Error on Account of Fraud: The Error Must Be Determinant and the Buyer Must Have Exercised Due Diligence in the Circumstances


June 9, 2017 Real Estate and Construction

This post, published on Éditions Yvon Blais’ blog on latent defects on June 7, 2017 (FR), discusses the judgment in Théberge v. Durette (Full Text) in which the Court of Appeal emphasizes that the error caused by the seller’s fraud must have been determinant and the buyer must have exercised due diligence in the circumstances.

Specifically, in this judgment from 2007, the principles of which are still applied, the Court of Appeal reminds us that it is not only a matter of demonstrating that the buyer’s consent was vitiated by the seller’s intentional fraud, but rather that the error caused by said fraud was determinant; had it not been for this fraud, it would not have been possible for the buyer, acting with due diligence and not himself contributing to being induced into error, to discover what he alleges the seller intentionally hid from him before the sale. 

In a context in which a buyer invokes a seller’s fraud for the purposes of section 1401 C.C.Q., it is crucial to analyze the buyer’s conduct before the sale, and specifically, his prudence and diligence. As the Court of Appeal specified, the buyer must not himself have contributed to being induced into error, notably by turning a blind eye or acting negligently or recklessly.

This bulletin provides general comments on recent developments in the law. It does not constitute and should not viewed as legal advice. No legal action should be taken on the basis of the information contained herein.

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