London Drugs Ltd. v. Kuehne & Nagel International Ltd.

London Drugs Ltd. V. Kuehne & Nagel International Ltd.

London Drugs Ltd. v. Kuehne & Nagel International Ltd.

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London Drugs Ltd. v. Kuehne & Nagel International Ltd., 3 S.C.R. 299 is a leading decision of the Supreme Court of Canada on privity of contract. It is also notable for La Forest J's discussion of vicarious liability, which has influenced subsequent Supreme Court decisions on that doctrine.See for example Bazley v Curry, 2 SCR 534 at paras 14, 28, 31.

Background

Kuehne & Nagel was storing a transformer owned by London Drugs valued at $32,000. The agreement between the parties included a limitation of liability clause which limited liability for damage to the transformer to $40. Two employees were moving the transformer with a forklift and negligently dropped it.London Drugs Ltd. v Kuehne & Nagel International Ltd., 3 SCR 299, SCJ No 84 at paras 155-57.

London Drugs sued the two employees on the basis that they owed a separate duty of care and could not seek protection under the contract.

Decision of the Supreme Court of Canada

Justice Iacobucci, writing for the majority, dismissed the appeal. The court held that the employees were liable in negligence but were able to gain protection under the contract. Employees are able to gain protection where "(1) the limitation of liability clause must, either expressly or impliedly, extend its benefit to the employee(s) seeking to rely on it; and (2) the employee(s) seeking the benefit of the limitation of liability clause must have been acting in the course of their...
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