CONTRACTS- Express terms - Force majeure

Law360 Canada (October 26, 2022, 1:50 PM EDT) -- Appeal by appellants who were the defendants at trial, from the dismissal of the application for summary judgment seeking declaratory relief in respect of their obligations to Interfor Corporation (Interfor). The appellants argued that the summary trial judge erred in his interpretation of the force majeure provision in art. 8.5 of the CSA and in his frustration analysis. Under a Chip Supply Agreement (CSA), Mackenzie Sawmill Ltd. (MSL) agreed to supply wood chips to Interfor from a mill. A series of fires damaged and destroyed Mackenzie Mill. As a result, MSL stopped supplying chips to Interfor as it was permitted to do under a force majeure clause in the CSA. A new mill was built on the same property not by MSL, but by one or more other companies associated with MSL's owners, some of whom were the appellants. When the new mill began operations, its owners sold chips to third parties. Interfor maintained that the obligations of MSL as well as the new owners as alter egos of MSL, were not terminated under the CSA and MSL. They were bound by the CSA to continue to supply wood chips. The appellants sought orders in a summary trial including an order that MSL was discharged from any obligation to produce and deliver wood chips to Interfor under the CSA following the force majeure events. The summary trial judge was satisfied that the application raised issues that were suitable for summary disposition by declaratory relief. The judge dismissed the application and made declarations in favour of Interfor....
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