Identify and discuss the legal issues that are relevant to this litigation.

What arguments will Canuck have against Wonder and vice versa?(As many as possible)

What about the distributor in Spain?

Wonder Machines Inc. ("Wonder") is a corporation located in Boston Massachusetts. It manufacturers a wide variety of medical devices.

It decides to sell off one of its many business lines. It indicates in material posted online and given to prospective purchasers that the reason for this decision is that it wants to focus its efforts on manufacturing test kits for viruses. The business line it wants to sell manufactures medical devices that deliver radiation therapy to cancer patients, and this is too far removed from the are on which it wished to concentrate its effort.It sells these units directly to hospitals in the USA and depends on a network of distributors and agents to sell these devices outside of the USA.

Initial Contact

A company located in Ottawa, Canada called Canuck Medical Devices Ltd. approaches Wonder directly and sends the following email to the President, of Wonder:

"Dear Jamie:

We understand that your cancer therapy product line is for sale. We are interested in making an offer to purchase the product line provided we can negotiate mutually agreeable terms and are satisfied that your product line is of high quality and state of the art."

Jamie, the President responds by email and invites Canuck to inspect the premises.Jamie says in the responding email "I can assure you that our products are of the finest quality and reliability". Canuck visits the manufacturing facility and are impressed.

Key Terms of the Sale Agreement

The parties sign a sale agreement on January 31, 2021, that contains, in part, the following clauses:

"Wonder Machines Inc. (hereinafter the Vendor) agrees to sell to Canuck Medical Devices (hereinafter the Purchaser) all those assets listed in Schedule "A" of this Agreement for the sum of $121 million US. The closing date of this transaction shall be April 30, 2021."

Schedule "A" includes 42 manufactured units, patents on the design filed in Canada, the USA and the EU which each have another 12 years to run before expiration, title to a small building in Boston owned by the Vendor in which the product line is manufactured and which also includes all of the equipment used to manufacture the units.

"The Vendor represents and warrants that there is no litigation related to or in connection with its cancer therapy units. No other representations or warranties are made by the Vendor to the Purchaser."

"The Vendor shall indemnify and hold the Purchaser harmless in connection with any liabilities arising out of or in connection with any sale of units finalized before the closing date of April 30, 2021."

"This Agreement is the entire agreement between the parties and supersedes all prior understandings, agreements, and communications whether written or verbal."

"This Agreement is governed by the laws of Ontario and the courts of Ontario shall have exclusive jurisdiction over any dispute related to this Agreement."

Events After the Deal Closes

The transaction closes on schedule on April 30, 2021.Wonder gets is payment of $121 million US and Canuck gets title to all of the assets listed in Schedule "A" and all relevant distributor and agency agreements are assigned to it.

Canuck is served with a class action in Ontario filed on behalf of 300 patients who received too much radiation from units between May 15 2021, and June 30 2021 in Spain and which were sold to hospitals in Spain between March 1, 2021 and June 15, 2021. Both Canuck and Wonder are Defendants. The claim is for over $400 million US.The claim asserts that Wonder knew there were manufacturing defects in the units and sold the product line for that very reason. Wonder denies all of this and states that the problem arose because their distributor in Spain made a mistake in translating the user instructions and this caused the 300 deaths.