Can a Quebec seller refuse a claim because the buyer already knew about the problem?

Quebec answers part of this question in its Civil Code. The Code sets a statutory warranty of quality for the sale of property, and the buyer’s knowledge narrows what that warranty covers. The agreement can then add to it or cut it back, within limits the Code also sets.

What the Code says about known defects

Article 1726 makes the seller warrant that the property is free of latent defects that make it unfit for its intended use, or that so reduce its usefulness that the buyer would not have bought it, or paid as much, had it known. The seller is not bound to warrant against a latent defect the buyer knew about, or against an apparent defect, meaning one a prudent and diligent buyer could perceive without an expert.

Why a problem found in diligence matters

An issue the buyer’s accountant or lawyer spotted before closing is one the buyer knew about. If it is a latent defect in the property, the statutory warranty does not cover it, so the Code will not do the work. BDC makes the related point from the seller’s side: issues left unaddressed complicate a sale and can affect price or terms. A known problem is a matter for the agreement.

What the agreement can change

Article 1732 lets the parties add to the legal warranty, reduce its effects or exclude it, but never exempt the seller from liability for its personal acts or omissions. Under article 1733 a seller cannot exclude or limit liability unless it has disclosed the defects it was aware of or could not have been unaware of that affect the right of ownership or the quality of the property, except where a buyer buys at its own risk from a seller who is not a professional seller.

Notice, and who should read it

Under article 1739 the buyer must give the seller written notice of a defect within a reasonable time after discovering it. How these articles apply depends on what is bought, such as equipment and inventory or shares, so have a Quebec lawyer confirm it. The Barreau du Québec describes lawyers as drafting contracts and informing clients about the law. For the contract-clause side, see our entry on sandbagging.