Limitation Of Liability Clauses: Manufacturers, Sellers And Contractors Beware

Introduction

On November 22, 2007, the Supreme Court of Canada rendered a landmark decision on the liability of sellers and manufacturers in Quebec. In ABB Inc. vs. Domtar Inc.¹ the Court upheld Domtar's action against ABB Inc. and Alstom Canada Inc. for nearly 39 million dollars (capital and interest). This judgment is of the utmost importance for all manufacturers and other professional vendors selling their products in Quebec. It confirms the difficulty they will have relying on exclusion or limitation of liability clauses to escape liability for the consequences of latent defects in their products, even when they are dealing with sophisticated buyers. Manufacturers in particular will rarely be able to rely on such clauses, even though they are commonly included in contracts of sale.