Canada: Agricultural Law Netletter - January 7, 2017 Issue 363


* The Ontario Court of Appeal has rejected an appeal by the purchasers of a hog barn who alleged it was a term of an agreement for the purchase of the barn that it would have had hogs in it at the time of closing. The Court also rejected arguments that the vendor had breached its duty of good faith by failing to advise the purchaser in advance of closing that there would be no hogs in the barn; that the vendor had negligently misrepresented its arrangement with a hog supplier and that provisions in the sale agreement which provided for an adjustment on closing for the proceeds of a hog contract and management services could be interpreted as a provision that there would be hogs in the barn at the time of closing. (Eureka Farms Inc. v. Luten, CALN/2017-031, [2016] O.J. No. 6630, Ontario Court of Appeal)


 Eureka Farms Inc. v. Luten;


Full text: [2016] O.J. No. 6630;

2016 ONCA 969,

Ontario Court of Appeal,

R.J. Sharpe, P.D. Lauwers and B. Miller JJ.A.,

Contract of Purchase and Sale -- Hog Barns.

Roelof Luten and Roelofje Remmells-Luten (collectively the "Lutens") appealed to the Ontario Court of Appeal from a judgment of the Superior Court of Justice which dismissed their claim for damages when the Lutens were forced to sell a hog farm they had purchased from Eureka Farms Inc. ("Eureka") at a loss, because they could not secure a supply of hogs for the farm.

The Lutens had entered into an agreement to purchase a hog farm from Eureka. The agreement contained a condition which gave the Lutens the right to extract themselves from the agreement if they were not able to satisfy themselves that there would be a supply of hogs for the barn.

The Lutens had met with Eureka's supplier who told them that he was prepared to supply them with hogs, but only on the basis of an oral "turn by turn" agreement. The supplier declined to enter into a written or long term agreement. After this meeting, the Lutens waived this condition in the agreement.

The Lutens learned that the hog barn was empty prior to closing, but did not ask for an extension of the closing date to verify their source of supply, nor did they refuse to close on the basis that Eureka was in breach.

Prior to closing, Eureka had entered into a new agreement with the supplier pursuant to which Eureka financed the supply of hogs for the barn when they came into the barn and then resold them to the supplier when the hogs left.

Eureka did not disclose this arrangement to the Lutens

Decision: Sharpe, Lauwers and Miller, JJ.A. dismissed the Lutens' appeal [at para. 14].

The Court of Appeal considered three issues:

1. Duty of good faith:

The Court rejected the Lutens' argument that Eureka had breached its duty of good faith, based on the principles in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, by failing to advise the Lutens, well in advance of closing, that there would be no hogs in the barn when the transaction closed.

The Court agreed that at the time the agreement was concluded, both the Lutens and Eureka expected there would be hogs in the barn, however the Court concluded that the Lutens knew that they had no assurance of an ongoing supply of hogs and that by waiving the condition in their favour prior to closing, they assumed the risk that market conditions could change and that the supply of hogs could dry up.

Even if Eureka should have told them in a more timely fashion that the barn would have no hogs in it at the time of closing, this would not have amounted to a breach of the duty of good faith sufficient to trigger a remedy for the Lutens given the terms of the contract, and the way it allocated the risk of market change.

The allegation of bad faith was not sufficient to overcome the fact that the Lutens knew they had no guaranteed source of supply and had assumed the risk by waiving the condition and closing the transaction with full knowledge of the fact that the barn was empty.

2. Negligent misrepresentation:

The Court rejected the argument that Eureka had made a negligent misrepresentation by failing to disclose that its agreement with the supplier involved financing the hogs by purchasing them when they came into the barn and reselling them to the supplier when they left. The Court held that this argument was excluded by an entire agreement clause in the agreement for sale. Further, the Lutens had met with the supplier and discussed an arrangement for a supply of hogs with the supplier if they purchased the barn. The Lutens decided to proceed with the purchase of the barn based on this arrangement, and the terms of the previous arrangement with Eureka was irrelevant.

3. Contractual obligations to have hogs in the barn on closing:

The Court rejected the argument that the terms of the agreement for purchase and sale required Eureka to have hogs in the barn at the time of closing. There was no provision to this effect in the agreement. Provisions in the agreement providing for an adjustment on closing regarding the proceeds of hog contracts, and an agreement to provide management and guidance for a 4 week period could not be interpreted as creating a contractual obligation to ensure there were hogs in the barn at the time of closing.

4. No damages:

The loss was sustained as a result of the fact that there were no hogs in the barn at the time of closing because the supplier could not supply the Lutens with hogs because of adverse market conditions. There was no evidence that this supply contract was related to the fact that the Lutens had acquired a farm with an empty hog barn. The real cause was a significant rise in the price of hogs, which was an adverse market condition which, based on a reading of the agreement for purchase and sale, had been assumed by the Lutens.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.