Okay, this seems like the most likely problem with the car. When the tech did the PDI (pre-delivery inspection) he forgot to check the oil levels/put oil in the car. When the car arrives at the dealership, it does not have all its fluids compeltely filled, it has something to do with transporting the car. Honda pays for the dealership's techs to fill up the fluids, adjust torque bolts, etc. If the tech forgot to add oil, there would only be small amount of oil in the car. So at 3700 km it crapped out. A big deal? Sure. There is a chance the engine will need to be replaced, but it will be done under warranty, costing your friend nothing. Your friend should be happy with that, that is reasonable.
Replacing the car is absurd. This is not a matter of lemon law (at least in the States, I don't know what the rules are for Canadians) This is a one time problem that is easily fixed.
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