fbpx
  • Latest News
  • Trending News
  • All
  • Latest News
  • Featured
  • Industry News
  • Legal Governance
  • Constitutional Law
  • Op-Ed
  • News Archives
  • Alternative Dispute Resolution
  • Analysis
  • Bankruptcy Law
  • Consumer Protection Law
  • Cyber Security Law
  • Family Law
  • Disability Law
  • Employment Law
  • Environmental Law
  • Estate Law
  • Housing Law
  • Human Rights Code
  • Immigration Law
  • Insurance Law
  • Intellectual Property Law
  • Privacy Law
  • Tax Law
  • Workers Compensation Board
Limitation of Liability Clauses: the Supreme Court Sets the Record Straight

Limitation of Liability Clauses: the Supreme Court Sets the Record Straight

April 5, 2022
More than 10,000 Canadians received a medically-assisted death in 2021: report

More than 10,000 Canadians received a medically-assisted death in 2021: report

August 13, 2022
Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

August 12, 2022
The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

August 12, 2022
FBI took 11 sets of classified material from Trump’s Mar-a-Lago home while investigating possible Espionage Act violations (US)

FBI took 11 sets of classified material from Trump’s Mar-a-Lago home while investigating possible Espionage Act violations (US)

August 12, 2022
Ontario class action settlement reclassifies volunteers as employees, setting new precedent

Ontario class action settlement reclassifies volunteers as employees, setting new precedent

August 11, 2022
Availability of Judicial Review in SABS Disputes

Availability of Judicial Review in SABS Disputes

August 10, 2022
Are masking policies still valid?

Are masking policies still valid?

August 10, 2022
Justice Canada releases commission report on impact of lack of legal aid in family law disputes

Justice Canada releases commission report on impact of lack of legal aid in family law disputes

August 9, 2022
Harmonized sales tax part of maximum amount of attendant care benefits owed by insurer: court

Harmonized sales tax part of maximum amount of attendant care benefits owed by insurer: court

August 8, 2022
New rules coming next month to help Canadians with cancelled and delayed flights

New rules coming next month to help Canadians with cancelled and delayed flights

August 3, 2022
Stephen King set to testify for govt in books merger trial (US)

Stephen King set to testify for govt in books merger trial (US)

August 2, 2022
New law program in Quebec to begin next fall, a first in 50 years

New law program in Quebec to begin next fall, a first in 50 years

August 2, 2022

Defence lawyers threaten job action over Legal Aid Alberta funding

August 1, 2022
The Impact of the Lack of Legal Aid in Family Law Cases

The Impact of the Lack of Legal Aid in Family Law Cases

July 29, 2022
SCC rules that when someone is required by their partner to wear a condom but do not, they could be guilty of sexual assault.

SCC rules that when someone is required by their partner to wear a condom but do not, they could be guilty of sexual assault.

July 29, 2022
Big Plastic suing feds over single-use ban — again

Big Plastic suing feds over single-use ban — again

July 29, 2022
Tim Hortons offers coffee and doughnut as proposed settlement in class action lawsuit

Tim Hortons offers coffee and doughnut as proposed settlement in class action lawsuit

July 29, 2022

NBA investigating Philadelphia 76ers for possible tampering

July 29, 2022

#MeToo didn’t end sexual harassment in the workplace and vigilance remains a must

July 29, 2022
The SCC has refused to hear the appeal to declare the renewal of the state of health emergency by the Quebec government invalid

The SCC has refused to hear the appeal to declare the renewal of the state of health emergency by the Quebec government invalid

July 28, 2022
Federal privacy commissioner investigating controversial ArriveCAN app

Federal privacy commissioner investigating controversial ArriveCAN app

July 28, 2022
Kraken, a U.S. Crypto Exchange, Is Suspected of Violating Sanctions (US)

Kraken, a U.S. Crypto Exchange, Is Suspected of Violating Sanctions (US)

July 26, 2022
Ontario court certifies class action on former patients’ anxiety from notice of risk of infection

Ontario court certifies class action on former patients’ anxiety from notice of risk of infection

July 26, 2022
The stakes couldn’t be higher as Canada’s top court decides whether to hear climate class action lawsuit

The stakes couldn’t be higher as Canada’s top court decides whether to hear climate class action lawsuit

July 26, 2022
Professor Barnali Choudhury selected by EU as trade and sustainable development expert

Professor Barnali Choudhury selected by EU as trade and sustainable development expert

July 25, 2022

Abuse and harassment survivors ‘silenced’ by non-disclosure agreements fight for change to B.C. law

July 23, 2022
The Supreme Court decision on the ‘Ghomeshi’ amendments will help sexual assault victims access justice

The Supreme Court decision on the ‘Ghomeshi’ amendments will help sexual assault victims access justice

July 5, 2022
AFN Reaches $20 B Final Settlement Agreement to Compensate First Nations Children and Families

AFN Reaches $20 B Final Settlement Agreement to Compensate First Nations Children and Families

July 4, 2022

Why your options may be limited if your employer wants you back in the workplace

July 4, 2022

City directs contractors to reinstate Sikh security guards who lost work due to clean-shaven rule

July 4, 2022
  • ABOUT LITN
  • SUPPORT LITN
  • LEGAL, PRIVACY & POLICY
  • PUBLIC EDUCATION & RESOURCE LINKS
Friday, January 27, 2023
  • Login
  • Register for a FREE LITN account
⚖ Law in the News .com (LITN) Media 📃
  • Latest News
  • Industry News
  • Categories
    • A to C
      • Aboriginal Law
      • Access to Justice (A2J)
      • Administrative Law
      • Alternative Dispute Resolution
      • Analysis
      • Animal Law
      • Anti-Corruption Law
      • Antitrust Law
      • Arbitration Law
      • Banking and Securities Law
      • Bankruptcy Law
      • Cannibis Law
      • Civil Litigation
      • Class Action
      • Commercial Law
      • Constitutional Law
      • Construction Law
      • Consumer Protection Law
      • Contract Law
      • Criminal Law
      • Cyber Security Law
    • D to H
      • Disability Law
      • Editor’s Choice
      • Elder Law
      • Employment Law
      • Environmental Law
      • Entertainment Law
      • Estate Law
      • Family Law
      • Highway Traffic Law
      • Housing Law
      • Human Rights Code
    • I to L
      • Immigration Law
      • Industry News
      • Insurance Law
      • Intellectual Property Law
      • International Law
      • Labour Law
      • Latest News
      • Legal Governance
    • M to Z
      • Medical Law
      • Municipal Law
      • Op-Ed
      • Personal Injury Law
      • Privacy Law
      • Real Estate Law
      • Regulatory Law
      • Tax Law
      • Telecommunications Law
      • Transportation Law
      • Workers Compensation Board
  • Archives
    • 2022
      • July 2022
      • June 2022
      • May 2022
      • April 2022
      • March 2022
      • February 2022
      • January 2022
    • 2021
      • December 2021
      • November 2021
      • October 2021
      • September 2021
      • August 2021
  • About LITN
    • Who We Are
    • What We Do
    • Our Mission
    • Our Goal
    • Contact Us
    • Support LITN
      • Contribute to LITN Operations
      • Place YOUR Custom Ad on LITN
      • Engage with LITN Sponsored Ads
      • Create a FREE LITN Account
      • Subscribe to the LITN Newsletter
      • Connect, Follow, Like, Retweet and Repost LITN
    • Legal, Privacy and Policy
      • Cookie Policy (CA)
      • Privacy Policy
      • Terms and Conditions
  • Public Education and Resource Links
No Result
View All Result
⚖ Law in the News .com (LITN) Media 📃
  • Latest News
  • Industry News
  • Categories
    • A to C
      • Aboriginal Law
      • Access to Justice (A2J)
      • Administrative Law
      • Alternative Dispute Resolution
      • Analysis
      • Animal Law
      • Anti-Corruption Law
      • Antitrust Law
      • Arbitration Law
      • Banking and Securities Law
      • Bankruptcy Law
      • Cannibis Law
      • Civil Litigation
      • Class Action
      • Commercial Law
      • Constitutional Law
      • Construction Law
      • Consumer Protection Law
      • Contract Law
      • Criminal Law
      • Cyber Security Law
    • D to H
      • Disability Law
      • Editor’s Choice
      • Elder Law
      • Employment Law
      • Environmental Law
      • Entertainment Law
      • Estate Law
      • Family Law
      • Highway Traffic Law
      • Housing Law
      • Human Rights Code
    • I to L
      • Immigration Law
      • Industry News
      • Insurance Law
      • Intellectual Property Law
      • International Law
      • Labour Law
      • Latest News
      • Legal Governance
    • M to Z
      • Medical Law
      • Municipal Law
      • Op-Ed
      • Personal Injury Law
      • Privacy Law
      • Real Estate Law
      • Regulatory Law
      • Tax Law
      • Telecommunications Law
      • Transportation Law
      • Workers Compensation Board
  • Archives
    • 2022
      • July 2022
      • June 2022
      • May 2022
      • April 2022
      • March 2022
      • February 2022
      • January 2022
    • 2021
      • December 2021
      • November 2021
      • October 2021
      • September 2021
      • August 2021
  • About LITN
    • Who We Are
    • What We Do
    • Our Mission
    • Our Goal
    • Contact Us
    • Support LITN
      • Contribute to LITN Operations
      • Place YOUR Custom Ad on LITN
      • Engage with LITN Sponsored Ads
      • Create a FREE LITN Account
      • Subscribe to the LITN Newsletter
      • Connect, Follow, Like, Retweet and Repost LITN
    • Legal, Privacy and Policy
      • Cookie Policy (CA)
      • Privacy Policy
      • Terms and Conditions
  • Public Education and Resource Links
No Result
View All Result
⚖ Law in the News .com (LITN) Media 📃
No Result
View All Result
Home Contract Law

Limitation of Liability Clauses: the Supreme Court Sets the Record Straight

The Supreme Court of Canada has reaffirmed the full effect of limitation of liability clauses in contracts by mutual agreement.

April 5, 2022
Reading Time: 5 mins read
0
A A
0
Limitation of Liability Clauses: the Supreme Court Sets the Record Straight
Share on FacebookShare on TwitterShare on LinkedInShare by Email

 


PHOTO: Stock
  • Mathieu Leblanc-Gagnon, Maxime-Arnaud Keable, Camila Saïdi ⁞ Fasken
  • April 5, 2022

 
 

The Supreme Court of Canada has reaffirmed the full effect of limitation of liability clauses in contracts by mutual agreement. That conclusion, which is based on the principle of freedom of contract, is a reminder of the importance of careful drafting of this type of clause.

Introduction

In its judgment in 6362222 Canada inc. v. Prelco inc.,[1] delivered on October 15, 2021, the Supreme Court of Canada unanimously confirmed that a limitation of liability clause in a contract by mutual agreement is valid against a breach of a fundamental obligation. The highest court in the land has thus circumscribed the application of the doctrine of breach of a fundamental obligation, which holds that a party to a contract may be exempted from the application of a limitation of liability clause if that clause relates to the very essence of the contract.

The Facts

The appellant, 6362222 Canada inc. (“Createch”), is a firm that specializes in operational performance improvement and in the implementation of business management systems. The respondent, Prelco inc. (“Prelco”), is a firm that specializes in transforming glass for various architectural, industrial and commercial purposes. In April 2008, Prelco and Createch entered into an agreement for Createch to implement an integrated management system at Prelco. The agreement included a clause that limited Prelco’s remedies “to the amount of any fees paid [to compensate for the] unsatisfactory services” performed in connection with the implementation of the integrated management system.

The business relationship between Prelco and Createch ended in the spring of 2010, following numerous difficulties experienced in implementing the system. Prelco terminated their contract and retained Irisco, another firm, to complete the implementation of an efficient system.

Prelco brought an action in damages against Createch claiming over $6 million as reimbursement for an overpayment, costs for restoring the system, claims from customers, and loss of profits.

Previous Judgments

The Superior Court and the Quebec Court of Appeal found for Prelco on the ground that the limitation of liability clause could not apply in this case. In the opinion of those courts, the implementation of an integrated management system was the principal object of the contract, and so the doctrine of breach of a fundamental obligation had to be applied and negated the clause.

Reasons of the Supreme Court

Recognition of limitation of liability clauses in Quebec civil law

The Court first reaffirmed, “[t]he validity in principle of non‑liability clauses.” On that point, the Court pointed out that the validity of such clauses is based on the principle of autonomy of the will of the parties, the corollary of which is freedom of contract.

The Court reiterated that limitation of liability clauses are still subject to the limits provided by the rules that apply to certain nominate contracts and by public order articles 1474 and 1475 of the Civil Code of Québec. On this point, we would note that article 1474 of the Civil Code of Québec prevents anyone from excluding or limiting their liability “for material injury caused to another through an intentional or gross fault” or “for bodily or moral injury caused to another.” In this case, the Court was of the opinion that the legislature’s choice to exclude the fundamental obligation concept from those constraints, which arise from the formal public order of direction, cannot be disregarded.

In the opinion of the Court, recognizing the validity of a non-liability clause “in a contract by mutual agreement that was negotiated by two sophisticated legal persons” is even easier to understand when the inclusion of such a clause may express the will of the parties to provide that risks be shared. The Court pointed out that a limitation of liability clause is often agreed to in exchange for a “favourable price.” The Court thus acknowledged that non-liability clauses have a “commercial and social utility” while also agreeing that they can be a risk management mechanism used by sophisticated parties.

The doctrine of breach of a fundamental obligation

Interpreting the intention of the legislature, the Court rejected “the existence of a rule of public order of general application that would neutralize a non‑liability clause affecting a fundamental obligation” and thus reversed the trend established by the Court of Appeal in Samen.[2] In the case of contracts by mutual agreement, the principal limits on the validity of non-liability clauses are therefore still the limits expressly provided by the legislature in the Civil Code of Québec.

The Court read articles 1379 and 1384 of the Civil Code of Québec, which govern contracts of adhesion and consumer contracts, respectively, and concluded that the doctrine of breach of a fundamental obligation exists in Quebec civil law, but stressed the legislature’s intention to limit its application to “these two types of contractual relationships” that are characterized by an imbalance between the parties.

Since the Court of Appeal also relied on the reciprocity of obligations and the idea of cause to justify applying the doctrine of breach of fundamental obligation, the Court revisited the two competing views advanced by the authors on this subject. In the circumstances, the Court concluded that this is not a situation in which the obligation is deprived of its objective cause, and so it considered it appropriate to refrain from taking a position on the disagreement among the authors in the abstract.

The Court concluded, in summary, that the non-liability clause was valid in this case because the clause was not covered by any public order limit codified by the legislature.

Comments and Conclusion

Freedom of contract enthusiasts will be pleased with this decision. Although the Court did come down in favour of the validity of limitation of liability clauses in contracts by mutual agreement, it should be noted that these clauses are still subject to certain legislative limits, including the limits relating to gross or intentional fault (art. 1474, para. 1 C.C.Q.) and moral or bodily injury (art. 1474, para. 2 C.C.Q.). In addition to those qualifications, noteworthy other limits include the liability of the manufacturer, distributor and professional seller (art. 1733 C.C.Q.), contracts for the lease of a dwelling (arts. 1863, 1893 and 1900 para. 1 C.C.Q.), contracts of sale (arts. 1732 and 1733 C.C.Q.), carriage (art. 2070 C.C.Q.) and employment (art. 2092 C.C.Q.), deposit with an innkeeper (art. 2298 C.C.Q.), and consumer contracts (s. 10 of the Consumer Protection Act). We would also note that the codes of ethics of the various professional orders in Quebec may limit the application of such clauses.

In light of the foregoing, Prelco confirms that limitation of liability clauses may be used for parties that wish to manage their contractual risks. Nonetheless, caution must be exercised, in view of the limits imposed by the public order provisions referred to above.

 


[1]              6362222 Canada inc. v. Prelco inc., 2021 SCC 39.

[2]              Samen Investments Inc. v. Monit Management Ltd., 2014 QCCA 826.

GOOGLE ADVERTISEMENT

Want direct access to the latest LITN content?

Stay in the loop ➞ Subscribe to LITN instant notifications.
Receive the latest content delivered directly to your device.
Unsubscribe at anytime.

Unsubscribe from LITN instant notifications
Previous Post

Canadian Bar Association favours mandatory vaccination policy for Federal Court in-person hearings

Next Post

Court decision ‘stabs at the heart’ of transparency law oversight, N.L. watchdog says

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to LITN's Terms & Conditions.

Latest News

More than 10,000 Canadians received a medically-assisted death in 2021: report
Medical Law

More than 10,000 Canadians received a medically-assisted death in 2021: report

August 13, 2022
7
Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined
Constitutional Law

Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

August 12, 2022
7
The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence
Disability Law

The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

August 12, 2022
7

Subscribe

Join the LITN Newsletter ➞ the latest news delivered to your inbox. Unsubscribe at any time.


GOOGLE ADVERTISEMENT

Instagram Feed

  • #LegalTechWoes #legaltech #legaltechpainpoints #legalinnovation  #legalops #legaloperations #legal
#legalgeek #legaltechs #legaltechnology | https://instagram.com/lawinthenews
Courtesy Mat Jakubowski ...silvertownlegal.com | @matjakubowski ... https://www.linkedin.com/in/mat-jakubowski | https://lawinthenews.com/
  • #LegalTechWoes #legaltech #legaltechpainpoints #legalinnovation  #legalops #legaloperations #legal
#legalgeek #legaltechs #legaltechnology | https://instagram.com/lawinthenews
Courtesy Mat Jakubowski ...silvertownlegal.com | @matjakubowski ... https://www.linkedin.com/in/mat-jakubowski | https://lawinthenews.com/
  • #LegalTechWoes #legaltech #legaltechpainpoints #legalinnovation  #legalops #legaloperations #legal
#legalgeek #legaltechs #legaltechnology | https://instagram.com/lawinthenews
Courtesy Mat Jakubowski ...silvertownlegal.com | @matjakubowski ... https://www.linkedin.com/in/mat-jakubowski | https://instagram.com/lawinthenews

Facebook Feed

Facebook Feed

Twitter Feed

Join the Conversation

Personal selections from a Canadian perspective. #Law in the #News #LITN @Law_In_The_News

News Categories

Latest Headlines

More than 10,000 Canadians received a medically-assisted death in 2021: report

More than 10,000 Canadians received a medically-assisted death in 2021: report

August 13, 2022
7
Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

August 12, 2022
7
The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

August 12, 2022
7

Subscribe to the LITN Newsletter

Join the LITN Newsletter ➞ the latest news delivered to your inbox. Unsubscribe at any time.

Website Powered By

DJT Design Studios logo

© 2022 Law in the News Media (LITN)

  • About LITN
  • Contact LITN
  • Support LITN
  • Legal, Privacy and Policy
  • Public Education & Resource Links
No Result
View All Result
  • Login
  • Sign Up
  • Latest News
  • Industry News
  • Categories
    • A to C
      • Aboriginal Law
      • Access to Justice (A2J)
      • Administrative Law
      • Alternative Dispute Resolution
      • Analysis
      • Animal Law
      • Arbitration Law
      • Anti-Corruption Law
      • Antitrust Law
      • Banking and Securities Law
      • Bankruptcy Law
      • Cannibis Law
      • Criminal Law
      • Civil Litigation
      • Class Action
      • Commercial Law
      • Constitutional Law
      • Construction Law
      • Consumer Protection Law
      • Contract Law
      • Criminal Law
      • Cyber Security Law
    • D to H
      • Disability Law
      • Editor’s Choice
      • Elder Law
      • Employment Law
      • Environmental Law
      • Estate Law
      • Family Law
      • Highway Traffic Law
      • Housing Law
      • Human Rights Code
    • I to L
      • Immigration Law
      • Industry News
      • Insurance Law
      • Intellectual Property Law
      • International Law
      • Labour Law
      • Latest News
      • Legal Governance
    • M to Z
      • Medical Law
      • Municipal Law
      • Op-Ed
      • Personal Injury Law
      • Privacy Law
      • Real Estate Law
      • Regulatory Law
      • Tax Law
      • Telecommunications Law
      • Transportation Law
      • Workers Compensation Board
  • News Archives
    • 2022
      • July 2022
      • June 2022
      • May 2022
      • April 2022
      • March 2022
      • February 2022
      • January 2022
    • 2021
      • December 2021
      • November 2021
      • October 2021
      • September 2021
      • August 2021
  • Public Education & Resource Links
  • About LITN
    • Who We Are
    • What We Do
    • Our Mission
    • Our Goal
    • Contact LITN
    • Support LITN
    • Legal, Privacy and Policy
      • Home
      • Cookie Policy
      • Privacy Policy
      • Terms of Use Policy

© 2022 Law in the News Media (LITN)

Welcome Back to LITN!

Sign In with Facebook
Sign In with Google
Sign In with Linked In
OR

Login to your LITN account below.

Forgot your password? Sign Up

Create a FREE LITN Account!

Sign Up with Facebook
Sign Up with Google
Sign Up with Linked In
OR

Please complete your registration below.

*By registering into the website, you agree to LITN's Terms & Conditions.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
⚖ Law in the News .com (LITN) Media 📃
Manage Cookie Consent
LITN uses technologies like cookies to store and/or access device information to provide the best user experience. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}
Go to mobile version