Seven spirits suppliers brought an application challenging the enforceability of section 14 of the LCBO's standard purchase order Terms and Conditions — a "most favoured customer" no-price-discrimination clause — after the LCBO assessed approximately $35.9 million in chargebacks by way of set-off for breaches of the provision.
The applicants raised multiple grounds: ultra vires, statutory illegality, restraint of trade, unenforceable penalty/unconscionable forfeiture, waiver, estoppel by convention, bad faith, and unjust enrichment.
The court rejected all grounds, holding that section 14 falls squarely within the LCBO's statutory mandate to buy and sell liquor as a wholesaler and retailer, is not prohibited by statute, does not restrain trade, is not an unenforceable penalty, was not waived, and was not the subject of a shared assumption with suppliers that it would not be enforced.
The application was dismissed.
