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Unilateral cancellation of distribution contract to gain clientele and =
claim for damages.

Can Ltd. is the subsidiary of a Japanese multinational and is =
specialized in the sale of industrial pneumatic products, as is Que Inc.

Can Ltd. then grants a non exclusive distribution contract to Que Inc. =
for the province of Quebec, without there being any written contract. =
When Que Inc. starts distributing the multinational's products, they are =
for all practical purposes unknown of in the province, but thanks its =
efforts, energy and dynamic marketing, Que Inc. makes numerous sales in =
the following years.

Suddenly, Can Ltd. decides to sell the multinational's products directly =
to Que Inc.'s clients and Que Inc. sees its market considerably reduced =
following Can Ltd.'s increasingly aggressive interventions.

Then, Can Ltd. notifies Que Inc. of the fact that it's distribution =
contract is cancelled because it has exceeded its line of credit, while =
advising Que Inc.'s clients of the situation. Afterwards, Can Ltd. =
refuses to honor Que Inc.'s purchase orders, even if Que Inc. confirms =
it will pay upon delivery (C.O.D.). Que Inc. then has no choice but to =
cease distributing Can Inc.'s products, thereby loosing 70% of its =
business.

In the course of legal proceedings undertaken against Can Ltd.., Que =
Inc. alleges that the reason invoked for its unilateral contract =
cancellation (exceeded line of credit) is nothing but a pretext since =
Can Ltd. had, according to Que Inc., tried to eliminate it as =
intermediary to seize its clientele in the Quebec marketplace, thereby =
profiting from the exceptional results obtained by Que Inc., which had =
deployed numerous efforts over the years to promote and distribute the =
multinational's products in Quebec.

In view of applying circumstances (clientele very satisfied with Que =
Inc.'s services, repeated overdraws on its credit line in the past =
without Can Ltd. complaining, Que Inc.'s willingness to pay for its =
future purchases cash down, etc.), the court concluded that Can Ltd. had =
acted with flagrant disloyalty regarding Que Inc. and had indeed tried, =
by making direct sales, to seize the clientele it had developed, thereby =
acting maliciously, abusively and illegally.

Considering evidence submitted as to damages caused and after having =
subtracted from Que Inc.'s claim the 285 000$ it owed to Can Ltd. on =
credit, the court ordered Can Ltd. to pay 260 000$ to Que inc., =
including 50 000$ for loss of reputation (Que Inc.'s inability to =
continue servicing its clientele).

This judgment has been appealed from (discussions will surely allude to =
the fact that the case implicates a non exclusive distribution =
agreement) and we will keep you posted on future developments, while =
mentioning that it is much more preferable in such circumstances to have =
a written contract set up at the very beginning of the business =
relationship, so that each party knows what to expect.

[Posting date in the What's up section: 27/03/01. Court file number: =
500-05-037558-978. Judgment date: 07/06/00]

Beaulieu Normandeau, attorneys
Place Iberville III
2960, boulevard Laurier, suite 40
Sainte-Foy (QC) G1V 4S1
Canada
Tel: (418) 652-1868
Fax: (418) 657-6728
Web site: www.beaulieunormandeau.com
e-mail: attorney@beaulieunormandeau.com


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Operating out of the Quebec City suburb of Sainte-Foy in Canada, =
Beaulieu Normandeau represents individuals and small, medium and large =
companies and corporations by offering them practical and judicious =
strategies and solutions in view of maintaining and facilitating their =
growth.

Our web site's main purpose is to share legal information with our =
clients and the general public in a practical, dynamic and user-friendly =
manner. Its main section, "What's up?", is updated every Monday and =
contains a brief summary of our selection of recent judgments or of =
legal principles relating to the business world that we deem important =
for people residing in Quebec or who have interests here, and who wish =
to have a better understanding of the workings of our legal system. This =
section also allows visitors to our site to subscribe to our free e-mail =
service to automatically receive our weekly articles on business law.

Please note that the legal developments summarized above are shared as =
general information only, do not constitute a full analysis or a legal =
opinion on our part and do not establish a solicitor-client =
relationship. Although our summaries take into account applying law at =
the moment of their posting here and usually rely on a recent =
jurisprudential basis, and although we do our utmost to post up-to-date =
information, the law discussed here may be modified or may have been =
modified and the facts of the case are not necessarily the same as those =
that may concern you. Be prudent and consult an attorney before taking =
an important decision!

Any court file numbers and judgments referred to above truly exist. As =
to judgments, the vast majority are subject to a delay between the date =
at which they are rendered and the date at which they are available in =
electronic databases. Finally, as to the identity of parties to a =
litigation process, although such information is part of the public =
domain, our policy is to refrain from posting it.

We thank you for your attention.

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<DIV><FONT face=3DArial color=3D#400000 size=3D2><STRONG>Unilateral =
cancellation of=20
distribution contract to gain clientele and claim for=20
damages.</STRONG></FONT></DIV>
<DIV><STRONG></STRONG>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>Can Ltd. is the subsidiary of a =
Japanese=20
multinational and is specialized in the sale of industrial pneumatic =
products,=20
as is Que Inc.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>Can Ltd. then grants a non exclusive =
distribution=20
contract to Que Inc. for the province of Quebec, without there being any =
written=20
contract. When Que Inc. starts distributing the multinational's =
products, they=20
are for all practical purposes unknown of in the province, but thanks =
its=20
efforts, energy and dynamic marketing, Que Inc. makes numerous sales in =
the=20
following years.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>Suddenly, Can Ltd. decides to sell the=20
multinational's products directly to Que Inc.'s clients and Que Inc. =
sees its=20
market considerably reduced following Can Ltd.'s increasingly aggressive =

interventions.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>Then, Can Ltd. notifies Que Inc. of the =
fact that=20
it's distribution contract is cancelled because it has exceeded its line =
of=20
credit, while advising Que Inc.'s clients of the situation. Afterwards, =
Can Ltd.=20
refuses to honor Que Inc.'s purchase orders, even if Que Inc. confirms =
it will=20
pay upon delivery (C.O.D.). Que Inc. then has no choice but to cease=20
distributing Can Inc.'s products, thereby loosing 70% of its=20
business.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>In the course of legal proceedings =
undertaken=20
against Can Ltd.., Que Inc. alleges that the reason invoked for its =
unilateral=20
contract cancellation (exceeded line of credit) is nothing but a pretext =
since=20
Can Ltd. had, according to Que Inc., tried to eliminate it as =
intermediary to=20
seize its clientele in the Quebec marketplace, thereby profiting from =
the=20
exceptional results obtained by Que Inc., which had deployed numerous =
efforts=20
over the years to promote and distribute the multinational's products in =

Quebec.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>In view of applying circumstances =
(clientele very=20
satisfied with Que Inc.'s services, repeated overdraws on its credit =
line in the=20
past without Can Ltd. complaining, Que Inc.'s willingness to pay for its =
future=20
purchases cash down, etc.), the court concluded that Can Ltd. had acted =
with=20
flagrant disloyalty regarding Que Inc. and had indeed tried, by making =
direct=20
sales, to seize the clientele it had developed, thereby acting =
maliciously,=20
abusively and illegally.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>Considering evidence submitted as to =
damages caused=20
and after having subtracted from Que Inc.'s claim the 285 000$ it owed =
to Can=20
Ltd. on credit, the court ordered Can Ltd. to pay 260 000$ to Que inc.,=20
including 50 000$ for loss of reputation (Que Inc.'s inability to =
continue=20
servicing its clientele).</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>This judgment has been appealed from =
(discussions=20
will surely allude to the fact that the case implicates a non exclusive=20
distribution agreement) and we will keep you posted on future =
developments,=20
while mentioning that it is much more preferable in such circumstances =
to have a=20
written contract set up at the very beginning of the business =
relationship, so=20
that each party knows what to expect.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D1>[Posting date in the What's up section: =
27/03/01.=20
Court file number: 500-05-037558-978. Judgment date: =
07/06/00]</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV align=3Djustify><FONT face=3DArial size=3D2>Beaulieu Normandeau,=20
attorneys<BR>Place Iberville III<BR>2960, boulevard Laurier, suite=20
40<BR>Sainte-Foy (QC) G1V 4S1<BR>Canada<BR>Tel: (418) 652-1868<BR>Fax: =
(418)=20
657-6728<BR>Web site: <A =
href=3D"http://www.beaulieunormandeau.com"><FONT=20
color=3D#0000ff>www.beaulieunormandeau.com</FONT></A><BR>e-mail: <A=20
href=3D"mailto:attorney@beaulieunormandeau.com"><FONT=20
color=3D#0000ff>attorney@beaulieunormandeau.com</FONT></A></FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>
<HR align=3Djustify>
</FONT></DIV>
<DIV><FONT face=3DArial size=3D1></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D1>Operating out of the Quebec City suburb =
of=20
Sainte-Foy in Canada, Beaulieu Normandeau represents individuals and =
small,=20
medium and large companies and corporations by offering them practical =
and=20
judicious strategies and solutions in view of maintaining and =
facilitating their=20
growth.</FONT></DIV>
<DIV><FONT size=3D1></FONT>&nbsp;</DIV>
<DIV align=3Djustify><FONT face=3DArial size=3D1>Our web site's main =
purpose is to=20
share legal information with our clients and the general public in a =
practical,=20
dynamic and user-friendly manner. Its main section, "<A=20
href=3D"http://beaulieunormandeau.com/new.htm">What's up?</A>", is =
updated every=20
Monday and contains a brief summary of our selection of recent judgments =
or of=20
legal principles relating to the business world that we deem important =
for=20
people residing in Quebec or who have interests here, and who wish to =
have a=20
better understanding of the workings of our legal system. This section =
also=20
allows visitors to our site to subscribe to our free e-mail service to=20
automatically receive our weekly articles on business law.</FONT></DIV>
<DIV><FONT size=3D1></FONT>&nbsp;</DIV>
<DIV align=3Djustify><FONT face=3DArial size=3D1>Please note that the =
legal=20
developments summarized above are shared as general information only, do =
not=20
constitute a full analysis or a legal opinion on our part and do not =
establish a=20
solicitor-client relationship. Although our summaries take into account =
applying=20
law at the moment of their posting here and usually rely on a recent=20
jurisprudential basis, and although we do our utmost to post up-to-date=20
information, the law discussed here may be modified or may have been =
modified=20
and the facts of the case are not necessarily the same as those that may =
concern=20
you. Be prudent and consult an attorney before taking an important=20
decision!</FONT></DIV>
<DIV><FONT size=3D1></FONT>&nbsp;</DIV>
<DIV align=3Djustify><FONT face=3DArial size=3D1>Any court file numbers =
and judgments=20
referred to above truly exist. As to judgments, the vast majority are =
subject to=20
a delay between the date at which they are rendered and the date at =
which they=20
are available in electronic databases. Finally, as to the identity of =
parties to=20
a litigation process, although such information is part of the public =
domain,=20
our policy is to refrain from posting it.</FONT></DIV>
<DIV><FONT size=3D1></FONT>&nbsp;</DIV>
<DIV align=3Djustify><FONT face=3DArial size=3D2><FONT size=3D1>We thank =
you for your=20
attention.</FONT></FONT></DIV></BODY></HTML>

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