Can Amazon be liable for the sale of defective goods by third parties? 

By Irvin Schein, Litigation Lawyer, Mediator, and Arbitrator
Originally published at irvinschein.com. 

As we all know, Amazon.com, Inc. and its Canadian affiliate, Amazon.ca, are giants in the world of e-commerce. As most realize, the bulk of sales of products on the Amazon websites involve products produced by third party sellers and sold through Amazon as a sales vehicle. The interesting question is whether or not Amazon can be held liable if any of these products proves to be defective to the extent that the purchaser of the product suffers loss or damages.

In the United States, the issue appears to have been considered in at least six cases in various American states. In three cases, the courts ruled that Amazon is not a seller of products sold by third parties on the Amazon website. Accordingly, Amazon is not liable for damages caused by defective products. In another three cases, the courts reached the opposite conclusion.  

The most recent decision on the point involved a blender purchased by a sushi restaurant on Amazon from a Chinese third party seller. The Chinese seller had paid Amazon for “Fulfillment by Amazon” services. When the purchaser placed the order, Amazon packaged the blender in an Amazon box and sent it directly from its Fulfillment Centre in Virginia to the restaurant. The blender allegedly started a fire, possibly because of a defect in the product.

Amazon moved for summary judgment to dismiss the claim against it. The court ruled that because Amazon had never actually taken title to the blender, it was outside the distribution chain. Furthermore, it ruled that Amazon owed no duty to the restaurant owner because it did not manufacture, sell, or distribute the blender.

Clearly Amazon did not manufacture the blender. The question as to whether or not Amazon may be considered to have sold or distributed it, however, it is obviously open to debate. The debate has not been resolved in the United States.

I have been unable to find any reported cases in Canada where the same issue was raised against Amazon.ca. Perhaps it is only a matter of time. Given the lack of consensus in American courts, it will be very interesting to see what position Canadian judges take on the point.