Highlights
In general, a supplier’s obligation is to ensure the safety of its goods to the end consumer. A supplier does not owe a duty of care to other commercial parties in a supply chain.
Courts are reluctant to recognize that commercial parties in a chain of contracts are provided additional rights outside of a contract where the parties had the chance to address any risks through the contract.
Franchisees should not necessarily rely on extra-contractual claims to protect against potential risks and should negotiate these risks ahead of time or insure against them.
Franchisors entering into exclusive supply agreements for their franchise system should consider alternative supplier clauses in the event the supply of products is interrupted.
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If you don t operate a meat processing plant or a sandwich
franchise, you might think that the Supreme Court s recent
decision in
1688782 Ontario Inc. v. Maple Leaf Foods
Inc. does not affect your business. That is a
mistake.
The
Maple Leaf Foods case had the potential to expand
tort liability for business activity far beyond its historical
scope. Four Supreme Court judges endorsed such an expansion.
Fortunately, the majority in this 5-4 decision disagreed, and
instead maintained the rule that pure economic loss
caused by negligence can only be collected in a relatively narrow