CanadaDoes a manufacturer owe a duty of care for purely economic losses to downstream purchasers?
Generally, no — Canadian law presumes no duty of care for purely economic losses to downstream purchasers, unless a recognized exception applies, such as negligent misrepresentation or assumption of responsibility.
What the Law Says
Canadian tort law does not recognize a general duty of care for purely economic loss arising from defective products. The Supreme Court has consistently held that recovery for such losses is exceptional and must fit within established categories or satisfy a rigorous two-stage duty-of-care analysis.
Pure economic loss means financial harm without accompanying physical injury or property damage — for example, lost sales, recall costs, or reputational harm suffered by a franchisee due to product contamination.
The law distinguishes this from relational economic loss (e.g., losses flowing from damage to someone else’s property) and consequential economic loss (e.g., lost profits after physical damage occurs), which may be recoverable in some circumstances.
There is no statutory codification of the duty of care for economic loss in Canadian tort law; instead, the framework is judge-made and grounded in precedent.
What Courts Have Said
The Supreme Court of Canada has clarified the limits of liability for pure economic loss in two landmark decisions — one involving food safety and franchising, the other concerning construction defects.
The Court held that Maple Leaf Foods did not owe a duty of care to franchisees for purely economic losses (e.g., lost sales, reputational harm) caused by listeria-contaminated meat. No established category applied, and the novel duty failed the second stage of the Anns/Cooper test because proximity and policy considerations weighed against imposing liability.
The Court recognized a narrow exception: where a dangerous defect poses a real risk of personal injury or damage to other property, the cost of repairing that defect *to avert danger* may be recovered as economic loss — even without physical damage having yet occurred.
What to Do
Determine whether your loss involves physical injury or property damage — if yes, negligence claims are more likely viable.
Assess whether your situation fits an established exception (e.g., negligent misrepresentation, assumption of responsibility, or the 'dangerous defect' exception from Winnipeg Condo).
Gather evidence of direct reliance, express assurances, or control over the product or information provided to you.
Consult a lawyer promptly — duty-of-care analyses are highly fact-specific and time-sensitive under provincial limitation periods.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.