A purchase order for 4 commercial-grade food processing machines formed the basis of a transaction between a small manufacturing operation in Calgary and an expanding food production company in Saskatoon. The equipment, custom-built to the buyer's specifications and valued at $187,000, was ordered in early spring with delivery scheduled for 6 weeks later. The written purchase order specified the model numbers, technical specifications, and a delivery date, but said nothing about when ownership would transfer, who would bear the risk during shipment, or what would happen if the machines failed to perform as expected.

The manufacturer arranged for a third-party trucking company to transport the equipment from its Calgary facility to the buyer's Saskatoon plant. The buyer had no role in selecting the carrier and no contractual relationship with the trucking firm. During transit across the provincial border, the transport truck was involved in a collision that caused significant damage to 2 of the 4 machines. The remaining 2 machines arrived intact and were unloaded at the buyer's facility without incident.

Upon inspection of the undamaged machines, the buyer's production staff discovered that while the equipment matched the model numbers and external specifications in the purchase order, the internal components differed from what the buyer had expected based on earlier discussions with the manufacturer's sales representative. The machines could process food products, but at a rate approximately 30 percent slower than the buyer had anticipated when placing the order. No written documentation memorialized the earlier conversations about processing speed, and the purchase order itself was silent on throughput capacity.

The buyer now faces 3 distinct problems. First, 2 machines worth approximately $93,500 were damaged in transit and the buyer has been asked to pay the full contract price despite never having received functional equipment. Second, the 2 machines that arrived intact do not perform at the level the buyer believed it was purchasing, though they technically conform to the written specifications. Third, the buyer has already made a non-refundable deposit of $37,400 and must decide whether to reject what has been delivered, demand replacement or repair, or pursue damages for the difference between what was promised and what was received. The manufacturer maintains that risk passed to the buyer when the goods were handed over to the carrier and that the machines conform to the written contract in all material respects.