Canadian Manufacturer Sues IKEA $5.5 Million for Breach of Contract

Swedish furniture giant IKEA is facing a multi-million dollar lawsuit for breach of contract from a former supplier based north of Toronto.

Zsemba Apron and Upholstery Ltd., a now defunct Canadian furniture manufacturer, is suing IKEA to the tune of $25 million. In its claim, the company says it was at one time one of IKEA’s largest suppliers of upholstered furniture in North America until the company decided to slash the prices it paid to its manufacturing suppliers.

The company claims that until that point, 75% of its business was tied to IKEA and that as a result of the forced price markdown, it lost $5.5 million in profits between 2010 and 2013. The statement of claim also alleges that “IKEA unreasonably demanded” alterations to their production facilities that resulted in a shutdown of two months.

In the U.S. there are some jurisdictions where there is a precedent that if a contract requires a manufacturing supplier to dedicate or alter facilities for a particular client, it creates an obligation on the purchaser’s side, and the plaintiff is clearly hoping to establish similar grounds here. The company had been a supplier to IKEA for more than two decades. IKEA has stated that Zsemba terminated its contract with them in March.

Legal Remedies

Whether your contract involves employment or business terms, if you feel the other party isn’t upholding their side of the bargain, you’ll need the help of experienced breach of contract lawyers.  Clarity on the issues covered by a contract is your key to understanding your rights.

You only have a limited time to take action. If you think your rights under a contractual agreement are being disregarded contact Petrillo Law today or call us at (905) 949-9433 for a free consultation with an experienced contract lawyer.  We look forward to hearing from you.

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