If a supplier fails to deliver goods as promised in New Brunswick, your first step is usually to send a formal demand letter outlining the breach. If the issue remains unresolved, you may need to pursue financial compensation through the Court of King’s Bench, which can involve filing fees starting around $75 CAD.
Reliable suppliers are the backbone of any retail, construction, or manufacturing business. When a vendor misses a critical delivery in Moncton, Bathurst, or Fredericton, it can severely disrupt your operations, upset your customers, and damage your reputation.
Understanding your rights under New Brunswick contract law is absolutely essential. Whether the delay was caused by a simple miscommunication or a blatant refusal to honour the agreement, taking swift and legally sound action can help you recover your financial losses. 📍
Step-by-Step Process for Handling a Supplier Breach
In the Canadian business world, jumping straight to a lawsuit is rarely the best first step. You must carefully document the breach, mitigate your own losses, and give the supplier a formal opportunity to correct their mistake.
Step 1: Review the Original Delivery Contract
Before taking aggressive action, you must closely read your contract or purchase order. Look specifically for delivery deadlines, penalty clauses, and “force majeure” (Act of God) provisions that might excuse the delay. 📄
You need to determine if this is a “fundamental breach”-meaning the failure goes to the very heart of the contract, making the goods completely useless to you now-or a minor delay that simply warrants a financial discount.
Step 2: Mitigate Your Damages
Under Canadian common law, you cannot simply sit back, let your business fail, and then blame the supplier. You have a strict legal duty to “mitigate” your losses.
This means you must make reasonable efforts to find an alternative supplier to keep your business running. Keep all receipts and invoices from the replacement vendor, as you will claim this price difference as damages later.
Step 3: Send a Formal Demand Letter
If phone calls and emails have failed, it is time to have a law firm draft a formal demand letter. This letter will clearly state how the supplier breached the contract, the exact financial damage it caused, and a strict deadline to either deliver the goods or issue a full refund.
A letter on a lawyer’s letterhead shows the supplier that you are entirely serious and prepared to take legal action if necessary.
Step 4: File a Lawsuit at the Court of King’s Bench
If the supplier ignores the demand letter or refuses to compensate you, litigation may be your only remaining option. If your financial damages are under $20,000 CAD, you can file a fast-tracked claim in the Small Claims division of the Court of King’s Bench.
For massive breaches involving damages exceeding $20,000 CAD, you will need to pursue a formal civil action, which highly requires the ongoing expertise of a corporate litigation lawyer.
Small Claims vs. Full Civil Litigation
| Feature | Small Claims Court (NB) | Full Civil Action (Court of King’s Bench) |
|---|---|---|
| Claim Limit | Up to $20,000 CAD in damages. | No maximum limit. |
| Need for a Lawyer | Optional. Many business owners represent themselves. | Highly necessary due to complex rules of evidence. |
| Process Speed | Faster; typically resolved within 3 to 6 months. | Slower; can take 1 to 3 years to reach a final trial. |
How Much Does it Cost in New Brunswick?
Pursuing a supplier for a breach of contract involves closely balancing the cost of legal action against the true value of your lost goods:
- Demand Letter: Having a lawyer review the contract and draft a strict demand letter typically costs between $300 and $600 CAD.
- Small Claims Filing Fee: Filing a statement of claim for amounts under $20,000 CAD generally costs around $75 to $100 CAD.
- Mediation Services: Hiring a private commercial mediator usually costs $1,500 to $3,000 CAD, which is often split equally between both parties.
- Litigation Lawyer Fees: If you must pursue a large civil action, expect to pay a retainer of at least $5,000 CAD, with total trial costs potentially exceeding $15,000 CAD.
How Long Does the Process Take?
Sending a demand letter and negotiating a quick settlement can often be successfully completed within 2 to 4 weeks. ⏱
If you need to file a lawsuit, the Small Claims process usually takes 3 to 6 months. However, a full civil trial at the Court of King’s Bench involves discoveries and pre-trial motions, meaning it can take 1 to 2 years to receive a final judgment.
Frequently Asked Questions (FAQ)
Can I cancel the contract immediately if they are late?
It depends on whether the contract stated that “time is of the essence.” If delivery timing was explicitly critical to the agreement, a delay might be a fundamental breach allowing you to cancel. Otherwise, you must usually provide them a reasonable extension to perform.
Are verbal agreements with suppliers legally binding?
Yes, verbal contracts can be legally binding in New Brunswick. However, they are incredibly difficult to prove in court. You will need supplementary evidence, such as text messages, emails, or proof of a deposit paid, to support your claim.
Can I claim lost profits from the supplier?
You may be entitled to claim lost profits, but only if you can prove that those losses were a direct, foreseeable result of the supplier’s breach. Speculative losses (e.g., “I might have sold 1,000 extra units”) are generally not awarded by judges.
Should I stop paying the supplier if they breach?
Withholding payment can be risky. If the breach is considered minor, refusing to pay might mean you are now also breaching the contract. It is always safest to consult a law firm before stopping payments on a delivered portion of the goods.
What happens if the supplier goes bankrupt?
If the supplier files for bankruptcy, you become an unsecured creditor. You will need to file a proof of claim with their insolvency trustee, but you will likely only recover pennies on the dollar, if anything at all.
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