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Sanofi Pasteur Limited v. UPS SCS Inc. [2015] ONCA 88

Decided February 9, 2015

“A covenant to insure is binding on the signatories and other defendants up to the policy limits.”

Ontario Court of Appeal

The Defendant, UPS, stored vaccines of the Plaintiff Sanofi in a dedicated, temperature-controlled warehouse. In their contractual agreement, Sanofi agreed to insure the vaccines under an “all-risks” policy. When the warehouse cooling system malfunctioned, the vaccines became valueless. After indemnifying their insured, Sanofi’s insurer brought a subrogated claim against UPS and others who were allegedly responsible for the losses. The Defendant brought a summary judgment motion to dismiss the Plaintiff’s claim. The Court of Appeal upheld the lower court’s ruling on the basis of Sanofi’s covenant to insure, notwithstanding the fact that other defendants were not parties to the contract between UPS and Sanofi. It was implied that the parties to the contract intended to extend the benefit of the covenant to the other defendants as their activities were the very activities at which the covenant to insure was aimed.

Submitted to the FDCC by David A. Bertschi, a founding partner at Bertschi Orth Solicitors and Barristers LLP.

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