Supreme Court Upholds Non-Liability Clause In Québec Commercial Contract In Key Ruling

Canada's highest court has unanimously ruled that Québec law allows parties to limit or exclude their liability in a freely negotiated non-consumer contract. In 6362222 Canada inc. v. Prelco inc.,¹ the Supreme Court of Canada had to decide whether a limitation of liability clause could be nullified based on the doctrine of breach of a fundamental obligation. In its decision, the Court deferred to the intention of the commercial parties and upheld the validity of the clause. This judgment is critically important for commercial parties contracting under Québec law.

Background

The underlying dispute concerned a contract between 6362222 Canada inc. (Createch), a software consulting firm, and Prelco inc. (Prelco), a manufacturer. Under a 2008 agreement between them, Createch was to supply software and professional services to assist Prelco in implementing an integrated management system.