The appellant distributor sued the respondent manufacturer for wrongful termination of an exclusive distributorship agreement.
The trial judge dismissed the action, finding the distributor breached an implied duty of good faith by failing to disclose a change in its ownership, which gave the manufacturer 'just cause' to terminate without notice.
The Court of Appeal allowed the appeal, holding that employment law concepts like 'just cause' should not be imported into commercial distributorship agreements.
Instead, ordinary contract principles apply, and a contract can only be terminated without notice if the breach amounts to a fundamental breach.
The Court found the distributor's failure to disclose the sale did not substantially deprive the manufacturer of the whole benefit of the contract, and thus did not constitute a fundamental breach.
