In its recent five-to-four split decision in
1688782 Ontario Inc v Maple Leaf Foods Inc,(1) the Supreme Court of Canada dismissed the proposed class action brought by Mr Sub franchisees against Maple Leaf Foods for damages resulting from a listeria outbreak linked to Maple Leaf cold cuts. By ruling in favour of the supplier, the majority of the court found that no duty of care is owed by an exclusive supplier for purely economic losses suffered by franchisees with which the supplier has no direct contractual relationship.
While the court confirmed that the supplier owed a duty of care to the franchisees customers, who fortunately did not suffer any harm from the recalled products, it stopped short of finding that the supplier owed a duty of care to the franchisees given the lack of proximity between them and the fact that the damages were limited to pure economic losses due to reputational harm and an interruption in supply.
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