Canada: Warranties - Who's Reponsible?

Last Updated: June 27 2013
Article by Bill Preston

There have been three recent Ontario cases which I think will give you some guide to the following questions:

  • When is it the builder's responsibility, not the designer's?
  • If there is an early termination of the construction contract, who is responsible for the warranties for the Work performed?
  • Can you enforce a manufacturer's warranty against the deep pockets in the distribution chain?

In 2006, the City of Brampton decided it needed an outdoor 1,500 m² concrete lacrosse pad.  Stantec's design required that it be laid upon a Styrofoam insulation sub-surface and its drawings spec'd:

3.9  Concrete shall be bull floated to true and level, followed by a power steel trowel finish.  The desired finish shall be as smooth as possible, while avoid being burnt or black (a burnt finish is too smooth).  An experienced rink surface specialist shall make final acceptance on site.

3.10  Concrete is [4-7%] air entrained and concrete finisher/supplier shall determine finishing technique required to provide desired finish without degrading the air void system.

Dirm for a price of $20,000 subcontracted to perform the concrete finishing in April/07, relying upon ready-mix supplied loads.  A week before the scheduled pour, Dirm, at a site meeting, expressed reservations about the use of a steel trowel on the hyper air entrained concrete, but after a test pad was completed, Dirm confirmed that the required smooth finish could only be achieved by using a steel trowel.  April the 20th was a sunny, warm (18°C), windy day.  Dirm called for 29 loads of concrete delivered to the site over an 8-hour interval, and by 1:30 in the afternoon had begun power troweling the surface.  It explained that its decision concerning this method of work was consistent with what everyone, including designers known – concrete finishers start troweling when they determine that their foot depression on the fresh concrete is less than a ¼ inch – this is a universally-accepted standard.  But, Dirm also had to admit that had it used the same method of finishing the surface as what it had used for the test pad, the troweling would have taken two weeks.  In this case, Dirm completed troweling of all of the 29 loads for the lacrosse pad at 11 in the evening of the same day.

Within three weeks surface blistering and serious cracking of the surface was evident.  Eventually, Dirm refused responsibility, taking the position that its installation was compliant with Stantec's design and had been performed using the well-recognized trade standards for troweling.  As a result, Bennington Construction, the general contractor, spent $168,622.20 to complete a reasonable repair.  It then sued Dirm.  The trial judge held Dirm responsible for these repair costs by explaining:

  1. Dirm was aware of the City's purpose and unless the subcontract other prescribes, there is an implied term in the subcontract that Dirm's choice of method of work must achieve the reasonable durability expected by the City of Brampton for the lacrosse pad;
  2. It is not sufficient that Dirm complied with Stantec's design;
  3. Given Dirm's concerns, experience with a test pad, the warm, windy weather and the Styrofoam sub base, Dirm ought to have permitted the bleed water in the concrete to evaporate over time by poly-covering, wind shielding, and misting or fogging;
  4. Thus, it was "possible" for Dirm to both be compliant with Stantec's design and the implied requirement that the City's purpose be reasonably achieved.

In essence, concrete finishing is an art, and it is implicit that Dirm warrant that it choose a "possible" method of work which is both compliant with the design and achieves the owners reasonable purpose.

But, what if Bennington had terminated Dirm before the concrete surface began blistering and cracking?  Would a judge have still said that Bennington is entitled to recover its repair costs?  The recent Ontario case of Hulst Town Contracting v. Innisbrook Developments has some answers.  Hulst was a site services contractor which in late 2002 accepted a unit-priced CCDC 4 contract to perform site services for both Phases I and II of Innisbrook's new residential subdivision in Innisbrook, Ontario.  In 2003 Hulst had completed Phase I and most of Phase II.  What was left in Phase II included top coating the asphalt roadway and completing some concrete curbing and sidewalks for Phase II.  At this point, the parties mutually terminated the CCDC 4.  Later, other contractors completed the outstanding Work.  But neither party documented the terms of the termination – no letters, no emails, no field notes, and certainly no release form!  Thus, when Innisbrook later demanded that Hulst returned to repair deficiencies in the Work which it had performed, Hulst refused and recalled that Innisbrook's president had agreed that it had "no further obligations under the contract"; while, Innisbrook, without the testimony of its deceased president, argued that it would have been against the character of the deceased to agree on any term other than "We'll delete the unfinished balance and I'll take care of it."  In the end, the judge held Hulst Town Contracting responsible for warranties because:

  • To contradict the clear written term of the CCDC 4 which made Hulst Town Contracting responsible for warranties on its work, Hulst needs documentation – recollection of oral discussions doesn't cut it; and
  • The other circumstances at the time of the termination support Innisbrook's position that the balance of work left was very minor and separate from what Hulst had completed, thus it is reasonable that Hulst would not have obtained a release of its warranty obligations without something in writing.

The sequel: the judge also criticized Innisbrook's documentation proving the amount of its costs to complete Hulst's deficiencies and thus shrunk its claim down to a total of $6,870.61!

The third Ontario case dealing with enforcement of warranties is Graci v. New Steel Roofers and Dura-Loc Roofing.  This case involved the installers following written warranty:

All material is guaranteed to be as specified.  All work is to be completed in a workmanlike manner according to standard practices.

With this warranty, New Steel made three essential arguments that it was not responsible:

  1. Where the material was purchased from others, I don't guarantee that this material (e.g. steel roofing) is fit for the customer's purpose;
  2. Also, I only promise that New Steel's installation will be compliant with the standard practice used by New Steel; I don't promise that it will be compliant with industry standard; and
  3. Alternatively, because the owner denied me a fair opportunity to repair, I can't be held responsible for the warranty.

The Court quickly knocked down these three submissions by noting that the guarantee includes an implied warranty of fitness for purpose, while it is reasonable that the standard adopts industry standard and finally, once the customer has an expert opinion that the whole roof must be replaced, then the owner no longer has a duty to let New Steel continue trying to patch its Work.  Pretty much what you expected, right?  Well, the judge went further.  He also decided that New Steel was negligent when it sub'ed the installation work out to Lifetime Roofing without giving Lifetime any installation instructions nor making regular site inspections of Lifetime's performance.  This is negligence and this permitted the Court to make New Steel jointly and severally liable with the manufacturer for the costs of replacing the roof and Court costs in the total amount of $276,718.36!

But, I am not reporting this case to you because New Steel took a big financial hit on a contract for which it earned only a $20,000 contract price.  Rather, this case is instructive because it deals with the struggle and the answers to enforcing the below manufacturer's warranty:

"50 Year Transferable Warranty" and

"Workmanship 10 yrs. Warranty"

Graci had decided to be his own general contractor for construction of his new home in Ancaster, Ontario.  He had some construction experience as well as draft plans prepared by an architect.  For his new home, he chose ARI Classic I steel roof in walnut colour.  He was not familiar with ARI, but he was aware of the sterling Ontario reputation of Dura-Loc, and he had read marketing materials representing that ARI was a "Dura-Loc company."  Also the supplier from whom he purchased the roofing, BAT, told him that Dura-Loc stood behind ARI products. Regrettably, the roof system didn't work.  Rather, after five months of New Steel and Dura-Loc failing to fix the leaks, Graci hired his own expert who opined:

  • The installation was so poor that one could stand below and see the sky above through puncture holes and gaps;
  • Degranulation of the steel roofing tiles, which began to appear within three months of installation, had progressed to the point where 60% of the roof was exposing the raw steel of the tiles;
  • And, the white stains on the walnut finish was mastic resin which had leached out of the roofing tiles;
  • Thus, the only fix was to remove and replace the roof.

Graci hired a separate installer and purchased a different roof product to complete the roof.  He then sued Dura-Loc on its warranty.  Dura-Loc defenced on various grounds.  But, for my report, the interesting one was Dura-Loc's position that it did not stand behind ARI's warranty; that Graci should look to ARI.  What Graci then learned was:

  • ARI Corp. was an insolvent Nevada shell corporation financed and controlled by Dura-Loc people;
  • ARI Corp. had, two years before, purchased the marketing image and production methods out of the insolvency of ARI California;
  • While Dura-Loc had fabricated the steel tiles in Ontario and then sent them to California for granular finishing and return to Ontario for the Graci's home;
  • Dura-Loc also used its sale's network to promote, sell, and distribute the ARI Classic I steel roof system;
  • But Dura-Loc used the ARI letterhead for both order forms and invoicing between itself and Graci's supplier, BAT.

How did the judge deal with Dura-Loc's Defence?  He didn't buy it.  He concluded:

  1. Dura-Loc is responsible for the warranty because its sales representations, promotional literature, and public advertising reasonably led Graci to rely upon Dura-Loc to stand behind the warranties;
  2. And, if that's not enough, given Dura-Loc for its financial benefit was closely connected to ARI Corp., the Court can and will lift the corporate veil and treat the two companies as one.


My reading of these three cases persuades:

  1. Judges will do their damnedest to imply a warranty of fit-for-purpose though the work is compliant with design, thus builders must be very careful in choosing their method of work;
  2. Also, if the construction contract is mutually terminated before completion, the builder should take care to obtain a written release of warranties on its Work performed or expect that it will have to return to sort out the difficult disputes of whether its Work was defective or the successor contractor caused the defect; and
  3. Finally, given most supply chains involve a number of different companies and people, Judges do have the ability to search through the chain to find that company which has deep pockets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions