Canadian Legal Guide to Buying a Car

Have you purchased a car, or are looking to purchase one? Did you ever wonder what your rights are as a consumer? In this consumer guide to buying a car, we debrief readers on consumer rights and what to look out for when buying a car in Canada.

Consumer protection law is governed provincially. This means that every province has its own legislation and rules regarding consumer rights when buying a car. In this quick guide, we will outline Ontario’s and Quebec’s relevant consumer protection laws, many of which are similar in other provinces, although to be certain, check your provincial consumer laws.

What are Consumer Protection Rights for Buying Cars?

When you buy or lease a new or used vehicle from a registered dealer in Ontario, you have rights under the Motor Vehicles Dealers Act and the Ontario Consumer Protection Act (Ontario CPA). The Ontario Motor Vehicles Dealer Act sets our consumer rights and car dealer obligations in terms of buying and selling vehicles. The Act only applies to vehicle transactions. On the other hand, the Ontario CPA applies to all consumer contracts and relationships. It provides comparable rights to Quebec’s Consumer Protection Act, such as warranties, the prohibition of unfair practices, credit contracts, vehicle sales, leasing, and repairs. The Ontario CPA  applies to consumer transactions if either the consumer or the supplier is in Ontario.

In Quebec, all transactions involving consumers in the province are governed by the provincial Consumer Protection Act (Quebec CPA). Unlike Ontario, Quebec does not have a vehicle-specific legislation, so the Quebec CPA is the primary applicable law. This law covers several aspects of the activities of automotive manufacturers and dealers, including, but not limited to, warranties, credit contracts, advertising, and price posting.

Consumer Protection Warranties

The Quebec CPA establishes several legal warranties in favour of consumers which dealers, manufacturers and intermediaries are required to provide. The two main legal warranties are the warranty of fitness for purpose and the warranty of durability.

The warranty for fitness of purpose requires that goods, such as a car, must be fit for the purpose for which goods of that kind are ordinarily used, such as driving. The second key warranty, the warranty of durability, requires that goods must be durable in normal use for a reasonable length of time, having regard to their price, the terms of the contract and the conditions of their use.

The legal warranty is a minimum legal protection for consumers. It applies automatically when you buy something, even a car. This means the legal warranty will be applied to your purchase even if you do not buy an added warranty.

According to the legal warranty, if a car dealer sells you a car that isn’t of good quality, durable, safe and in line with any expectations created by the dealer or car manufacturer, you can, among other things, get a refund. The legal warranty also protects consumers against hidden defects.

The Quebec CPA’s legal warranty covers products bought or leased in Quebec, even if they come from somewhere else. However, Quebec’s legal warranty only applies to “merchants,” meaning, someone whose business is to sell goods or services. If you purchase a car from an individual “as is,” you can’t use the legal warranty against that person. Nevertheless, you can use the legal warranty against the original merchant, such as the car dealer, who first sold the car.

Ontario’s CPA also sets out product warranty requirements: “The supplier is deemed to warrant that the services supplied under a consumer agreement are of a reasonably acceptable quality.” Unlike Quebec, the Ontario CPA does not list a number of specific warranties. Nonetheless, the Act requires that cars purchased in the province be of a reasonably acceptable quality. Although automobile dealers and manufacturers are obligated to sell quality cars, unfortunately, this is not always the case.

Warranties and Defects

In 2019, a Quebec class action lawsuit targeting Kia alleged that a design flaw caused the panoramic sunroofs of several Kia models to shatter. The $1 million Canada class action lawsuit claimed that Kia breached its warranty obligations by selling defective vehicles.

Although a court will need to determine whether or not Kia, indeed, breached its warranty, we already know that Kia had an obligation to provide consumers with a car that is of good quality, durable, safe and in line with the expectations created by the company. A shattering sunroof seems to not only be dangerous, but it is likely that consumers did not expect that to happen and would not have paid the price they did for a car with a potentially dangerous defect, as was argued in the case.

The Quebec CPA’s warranties result in a lower burden of proof imposed on consumers in terms of proving a breach of warranty. This means that once a consumer has shown a deficit of use or lack of durability, the car dealer or manufacturer has the burden of proving one of the following:

• That there is no latent defect;
• That the defect resulted from improper use by the consumer;
• That the defect was known by the consumer at the time of purchase; or
• That the lack of durability is the result of normal wear and tear.

For example, a B.C. class action lawsuit claimed that certain Hyundai and Kia vehicles were equipped with inadequately lubricated engines which caused engine seizures and even catastrophic failure. In this case, consumer members of the class action lawsuit Canada have brought evidence of a potential defect and breach of warranty, resulting in Hyundai and Kia being obligated to prove the contrary if they choose to contest the claims. Where inadequate evidence is brought by the car manufacturers to prove otherwise, the plaintiffs and Class Members may succeed in their class action lawsuit claims.

Warranties act as a guarantee of sorts, that a purchased vehicle is fit for use, of good quality and safe. The examples of Canadian vehicle class action lawsuits illustrate that often enough, car manufacturers may not respect their warranty obligations, and sell defective cars.

Buying a Car Via Contracts of Credit

The form and content of contracts of credit (as well as statements of account) are strictly regulated by the Quebec CPA. If you purchase a car in Quebec via a contract of credit from a dealership, the dealer’s main obligations are:

• To fully disclose credit charges and the credit rate;
• Prohibition against charging fees not disclosed in the contract; and
• To properly compute the credit rate.

The Ontario CPA requires that contracts of credit, such as a financing plan, must show all financing charges and the annual interest rate for the financing agreement. It must also explain how any extra charges would be calculated if you failed to make the payments.

Car Advertising

The Quebec CPA provides a prohibition against making false or misleading representations to consumers generally or regarding the benefits or other attributes ascribed to goods or services. Failing to mention an important fact in commercial advertising or a representation is also strictly prohibited. These prohibited advertising practices are similar to what constitutes deceptive advertising practices in common law jurisdictions, such as the rest of Canada.

For example, according to Ontario’s CPA, an unfair advertising practice constitutes making a false, misleading or deceptive representation. Therefore, a car dealership or manufacturer may not make a representation that a car is of a particular standard, quality or grade if it is not. This is seemingly what happened in the Bosch emissions class action lawsuit Canada, filed this July.

According to the Quebec Bosch emissions class action lawsuit, BMW and Bosch promoted certain BMW vehicles as having “BluePerformance Diesel Technology,” which the plaintiff argued is “misleadingly marketed as efficient and powerful, clean and environmentally friendly, which is false.”

In this case, certain vehicles were marketed as being fuel efficient and environmentally friendly, but they actually polluted above regulatory standards, according to the class action lawsuit. If The court determines that the allegations against BMW and Bosch are correct, both defendants would have engaged in deceptive advertising practices.

In the common and civil law, the standard of analysis for the determination of deceptive practices is applied from the perspective of the average, inexperienced and credulous consumer. The Quebec CPA provides that the use of a prohibited practice, such as deceiving consumers about the efficiency of an engine, creates a presumption that, had the consumer been aware of such a practice, the consumer would not have agreed to the contract or would not have paid such a high price.

In the landmark decision Richard v. Time, the Supreme Court of Canada held that the use of a prohibited practice such as false or misleading advertising creates an absolute presumption of prejudice (or damage) in favour of the consumer if the following criteria are met:

• The merchant or manufacturer failed to fulfill an obligation imposed by the consumer protection law;
• The consumer saw the representation that constituted a prohibited practice;
• The representation resulted in the formation, amendment or performance of a consumer contract; and
• There is a sufficient nexus between the content of the representation and the goods or services covered by the contract.

Where these four requirements are met, the court can conclude that the prohibited practice, such as deceptive advertising, is deemed to have had a fraudulent effect on the consumer.

Have you recently purchased or leased a car? Did the car have defects? Tell us your story in the comments below!

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