International Construction Law Review
THE COMMON LAW ENFORCEABILITY OF EXCULPATORY PROVISIONS IN CANADIAN CONSTRUCTION CONTRACTS: THE DIVINATION OF INTENT—THE PRIMACY OF COMMERCIAL REASONABILITY*
R BRUCE REYNOLDS
Borden Ladner Gervais LLP, Toronto
1. INTRODUCTION
According to the Canadian legal commentator, S M Waddams, “there is nothing inherently evil in … exclusionary provisions”.1
Commercial parties, within the construction sector, and otherwise, routinely seek to structure commercially sound risk-allocation strategies in the negotiation of contracts. The Canadian common law in respect of contractual limitation of liability provisions—or, to use a more generic term capable of capturing the breadth of their variety, exculpatory provisions—has settled on a measured approach, balancing, on the one hand, the traditional common law respect for freedom of contract and, on the other hand, the potential for judicial intervention in order to prevent unconscionability in the result of any given case.
This paper will first catalogue, generally, the types of exculpatory provisions most frequently found in Canadian construction contracts and at issue before the courts; will then proceed to consider, from a general perspective, the enforceability of exculpatory provisions at Canadian common law; and, finally, will address the issue of whether the Canadian common law extends the benefits of such provisions to non-parties.
2. TYPES OF EXCULPATORY PROVISIONS
There are many different types of exculpatory provisions in use in the Canadian construction industry. While the list is far from exhaustive, examples may be drawn from the standard form of construction industry contracts established by, for instance, the Canadian Construction Documents Committee,2
the Canadian Construction Association, and the
* The author gratefully acknowledges the invaluable assistance of his colleague Cullen F Price, an associate at Borden Ladner Gervais LLP.
1 S M Waddams, The Law of Contracts
(Toronto: Canada Law Book Inc, 1999) at para. 471.
2 The Committee is “a national joint committee responsible for the development of standard construction documents and industry guides for use in the public and private sectors by owners, contractors, design professionals and others in the construction industry” (Kirsh and Roth, The Annotated Construction Contract
(Aurora: Canada Law Book Inc, 1997)).
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Enforceability of Exculpatory Provisions
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