Dow Chemical Canada ULC V NOVA Chemical Corporation: Limiting Liability Contractually

The Alberta Court of Appeal has released a decision that provides much needed guidance as to how to distinguish between direct losses, which are generally recoverable, and indirect or consequential damages, which are often excluded from recovery by contractual agreement.

Dow Chemical Canada ULC v NOVA Chemical Corporation involved allegations of breach of contract in the context of the production of ethylene at the parties' jointly owned plant.  Among the issues under consideration was whether an exclusion of liability clause limited the recovery of indirect and consequential damages, and if so, what did that exclusion really cover. The decision provides insight into the applicability and interpretation of exclusion clauses and clarity on the distinction between direct and indirect or consequential damages.