Entrepreneurs would benefit from carefully reading the contracts they are presented with and understanding their implications before signing or accepting them implicitly through their repeated behavior.
Nowadays, new ways of transacting and the speed at which transactions take place require entrepreneurs to be extremely vigilant. Thus, a Quebec distributor of PVC products facing a lawsuit from one of its customers for product deficiency, calls upon the manufacturer of this product, an American company, as a warranty. The latter invokes the arbitration clause which is found on the back of each invoice and asks the Court* to dismiss the distributor's claims.
The court notes that the manufacturer and distributor have been in business relations for over ten years and that over 3500 sales have taken place since then. The distributor cannot claim to be unaware that an arbitration clause governs the legal relations between the two parties. "No particular formalism is required to establish the existence of consent to an arbitration clause compared to another type of contract." Thus, the manufacturer cannot be called upon as a warranty before the courts since both parties are subject to an arbitration clause. The judge therefore advises that "in this period of globalization of markets and transnational contracts concluded remotely, following a phone call or even an email [?], Quebec entrepreneurs would do well to read the contracts proposed to them and to understand their implications before signing or even tacitly accepting them through their repeated behavior."
Every entrepreneur must know how to cultivate their relationships with their clients and suppliers, because "small negligence often gives birth to great harm". Entrepreneurs should acquire the habit of regularly weeding out contractual issues, both in local cultures and in more exotic plants.
*C.A. 500-09-016734-063
