Bionics Inc. manufactures custom robotics for factories in Ontario.

With every customer, Bionics Inc. has a standard contract. Each contract with a customer includes the following terms:

Products manufactured by Bionics Inc. are built in accordance with provincial regulations and shall be tested for compliance with such requirements prior to shipment

Products manufactured by Bionics Inc. are built to customer specifications and warranted to operate, free of any defect, for at least one year

The warranty provided by Bionics Inc. specifically excludes, any alteration, misbranding or failure to meet specifications resulting from any work done, or activities undertaken, by the customer or its subcontractors after the product is shipped from Bionics Inc.

Customers must promptly inform Bionics Inc. of any complaint in writing and provide all reasonable assistance to Bionics Inc. in investigating complaints that are alleged to have arisen from manufacture or packaging of the product

In July 2020, a new customer, Austin Aeronautics Inc., ordered a custom robot from Bionics Inc.

The robot was completed on October 2, 2020. The robot was delivered on October 9, 2020 to Austin Aeronautics Inc. and installed by Bionics Inc. employees.

Three weeks after delivery and installation, a representative of Austin Aeronautics Inc. contacted Bionics Inc. to report that the robot had very seriously malfunctioned. While malfunctioning, the robot had destroyed another machine nearby, and had very nearly killed a factory worker. Austin Aeornautics Inc. is threatening to sue Bionics Inc.

Bionics Inc. brought the robot back to its business premise and examined it closely. Staff at Bionics Inc. discovered that a number of bolts provided to Bionics Inc. by a supplier, Geegaw Inc., had snapped in two.

Bionics Inc. has a long-term supply contract with Geegaw Inc. Under this contract, bolts were supposed to be made from tungsten, which is one of the hardest metals available. While examining the robot from Austin Aeronautics Inc., Bionics Inc. now discovered that Geegaw Inc. had switched to bolts that were partially made of lead, a softer and cheaper metal. Geegaw Inc. did not notify Bionics Inc. of this change.

Workers in the factory at Bionics Inc. either did not notice the change or did not notify anyone in management of the change before using the bolts in the robots. The robot had somehow passed inspection with lead bolts before being sent to Austin Aeronautics Inc.

On further inspection, staff at Bionics Inc. also suspect that Austin Aeronautics Inc. may have either moved or modified the robot after it had been installed by Bionics Inc.

What defences against liability, in tort law and in contract law, might be available to Bionics Inc.?