In Swern v Amazon Hardwood Centre Inc.1, the
appeal of an Ontario Small Claims Court decision, the Divisional
Court found that product retailers have a duty to disclose product
information in the context of an ordinary contractual relationship
between a retailer and a consumer.
Background to the Case
In June 2011, the defendant, Amazon Hardwood Centre Inc.
(Amazon), sold a hardwood product manufactured by Mercier Wood
Flooring Inc. (Mercier) to the plaintiffs. In order to avoid
degradation, hardwoods must be exposed to humidity on an ongoing
basis. The product purchased by the plaintiffs had above-average
humidity requirements that differed from industry standards.
Following installation, the plaintiffs' flooring began to cup
and crack due to the overly dry environment of the plaintiffs'
The plaintiffs initially brought this action claiming damages
from Mercier, Amazon and the general contractor who installed the
flooring. Following a two-day trial, the Small Claims Court
dismissed the plaintiffs' claims against Mercier and the
general contractor but found Amazon liable for failing to advise
the plaintiffs of the need to maintain higher than ordinary levels
of humidity on an ongoing basis following installation in order to
protect the flooring. Amazon appealed this decision to the
The Decision of the Small Claims Court
The Small Claims Court accepted the plaintiffs' evidence
that they were not aware of the required humidity levels for the
flooring and rejected Amazon's submission that the respondents
had actual knowledge of this information. The Court found that the
three principal documents, which the appellant argued advised the
respondents of the correct humidity levels, did not discharge
Amazon's duty to communicate such information.
The Divisional Court Upholds the Decision of the Small
On appeal, Amazon argued that imposing a duty of care to direct
prospective purchasers to prudent purchases imposes too high a
standard on retailers. In upholding the Small Claims Court's
decision, the Divisional Court stated that the effect of the
decision is not to impose a duty to direct purchasers to prudent
purchases, but rather to require "disclosure of information
that is unique to a particular product and therefore would not be
known to a reasonable consumer."
Key Take-Away Principle
While this decision is limited to a specific issue – the
disclosure of product-specific information that veers away from
industry standards - it does raise some challenges for retailers.
What information is considered to be unique to a particular
product? What does a reasonable consumer know or not know about a
particular product? Does the retailer have a duty to analyze and
further explain to the consumer the meaning of the
manufacturer's warnings? Unfortunately, these questions were
not addressed by either the Small Claims Court or Divisional Court
and remain to be answered. One thing is for sure - going forward,
retailers should carefully consider what information they disclose
about their products, whether considered to be unique or not, in
light of this decision.
The recent decision of the Ontario Court of Appeal in BMW Financial Services Canada, a Division of BMW Canada Inc. v. McLean provides some useful insight into the relationship between automobile dealers and the financing arms of the manufacturers for whom those dealers are franchisees.
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