Date: 04.05.2004
Country: Canada
Number: 2004 MBCA 63
Court: Court of Appeal of Manitoba
Parties: Brown & Root v. Aerotech Herman Nelson Inc. et al.
The buyer (respondent), a U.S. company, claimed that in purchasing from the Canadian seller (appellant), 282 portable heaters and related goods and services for use for US soldiers in Hungary, it was the victim of fraud and entitled to rescission of the contract. The first instance court (Court of Queen's Bench of Manitoba, 20.09.2002, abstract and fulltext in UNILEX) decided in favour of the buyer. The seller argued that the trial judge erred when it found that technicians encountered ongoing breakdowns with the heaters, and that those made operational functioned only on a temporary basis. In support of the seller’s position, it presented evidence that the heaters were repairable and serviceable, had the buyer not prematurely sent the technicians home.

In affirming the decision at trial, the appeal court found there was ample evidence to support the trial judge’s conclusion that there was little effective use of the heaters before the decision was made by the buyer to discontinue the attempt to service or use the heaters. It concluded that the heaters supplied were not fit for their intended purpose. The appeal court also acknowledged that the buyer had only conditionally rejected the heaters when it initially received the shipment. However, the fact that the buyer had attempted to repair the heaters did not constitute acceptance or bar rescission (termination).

In reaching these conclusions the court made a single reference to CISG, relating to acceptance of an offer by the buyer. Thereafter, the court refers only to domestic cases and law. It implicitly combines CISG with the internal The Sale of Goods Act, and does not address the issue of when CISG applies and takes precedence over provincial sale of goods legislation.