The Supreme Court of Canada holds that a manufacturer cannot plead ignorance of a defect in its product

    MONTREAL, Nov. 23 /CNW Telbec/ - The Supreme Court of Canada yesterday
rendered a landmark decision on manufacturers' liability in Quebec. In ABB
Inc. v. Domtar Inc., the Court upheld Domtar's action against ABB Inc. and
Alstom Canada Inc. for nearly 39 million dollars, in capital and interest. In
so doing, it confirmed that rarely will a manufacturer be able to rely on an
exclusion or limitation of liability clause to avoid liability for the
consequences of a latent defect in products it sells in Quebec, even when
dealing with a sophisticated buyer.
    Quebec law presumes that manufacturers and other professional sellers
know of any defect in the products they sell and requires them to disclose
these defects to buyers. This includes both defects of which they were
actually aware and those of which they are presumed to know. According to the
Supreme Court, manufacturers in particular are subject to a "high standard of
diligence" and "will have difficulty" showing that they could not reasonably
have known about a defect.
    The Court notes that Quebec law's approach differs from the common law
where limitation of liability clauses carry greater weight. However, it
concludes that the common law cannot easily be grafted onto Quebec civil law.
    Olivier F. Kott, senior partner at Ogilvy Renault, explains the impact
for manufacturers of this anxiously awaited Supreme Court of Canada decision
on product liability. "As a result of this judgment, a manufacturer who sells
in Quebec must be aware that only in rare cases will it be able to avoid
liability for the consequences of latent defects in its products by relying on
exclusionary clauses in its contracts."
    Ogilvy Renault represented Domtar in this case.

    About Ogilvy Renault

    Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers,
patent and trade-mark agents practising in the areas of business, litigation,
intellectual property, and employment and labour. Ogilvy Renault has offices
in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of
the largest and most successful corporations in Canada and in more than
120 countries worldwide. The firm was awarded the Client Choice Award among
all Canadian law firms by International Law Office in 2006. Find out more at

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with one of our lawyers: Caroline Emond, Senior Advisor - Media Relations,
(514) 847-4723,; Peter Zvanitajs, Senior Advisor -
Media Relations, (416) 216-1871,

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