Remedies for Damaged but Brand New Appliances

(Ontario)

Question:

Brand new “damaged” appliances were included in a Newly Built Home.

The second Buyer moved into the house when it was about 4 months old. The Seller had bought brand new appliances about 3 months previously, but they were never used because no one lived in the house.

My clients moved into the house and found that dryer was making weird noise. So they stopped and called the manufacturer. Manufacturer’s technician came and said that dryer had a big dent at the bottom that is hitting the drum when they put in any clothes. It runs fine without any load. Technician said it cannot be fixed.

Then he looked at the stove; he said that at the back of the stove has a big dent as well. The manufacturer says that if someone had complained within 30 days after delivery, then they would have replaced the damaged appliances, but now it is too late. I am not too sure who can my client contact about these appliances. The store that sold them has refused to take any responsibility. We do not know the delivery company.

While on our visits before closing we did check appliances. Dryer was empty so it was running fine. We were happy that all appliances are working fine. Who’s responsible for all of this?

Answer:

Your Clients purchased a house which they believed to include brand new, and undamaged appliances. The Seller may or may not be responsible under the contract.

The Agreement of Purchase and Sale provides for the transfer of the property in “as is” condition. If the stove and the dryer were simply written as “inclusions”, then there is no remedy as against the Seller.

However, the APS may have included a “good working order” clause which survived closing. If that were the fact, then the Buyer may sue the Seller in contract, and the Seller would be responsible. If the additional clause were not included, then the Buyer can still sue the Seller, but has to prove that the Seller knew of the defect. That’s a little more difficult, but, there may be a “complaint” by the Seller either to the store or the manufacturer and that would be fatal to the Seller’s defence.

There is no remedy against the manufacturer unless the APS included a clause assigning the “warranty”. Since this appears to be the result of damage, most manufacturers’ warranties will not cover this.

That leaves us with the store and the subsequent delivery and installation system.

Likely, something went wrong there, and the appliances were dropped causing some damage or they were installed when the damage should have been observed and sent back to the store for repair. It could be that the Seller installed them himself. In that circumstance, he should have been aware that damaged appliances might not work properly. This matter would go back to the issue of whether or not he knew about the damage and was under an obligation to disclose it. This would get around the “I didn’t know anything about it and therefore I didn’t have to disclose it issue”.

The next person possibly “on the hook” here is the Listing Agent. The MLS information, brochures, other documents and advertising materials may have described the appliances as “brand new”, “never used”, “under warranty etc.” While the liability of the Seller will be determined under the law of Contracts in accordance with the Agreement of Purchase and Sale (APS), the Listing Agent’s liability is determined under the law of Torts. We may have a misrepresentation, but we still have to prove that it was either reckless or negligent. That could prove to be a challenge. The misrepresentation likely arose from information provided by the Seller. So, this is a way of claiming from the Seller and getting around the APS, indirectly.

The real difficulty here is that the amount at stake is likely too small to justify any action. The dryer might be worth $1,000 and the stove might be worth $3,000. The Buyer would be entitled to replacements if they can’t be repaired. So, is it worth suing for $4,000; that’s the question!

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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