Company alleges it was left with more than $2.17M worth of inventory after Telus terminated a sales agreement
Two of B.C.’s largest companies are going to court with one suing the other for allegedly leaving it with more than $2.1 million in unsellable inventory after terminating a sales agreement.
London Drugs Ltd. filed a lawsuit in BC Supreme Court July 2 against Telus Communications Inc., seeking unspecified damages plus interest and costs.
None of its allegations has been tested in court.
Telus has yet to file a response to London Drugs’ notice of civil claim.BIVon Tuesday contacted Telus for a response to the lawsuit but has not yet received a reply.
The two businesses’ partnership hatched in 2002, according to London Drugs, which described the pact as a “retail technical group master vendor agreement (MVA)” involving Tele-Mobile Co.
In March 2006, the rights and obligations of the Tele-Mobile Co. contract transferred to Telus, London Drugs alleged.
Two years later, London Drugs entered a second such agreement, it said. This time it was specifically with Telus Communications Co., which carried on business under the brand Koodo Mobile, according to the lawsuit.
“Koodo Mobile is a mobility division and a registered business name of Telus, and not a separate legal entity,” London Drugs said in its lawsuit.
Agreements governed how London Drugs could buy Telus-branded inventory that would be subsequently activated on Telus’ telecommunications network and Koodo-branded inventory that would be activated on Koodo’s network, London Drugs said.
At first, London Drugs was able to buy products at a discount and then resell them at retail price to make a profit, London Drugs said.
In August 2015, the two companies reached a new deal whereby London Drugs would buy products at retail price but get compensation from Telus each time it activated a customer’s device on Telus’ or Koodo’s networks, it alleged.
London Drugs claimed that “it was an express or, alternatively, an implied term of the MVAs” that it had a broad right to return goods to Telus “for whatever reason and receive reimbursement.”
It then detailed what it believed were expressed or implied terms of the agreement, such as that it could take the reimbursement as a credit or as a payment within 30 days.
It said that it accepted that either party could terminate the MVA if it gave 30 days’ written notice and that once that notice was given, the parties would “cooperate to wind down the operations under the MVAs in an efficient, cost-effective and expeditious manner.”
Fast forward to March 7, 2024, when Telus allegedly notified London Drugs that it intended to terminate its involvement in the MVA.
Telus suggested on that date that the wind-down of the MVA would be complete by June 30 last year, London Drugs said.
London Drugs claimed that Telus continued to sell it new inventory right up to the March 7, 2024 notice of terminating the two companies’ sales agreement.
In late May 2024, London Drugs provided Telus with a summary of the units that it intended to return to Telus together with a request to be reimbursed for $2,174,417.28.
Telus in October 2024, agreed to reimburse London Drugs for $944,387 worth of merchandise but “for reasons unknown” to London Drugs, did not accept the request to reimburse the rest, London Drugs said.
London Drugs said Telus “improperly and unilaterally” deducted amounts from the reimbursement for “allegedly missing units and unpaid invoices.”
London Drugs claimed that it has yet to see any reimbursement.
“To date, Telus has failed or refused to pay” London Drugs what it owes, London Drugs alleged.
The retailer claimed that it is not only out the $2,174,417.28, but it is also on the hook for storage, delivery, out-of-pocket costs, legal fees and other expenses. Because of this, London Drugs is “entitled to indemnification from Telus against all costs, expenses, damages and liability, including legal and other fees,” it claimed in its lawsuit.
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