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AGENCY - Creation of agency - Express contract

Friday, November 24, 2017 @ 8:23 AM  


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Appeal by HZPC Americas Corporation (HZPC) from an order granting summary judgment to Havenlee Farms (Havenlee) in the parties’ contractual dispute. Havenlee and HZPC contracted in February 2012 for Havenlee to supply HZPC with 10,320 cwt. of Kennebec foundation potatoes from its 2010 crop, for export to a buyer in Venezuela. Havenlee bagged the potatoes in HZPC-supplied bags and HZPC shipped the potatoes in 16 containers. Havenlee was able to fill 90 per cent of the order, for a total price of $137,098 USD. After the first shipment passed quarantine in Venezuela, HZPC remitted the proceeds from that shipment by two payments totaling $57,942 USD. It subsequently refused to remit payments for the second and third shipments because they did not pass quarantine. Havenlee took the position that the parties had a contract and that it held up its end of the bargain by bagging and sending the potatoes to HZPC. HZPC took the position that it was acting as agent for Havenlee in seeking to sell the potatoes in Venezuela and that it did not become liable as an intermediary between Havenlee and the purchaser. HZPC also argued that Havenlee should reimburse HZPC for costs associated with disposing of the potatoes that did not pass quarantine. In an action commenced by Havenlee, the parties each moved for summary judgment. The judge considered the parties’ relationship in its entirety in concluding that they had entered into an agreement of purchase and sale for a specified quantity of seed potatoes, to be sold by Havenlee and purchased by HZPC. The judge accepted that Havenlee’s representative had seen only one page of the parties’ written agency agreement until the litigation was underway, and found, in the absence of evidence from Venezuela, that the second and third shipments of potatoes were either never quarantined, or released from quarantine.

HELD: Appeal allowed. The judge accurately identified the two issues necessary for determination, namely, the nature of the parties’ contract and whether the potatoes had been quarantined and/or released from quarantine. He fell into error by determining the nature of the parties’ relationship through reference to their actions only, while ignoring the terms of the agency agreement, executed by both parties. Page one of the agreement, the page that Havenlee had seen, clearly stated that HZPC was its agent in selling the potatoes in Venezuela. The judge’s determination on the quarantine issue was made on the erroneous premise of there being an agreement of purchase and sale, therefore this finding fell away. Accordingly, the summary judgment order was set aside.

Havenlee Farms Inc. v. HZPC Americas Corp., [2017] P.E.I.J. No. 44, Prince Edward Island Court of Appeal, D.H. Jenkins C.J.P.E.I., M.M. Murphy and J.K. Mitchell JJ.A., October 27, 2017. Digest No. TLD-November202017010