Limits on Contractual Limits of Liability – Part II

While courts have declined to enforce contractual limitation of liability (LOL) clauses that are ambiguous, unconscionable or contrary to public policy, pre-contractual warranties can also undermine the effectiveness of these clauses.

In the last edition of the TLQ, we discussed the recent Supreme Court of Canada (SCC) guidance on the important exceptions that come into play to reduce the effectiveness of LOL clauses. The SCC guidance focuses on different aspects of the LOL clause itself, or the behavior of the wrongdoer under the Agreement. These exceptions are important in the context of LOL clauses in technology-related supply agreements, but they are also relevant to any other type of commercial contract that contains an LOL clause.