It is in the spirit of conventionalism that a contract of sale typically includes an “at your own risk and peril” clause. However, before signing such a contract, it is crucial to understand the implications and the extent to which you are consequently surrendering your rights as a buyer.
The warranty of ownership (articles 1723 to 1725 of the Civil Code of Québec) and the warranty of quality (article 1726 to 1731 of the Civil Code of Québec), act as accessories to the transfer of ownership (i.e., a sale). By operation of law, the Québec legislator created a legal regime which considers these warranties to exist and apply automatically to all sale contracts.
The warranty of ownership consists of guaranteeing to the buyer that the property he purchased from the seller is free of all rights (other than those the seller specifically declared at the time of sale). On the other hand, the warranty of quality protects the buyer from all (undeclared) latent defects which render the property unfit for its intended use, or which so diminish the property’s usefulness that the buyer would either (i) never have purchased it or (ii) paid such a high price – had he initially been aware of the latent defects.
The raison d’être of these two legal warranties is to prevent a seller from excluding or limiting his contractual liability in the event he failed to declare the latent defects that he knew of or that he could not have been unaware of and which either affect the right of ownership or the quality of the property in question. However, there is an exception: the legal warranties will not apply if the following two conditions are fulfilled: (i) the seller is not a professional seller; and (ii) there is a clear and unambiguous “at your own risk and peril” clause in the contract of sale. The consequence of such a clause is a renunciation by the buyer of all his recourses under the legal warranty regime – even if the buyer was aware of latent defects and/or of encroachments affecting the property he purchased. However, this clause will not apply in fraudulent cases.
Indeed, if it has been proven that a seller lied, provided false information and/or diminished the importance of a latent defect, the exonerating “at your own risk and peril” clause will be considered null and void.
As a buyer, you have the right to be informed. Before signing a contract containing a clause excluding all legal warranties, you must remain prudent and diligent – have the property you wish to acquire inspected beforehand and ask questions pertaining to (but not limited to) the quality of the property.