Vehicle Sale (Lemon)

Sale of Goods Act, RSO 1990, c S.1

Implied conditions as to quality or fitness

15 Subject to this Act and any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:

1. Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description that it is in the course of the seller’s business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods will be reasonably fit for such purpose, but in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose.

2. Where goods are bought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not), there is an implied condition that the goods will be of merchantable quality, but if the buyer has examined the goods, there is no implied condition as regards defects that such examination ought to have revealed.

3. An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.

4. An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.

Louison Automotive Inc. v. Richards, 2023 ONSC 1331 (CanLII)

[12] Louison represented to Richards that the car was in good condition and in a good state of repair. However, the evidence of Richards, accepted by the trial judge, was that the car manifested a number of problems immediately after Richards drove it off the lot. These included defective sensors, concerns about emissions, leaking airbags, and broken lights and wipers. The car required a number of repairs to solve these defects.

[13] The appellant does not dispute that Richards’ attention was not drawn to the fact that the vehicle had been designated a “Manufacturer Buyback Lemon”. However, he argues, that fact was contained in the Bill of Sale and on the CarProof document. The appellant points out that Richards initialed the reference to the “lemon” status on the Bill of Sale. On the other hand, Richards’ evidence was that he had a limited education, and was unfamiliar with the term “lemon” and what it might mean about a vehicle.

[14] Louison offered no evidence to support his representation that the car was in a good state of repair other than to note that the car, despite its designation as a “lemon” several years earlier, had subsequently been sold to others and driven over 150,000 kms. He gave no evidence about why the car had been declared a “lemon” in 2013 or what repairs had been made to the car to address issues that had led to the “lemon” designation, or about any other issues with the vehicle that might have arisen in the intervening four years before Richards purchased the vehicle.

[16] The trial judge observed that a vehicle found to be a “buyback lemon” was a “huge strike” against it. He noted that under American law “it had been turned back” and “was not fit for the purpose, and yet here it was on a lot in Ontario being sold to an unassuming purchaser.” The failure to draw Richards’ attention to this fact was “significant”, as the trial judge pointed out, because the car was not sold “as is” but rather with a representation that the vehicle was in a good state of repair.

[17] The trial judge’s conclusions on the issue of liability are all grounded in the evidence and reveal no palpable and overriding error. These conclusions did not turn on a finding that the car had been designated a “lemon” years ago. Rather, the “lemon” status was just one factor in the trial judge’s determination that Louison misrepresented the condition of the vehicle as being in a good state of repair when it was sold to Richards.

(...)

[20] In my view the trial judge made no palpable and overriding error in not deducting any amount from the financing costs. First, the financing costs themselves were damages that could be awarded after a finding that Richards did not receive the vehicle in a good state of repair, as was represented to him. While it was open to the trial judge to make a deduction based on Richards’ use of the car, he had limited evidence on which to do so. Richards testified that he was not able to use the car as he had hoped or intended, but on the other hand, he did make considerable use of the car. This was an issue that could have been explored in the appellant’s cross-examination of Richards. Additionally, the $3300 Richards paid Louison by way of a deposit was not part of the damages award.

Benny Cyr v. R.V. Warehouse Inc., 2015 ONSC 3285 (CanLII)

[20] The second issue raised by the Defendant was its submission that there was no breach of s. 15(1) because the Motor-home was reasonably fit for its intended purpose when it was sold to the Plaintiff.

(...)

[23] Further, the evidence is undisputed that the Plaintiff had not previously purchased a recreational vehicle. As stated above, the Defendant is in the business of selling recreational vehicles such as the Motor-home in question, and at the time that the Plaintiff purchased the Motor-home, the Defendant knew that the Plaintiff was purchasing the Motor-home to live in it full-time and travel around North America. For these reasons, I find that when the Defendant sold the Motor-home to the Plaintiff, the Defendant knew that the Plaintiff was relying on the Defendant’s skill and judgment to sell the Plaintiff a recreational vehicle that was reasonably fit for that intended and known purpose.

(...)

[39] The Motor-home was the first, and no doubt last, recreational vehicle purchased by the Plaintiff. The number, nature, and seriousness of the problems are astounding. The Plaintiff received very little assistance from the Defendant when complaints were made. The Plaintiff paid almost $200,000 for a brand-new luxury recreational vehicle. The Defendant should have jumped to provide assistance. But, the nature of assistance offered was pitiful. Just some examples are the Defendant’s suggestions to the Plaintiff: to look at a website; to contact suppliers for parts of the Motor-home; and, most unreasonable of all, was the advice to drive eight and one-half hours to someplace in Indiana to try to get something fixed. Mr. Stovold thought that was only two or three hours out of the way, but based on my experience driving to Florida, it was much further. In any event, after so many serious problems, I totally understand the Plaintiff refusing to drive there and his desire to just get home.