Muskoka Fuels v. Hassan Steel Fabricators Limited, 2011 ONCA 355 (CanLII)
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Muskoka Fuels v. Hassan Steel Fabricators Limited, 2011 ONCA 355 (CanLII) Muskoka Fuels bought a 2000 L fuel storage tank from the manufacturer, Hassan Steel. The life expectancy of such a tank was at least 10 years in service. But five months after putting the tank into service, diesel fuel leaked out through a 0.5 cm hole r located at the bottom of the tank, causing damage totalling $71 589.34. The Court determined that Muskoka Fuels did nothing to cause the damage. The tank did not fail due to improper maintenance, had not been damaged during or after installation and had been properly installed and used only as intended. Instead, the hole in the tank was due to “microbially induced/influenced internal corrosion process” of unknown explanation. Describe the cause of action available to Muskoka Fuels. Identify the applicable legislation. What remedy ought to be available? |
In the case of Muskoka Fuels v. Hassan Steel Fabricators Limited, where a 2000 L fuel storage tank purchased by Muskoka Fuels developed a hole that caused significant damage, Muskoka Fuels may have a cause of action based on the principles of product liability and breach of implied terms under contract law. The applicable legislation in this case could include the Sale of Goods Act or similar legislation in Ontario, which would govern the implied terms in the contract for the purchase of the fuel tank.
Cause of Action:
- Breach of Implied Terms (Sale of Goods Act): Muskoka Fuels may argue that Hassan Steel, as the manufacturer and seller, breached the implied terms in the Sale of Goods Act (or similar provincial legislation). Specifically, they could claim a breach of the implied terms of merchantability and fitness for a particular purpose.
- Product Liability: Muskoka Fuels could pursue a product liability claim based on the defect in the fuel storage tank. They may argue that the tank was inherently dangerous or defective, leading to the damage.
Applicable Legislation:
- The applicable legislation would likely be the Sale of Goods Act in Ontario. This Act contains provisions that govern contracts for the sale of goods, including implied terms and warranties.
Remedy: The available remedies for Muskoka Fuels could include the following:
- Damages: Muskoka Fuels could seek damages to compensate for the losses they incurred as a result of the defective tank. This would cover the cost of repairing the damage and any other financial losses directly resulting from the defect.
- Rescission: They might seek to rescind the contract and return the defective tank to Hassan Steel in exchange for a refund of the purchase price.
- Replacement or Repair: Muskoka Fuels could request that Hassan Steel replace the defective tank with a non-defective one or repair the tank at no additional cost.
- Consequential Damages: Depending on the circumstances, consequential or indirect damages may be recoverable if they are a foreseeable result of the breach of contract or product liability.
- Recall or Warning: In addition to seeking remedies, Muskoka Fuels may request that Hassan Steel initiate a product recall or provide warnings to other purchasers about the defect to prevent similar incidents.
The availability and extent of these remedies would depend on the specific facts, the terms of the purchase contract, and the impact of the defect on Muskoka Fuels. Legal action should be taken to enforce these remedies, and consulting with legal counsel would be advisable to determine the best course of action and strategy in this case.
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