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' home.

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 Divisional Court.

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 Claims Court

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.

Read the full decision in Swern v Amazon Hardwood Centre Inc. here.

Footnotes

1. 2015 ONSC 7590, http://canlii.ca/t/gmnv.

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