Rockland Industries Inc. v. Amerada Minerals Corp. of Canada Ltd., (1980) 31 N.R. 393 (SCC)

• Judge: Martland, Ritchie, Dickson, Beetz and Estey, JJ.
• Court: Supreme Court (Canada)
• Case Date: March 18, 1980
• Jurisdiction: Canada (Federal)
• Citations: (1980), 31 N.R. 393 (SCC);1980 CanLII 165 (SCC);28 BCLR 21;11 BLR 29;[1981] 1 WWR 110;21 AR 79;[1980] CarswellAlta 314;108 DLR (3d) 513;[1980] 2 SCR 2;12 Alta LR (2d) 172;1980 CanLII 188 (SCC);[1980] 1 SCR 431;31 NR 393

Rockland Ind. Inc. v. Amerada Minerals (1980), 31 N.R. 393 (SCC)

MLB headnote and full text

Rockland Industries Inc. v. Amerada Minerals Corp. of Canada Ltd.

Indexed As: Rockland Industries Inc. v. Amerada Minerals Corp. of Canada Ltd.

Supreme Court of Canada

Martland, Ritchie, Dickson, Beetz and Estey, JJ.

March 18, 1980.

Summary:

This case arose out of a buyer's claim for damages for breach of a contract for the sale of 50,000 tons of sulphur. The buyer negotiated the purchase with an employee of the seller. The seller refused to deliver and claimed that the employee had no actual authority to conclude the contract. The seller claimed that the contract was required to be approved by the employee's superiors. Unknown to the buyer the employee's authority was revoked 2 days before the contract was made. The buyer brought an action against the seller for damages. The Alberta Supreme Court, Trial Division, in a judgment reported at 10 A.R. 137, allowed the buyer's action and found that the employee had authority to conclude the contract - The seller appealed.

The Alberta Court of Appeal allowed the appeal and dismissed the buyer's action. The Court of Appeal held that the employee had no actual authority from his employer to conclude the contract. The Court of Appeal held that the conditions for the creation of an ostensible or apparent authority of the agent were not met, where the seller made no representations to the buyer that the employee had authority. The judgment of the Court of Appeal is reported at 14 A.R. 97. The buyer appealed to the Supreme Court of Canada.

The Supreme Court of Canada allowed the appeal, set aside the judgment of the Alberta Court of Appeal and restored the judgment of the Trial Division. The Supreme Court of Canada held that the buyer was entitled to rely on the employee's apparent authority and there was no duty on the buyer to inquire as to the employee's actual authority to enter into the contract (see paragraph 37).

Agency - Topic 1446

Authority of agent - Apparent authority, where actual authority revoked - Duty of inquiry by person dealing with agent - A buyer negotiated the purchase of 50,000 tons of sulphur with an employee of the seller - During the negotiations the employee of the seller had actual authority to make the sale but 2 days before the contract was made the employee's authority was revoked (unknown to the buyer) - The Supreme Court of Canada held that the buyer was entitled to damages from the seller for breach of contract - The Supreme Court of Canada stated that the buyer was entitled to rely on the employee's apparent authority and there was no duty on the buyer to inquire as to the employee's actual authority to enter into the contract (see paragraph 37).

Damages - Topic 5844

Contracts - Sale of goods - Breach by seller - Measure of damages, loss of anticipated profits - The seller agreed to sell and the buyer agreed to buy 50,000 tons of sulphur at $8.00 per ton - The seller refused to honour the contract - The market price for the sulphur rose rapidly between the date of the contract and the proposed delivery dates - The Supreme Court of Canada affirmed an award to the buyer of $689,328 including an amount for anticipated loss of profits based on the market price - The Supreme Court of Canada stated that had the buyer made firm commitments for the resale of the sulphur at prices less than the market price then the buyer's damages would be reduced accordingly (see paragraph 55).

Cases Noticed:

Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd., [1964] 2 Q.B. 480, refd to. [para. 32].

Statutes Noticed:

Sale of Goods Act, R.S.A. 1970, c. 327, sect. 7 [para. 16].

Authors and Works Noticed:

Bowstead on Agency (14th Ed.), page 434 [para. 38].

Counsel:

A.D. Hunter and M.K. Machida, for the appellant;

R.S. Dinkel, Q.C., for the respondent.

This appeal was heard by MARTLAND, RITCHIE, DICKSON, BEETZ and ESTEY, JJ. of the Supreme Court of Canada at Ottawa, Ontario on November 1, 1979.

The judgment of the Supreme Court of Canada was delivered by MARTLAND, J. at Ottawa, Ontario on March 18, 1980.