Rights & Money

How Good is That Guarantee?

The law provides safeguards, but most consumers don’t know it.

By Olev Edur

 

What help can you expect if you buy something and it falls apart or doesn’t work properly? Did you know that you might have warranty protection regardless of what’s stated in the product literature, and even despite what the vendor says?

We tend to associate warranties with those decoratively bordered certificates you get when you buy electronic gadgetry, appliances, and cars. But a warranty needn’t be expressed in writing to be legally enforceable: most Canadian consumer purchases are also covered by a legal concept called the “implied warranty” (in Quebec, a “legal warranty”).

In the United States, Article 2 of the Uniform Commercial Code provides that two warranties are implied in any sale unless they are explicitly disclaimed (for example, with an “as is” statement): in essence, the product or service must meet normal industry standards for similar items of comparable price and it must be appropriate to the needs expressed by the buyer to the seller.

In Canada, implied warranties vary by province and territory but are generally included in Sale of Goods Acts (SGAs) based on common law, with coverage similar to that in the United States (though subject to differing legal interpretations). Some provinces, however, have introduced more extensive—and less debatable—coverage through province-specific warranty legislation.

 

THE GOVERNMENT’S CONSUMER HANDBOOK

If you want further information about warranties or any other consumer-related issue, you should start by getting a copy of the Canadian Consumer Handbook, which is produced and regularly updated by the Consumer Measures Committee—a partnership of senior federal, provincial, and territorial government consumer affairs officials.

The handbook contains a lot of useful information, tips, and suggestions and is available online at Innovation, Science, and Economic Development Canada’s Office of Consumer Affairs website, at consumerhandbook.ca. 

 

Provincial Warranty Legislation

Quebec, for example, has codified its legal warranty rules, which apply automatically at no cost whenever you buy or even lease something in the province. The law imposes standards relating to:

–          quality,

–          hidden defects,

–          durability (expensive products must be warranted longer than cheap ones),

–          accuracy of descriptive materials, and

–          safety.

If a product doesn’t pass muster on all these criteria, the law says that you are entitled to repairs, a replacement, or ultimately a refund. Furthermore, vendors are required to explain this legal warranty and its provisions to buyers, both verbally and in writing, before offering them any additional coverage such as extended warranties.

Similarly, New Brunswick’s Consumer Product Warranty and Liability Act, introduced in 1980, establishes rules for warranties in the province. “This law has had major effects on the regulation of warranties in that province,” states a 2012 report for Quebec’s consumer union entitled “Adequacy of Legal Warranty Plans in Canada,” written by Marcel Boucher and Yannick Labelle. “It introduces new principles, such as the buyer’s right to refuse the good and the seller’s right to have a reasonable opportunity to correct a breach of any warranty under the Act.”

Saskatchewan’s Consumer Protection Act provides that retailers are liable for implied warranties whenever they sell a product, according to Natalie Fraser, a Whitby, ON, lawyer who writes for canadian-lawyers.ca and The Lawyers Weekly. “The implied warranty guarantees the product is of acceptable quality, reasonably durable, and fit for its intended use,” she wrote in The Lawyers Weekly.

For the rest, the Boucher-Labelle report points out that most other provinces and territories rely solely on SGAs that vary by jurisdiction: “Other provinces repeat, in their consumer protection law, the same principles as the SGAs, while adding a few components at times,” the report states, citing an Ontario-specific example: “Ontario’s Consumer Protection Act, 2002, which applies the warranties of the Sale of Goods Act to consumer contracts, adds a warranty of quality to service contracts.”

 

Few Are Aware of Coverage

While provincial laws provide various safeguards, most people don’t know it. One result, according to the Boucher-Labelle report, has been robust sales of extended warranties.

“Although Canada’s provincial and territorial legislatures have enshrined legal warranties benefiting consumers, the latter (and often merchants, as well) are not aware of the scope of those warranties, or even their existence,” the report states.

“Despite the explicit intention of some provincial legislatures to assert the legal warranty’s primacy over other forms of existing warranties, consumers are, in some market sectors, strongly induced to acquire an extended warranty, or are led to believe that only the manufacturer’s conventional warranty is available free of charge.”

Boucher and Labelle cite a study by Quebec magazine Protégez-Vous that found that merchants succeed in selling extended warranties to as many as 40 to 75 per cent of consumers.

“Merchants’ lack of co-operation with attempts to apply the legal warranty, and the obligation of going to court to have the latter honoured—which costs time and money—also appear to be factors that dissuade consumers from depending on the legal warranty, and rather lead them to purchase, at a high price, the relative certainty offered by an extended warranty,” the report concludes.

 

Rules for As Is and Private Sales

As noted above, US laws offer an exemption where goods are clearly marked “as is” or with words to that effect. In Canada’s provinces, however, the effect of such disclaimers is not so clear-cut.

Jonathan Kleiman, a Toronto lawyer specializing in consumer law, suggests that such disclaimers would have a limiting effect, at least in Ontario. “‘As is’ would make a difference,” he says. “There would be no warranty for fitness of purpose.”

However, the government’s Canadian Consumer Handbook states: “A retailer may say a product is sold ‘as is,’ meaning that the retailer claims the consumer should not be able to expect any after-sales repairs or service for the product under any kind of warranty. Despite what some retailers might say about ‘as is’ sales, there are implied warranties that apply to the sale of consumer goods, no matter what the retailer claims.”

There is generally less doubt about private as opposed to retail sales. While acknowledging that he is not well versed in the laws outside Ontario, Kleiman says, “Consumer protection laws around Canada generally dictate that goods sold be of ‘merchantable quality’ and be fit for the purpose for which they were sold. A private sale would follow the same rules. In the worst case, it could be deemed a commercial sale but would still be governed by the common-law rules.”

Separate legislation may provide further protection on certain products. In Ontario, for example, Tarion Warranty Corp. provides extended coverage on new home purchases, and special provisions apply to used-car sales. Similarly in Quebec, extra warranty protection is mandated on the sale of vehicles and real estate. When it comes to issues of safety, the federal Hazardous Products Act or the Food and Drugs Act may apply. And for misleading information on warranties, the Competition Act can impose penalties on offending vendors of as much as $1,000,000 for individuals and $15,000,000 for corporations.

 

Product Warranties

As for all those standard warranties for cars, televisions, and so on, the vendor is bound by the terms in the warranty documentation, so you need to take some time to read and understand them.

“You should review the warranty closely,” Kleiman says, “perhaps with a lawyer, depending on how important it is.

“Obviously a vacuum cleaner warranty is less important than a car or home warranty. If the warranty doesn’t provide specifics or the product ends up taking forever to fix, then perhaps the warranty itself wasn’t of merchantable quality or was deceptive in some way. The interpretations of those words will vary by province, and there’s no silver bullet short of reviewing the relevant case law.”

So what do you do if the product doesn’t live up to its billing? The standard procedure is to notify the vendor and ask for redress. But when buying from that flea market booth or the unfamiliar foreign corporation behind an online purchase, ask yourself whether the party providing the warranty is able and willing to honour its commitments.

All provinces provide some degree of protection, but don’t count on government help when it comes to replacements or refunds.

“The solution is ultimately a lawsuit,” Kleiman says. “In Ontario, if found guilty under the Consumer Protection Act, a corporation can be fined up to $250,000, and a business owner can be sentenced to a term of imprisonment of up to two years less a day or be fined up to $50,000, or both. The Ontario Ministry of Government and Consumer Services does have power, but my understanding is that it very rarely wields it, and it usually will at most add the business to a list that nobody really looks at.”

The bottom line is that, while warranty protection is available on almost all purchases, caveat emptor still applies, as your only recourse may be a costly and time-consuming legal proceeding. Nevertheless, the Canadian Consumer Handbook stresses that you should always keep all your warranty information, including receipts and service contracts, in a safe place, as these may be essential to making a claim. And if you’re not sure where you stand, contact your provincial consumer affairs office.

KEY ELEMENTS IN ANY WARRANTY

  1. What’s covered. Does the warranty include both parts and labour? What about associated damage? Is the coverage limited: for example, is coverage pro-rated based on depreciating value rather than full replacement cost? Does it exclude certain components? Is there a deductible?

 

  1. What isn’t covered. In addition to specified limitations and exclusions (such as “normal wear and tear” on cars and other mechanical devices), certain actions can void a warranty. Most warranties do not, for example, cover accidents or misuse (including improper installation or trying to fix things yourself).Manufacturers’ warranties are usually invalid outside the country of origin, so you may be on your own when, for example, it comes to fixing that bargain TV you picked up in the United States last winter.

 

  1. How long the warranty lasts. Typical terms are a year for most consumer electronics, three years for most new cars and some high-end products, and even longer for some extended warranties. Some parts may be accorded different coverage durations—for example, the longer power train warranties on many new cars. A so-called lifetime warranty could mean the life of the original purchaser or the product, or merely the product’s normal life expectancy.

 

  1. Where to go for repairs. Does the store where you bought the item take care of repairs or do you have to send the product to the manufacturer? Who pays for shipping? How long will it take? Can a temporary replacement be provided in the case of, say, a new car? The cost and inconvenience of manufacturers’ processes is often cited as a selling feature for add-on retailer warranties.

 

  1. Whether an extended warranty is advisable. How reliable is the product (reviews of most products abound online these days), and how much are repairs likely to cost, compared with the cost of simply replacing the item? Does the extended warranty overlap with the manufacturer’s warranty? Check with your credit card company, too, about possible free warranties on items purchased with their cards.The Canadian Consumer Handbook cautions that a “number of scams have been reported where consumers receive telephone calls offering extended warranties [for a price] on an automobile the consumer has purchased. Be careful about such offers, because a number of cases have been reported throughout Canada where the callers have simply taken the money and run.”