Executive Summary: Key Legal and Evidentiary Issues

• Central dispute over a commercial sales agreement for cattle hides and the seller’s failure to deliver, engaging the seller’s obligation of result under Quebec civil law.
• Key question whether market price volatility and supplier refusal constituted force majeure (superior force) sufficient to excuse non-performance of the delivery obligation.
• Contested issue of whether Crown Hides Limited implicitly waived its right to damages by agreeing to the resolution of the contract and requesting return of its deposit.
• Assessment of the buyer’s proof of damages, including admissibility and sufficiency of invoices and bank records for the replacement purchase from Inkatay.
• Comparison of the original contract and the replacement contract terms (quantity, type of hides, port, price) to determine whether the claimed loss (price difference) was justified and reasonable.
• Allegations of abuse of process by the seller, including a request for legal fees, and the court’s rejection of those allegations in light of the evidence and applicable procedural standards.

Factual background and the original sales agreement

Crown Hides Limited (CHL), a buyer of cattle hides, entered into a sales agreement with Alimonco Group Inc. (Alimonco) on January 7, 2021. Under this contract, Alimonco undertook to supply approximately 10,000 cattle hides to CHL at a unit price of USD $16, for a total contract price of USD $160,000. The hides were to come from Argentina and be shipped to the port of Qingdao in China. The agreement specified that 80% of the hides would be steers and 20% would be heifers or cows, with an average weight of 27–28 kilograms, and required CHL to pay a 30% deposit. CHL paid a deposit of USD $48,000 on January 19, 2021, following an inspection in Argentina by CHL’s representative, as contemplated in the parties’ dealings.
The hides were expected to be shipped in early 2021. According to CHL’s managing director, Alimonco provided a shipping program indicating departure on February 22, 2021, from Buenos Aires to Shanghai. Although the court later ruled that the specific schedule document was inadmissible, it accepted testimony that such a timetable had been communicated and formed part of CHL’s understanding of the contractual performance.

Seller’s cancellation and buyer’s response

On February 22, 2021, Alimonco informed CHL that it was cancelling the order and would return the deposit. The email explained that hide prices in Argentina had skyrocketed due to high demand from China and India, that some slaughterhouses had increased prices by nearly 60%, and that suppliers refused to deliver at the previously negotiated price. Alimonco stated it had “no choice to cancel the order and return the deposit” and suggested that the new market price would be in the range of USD $23–24 per hide, which it believed would “kill the deal.”
The very next day, February 23, CHL rejected this unilateral cancellation. In an email to Alimonco’s principal, CHL insisted on delivery in accordance with the signed contract and pointed out that what occurred between Alimonco and its suppliers was not CHL’s concern, as the contract bound CHL and Alimonco. CHL emphasized it had a clear written contract and had already paid the deposit, and it referred back to the previously communicated shipping program.

Attempts to renegotiate and ultimate resolution of the contract

On February 26, 2021, Alimonco made three proposals: (1) to return the deposit; (2) to proceed with hides from Argentina but at a higher price reflecting current market conditions; or (3) to supply hides from Bolivia at market price. CHL chose to have its USD $48,000 deposit returned, which occurred on March 3. At trial, CHL explained that the proposals to wait indefinitely for prices to normalize or to accept hides from Bolivia were unacceptable. CHL viewed Bolivian hides, particularly from tropical regions, as inferior and unsuitable for the type of leather it intended to produce from Argentine hides.
On March 12, 2021, CHL sent a formal notice demanding that Alimonco perform the original contract—deliver the hides in the agreed quantity and at the original price—failing which CHL would claim damages. Further discussions followed between March 12 and March 18. Alimonco indicated a willingness in principle to reinstate the original sales agreement, but refused to fix a new shipping date until it had received a fresh deposit from CHL. CHL, in turn, insisted that shipment occur by April 15, that product quality conform to the agreement, that its representative be allowed to inspect the hides and be present at loading and sealing, and that the renewed deposit be held in escrow until shipment.
Alimonco rejected these additional conditions for quality control and maintained that it needed the deposit first before committing to a schedule. On March 18, CHL indicated it was prepared to pay the deposit upon confirmation that shipment would respect the 24-day shipping time originally agreed. Alimonco did not respond to this proposal. CHL again placed Alimonco in default on March 19, seeking confirmation that the 24-day shipping delay would be respected and that CHL’s inspector would have the right to inspect and witness loading and sealing, with CHL indicating it would remit the deposit within 24 hours of such confirmation.

Replacement purchase and commencement of proceedings

As negotiations failed, CHL turned to other suppliers. On March 31, 2021, it entered into a contract with Inkatay World Trading Ltd. for cattle hides from Argentina at a higher total price of USD $261,000. The Inkatay contract called for 9,000 hides, all steers, originating from Argentina, with characteristics broadly comparable to the commodities in the Alimonco contract, albeit with variations in quantity, composition (100% steers instead of an 80/20 mix of steers and cows/heifers), and destination port.
CHL later filed commercial invoices and banking documentation showing that Inkatay invoiced a total of USD $261,000 and that CHL’s bank account was debited in three payments matching that sum and referring to the Inkatay contract. CHL’s representative also testified that the hides were delivered and paid in full. CHL showed that it had solicited quotes from other suppliers, including Surpiel, and that the price it ultimately paid to Inkatay was competitive in light of the market volatility at that time. On April 21, 2021, CHL commenced proceedings against Alimonco, seeking damages corresponding to the difference between the original contract price (USD $16 per hide) and the replacement price (USD $29 per hide), quantified at USD $130,000, which it converted to CAD $163,475 for the purposes of its claim.

Legal issues and positions of the parties

The court framed the case within Quebec civil law governing contracts of sale. A seller’s obligation to deliver the thing sold is characterized as an “obligation of result,” meaning the seller must both place the buyer in possession and provide goods that correspond to the agreed specifications. If the seller fails to deliver, the buyer may treat the sale as resolved (terminated) and seek restitution of what it has paid, unless the seller proves a situation of superior force (force majeure) or that the failure is attributable to the buyer.
Article 1736 of the Civil Code of Québec allows the buyer of movable property to consider the sale resolved if the seller is in default by operation of law or fails to deliver within the time specified in a notice. Under article 1597 CCQ, a debtor is in default by operation of law, among other triggers, when specific performance becomes impossible through the debtor’s fault or when the debtor clearly communicates its intention not to perform. Once the debtor is in default, the creditor need not send a formal default notice under article 1594 CCQ, although CHL in fact did send multiple notices. The court also reiterated that resolution of a sale for non-performance by the seller does not extinguish the buyer’s right to claim damages; the buyer may seek both restitution and compensation for the loss caused by the breach.
Alimonco did not dispute that it had failed to deliver the hides under the agreed terms and that the contract had been resolved with return of CHL’s deposit. However, it advanced three main lines of defense. First, it suggested that market price shocks and suppliers’ refusal to deliver at the old price amounted to “unforeseen circumstances” or force majeure, relieving it of liability. Second, it argued that CHL had implicitly waived any right to damages by consenting to the resolution of the contract and requesting return of its deposit, such that only restitution, not damages, should be available. Third, it attacked the quantum and proof of CHL’s loss, contending that the documentary evidence for the Inkatay transaction was inadmissible under the best evidence rule and that CHL had failed to mitigate damages by refusing Alimonco’s offers and by accepting higher prices and longer shipping times from a third party.
Alimonco went further and characterized CHL’s claim as abusive litigation under the Code of Civil Procedure, seeking a declaration of abuse and reimbursement of its legal fees and disbursements.

Force majeure and the impact of market volatility

The court rejected Alimonco’s reliance on market volatility and increased supplier costs as a force majeure event. Article 1470 CCQ defines superior force as an unforeseeable and irresistible event, and case law requires that it render contractual performance absolutely impossible, not merely more difficult or more expensive. On the evidence, Alimonco could still have performed the original contract by procuring hides at the higher market price, albeit at a reduced margin or potential loss. The fact that prices rose sharply and suppliers demanded more money did not make delivery impossible; it only made performance more onerous to Alimonco. The court also noted evidence that the commodities market was already highly volatile during the period in question, which made such fluctuations foreseeable rather than extraordinary. Accordingly, Alimonco failed to discharge its burden of proving superior force.

Alleged waiver of damages by the buyer

Alimonco’s argument that CHL had implicitly waived its right to damages by agreeing to resolve the contract and asking for its deposit back was also dismissed. The court viewed Alimonco’s February 22 email announcing cancellation and return of the deposit as a clear indication that Alimonco did not intend to perform, thereby placing Alimonco in default by operation of law under article 1597 CCQ and entitling CHL to consider the sale resolved without further notice. CHL, in fact, went beyond what was strictly necessary by expressly objecting to the unilateral cancellation on February 23 and insisting on performance.
In assessing waiver, the court relied on principles confirmed by the Supreme Court of Canada: waiver of a right cannot be presumed; it must be proven and can be either express or tacit but always grounded in clear evidence of intention. In this case, there was no express renunciation by CHL of its right to seek damages. None of the emails or voicemail evidence established that CHL agreed to relinquish its claim beyond recovering the deposit. Furthermore, Alimonco’s offers to refund the deposit were not made conditional on CHL’s abandonment of damages, and CHL’s request for its money back was similarly unconditional and did not reference any waiver. Even if the parties mutually agreed to resolve the sales agreement and return the deposit, that mutual resolution, in the court’s view, did not extinguish CHL’s independent right to sue for damages caused by the breach.

Proof and quantification of damages

The court then addressed the heart of the damages claim. In sales cases where the seller fails to deliver, the standard measure of damages to the buyer is the difference between the contract price and the price reasonably paid to obtain replacement goods. CHL’s claim for USD $130,000 was calculated as the price gap between the original contract (USD $16 per hide) and the replacement purchase from Inkatay (USD $29 per hide).
Alimonco objected to CHL’s proof on several grounds. It argued that the replacement transaction was inadequately proven because CHL had not produced bills of lading or original bank statements, and it invoked the best evidence rule to challenge the admissibility of CHL’s invoices and banking documents (Exhibit P-9). The court rejected these objections. It noted that Alimonco had previously admitted the origin and integrity of the key exhibit in a joint declaration of readiness. The commercial invoices in that exhibit matched the full USD $261,000 contract amount with Inkatay, and the bank records documented three payments from CHL to Inkatay referencing the contract and totaling the same amount. CHL’s testimony that the hides were delivered and paid for was consistent with this documentation. In the court’s view, the evidence was both admissible and sufficient to demonstrate delivery and payment.
The court also evaluated whether the Inkatay contract price was reasonable in the circumstances. CHL showed that it had solicited competing offers and that the Inkatay pricing was competitive compared to other quotes, including from Surpiel. Market evidence indicated that hide prices during the relevant weeks were elevated and volatile, and Surpiel’s price lists confirmed that CHL did not overpay relative to market conditions. On that basis, the court accepted that USD $29 per hide reflected a fair replacement price in a rising market.
Alimonco pointed out certain differences between the Alimonco and Inkatay contracts: the replacement contract involved 9,000 hides rather than 10,000; it specified 100% steers (which are more expensive) instead of an 80/20 mix; and it involved a different destination port, which might carry different shipping costs. The court acknowledged these distinctions but found they did not undermine CHL’s damage calculation. Both contracts required Argentine-origin hides of similar weight and quality, and Alimonco led no concrete evidence quantifying any price premium for all-steer lots at the relevant time. Nor did it provide proof of any material difference in shipping costs between the ports. The reduction in quantity from 10,000 to 9,000 hides was seen as at least partially offsetting any increased per-unit cost from a 100% steer composition. Without evidence of the actual price impact of these differences, Alimonco failed to show that CHL had “overpaid” or that the claimed damages should be discounted.

Mitigation, “author of its own misfortune” and abuse arguments

Alimonco further argued that CHL failed to mitigate its loss and was the author of its own misfortune by rejecting Alimonco’s offers to supply hides from Argentina at a higher price (USD $23–24 per hide) or from Bolivia at market price. It contended that CHL later accepted an even higher price from Inkatay (USD $29 per hide), which should break the chain of causation or reduce recoverable damages.
The court was not persuaded. Once the sales agreement had been resolved following Alimonco’s refusal to honour the original terms, CHL was under no obligation to continue doing business with Alimonco. CHL’s discomfort and loss of confidence in Alimonco’s reliability, as recounted in testimony, were considered reasonable. The law required CHL to act prudently in limiting its loss, not to accept whatever modified terms the defaulting seller might propose. By seeking other suppliers, evaluating market offers, and ultimately contracting with Inkatay at a competitive price, CHL acted consistently with its duty to mitigate. The fact that Alimonco’s proposed revised price happened to be lower than the eventual replacement price did not transform CHL into the cause of its own loss, especially where Alimonco’s proposals involved changed origins, uncertain timing, or conditions CHL reasonably viewed as unacceptable.
Regarding the allegation of abusive proceedings, the court found no basis to conclude that CHL’s lawsuit was manifestly ill-founded or pursued in bad faith. CHL had a legitimate contractual claim supported by evidence and grounded in established principles of civil liability. Alimonco’s application for a declaration of abuse and for recovery of its legal fees was therefore dismissed.

Final ruling and outcome

In the result, the Superior Court held that Alimonco had breached its obligation of result to deliver the hides at the agreed price and within the agreed shipping delay, and that the increase in market prices and supplier resistance did not amount to force majeure. The court concluded that CHL had not waived its right to damages by consenting to the resolution of the contract and recovery of its deposit, and that CHL had adequately proven both the fact and the quantum of its loss through the Inkatay replacement purchase. The court therefore granted CHL’s originating application, ordering Alimonco Group Inc. to pay Crown Hides Limited CAD $163,475.00 in damages, together with interest at the legal rate and the additional indemnity under article 1619 CCQ from March 12, 2021, as well as judicial costs in CHL’s favour, with the precise monetary value of interest and costs to be determined in the ordinary course.