The plaintiff in Fortier Beverages Ltd v Kapuskasing Plumbing & Heating Ltd, 2011 ONCA 558 [Link available here], bought the defendant’s bottled water business. Both were Culligan franchisees. In their preliminary negotiations, Villeneuve, the principal of Kapuskasing Plumbing (KP), had given an off-the-cuff estimate of annual sales of 200,000 bottles, subsequently recorded in a memo to Fortier Beverages (FB). Later, KP’s lawyer said the deal was ‘not dependent on the number of bottles sold’ (emphasis in original), but KP disclosed the dollar value of annual sales. The purchase agreement that was signed included an entire agreement clause stating that there were no reps and warranties other than those found in the actual document. As things turned out, KP’s annual sales were just over 100,000 bottles. FB sued for breach of the oral warranty and negligent misrepresentation.
At trial, the judge focused on the preliminary discussions where the 200,000 figure came up. Incorrectly, said the Ontario Court of Appeal. The memo was collateral to the actual agreement (and ousted by it) and, while Villeneuve had certainly been negligent in representing annual sales at 200,000 bottles, it was unreasonable to rely on that given the absence of a warranty in the agreement and given that it would have been easy to figure out the number of bottles actually sold from the dollar figure for sales that had been provided before closing.