OMVIC OMVIC Warranties and Vehicle Condition Representations 2 — Questions and Answers
Question 1: Under OMVIC regulations, dealers MUST disclose that a vehicle was previously used as which of the following?
- A former police, taxi, or emergency vehicle (Correct answer)
- A vehicle used for personal road trips of over 10,000 km
- A vehicle previously registered in another Canadian province
- A vehicle that has undergone routine tire replacements
Correct answer: A former police, taxi, or emergency vehicle
OMVIC requires dealers to disclose prior use as a police, taxi, emergency, or other specialized service vehicle, as buyers would consider this information material to their purchasing decision.
Question 2: When a buyer tells a dealer they specifically need a vehicle for towing a 5,000 lb trailer and relies on the dealer's recommendation, which implied condition may arise under the Sale of Goods Act?
- Implied condition of merchantability
- Implied condition of fitness for a particular purpose (Correct answer)
- Implied condition of title
- Implied condition of quiet possession
Correct answer: Implied condition of fitness for a particular purpose
Under the Sale of Goods Act, an implied condition of fitness for a particular purpose arises when the buyer makes their specific purpose known and relies on the dealer's skill and judgment in selecting a suitable vehicle.
Question 3: A vehicle is sold 'as-is' with a signed buyer acknowledgment. Two weeks later, the buyer discovers the engine has a defect the dealer knew about but never disclosed. What is most likely TRUE?
- The as-is clause fully protects the dealer from all claims
- The dealer has no liability since the buyer signed the acknowledgment
- OMVIC will automatically refund the buyer from the Compensation Fund
- The dealer may still be liable for failing to disclose a known material defect (Correct answer)
Correct answer: The dealer may still be liable for failing to disclose a known material defect
An as-is clause does not shield a dealer from liability when they knew about a material defect and failed to disclose it — concealment of known defects can constitute fraudulent misrepresentation.
Question 4: What is the primary distinction between 'innocent misrepresentation' and 'fraudulent misrepresentation'?
- Innocent misrepresentation only applies to written contracts
- Fraudulent misrepresentation always results in a higher purchase price for the buyer
- With innocent misrepresentation the speaker believed the statement was true; with fraudulent, they knew it was false (Correct answer)
- Innocent misrepresentation only applies to private vehicle sales
Correct answer: With innocent misrepresentation the speaker believed the statement was true; with fraudulent, they knew it was false
The critical distinction is the speaker's state of mind: innocent misrepresentation occurs when the speaker genuinely believed the false statement was true, while fraudulent misrepresentation involves knowingly making a false statement to deceive.
Question 5: A dealer states that a high-mileage vehicle 'has at least another 100,000 km in it.' This statement is best characterized as:
- A fraudulent misrepresentation if the engine fails before 100,000 km
- A specific warranty creating enforceable legal obligations
- A material disclosure required under OMVIC regulations
- Puffery or a non-binding opinion that is unlikely to create legal liability (Correct answer)
Correct answer: Puffery or a non-binding opinion that is unlikely to create legal liability
A dealer's general opinion about a vehicle's remaining useful life is typically characterized as puffery or opinion rather than a factual statement or warranty, and is unlikely to create enforceable legal obligations.
Question 6: Under OMVIC's Code of Ethics, if a registrant discovers after signing a sales contract that they failed to disclose a material defect, they should:
- Ignore the defect since the contract is already signed
- Wait to see if the buyer discovers the defect independently
- Immediately inform the buyer and attempt to resolve the situation (Correct answer)
- Report the defect to OMVIC before contacting the buyer
Correct answer: Immediately inform the buyer and attempt to resolve the situation
OMVIC's Code of Ethics requires registrants to act with integrity; discovering an undisclosed material defect after signing obligates the registrant to promptly inform the buyer and work toward a fair resolution.
Question 7: The legal remedy of 'rescission' in a vehicle sale contract means:
- The buyer receives a partial refund and keeps the vehicle
- Both parties return to their pre-contract positions — the vehicle is returned and the purchase price is refunded (Correct answer)
- The dealer repairs the vehicle at no cost to the buyer
- A third-party arbitrator determines an adjusted fair purchase price
Correct answer: Both parties return to their pre-contract positions — the vehicle is returned and the purchase price is refunded
Rescission restores both parties to their pre-contractual positions by unwinding the transaction — the buyer returns the vehicle and the dealer refunds the purchase price.
OMVIC OMVIC Warranties and Vehicle Condition Representations 2
Under OMVIC regulations, dealers MUST disclose that a vehicle was previously used as which of the following?