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Liability Waiver for Excise-Taxed Vaping Products

Parties: Agreement between One Trading Ltd. (supplier) and the Retailer (buyer).

Key Duty Requirements:

  • Vaping products sold in Ontario, Quebec, Northwest Territories, and Nunavut are subject to additional excise duty and must be stamped as "duty-paid" for these specific regions.

    (Ex) Products stamped for Ontario, Quebec, Northwest Territories, or Nunavut may not be sold outside of these provinces/territories. Additionally, products bearing only a federal tax stamp are not permitted for sale within these specified regions.

  • By ordering, the Retailer confirms they understand, accept, and have the legal authority to enter into this Agreement.

  • Indemnity: Retailer agrees to protect One Trading Ltd. from any losses, fines, or penalties resulting from the Retailer’s non-compliance with regional duty requirements.

Agreement Term & Background

This indemnity agreement is made by and between One Trading Ltd., located at 1111 Flint Road, Unit 29, North York, ON M3J 3C7, and the purchasing customer (collectively referred to as "Parties" and singularly as "Party"), effective upon the latest date of execution of the Agreement by the Parties hereto as of October 1, 2024.

WHEREAS the Retailer operates brick-and-mortar retail stores, e-commerce websites, wholesale distribution channels, or a combination thereof, and offers for consumption, use, or sale vaping products manufactured in or imported to Canada subject to the Excise Act, 2001 (the "Act");

AND WHEREAS the Parties maintain a non-exclusive retailer-supplier relationship involving the sale of products subject to the Act and the Customs Act (the "Products") by One Trading Ltd. to the Retailer;

AND WHEREAS the Retailer agrees to be liable under the Act and the Customs Act to pay duties levied on the Products, acknowledges the requirement to pay vaping duties and additional vaping duties to the applicable governmental authority at the time of accounting, and wishes to confirm the indemnity provided to One Trading Ltd. for additional vaping duties in specified provinces imposed under the Act;

NOW THEREFORE, in consideration of the mutual covenants contained herein, the sale of Products by One Trading Ltd. to the Retailer, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

Compliance & Order Acknowledgments

The Retailer acknowledges that, pursuant to Section 158.58 of the Act and Section 3 of the Excise Duties on Vaping Products Regulations (the "Regulations"), vaping products intended for consumption, use, or sale to consumers in Ontario, Quebec, Northwest Territories, Nunavut, or any other province prescribed in Section 2 of the Regulations ("Additional Duty Provinces") are subject to an additional excise duty and must be stamped as duty-paid for the applicable Additional Duty Province.

By ordering Products from One Trading Ltd., the Retailer:

  1. Acknowledges having read and understood this Agreement;
  2. Represents and warrants that it has the right, power, and legal authority to bind itself or its organization to this Agreement; and
  3. Accepts this Agreement and agrees to be legally bound by its terms.

If the Retailer does not comply with this Agreement, it is not permitted to order Products from One Trading Ltd., and One Trading Ltd. reserves the right to cancel any submitted orders without liability. The Retailer further represents that it has not ordered, and will not order, vaping products from One Trading Ltd. for consumption, use, or sale in any Additional Duty Province unless those products are stamped as duty-paid for that applicable province.

The Retailer acknowledges that the Regulations came into force on July 1, 2024, with a transition period ending September 30, 2024, and agrees that all inventory intended for use, consumption, or sale in Additional Duty Provinces must be appropriately stamped as of October 1, 2024. The Retailer agrees to comply with the Act, the Customs Act, the Customs Tariff, the Regulations, and all other applicable legislative and regulatory requirements (collectively, the "Regulatory Requirements").

Indemnity & Limitation of Liability

The Retailer acknowledges that One Trading Ltd. relies on this Agreement and agrees to indemnify, release, defend, save, and hold harmless One Trading Ltd. from all claims, losses, liabilities, damages, deficiencies, actions, judgments, settlements, interest, awards, penalties, fines, fees, expenses, or costs (including reasonable legal fees) resulting from or in connection with the Retailer's use, sale, or distribution of Products in Additional Duty Provinces, non-compliance with Regulatory Requirements, or deviation from Regulatory Requirements.

In no event will One Trading Ltd. be liable under or in connection with this Agreement under any legal or equitable theory (including breach of contract, tort, negligence, or strict liability) for:

  1. Consequential, incidental, indirect, exemplary, special, aggravated, or punitive damages;
  2. Increased costs, diminution in value, or lost business, production, revenues, or profits;
  3. Loss of goodwill or reputation;
  4. Any amount owing under the Regulatory Requirements; or
  5. Compliance with the Regulatory Requirements, regardless of whether One Trading Ltd. was advised of the possibility of such damages.

Audit & Disclosure Obligations

The Retailer agrees to provide One Trading Ltd. with records (such as distribution logs) that substantiate compliance with Regulatory Requirements upon request resulting from any investigation or penalty imposed by the Canada Revenue Agency (CRA), Canada Border Services Agency (CBSA), or any governing authority. The Retailer shall promptly deliver upon request:

  1. Documents of title, bills of sale, conveyancing documents, instruments, stamps, and chattel paper relating to the Products;
  2. Books of account, records, ledgers, reports, correspondence, schedules, documents, statements, and lists for inspection, auditing, or copying; and
  3. Any information concerning the Products, business, or affairs as it relates to Regulatory Requirements. One Trading Ltd. reserves the right to cancel or terminate sales to the Retailer at its sole discretion.

Binding Nature & Severability

This Agreement shall be binding upon and inure to the benefit of the Parties, their respective heirs, successors, assigns, affiliates, and legal representatives. If any provision is deemed invalid or void by a court of competent jurisdiction, such provision shall be severed without prejudice to the remaining terms, which shall continue in full force and effect. This Agreement remains effective as long as the retailer-supplier relationship exists, and the indemnity obligations shall survive termination.

Independent Legal Advice

Each Party acknowledges that it has had the opportunity to obtain independent legal advice and confirms by executing this Agreement that it has either received such advice or knowingly waived its right to do so.

Governing Law

This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

Counterparts

This Agreement may be executed in multiple counterparts, including electronic or digital formats, each of which shall be deemed an original and together constitute the same document.