Limits of the Legal Warranty Regarding Regulatory Approvals

Overview of the Legal Warranty of Quality

Article 1726 of the Civil Code of Québec sets out the legal framework for the warranty of quality applicable to goods sold. This provision, well-known even beyond legal circles, states that a good must be “free from latent defects that render it unfit for the use for which it is intended, or that so diminish its usefulness that the buyer would not have bought it, or would not have paid such a high price, had they been aware of them.”

However, this protection has its limits. A defect that was known to the buyer, or that a prudent and diligent buyer could have discovered through ordinary inspection without the assistance of an expert, is not covered by the legal warranty.

When the Absence of Regulatory Approval Does Not Constitute a Latent Defect

It is easy to picture how the legal warranty of quality applies when, for example, a buyer discovers a major water infiltration only a few months after purchasing a building. Other situations, however, can be less straightforward.

This is particularly true when the goods do not have all the approvals required by law, even by a law of public order. Should such a shortcoming automatically be considered a latent defect that makes the goods unfit for their intended use within the meaning of Article 1726 of the Civil Code of Québec?

In a recent decision, the Superior Court of Québec answered this question in the negative, confirming that in some circumstances, the absence of a required regulatory approval, even one mandated by a law of public order, does not, by itself, establish the existence of a latent defect.

The Environnement routier NRJ inc. Decision: A Case Where the Projected Use Proved Decisive

In Environnement routier NRJ inc. v. Ville de Montréal, 2025 QCCS 611, the Court dealt with a dispute in which a buyer accused the seller of having sold it a scanner that had not received approval from Measurement Canada, as required by the Weights and Measures Act (RSC 1985, c. W-6).

At the time of purchase, however, the buyer did not yet know that it would later use the scanner as part of a public tender issued by the City of Montréal to provide electronic truck-weighing services for the City’s snow-removal operations. It was only several years later that the buyer used the scanner for that purpose, after having used it for several other applications.

The Court therefore found that, given these circumstances, the buyer could not claim that the absence of regulatory approval constituted a latent defect that made the goods unfit for their intended use, or that it significantly diminished their usefulness.

The Duty of the Prudent and Diligent Buyer

The Court also reaffirmed a key principle: a prudent and diligent buyer must take steps to determine whether the goods they intend to purchase have the necessary regulatory approvals for their intended use.

Without such due diligence, even if the absence of regulatory approval could otherwise be considered a latent defect, the Court would likely view it as an apparent defect, thus excluding the application of the legal warranty of quality provided for in article 1726 of the Civil Code of Québec.

Buyer Responsibilities and Seller Limitations

This case serves as a reminder that, even when dealing with a professional seller, the buyer must ensure that the goods they intend to purchase comply with the legal and regulatory requirements applicable to their intended use, both at the time of purchase and during any future use.

It would be unreasonable to impose on the seller an obligation to guarantee that the goods meet all possible regulatory standards for every potential use, especially once control over the goods — and therefore over their use — has passed to the buyer.

Facing a similar situation and want to better understand your rights and obligations? Our litigation team can help you assess your legal position and develop strategies tailored to protecting your interests.