall its hamburger packaging due to a latent defect in the adhesive manufactured by Technical that caused residual odours in the food packaging.
De Luxe bases its recourse on the warranty of quality provisions in the Civil Code of Quebec as well as on the teachings of the Supreme Court in ABB inc. c. Domtar inc., where it was established that a defect is latent when it is serious, when it existed at the time of the sale and when it is hidden. In Québec, a defect is presumed to have existed at the time of the sale when a product perishes prematurely in comparison to similar products.
When these elements are combined, the manufacturer is presumed to have been aware of the defect given its privileged knowledge. Rebutting this presumption is an uphill battle for any manufacturer and is contingent on proving improper use of the product or an act of God.
However, on the flip side, the experience of a purchaser will come into play when determining the hidden nature of the defect and, in this case, the contributory liability of the purchaser. This is in fact what led the court to find shared liability between the purchaser and the manufacturer in De Luxe c. Technical.
On the one hand, Technical, as the manufacturer of the product, had not met its duty to inform the purchaser. More specifically, Technical was aware that diluting adhesive was normal practice for the purchaser. However, Technical chose to simply advise De Luxe that there was no need for dilution rather than articulating the adverse affects of such a practice. The duty to inform was even more burdensome in this case as the manufacturer had been advised of this potentially adverse practice prior to developing and tailoring the product to the specific needs of the purchaser. Furthermore, the manufacturer omitted to advise the purchaser of the importance of drying the product adequately so as to avoid odour formation.
On the other hand, the purchaser, who was equipped with a team of professionals capable of analyzing technical sheets and carrying out its own qualification testing was also found liable. More specifically, De Luxe had ignored the inscriptions on the technical sheets pertaining to odour formation and had also omitted to draw inferences from the odour emanating from the adhesive before it was even incorporated into the product. De Luxe was also responsible for not having inquired about the consequences of changing the method used during product testing to incorporate the adhesive into the product, a procedure in which both parties were involved.
These elements resulted in a 50/50 finding of shared liability for both the experienced purchaser and the manufacturer.
What does this mean for you? Purchasers, beware: your level of expertise can and will be held against you. Manufacturers, be transparent: you must explicitly communicate any information that may be useful to the purchaser.
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